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CEO’s Misbehaviors and Reactions of the Board
These three scenarios examine the question of sexual harassment. Sexual harassment is one of the misbehaviors in many organizations. The first case shows how the board accused Harry Stonecipher of sexual harassment. This does not constitute “misbehavior” because the relationship was purely consensual. The CEO did not harass her female employee in any way. The board’s decision to remove Harry from office was erroneous. Mark Hurd’s situation is different. The Board of Directors accused Mark of having a close sexual relationship with one of his female contractors. The misbehavior arising from the relationship is that the CEO altered his expenses’ data and reports. This malpractice could defraud the organization. This explains why the board’s decision to terminate Hurd’s contract was necessary (Donaldson, Werhane, & Zandt, 2007). Brian Dunn was a favorite American CEO and entrepreneur. Dunn decided to date one of her female employees. According to the Internal Audit Committee (IAC), Dunn had violated the company’s policy by maintaining a delicate relationship with her female employee. The CEO also gave her gifts thus affecting the integrity of the workplace. The board’s decision was meaningful because the CEO had misbehaved.
Issues to Consider when Selecting a New CEO
The Board of Directors should always present new ideas to limit these misbehaviors. This calls for the best practices because the board might dismiss some individuals unfairly. According to Bass (2008), the board should begin by analyzing the CEO’s personal life. Every leader and CEO is a human being. These leaders encounter certain challenges in their lives. I would examine the personal relationships formed by every individual before making my decision. The selected CEO should also “set the required tone in order to have acceptable behaviors within the organization” (Kotter & Cohen, 2012, p. 48). Many companies select their CEOs without asking them about their past relationships. This information will ensure the organization hires competent and responsible individuals. This strategy will reduce misbehaviors in the company. The board should also inform the targeted candidates about the organization’s policies and regulations. Every CEO should also be responsible. The idea will reduce the possibilities of such misbehaviors. The board should also inform the CEO about the “consensual or love contract agreements in the organization” (Bass, 2008, p. 74). Such policies will ensure the CEO understands his or her obligations as the leader of the targeted organization (Vries, Bakker-Pieper, & Oostenveld, 2010).
CEO’s Competitive Severance Package
The three cases explain why many CEOs receive large severance packages. This practice explains why future CEOs must get similar packages after leaving their jobs (Martin, 2010). The CEOs also received stock benefits or sizeable pensions. This explains why future leaders might misbehave to receive similar packages. Some CEOs might also decide to terminate their contracts to receive such severance payments (Ivancevich, Konopaske, & Mattson, 2011). This issue can have different impacts on the company’s performance. I would not endorse such severance packages in my company. The practice can encourage leaders to misbehave. I would reduce the packages to acceptable levels to retain the company’s performance. I will also conduct a study to understand the most competitive packages in my industry (Bass, 2008). Failure to grant a competitive severance package might undermine the effectiveness of different CEOs. This will eventually affect the performance of the organization.
Bass, B. (2008). Bass & Stogdill’s Handbook of Leadership: Theory, Research & Managerial Applications. New York, NY: The Free Press.
Donaldson, T., Werhane, P., & Zandt, J. (2007). Ethical Issues in Business: A Philosophical Approach. London: Pearson.
Ivancevich, J., Konopaske, R., & Mattson, M. (2011). Organizational Behavior and Management. New York: McGraw Hill Book Company.
Kotter, J., & Cohen, D. (2012). The Heart of Change: Real-Life Stories of How People Change Their Organizations. Watertown: Harvard Business Review Press.
Martin, C. (2010). Leadership Style and Communication Process: An Experiment Using the Psychological Isotope Techniques. Education Resources Information Center, 1(1), 1-23.
Vries, R., Bakker-Pieper, A., & Oostenveld, W. (2010). Leadership = Communication? The Relations of Leaders’ Communication Styles with Leadership Styles, Knowledge Sharing, and Leadership Outcomes. Journal of Business and Psychology, 25(3), 367-380.