Love is in the air in the corner office these days, and that’s not a good thing.
Over the weekend, Steve Easterbrook of McDonald's became the fifth US chief executive to step down over a consensual relationship since June 2018 when Intel boss Brian Krzanich lost his job, according to data collected by Challenger, Gray & Christmas.
The cluster of departures is the first of its kind since the outplacement firm began keeping records. But companies have been struggling with office romances for more than a century.
Early factories were deliberately segregated by sex to limit heterosexual relationships, writes historian Jane Humphries. Until the 1970s, many companies forced women to quit when they married. This had the dual purpose of limiting the possibilities for romance and making it clear that women would pay the price if Cupid struck.
However, growing opportunities for women, anti-discrimination laws and longer working hours eventually began to translate into romance.
The share of US couples who met as, or through, co-workers trebled between the 1940s and 1995 to 19 per cent, as more women entered and stayed in the workforce, the comprehensive How Couples Meet and Stay Together survey shows.
That has created dilemmas for HR departments. Anita Hill's 1991 allegations of harassment by then-Supreme Court nominee Clarence Thomas, and a series of discrimination lawsuits, led most US groups to focus first on prohibiting unwanted attention.
Some also began setting rules on dating – Boeing dumped its chief executive Harry Stonecipher over a consensual relationship in 2005. But many HR departments opted to ignore romances or let managers deal with them case by case.
However, the 2017 #MeToo movement forced many companies to reconsider. The sexual allegations against film producer Harvey Weinstein and CBS's Les Moonves, among others, highlighted power imbalances in the workplace. The slew of allegations made it blatantly obvious that top executives had a completely different definition of "consensual" than the people they encountered.
Surveys by Challenger in 2018 found that more than half of companies had reviewed or created sexual harassment and dating policies in light of #MeToo. Among companies with formal policies on consensual relationships, three-quarters now ban them between a manager and a direct report and one-quarter require any intra-company relationship to be reported.
McDonald’s, which has been dogged by allegations that it fails to protect employees from harassment, has a policy that is very clear – and very strict. According to its 2018 employee code of conduct, relationships between “employees who have a direct or indirect reporting relationship to each other are prohibited”.
The code also admonishes those who “plan to enter into a relationship [to] advise your human resources representative or director immediately”.
The company did not say whether Mr Easterbrook reported his relationship. But McDonald's' top human-resources executive David Fairhurst followed Mr Easterbrook out of the door on Monday.
The five recent departures show that the tighter rules are starting to bite. "If the policy applies to all the employees, it has to apply to the CEO. Everyone has to buy in," says Charles Elson, of the University of Delaware.
There is a significant, short-term share-price hit when companies reveal sexual misconduct, even if the relationship is consensual, says Amy Baker, a University of New Haven psychology professor studying the issue: "The market looks at this as a signal that the company is not being properly managed."
There is a bright spot for harassed HR teams. The US couples survey suggests that this issue might be starting to go away. The share of couples in the US who met at or through work has dropped by a third since 1995 to 11 per cent in 2017. Nearly 40 per cent of US couples now meet online. – Copyright The Financial Times Limited 2019