In Managing Outcomes, Tony Jaques, Director of Issue Outcomes and author of Crisis Counsel, discusses if top executives should be penalized after a crisis. Order your copy of Crisis Counsel: Navigating Legal and Communication Conflict here.
Should top executives be penalized after a crisis?
It’s human nature to demand that “heads should roll” when things go wrong. And politicians and business leaders have got used to pointless calls for them to resign after every minor problem.
But what is the right response when an organization gets into a real financial or environmental or reputational crisis?
Two news reports last week highlighted different approaches to penalizing senior executives in the face of organizational failure.
First, it was announced that Rio Tinto’s CEO Jean-Sebastien Jacques will lose $4.9 million in bonuses after the deliberate destruction of 46,000-year-old Aboriginal rock shelters in the Juukan Gorge to expand an iron-ore mine.
The same day also saw an announcement that AMP Chairman David Murray would lose his job entirely after mismanagement of a sexual harassment scandal.
Meantime, later this month Ardent Leisure is due to appear in court in Queensland for sentencing following four deaths on a water rapids ride at its Dreamworld theme park in late 2016. Although the company faces up to $4.5 million in fines, no individual executive is expected to face further penalty. The CEO at the time had to give away a controversial $167,500 bonus in the face of public outcry and eventually lost her job. However, she walked away with a $731,00 payout and was retained on a $3,000-a-day consultancy…Read more