"For most people, personal indiscretions-such as having an extramarital affair or abusing drugs-are a private matter. But for CEOs, even scandals unrelated to business create doubt about their judgment, integrity, and leadership. The result is usually career-ending for the CEO, research shows, and can create lasting harm for the company. We found that CEOs overwhelmingly exit in the wake of personal scandals-five times as often as CEOs who commit financial misconduct do, in fact. And strong business performance doesn't tend to offer protection."
"The case, involving the AI firm Astronomer, may be the most visible of recent CEO personal scandals-think sex affairs, drug abuse, or embarrassing behavior-but it's not an isolated incident. Just weeks following the Coldplay "kiss cam" incident, the CEO of Nestlé was shown the door for similar behavior involving a relationship with a subordinate. Personal scandals have been the top cause of CEO terminations in recent years."
Nearly 400 CEO scandals involving financial or personal misconduct were compared to assess outcomes. The analysis found that scandal type strongly predicts outcomes. CEOs implicated in personal indiscretions are forced out far more often than those involved in financial misconduct. Personal scandals undermine perceptions of judgment, integrity, and leadership and commonly end CEO careers. Strong business performance typically fails to shield CEOs from the fallout of personal misconduct. High-profile incidents include a Coldplay kiss-cam episode at an AI firm, a Nestlé CEO removed for a subordinate relationship, and Hewlett-Packard's Mark Hurd being ousted after visible personal misconduct. Companies can suffer lasting harm.
Read at Fast Company
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