Last Friday, ABC News carried a story about the Board of building materials maker, James Hardie, dismissing its chief executive, Jack Truong. The Board had conducted “extensive due diligence to provide for a sincere change in Mr Truong’s behaviour”, but employees made further complaints about how he treated them. The company shares lost 4.1% on the news of the CEO’s departure.
The Chair of the Board commented that “while the transformation and share price growth that occurred under Mr Truong’s leadership was truly remarkable … Mr Truong’s conduct, while not discriminatory, extensively and materially breached the James Hardie Code of Conduct, and a Board meeting held today resolved to terminate Mr Truong’s employment, effective immediately. The Board took this action to uphold the Company’s core values, including Operating with Respect, and to maintain continuity of the management team that has been instrumental in our transformation”.
We wondered if this damage to the company’s reputation and share price as a result of an alleged misconduct Executive dismissal was an isolated phenomenon.
We found an article written by Amber Shultz in September 2021 that described three instances in 2018 of the ‘exponentially expensive’ effect of allegations about CEOs’ alleged inappropriate behaviour:
These examples appear to indicate a seachange in which Boards and shareholders are no longer prepared to put up with company executives’ poor behaviour, irrespective of the short to medium term impact it may have on share price and company value.
Plainly, publicly listed and indeed all other organisations need to ensure the ‘tone at the top’ is such that a culture of respectful and appropriate behaviour towards employees is fostered and rewarded. It is also critical that employee complaints are taken seriously and quickly acted upon.
Centium has extensive experience in discretely investigating employee complaints involving CEOs and senior executives. We have also recently developed a cost-effective Health Check that can proactively assess your organisation’s culture and prevention framework as they relate to bullying and harassment.
If you would like to check the health of your organisational culture or have a confidential no-obligation discussion, contact our Director, Ethical Conduct & Investigations, Peter Mulhall, on 0416 161 819 or email@example.com.