Economy

When should leaders leave a troubled company?

Myriam Robin /

For the past two nights, the founder and former CEO of News Corporation, Rupert Murdoch, has been grilled by the United Kingdom’s Levenson inquiry on media ethics, which was prompted by allegations of journalists at News Corp’s now-defunct tabloid News of the World hacking into private phones to generate stories.

There’s been understandable interest in the mogul. How he did before the inquiry, what he’ll do now, and of course, what he did. It’s easy to forget he’s not the sole leader of his empire. According to Wikipedia, News Corporation employs 51,000 people worldwide. Hundreds of these are executives, directors, and heads of divisions.

In News Corp’s case, many won’t speak their employer’s name with the same pride they used to.

It’s even affecting the Australian business. The chief executive of News Limited, Kim Williams, today appointed a ‘director of people and culture’, Janine Stewart, to report directly to him. Williams said in a press release: “News Limited has begun a top-to-bottom transformation of its business. One of our key aims is to be the employer of choice for the best and most ambitious media professionals in Australia. In order to do this we must manage and invest in our people, and carefully devise and implement a program of cultural change.”

Similarly, construction company Leighton Holdings is facing a class action over allegations it misled shareholders over the status of several of its projects. Its share price has languished this year following several profit downgrades. In Leighton’s case, managers and executives may fear for their company’s future, or regret being made to bear the mistakes of the company’s previous management.

This poses a conundrum for executives in both companies: whether to stay or, should the opportunity present itself, to go.

“It’s a very difficult issue that people find themselves in, and increasingly a contemporary issue,” says Hilary Armstrong, director of education at the Institute of Executive Coaching.

“People have to do the job they’re doing the best they can, but also recognise that they have to look after themselves and look at what their future is,” she says.

There are no easy answers, but one way managers and leaders can help their own decision making is by making sure they have good information, and good options.

“If I was coaching somebody in this situation, I would be asking them questions about what information they do have, to make sure they have got very clear and correct information,” Armstrong says.

“I think there’s often a tendency to fall into a gossip loop about crises, which means that people get paralysed by fear. And I think it is important to be proactive.”

Armstrong adds that where appropriate, it’s important for leaders to discuss the situation with their team.

One way leaders can control their fear over their company’s future is by looking outside their workplace for opportunities, even if they have no intention of leaving. It can help people to feel they have options.

Reyna Mathes, director at coaching company Executive Central, says in many situations managers should go to the human resources department of their company. “They should immediately look into it from both sides and do a thorough investigation,” she says. They can offer training, counselling, and, if it comes to that, offer processes to leave the organisation.”

Asked whether staying at a troubled company can negatively impact an executive’s resume, Armstrong says this is likely to be the case.

“I think they’d have to be clear what their position and role was if they were involved in a crisis like that. And I’m sure it actually could affect people’s reading of a resume.”

But she adds it is possible to improve one’s reputation by taking a clear and conscientious stand during a crisis. She recalls one board member she’s dealt with, who before the collapse of an Australian company, was the sole voice of caution against the company’s direction. That put her at odds with her others at the time, but her reputation was enhanced in the long-term.

“The silence of people who do have values is often why bad things happen … it takes a lot of courage to speak truth in the face of power, but there are some extraordinary souls that do just that.”

Armstrong says keeping faith in yourself is key to making the best of a bad situation. “You have to be very clear about what your values are, and make sure you are standing for this. That helps people get through the stress, and in the long-run, they feel they did the right thing.”

This article first appeared on LeadingCompany.

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Myriam Robin

Myriam Robin is a reporter for SmartCompany and its sister site LeadingCompany. She has degrees in economics, international studies and journalism. She likes writing about businesses taking risks and doing new things.

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