What Is Your Organization’s Threshold for Firing Someone For Personal Misconduct?

Earlier this month, a portfolio manager at a large hedge fund, Moore Capital Management, was fired for having thrown what was labelled as a “Wolf of Wall Street-style pool party” that garnered a lot of (negative) attention on social media and within the press. To paint a picture of this 4th of July party in the Hamptons, the party was reported by CNBC to have “featured showers of Champagne, throngs of young people milling around the house and dwarfs with Champagne guns”.

But no matter how ridiculous this pool party may have been, why would the PM be fired, if this monstrosity of a party was thrown on his own time and was entirely unrelated to his work or his employer?

If, like many, you find yourself pondering the reason behind Moore Capital Management’s decision, let me ask you this more important question:

What is your organization’s threshold for determining when you would immediately fire a member of your team for some form of personal misconduct?

This is a question that is often overlooked, though in my experience tends to find itself on many organizations’ top 10 list of high-risk crisis scenarios that management worries about. And not unreasonably so. This type of incident can get quite messy. Tie controversy in with emotions and you’ve got a recipe for disaster. Just ask CBC post the Jian Ghomeshi scandal, or more recently, Whole Foods Market.

Depending on your organization and its industry, this threshold can vary. While hedge funds tend to be more conservative in nature, maybe your organization’s threshold is set a little higher. But on the other hand, maybe it isn’t. As this is a type of high-risk scenario that can be unpredictable, unpreventable and highly controversial, it should be, at the very least, a discussion that should be brought to the table as part of your crisis preparedness program.

What’s so complicated about the management of this type of crisis?

In theory it may be easy to say that, if an employee were to commit a personal act of misconduct that did not align with or reflect upon the organization’s values or code of ethics, that the decision to terminate that employee’s position at the organization would be easy. But what if…

…The person who committed the act were a member of senior management, or an employee who held a prominent (and public) position at your organization?

…What if this person held a long-standing position at your organization and the rest of the management team considered him or her to be, not just an employee or a colleague, but a friend?

…What if the allegations of this personal misconduct had not yet been proven and were widely believed by management to be false – though the allegations were highly controversial, or worse, criminal and were garnering a lot of unwanted attention and interrupting business as a result?

…What if the person were a business head and, if they were fired on the spot, the business would suffer for a period of time?

…What if the personal misconduct presented regulatory implications and triggered a requirement to report the incident and the person, depending on the industry you work in?

Would the decision be as easy to make as previously expected? Would it be simple to cut ties, walk away and never turn back?

Adding personal misconduct to your crisis preparedness

Personal misconduct that reflects poorly upon the organization is a high-risk scenario that keeps executives up at night for a reason. It can get messy and can be unpredictable and fact-dependant in terms of crisis management. The more employees an organization has – and the more prominent employees it has – the more at-risk it is to this type of scenario. Even if you hire the best of the best, accidents and lapses in judgement can happen. And they can happen in an instant.

What would your team do if they were faced with this type of difficult and public situation? Have you had this conversation with the decision makers within your organization yet?