Ouster of Boeing CEO points to continued corporate confusion on executive affairs

Monday, March 7th 2005, 8:43 am
By: News On 6

NEW YORK (AP) _ At first glance, Boeing Corp.'s decision to oust its CEO because of his affair with a female executive suggests a bold new era in corporate politics. Or maybe not.

Elements of the tale hint at dramatic change. Perhaps Boeing's stern enforcement of its seemingly boilerplate Code of Conduct means executives will now be held accountable not just for how they run businesses, but how they conduct their private lives. Maybe the standards often applied to the rank and file will be administered in the executive suite, too.

But 25 years after an interoffice romance in the executive suite at Bendix Corp. dominated watercooler conversation, the only thing made clear by the Boeing tale and the talk it's stirring, is that U.S. companies are still far from certain about how to police sexual relationships in their uppermost ranks.

And the debate may be even farther away from being settled than years ago, as companies increasingly weigh the danger of lawsuits and respond to the scrutiny of business practices stemming from the scandals of recent years.

``My concern in the current climate is that boards are acting out of litigation avoidance, and still not acting out of carefully considered principals about how do we make a decision, and what kind of behaviors do we want to reward,'' said Freada Klein, a consultant to companies on dealing with sexual harassment and other issues of workplace bias.

Klein said what's most striking about the Boeing case is that its so atypical. She said she's been called by at least a dozen companies in recent years to deal with affairs in the top executive ranks. Not a single one of those instances saw the executives involved lose their jobs, she said.

The biggest question provoked by Boeing's ouster of CEO Harry Stonecipher on Monday is not what it says about how companies are changing, but whether this particular company would have acted at all if it hadn't already been shadowed by a series of ethical lapses, Klein said.

Business ethics experts said the situation hints at possible changes in the way corporate board scrutinize executive conduct, but also said it was too soon to say if a new norm was being set.

``Any company that has a similar issue like this, if they want to do something different, is going to have the Boeing example to answer to,'' said Thomas Donaldson, a professor of business ethics and law at the Wharton School at the University of Pennsylvania.

But if Boeing's action is the beginning of something larger, it raises troubling questions about boards focusing on moral behavior without any direct ties to business, said W. Michael Hoffman, executive director of the Center for Business Ethics at Bentley College in Waltham, Mass.

``I don't want business ethics to become kind of a business witch hunt... and all of sudden directors begin to make decisions about the ethical behavior of employees,'' Hoffman said. ``They need to be clearer to the public about exactly why Mr. Stonecipher was asked to resign.''

Mostly, though, observers say the Boeing situation struck them as the unusual example rather than a pattern of something larger. And as the exception, rather than the rule, the case signals how little has changed over time.

``One case is not a trend,'' said Ellen Bravo, former executive director of 9to5 National Association of Working Women. ``In most cases, the CEO gets away with murder.''

Bravo and others pointed back to the situation at Bendix Corp. in 1980, when CEO Bill Agee came under scrutiny. Agee denied that his relationship with a subordinate, Mary Cunningham, was at all responsible for the 29-year-old Cunningham's quick elevation to a job as vice president of corporate strategy.

In the end, Cunningham was the one who was asked to leave. Agee stayed on. Eventually, they married.

The case, which drew extensive press coverage and public attention, provoked strong reactions, including among many women who argued that Agee was at least as much to blame for the situation.

If anything, the Boeing case shows that the line between when those relationships are acceptable is still ever-shifting, experts say.

``Companies are really wrestling with what is the line between business behavior and private behavior,'' Klein said, ``and when does that private behavior compromise the confidence that employees have in a senior person.''