Over the weekend, one of the most prolific names in fast food was fired. You may not know Steve Easterbrook by name but you’re sure to know his title, which was CEO of McDonald’s. Easterbrook was fired for engaging in a consensual relationship with an employee but he’s still being paid US $40 million as part of his severance package.
Workplace conduct has never been a more sensitive topic, following the #MeToo movement, more and more people are being aware to, and standing up against misconduct in the workplace. There’s no doctrine for what’s right and wrong however, and different corporates have different measures in place to tackle such issues.
As it turns out, McDonald’s CEO broke the company’s rules, even if the relationship was fully consensual. Regardless of consent or not, it’s against McDonald’s policy for employees to engage in any kind of relationship together, especially if one of them holds power over the other. The bad news for Easterbrook is that no one holds more power than he does in the Golden Arches so his relationship was especially taboo.
According to The New York Times, McDonald’s’ board of directors met on November 3 and deemed Easterbrook to have violated policy and fired him immediately. The following day it was revealed Easterbrook would receive a six-month severance pay, which is likely to be around US $675,000 according to reports.
If that sum wasn’t enough, he’s also going to be given more than US $40 million in compensation. According to the BBC, the 52-year old’s 2018 pay packet was US $15.9 million, a number made up of a US $1.3 million base salary, with added benefits and bonuses.
For reference, that 2018 figure is 2,124 times the median pay of a McDonald’s employee, which is around US $7,473 according to the BBC.
Part of his exit deal is he’s not allowed any job at any of McDonald’s’ competition (KFC, Burger King, Wendy’s, etc.) for up to two years.
Wendy’s has often used Twitter to poke fun at McDonald’s
Hey @McDonalds, heard the news. Happy #NationalFrozenFoodDay to you for all the frozen beef that’s sticking around in your cheeseburgers.
— Wendy's (@Wendys) March 6, 2018
In McDonald’s’ official guidelines on business conduct, it states that “It is not appropriate to show favouritism or make business decisions based on emotions or friendships rather than on the best interests of the company.” Since there was a ‘power differential’ between Easterbrook and the unnamed employee, any business decisions he made that could impact the employee would be deemed as being made on emotions rather than business.
Steve Easterbrook with model Chrissy Teigen in 2017
“Companies and executives and boards are being far more sensitive to personal relationships, whether consensual or non-consensual, than has been true in the past,” says Erika James, the dean of Emory University’s Goizueta Business School.
An interesting parallel Time magazine draws is that McDonald’s must be consistent in holding up its rules, as it is with its business model. With almost 40,000 restaurants around the world, McDonald’s aims to always have a consistent quality. Time points out that this consistency that led McDonald’s to success must be shown in every facet of business.
“Any organization that has a strong brand—they have that strong brand because of consistency,” says James.
In an email to workers, Easterbrook acknowledged the relationship and said it was a mistake. “Given the values of the company, I agree with the board that it is time for me to move on,” he explained.
McDonald’s’ Chicago HQ
The same day Easterbrook’s severance pay was announced, McDonald’s HR chief, David Fairhurst, also left the company. It has been claimed his exit has nothing to do with the Easterbrook situation. Though it is worth noting part of McDonald’s policy is that: “If you are either in a relationship or plan to enter into a relationship that may violate Company policies, you must advise your Human Resources Representative or Director immediately.” Given that Fairhurst is part of HR, it would’ve been part of his division’s job to handle such violations.
Effective immediately, Easterbrook’s role as CEO has been taken over by the president of McDonald’s USA, Chris Kempczinski.
Chris Kempczinski
The new CEO thanked Easterbrook, calling him his mentor: “Steve brought me into McDonald’s and he was a patient and helpful mentor.”
Speaking to the Wall Street Journal, Kempczinski said: “There isn’t going to be some radical, strategic shift. The plan is working.”
This working plan, according to Gulf News is that the Golden Arches has been investing heavily in using higher-quality products, diversifying the menu, improving home-delivery, and embracing technology more.
