How companies can restore trust after CEO misconduct | 2/19/2018 | Staff
leeann77 (Posted by) Level 3
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A new study published today in the Journal of Trust Research reveals how boards of directors can proactively address CEO misconduct to increase public trust towards an organization.

Experts assessed how members of the public might react to two different board-initiated responses to a CEO transgression - dismissing the CEO, or keeping the CEO in place while offering an apology and acknowledgement of the wrongdoing.

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They discovered that both tactics increased trust towards the organization, but in different ways. By firing the CEO, the board differentiates itself from the transgressor, leaving the organization's reputation intact. However, in cases where the CEO must stay, a board-requested CEO apology, combined with the CEO's acknowledgement of wrongdoing, encourages others to see the CEO as a 'reformed sinner', helping to repair trust in the organization.

In both cases, the board of directors took initiative to handle these types of crises with authority to restore faith in the organization.

Authors - Boards - Directors - Signal - CEO

The authors suggest that boards of directors should consider how to best signal that either 1) the guilty CEO is distinct from the rest of the top leadership (which is assumed trustworthy), or 2) that the CEO has learned a lesson from the event and will be a reformed leader in the future.

Co-author of the study, Professor Cecily...
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