Orica ‘explosion’ highlights payout pitfalls

Corporate bullying has been in the news again lately, this time the incident at mining explosives supplier Orica in late March grabbing our attention in the media.

But when the TV and radio news bulletins move on and the papers become tomorrow’s fish and chip wrappings, we’re left with the stark reminder that, if companies are to protect and retain their standing as good corporate citizens, the days of rewarding recalcitrants are well and truly over.

Or at least they should be.

If you’re not familiar with the details of the Orica explosion, I’ll recap briefly…

The company’s CEO Ian Smith was summarily dismissed a month or so back after an aggressive outburst directed at one of his senior female colleagues.

This wasn’t an isolated incident. Indeed, as something of an alleged serial offender when it came to a confrontational management style and overly aggressive behaviour towards staff, Mr Smith had agreed to join an anger management program and had even consented with the board that he be phased out as soon as a suitable replacement could be found.

Then it happened…his latest display of aggression forced the board to rethink its position and he was immediately fired.

But he left with his contractual entitlements arising from his ‘termination’, as well as a $2.5-million payment for severance and his notice period.

Which brings us right back to the very point of this blog…

While it’s often tricky determining termination payouts, I would have thought that when the termination is for repeated inappropriate behaviour, this wouldn’t be the case.

Furthermore, it highlights just how important it is for boards to be prepared for such scenarios and have protocols and procedures in place to take swift and decisive action.

Probably the kind of action the average person in the street would deem just and fair, delivered without fear or favour.

As such, it reminds us that boards need to be vigilant when drawing up contracts with CEOs to ensure that bullying and other grossly unacceptable behaviours are deemed justifiable reasons for termination – and without severance payouts and other perks.

The board cannot be seen to reward recalcitrant behaviour with handsome termination cheques when it’s patently obvious – as was the case at Orica – that the individual concerned has, quite literally, broken the law.

That’s the only way we’ll start to stamp out this pernicious conduct in the workplace.

In closing, let’s put down the brickbat and grab a bouquet.

I think we need to congratulate the Orica board on a number of levels – firstly, for conceding that they initially got it wrong when they decided to retain the CEO while searching for a replacement…and secondly, for being big enough to admit its mistake and immediately reverse its decision.

Until next time,
Kate.

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One thought on “Orica ‘explosion’ highlights payout pitfalls

  1. Unacceptable behaviour is unacceptable behaviour regardless of who it is. A staff code of conduct should apply to everyone top to bottom. Behavioural trip wires are a good thing. Raised voices is the first. If summary dismissal is the sanction then that ought to be it – why would there be ‘notice’ involved? As always these provisions are not applied equitably top to bottom.

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