Even Top Executives Face the Axe Without Euphemisms

Being told "you're fired" is a shock to anyone, but for high-ranking executives used to control and gentle treatment, it can be particularly jarring. When misconduct occurs, some companies abandon euphemisms and clearly cut ties.

This direct approach was evident recently when Kohl's announced the dismissal of its new CEO, Ashley Buchanan, explicitly stating it was "for cause." Buchanan was accused of using his position to benefit a personal acquaintance.

Kohl's decision to use straightforward language underscores a shift among corporate boards towards forthrightness, especially when ethical lapses are detected, as explained by management expert Donald Hambrick from Pennsylvania State University. "Boards are more direct now compared to decades ago," Hambrick highlighted, noting the importance of maintaining transparency to uphold ethical standards.

Vivid, unambiguous communications are especially crucial when addressing scandals or fiduciary violations, according to Boston College's finance professor, Nadya Malenko. She emphasized that a lack of ambiguity in communication is necessary when internal misconduct is identified to reassure stakeholders.

In Buchanan's case, Kohl's board preferred clarity over mystery to prevent any speculation about broader issues within the company. The market reacted positively, with Kohl's shares increasing by approximately 12% after the announcement, indicating investor approval.

Efforts to reach Buchanan for comment were unsuccessful, as public profiles were unavailable. Kohl's has yet to comment on its choice of language in officially announcing Buchanan's exit.

Sustaining Trust in Corporate Governance

Kathy Gersch of Kotter, a change-management consultancy, suggested Kohl's board aimed to demonstrate competence, particularly with Buchanan being relatively new in his role. By acting decisively on the conflict of interest, they sought to assure stakeholders that their initial appointment decision was not flawed.

Previously the figurehead at Michaels, Buchanan was set to officially assume leadership at Kohl's in 2025. However, following disappointing sales and plans to shutter numerous stores, swift leadership changes seemed imperative.

Boards often juggle maintaining their dignity while dismissing executives, balancing honesty with public perception, said Gersch. There is growing public and shareholder demand for transparency concerning executive conduct and decisions.

Donald Hambrick reiterated that clear communications regarding ethical standards strengthen both corporate and board credibility. Ethical misconduct, regardless of who commits it, should result in prompt action to safeguard a company's reputation.