By Heather Haddon and Suzanne Vranica
McDonald's Corp. said its continuing investigation into former
CEO Steve Easterbrook's conduct is examining whether he covered up
improprieties by other employees alongside allegations of potential
misconduct within the human-resources department.
McDonald's filed suit against the former CEO following a tip
that board chairman Rick Hernandez received last month about an
alleged sexual relationship between Mr. Easterbrook and an
employee. That tip also raised concerns about the HR department and
possible improprieties by other employees, McDonald's executives
said. The company declined to provide details on allegations that
it said involved the HR department.
Some former managers told The Wall Street Journal they felt HR
leaders under Mr. Easterbrook ignored complaints about the conduct
of co-workers and executives. Some of those people said they feared
retaliation for reporting the conduct of co-workers and executives
"The board will follow the facts wherever they may lead,"
Mr. Easterbrook and his lawyer didn't respond to requests for
The fast-food giant's handling of workplace problems is in the
spotlight, as McDonald's has taken Mr. Easterbrook to court,
alleging he lied about three sexual relationships with employees
and demanding he relinquish tens of millions of dollars in
severance. McDonald's fired him without cause last November after
he acknowledged a consensual relationship with an employee that
violated company standards.
Mr. Easterbrook said in a legal filing this month that the
company had information about his relationships with other
employees when it negotiated his severance. McDonald's said it
stands by its complaint. At the time of his firing in November, Mr.
Easterbrook said his consensual relationship with an employee was a
mistake. "Given the values of the company, I agree with the board
that it is time for me to move on," he wrote at the time in an
email to McDonald's employees.
Before his dismissal, Mr. Easterbrook was lauded for helping to
turn around the company. After taking over in 2015, he overhauled
menus and pushed franchisees to update restaurants. Sales and
profits grew, and McDonald's stock nearly doubled during his
The changes included cost cuts through hundreds of buyouts that
led to the departure of some long-tenured compliance and HR
executives, former executives said.
David Fairhurst, whom Mr. Easterbrook appointed global chief
people officer months after becoming CEO, streamlined many HR
functions, including a change to performance reviews that allowed
for less employee feedback about concerns, former managers
Mr. Fairhurst socialized with employees outside the office, and
his conduct during a department holiday party in 2018 drew a
complaint from an employee who said some staffers drank heavily and
that the HR chief and one of his subordinates made inappropriate
physical contact, people familiar with the incident said.
McDonald's legal counsel conducted an investigation that year,
those people said. An executive told employees who attended the
gathering that such excessive drinking was inappropriate and should
be reported if it happened again, the people familiar with the
Some former managers and employees described feeling left out of
advancement opportunities in departments, including HR, because
they weren't part of an after-hours social circle among HR leaders.
Some employees concerned about favoritism in the HR department
alerted the company's legal department, according to a former
manager and a letter that a former employee sent to the department
last month, a copy of which was viewed by The Wall Street
In response to questions about Mr. Fairhurst's conduct and
leadership of the HR department, McDonald's now says that it fired
him with cause after Mr. Easterbrook's dismissal because of conduct
inconsistent with company policies and values. McDonald's said at
the time that Mr. Fairhurst had left the company.
McDonald's said the CEO's dismissal and HR chief's departure
weren't connected. Mr. Fairhurst, who has started a
workforce-consulting firm in Chicago, didn't respond to requests
for comment. "I have decided the time has come for me to move on to
my next career challenge," Mr. Fairhurst wrote in a LinkedIn post
New CEO Chris Kempczinski, who replaced Mr. Easterbrook in
November, pledged at the time to improve McDonald's work
environment. Mr. Kempczcinski said last month that he would renew
the company's values and condemned his predecessor's alleged
McDonald's hired a new global chief people officer, Heidi
Capozzi, in April from Boeing. She is reviewing HR processes and
policies put in place under Messrs. Fairhurst and Easterbrook,
company executives said, and plans to add new HR positions and
procedures such as evaluations for senior executives with
subordinates' feedback. Company executives said she is reviewing
the ways concerns are raised and investigated.
The company said it has hired consultants who plan to start
interviewing McDonald's employees next month about their
experiences at the company.
"Our board and CEO are committed to leading with integrity,"
McDonald's said in a statement. "We will continue to make changes,
where necessary, to support all parts of our organization."
Three executives and several other employees have left the HR
department since Mr. Easterbrook's firing, former managers said.
One of the recent HR departures, Melanie Steinbach, had been
promoted to senior vice president and chief people officer for
McDonald's U.S. last month. McDonald's said last week that Ms.
Steinbach had left the company. Ms. Steinbach couldn't be reached
"I know this team has gone through a ton of change," Ms. Capozzi
said in an online meeting last week with some employees, a
recording of which was viewed by the Journal. "I certainly wish
that wasn't the case, particularly with all the other challenges we
are dealing with."
She encouraged employees to raise concerns about questionable
Jim Oberman contributed to this article.
Write to Heather Haddon at firstname.lastname@example.org and Suzanne
Vranica at email@example.com
(END) Dow Jones Newswires
August 25, 2020 19:52 ET (23:52 GMT)
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