MCD McDonalds Corp

By Heather Haddon 

McDonald's Corp.'s former head of human resources is emerging as a focus of the company's investigation into possible impropriety under former CEO Steve Easterbrook.

David Fairhurst, global chief people officer under Mr. Easterbrook, was fired for cause last November after reportedly making women at the company feel uncomfortable on numerous occasions at business events, McDonald's current HR chief Heidi Capozzi told employees during an online meeting last week, notes from which were reviewed by The Wall Street Journal. The reason for Mr. Fairhurst's termination hadn't been previously disclosed by McDonald's.

Mr. Easterbrook was fired last November after acknowledging a consensual sexting relationship with an employee. McDonald's in August sued Mr. Easterbrook to recover tens of millions of dollars in severance after receiving an anonymous tip that the company said led to evidence that he had sexual relationships with three other McDonald's employees.

The company has said the mens' dismissals weren't connected. The company declined to comment on whether it is seeking to recoup severance from Mr. Fairhurst. He said at the time of his departure that he was moving on to another career challenge.

"The actions taken by former leadership aren't representative of this company as a whole, nor are they representative of us as an HR team," Ms. Capozzi, who became McDonald's global chief people officer in April, said in response to a question about Mr. Fairhurst's dismissal during the online meeting with employees last week, according to the notes reviewed by the Journal.

Mr. Fairhurst didn't respond to requests for comment. "I have decided the time has come for me to move on to my next career challenge," he wrote in a LinkedIn post last fall.

Mr. Easterbrook, whose attorneys didn't respond to requests for comment, 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 last week that its continuing investigation into Mr. Easterbrook's conduct is examining whether he covered up improprieties by other employees, including personnel in the HR department led by Mr. Fairhurst.

Messrs. Easterbrook and Fairhurst started working together at McDonald's in the U.K. in 2005.

Soon after Mr. Easterbrook became CEO in 2015, he recruited Mr. Fairhurst to Chicago as head of HR. The McDonald's board approved his appointment to the expanded role as global chief people officer, the company said in a release at the time.

"David is the leader we need to continue supporting the business turnaround and driving our global people strategy," Mr. Easterbrook said in a press release at the time of the promotion.

At McDonald's headquarters, Mr. Easterbrook charged Mr. Fairhurst with transforming the company's work environment, including tying employee performance more closely to business results, said Dave Ulrich, a professor at the University of Michigan's Ross School of Business who consulted with McDonald's executives on the company's HR systems from 2016 to 2019.

"Steve said to David, 'You have to change the culture. That's why you've been hired,'" Mr. Ulrich said.

Mr. Fairhurst and the department he rebuilt after many veterans retired or took buyouts replaced a longstanding performance review system with "performance motivation," as he called it in interviews at the time. Reviews were reduced to more casual conversations with managers, and some former executives said this contributed to less accountability and room for employee feedback.

Some former managers and employees told the Journal that they felt HR leaders under Mr. Fairhurst ignored complaints about the conduct of co-workers and executives they felt was inappropriate or unfair. Some of those people told the Journal they feared retaliation for reporting the conduct of co-workers and executives to HR.

Mr. Fairhurst also contributed to a party culture that developed among some executives and managers during Mr. Easterbrook's tenure, according to former employees, some of whom said they saw him intoxicated at company events.

Mr. Fairhurst's 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 incident said.

The company fired Mr. Fairhurst after receiving another complaint about his behavior around women at McDonald's, company executives said. McDonald's code of conduct bars harassment or intimidation. The code also bars relationships between employees and direct or indirect reports. Mr. Easterbrook was fired for violating that aspect of the company's code, McDonald's said at the time.

Ms. Capozzi said during the department meeting last week that McDonald's has policies preventing retaliation against employees who speak up and that any worker who doesn't feel that their concerns are being addressed should contact her directly, according to notes of the meeting viewed by the Journal.

(END) Dow Jones Newswires

August 30, 2020 18:06 ET (22:06 GMT)

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