Soon after The Wall Street Journal reported that Steve Wynn, Chairman and CEO of Wynn Resorts, had over many years sexually harassed female employees, the share price of Wynn Resorts (WYNN) dropped more than 10%. Wynn’s denial, complete with incredulity, was quickly issued. Mr. Wynn, your personal embarrassment is not the point. This is no longer just about your reputation, your ego or your former wife.

Clearly, whether a company is public or not, no employee should be subjected to the sort of treatment reported in The Wall Street Journal article.

When the top executive is the person causing a crisis, the task falls to the board to deal with it. Click To Tweet

Any leader at any level is responsible for intervening in such matters. Many don’t, which is precisely why we are experiencing a flood of accusations. Some refer to incidents long ago that were either kept secret, hidden or improperly dealt with.

One reason Wynn Resorts is in its current crisis is the unhealthy dependence the company has on Wynn. So clear were they about this dependence, they noted it in a securities filing that stated their business may be “significantly impaired” if Wynn is unable to continue in his role. Tolerating such a situation is simply negligent.

This extreme dependence on a leader, top sales person, CEO “confidant” or anyone else breeds an unhealthy relationship. Such relationships do not allow candor, never mind reining in truly bad behavior.

How do companies get in these messes?

  1. A strong desire not to rock the boat. Never mind that the undercurrents are going to take you down, eventually.
  2. Investing too much power in a single person. This is greatly magnified when leaders are afraid to speak up.
  3. Too little curiosity. Leaders who are too accepting of what they are told. This is all the more common when the dollars are rolling in.
  4. Lack of understanding of a founder or seller. Some leaders have no intention to alter their leadership practices after a sale. I’ve told many an acquirer, “That multi-million dollar check you wrote warms the heart of the recipient for about 20 minutes.”
  5. A culture of fear, propagated by a leader who uses force, threats and manipulation.
  6. Relationships that fracture under the slightest pressure. Most people do not like tension, even senior executives and directors. The most constructive relationships accommodate agreement and disagreement. Leaders need to have the courage to work through the tension. Failing to do so is to fail.

Leaders, at every level, need to have the courage to deal with anti-social behavior, regardless of how it is expressed. We expect leaders to be exemplary. The question is why would anyone ignore behavior that is not just bad, but criminal? Fear, denial and probably a cadre of advisors who try to help them hide and deny.

What trumps fear and denial?

  1. Courage to make the tough decisions.
  2. Judgment to enable discernment.
  3. Fortitude to intervene systemically.

The issue at Wynn Resorts is very high-stakes. These situations are tense, emotional and more so when public. Patricia Mulroy, an independent board member, is leading a committee to look into the matter. Many people are counting on her to be courageous.

The question for leaders is, if you can be a hero in a crisis, why can’t you do so to prevent it?