Managing People

In today's more casual workplace, who gets hurt if a single, consenting CEO becomes involved with a staffer? Just about everyone

Harry knows Sally. Harry works with Sally. Harry also sleeps with Sally.

Harry is 53 years old, divorced, the father of three adolescent sons, and the self-assured CEO of a successful high-tech company in Santa Monica, Calif.

Sally is vice-president of marketing for Harry's company. She is single, is a magna cum laude graduate of the University of California, Berkeley, and has an extensive media background. Sally hopes to find her soul mate, but at 35 she's completely focused on her career and devoted to building her reputation as an ace marketer in the high-tech industry.

At Comdex, an industry conference in Las Vegas, Harry and Sally find they're both staying at New York-New York, a hotel and casino on the strip. One thing leads to another, and they become involved and end up spending the next three days together.

After Las Vegas they meet in Sally's apartment, at trade shows, and once for four days during a high-tech convention in Bermuda. At the office they pretend there's nothing going on, but rumors begin to run rampant.

What would you say to Harry or Sally if you thought their affair was negatively affecting the company? Negatively affecting productivity and morale? Negatively affecting how they were perceived internally?

To start with, I've found that virtually every interoffice affair has had some negative impact on morale as people suddenly see their colleagues or bosses in a more critical light. Productivity can also suffer; workers may lose sight of the company's mission -- and even feel demoralized -- as they get more enmeshed in the gossip and rumors surrounding the office dalliance. Also, the reputation and the career of at least one of the participants are likely to suffer. Ultimately, it can take months, or even years, to repair all the damage. So the simple answer is to tell Harry and Sally to cut it out or to ask them, "Are you crazy?" But they already know they're a little nuts for having an office romance that's becoming more public every day. Still, what about Harry and Sally themselves? Don't they deserve to have a little love in their lives or at least a good sexual relationship?

None of those questions has a simple answer. Affairs are complicated enough when they're not in the office. Affairs in the office are even more complex.

Though Harry and Sally are two consenting adults, they do work in the same company. And as if that weren't enough, it's a company in which Harry is the employer and Sally is the employee. Whenever we talk about employer and employee, doctor and patient, lawyer and client, teacher and student, president and intern, issues of power and the lack of power always need to be factored in. Plus, it's important to remember that we're talking about very different legalities today. Yesterday sex was a private matter. If an office romance ended badly and one of the participants was suddenly out of a job, the result would be hurt and angry feelings, whispered innuendo, and, possibly, an inflated severance payout issued in order to make the problem go away quietly. Today the same scenario could likely end as a legal matter, with public accusations and a sexual-harassment suit.

There's another factor built into the scenario, which has to do with Harry's psychological state. If Harry had gone out and bought a red sports car or started bungee jumping, his employees would say, "Harry is having a midlife crisis," and they'd inevitably gossip about the trouble with Harry. But a midlife crisis is often a sign of midlife depression in men like Harry. I say "depression" because Harry, who is 53 years old, has begun to realize that there are no longer unlimited horizons in his future. He may still look good -- but for how much longer?

Whenever we talk about employer and employee, issues of power and the lack of power always need to be factored in.

Harry is nobody's fool, and he knows that his time is running out. He may not be as happy with his life as his brash, self-confident appearance suggests. He has a failed marriage behind him and kids who want to emulate his financial success without having to work as hard as he does, plus a stressful business to run each day.

He may be charming and cheerful in his public life, but Harry's also a man who releases his frustrations by pumping iron, running marathons, racing cars, and riding his expensive Harley on Sundays with a local motorcycle group. All that energy is expended, at least in part, to release his pent-up stress and tension.

Harry's affair with Sally may also be, in part, a way to relieve some of his stress. When Harry's turned on, his adrenaline flows and the endorphins pump, and he feels alive instead of dead. He feels terrific, and his depression lifts. "Sally makes me feel young again," he says, and he's right.

Of course, that's Harry's perspective. There may be an enormous difference in Sally's perception of the affair.

What might have started for Sally as a sexual escapade may have rapidly become the primary focus of many of her hopes and dreams for the future. So much so that what she might once have viewed as insignificant could now be a critical component of her life.

This disparity of viewpoints can get even dicier. While one of the lovers may at some point have said, "I love you," and really meant, "This is the best sex I've ever had," the other might have interpreted the same comment to mean they were both on the same page in terms of a more permanent, more committed relationship.

From my experience in dealing with about 100 such office romances, I'd guess that 95% end in a bitter split. The participant who expects to build a secure future with his or her paramour ends up rejected and hurt. If the rebuffed lover is the employee, he or she may have little recourse other than getting another job, moving to another city, or filing a lawsuit -- all of which I have seen happen.

Today many sexual-harassment settlements and judgments spring from interoffice relationships gone sour. Most managers and supervisors believe that a consensual affair is OK, but in fact, it's not OK. The fallout is often damaging to both parties.

Jilted partners sometimes later claim, often falsely, that they did not consent to the affair. They'll say their partners coerced the sexual relationship with threats of adverse consequences. They may also claim that "yes, it started as a consensual relationship," but then they'll explain, "when I tried to end the affair, my partner threatened me with termination or adverse consequences." Reputations can be ruined and careers ended by such accusations.

Lawsuits also generate expenditures, and in today's litigious atmosphere the deeper the company's pockets, the more likely the lawsuit.

Even if a lawsuit generates an insignificant settlement, the hidden monetary costs can be severe. Let's assume that a plaintiff lost no wages and a jury determines that he or she suffered only minimal emotional distress -- so the jury awards only $25,000 in damages and no punitive damages. It's a victory for the employer, right? Wrong, because by the time the case has gone to trial, aside from the negative public relations such a lawsuit inevitably generates, the company has very likely spent $250,000 in defense costs and fees, and the employer will probably be ordered to pay the plaintiff's costs and fees, potentially another $250,000.

So the results are actually: verdict, $25,000; costs, $525,000. Plus, of course, the incalculable, nonlegal costs of bad external publicity and harmful internal notoriety.

For example, let's say that Ted, who is a 15-year employee of Harry's company, a superstar in charge of product development, and one of Harry's most valued hires, begins to question Harry's judgment as the affair with Sally unfolds. Ted comes to doubt the CEO's intensity and focus. He eventually goes to work for a competitor. In his new position as executive vice-president in charge of marketing, Ted uses all his acquired knowledge of Harry's company and its goals, undoubtedly becoming a threat to Harry's market share.

How many customers will Ted take with him over the next few years? And how many of Harry's employees? If Ted's brilliant #2 person doesn't have a noncompete clause in her contract with Harry, she may follow Ted, as may many of Harry's best staffers. Furthermore, what will it cost Harry and his stockholders if Ted's replacement doesn't cut it (50% likely), or if Ted's successor doesn't inspire the creative but difficult product-development staff that Ted motivated so well?

Great people stay at their jobs not because of a few dollars here and there but because they believe in their CEO's judgment and focus. Every entrepreneur worries about losing key people to the competition, and Harry is no exception. For him, Ted's departure could be catastrophic.

So the next time Harry or Sally asks, "What do you think I should do?" tell the truth but realize that as the messenger, you have a good chance of being shot. Most couples know that an interoffice romance goes against common sense, but they've chosen to ignore common sense and professionalism, as well as most conventional and unconventional wisdom.

About 100 years ago Freud said, "The keys to happiness are love and work," and I agree. About love at work he unfortunately said nothing.

Dr. Pierre Mornell is a psychiatrist and consultant who helps companies evaluate and select high-level executives. This June his new book, Games Companies Play, was published by Ten Speed Press.

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