Shannon Roddel | August 10, 2019
Scandal gone viral has toppled many a leader, and new research shows it may have saved some too.
News and social media seem to thrive on sensationalizing scandal, and prominent CEOs, politicians, world leaders and sports stars often are forced to step down as a result. However, a new study from the University of Notre Dame introduces the role of the “severity gap,” showing that when media or public perceptions of a scandal outpace its actual severity, strong-performing leaders are more likely to keep their jobs.
“How the severity gap influences the effect of top actor performance on outcomes following a violation” is forthcoming in the Strategic Management Journal from John Busenbark, assistant professor of management in Notre Dame’s Mendoza College of Business.
Busenbark, along with co-authors Nathan Marshall, University of Colorado; Brian Miller, Indiana University; and Michael Pfarrer, University of Georgia, studied the performance, dismissal and labor market outcomes of NCAA Division I football and basketball head coaches in the wake of NCAA violations. They used rigorous and multiple econometric techniques to test ideas and reinforce findings.
“Our central finding is that organizations are less likely to dismiss stronger-performing leaders when there is a high severity gap, and this is because internal stakeholders want to protect their organization and its central figures from what they perceive as undue scrutiny,” Busenbark says. “Weaker-performing leaders, however, are apt to get dismissed following a scandal with a larger severity gap. We argue this is because the excess drama from a large severity gap provides insiders with a perfect opportunity to scapegoat leaders they do not perceive as integral to the organization.”
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