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QBE’s Chief Executive John Neal’s Relationship With His Secretary

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Question:

Discuss about the QBE’s Chief Executive John Neal’s Relationship With His Secretary.
 
 

Answer:

Office romance is a controversial topic in the business world. It has affected employee productivity and the organization’s image and performance. It is for this reason that some firms have set rules on workplace relationships. John Noel, an executive at QBE, was the most recent CEO to face this scrutiny after having an affair with his assistant.

The head of one of Australia's greatest organizations had his compensation cut by A$550,000 (£340,000) in light of the fact that he neglected to inform the board that he was engaging in extramarital relations with his assistant. This was a twenty percent reduction in John Neal’s compensation bonus of £1.71 million (Glasgow, & Lacy, 2017).

The organization's board made the decision after Mr. Neal neglected to quickly disclose that he was involved in a personal relationship with his assistant which could result in a conflict of interests. Such divulgences are required by the organization's official implicit rules.

According to the confession by Mr. Neal, the affair began in 2016 after separating from his wife. He also apologized for the inconveniences and the bad publicity that the matter had brought to the company. Apparently, the assistant, who so far has not been named, agreed to vacate her position in light of the scandal.

This unusual decision was followed by a statement by QBE stating that the parties involved came to a consensus that their personal decisions were highly inconsistent with the expectations of the board.

Mr. Neal, in his statement, admitted to his mistake and apologized for the risk his conduct placed on the reputation of QBE. He further stated that his late disclosure of his office romance was against the organization’s code of conduct.

 Mr. Neal says “I am truly sorry that something that is so deeply private has become public knowledge... It’s a material amount for me, I’ve understood it, I’ve accepted it, but it was not my decision… The code of conduct requires that that’s disclosed immediately to the board, which I did not do,” (Pearlman, 2017).

In his statement, he added that the priority of the board is to safeguard the reputation of the company thus in his judgment the decision made was in the best interest of the organization (Glasgow, 2017).

The relationship between John Neal and his secretary is one among other workplace romance that has been reported in the Australian. It is becoming a debated topic in the business world following the impact such relations have at the firm.

Office relationships are not recommended due to their negative impact on the organization performance. Besides, where parties can no longer work together, the business loses competent employees. In the case of QBE, the workplace relationships are not endorsed, but in the case that they occur, the parties are required to report to HR. However, Mr. Neal failed to uphold this rule thus risking firm’s reputation (Condie, 2017).

The question lies, however, should organizations prohibit office romance? Arguments for the office romance suggest that HR should not be concerned with what employees engage in when they are off-duty. However, they should remain objective during their working hours. Additionally, relationships in the workplace cannot be avoided following the fact that employees spend a lot of time together.

All in all, though office relationships are not entirely a no-go zone, in the case of organization heads, it impacts on the reputation of the firm as is the case for QBE. For such officials, reporting is necessary where failure leads to penalties. The solution is setting a clear policy on such relationships.

 

The Financial Review.

QBE’s 52-year- old chief executive John Neal’s relationship with his secretary.

Insurance dominant QBE's CEO John Neal has incurred a $550,000 sliced to his reward for not revealing a personal romance with his official aide.

The blow was publicized to investors in a note in the organization's compensation report which said the organization's board found that "some current individual choices by the CEO have been conflicting with the board's desires" (Boyd, 2017).

QBE's set of standard rules expresses that employees must reveal to their manager any romantic relationships that may bring about a conflict of interest and that relying upon the way of the contention or potential clash, activity will be resolved on a case-by-case premise.

According to Mr. Neal’s statement to a journalist, he stated that he was sorry that his ‘personal choice’ risked the company’s reputation and became a public topic. He declined to comment further on the relationship but acknowledge the note in the compensation reports by QBE. He said that he had accepted the money reduction on his bonus and that the decision was not his but still justified. He added that the cut resulted from his failure to report a personal relationship with his secretary in a timely manner.

The compensation report expresses the board discovered Mr. Neal had an honorable year and conveyed a solid entire year result for QBE. The board very much respected his execution. Mr. Neal said an independent review of his office had found no wrong use and he had not offered his abdication to the board.

Mr. Neal is separated from his wife. It is comprehended that Mr. Neal began the relationship with his executive assistant a year ago. However, he did not report it to the board until January 2017. The unnamed assistant still works at QBE. It is understood that she is expected to leave the company her will ("CEO docked $550k for secret relationship", 2017)

The news dominated the strong outcome from QBE, which declared a $1 billion share purchase back in the wake of revealing a 5 per cent bounce in yearly after-tax net benefit, at $844 million (Lacy, & Glasgow, 2017).

According to Dean Paatsch, a corporate governance expert, personal relationships in the firm ought to be reported. Such disclosures are required to avoid staff receiving special treatment or being perceived to do so. In the case of Mr. Neal, he ought to be punished since the organization’s code of conduct expressing says that personal relations should be disclosed yet he failed to do so in time.

Consistent with Dean’s view, personal relationships are immaterial to investors. They do not affect the value of shares directly. However, for QBE’s CEO John Neal, he is a representative of the organization and his choices impact on the reputation of the corporation (Knight, & Hatch, 2017).

Opposing views of this topic hold that relationships in the organization are not the concerns of HR and do not affect the value of the firm. Therefore, why report them?

These concerns are justified following that employees tend to spend long working periods together. However, obeying the firm’s code of conduct is important. For QBE, the insurance company has a policy that requires the staff to report relations thus protecting the reputation of the company. Besides, it ensures that the working environment is conducive and void of disruptive rumors via the grapevine.   

Policies in an organization are implemented to guide and eliminate dilemmas. QBE set a relationship reporting rule that ensured that the reputation of the firm is protected. Punishing Mr. Neal is justifiable following his failure to follow the rules.

Nonetheless, though relationships are immaterial to investors, they tend to affect a firm’s image thus the need for checks and balances.   

 

References

Boyd, T. (2017). Relationship with PA costs QBE boss $550,000. Financial Review. Retrieved

17 April 2017, from

https://www.afr.com/brand/chanticleer/qbe-ceo-john-neal-takes-550000-pay-cut-for-relationship-with-secretary-20170226-gulwog

CEO docked $550k for secret relationship. (2017). NewsComAu. Retrieved 17 April 2017, from

https://www.news.com.au/finance/work/leaders/qbe-boss-john-neal-lost-550k-of-his-massive-bonus-after-company-discovered-relationship-with-secretary/news-story/cef9caa6354c57c4cd7eec393aac94a4

Condie, S. (2017). CEO’s $550,000 relationship. Heraldsun.com.au. Retrieved 17 April 2017,

from

https://www.heraldsun.com.au/business/qbe-docks-chief-executive-john-neals-pay-citing-personal-decisions/news-story/0d2c8a103d8139f8465d25ebbd71790f

Glasgow, W. (2017). There’s something about John. Theaustralian.com.au. Retrieved 17 April

2017, from

https://www.theaustralian.com.au/business/margin-call/theres-something-about-john-neal-at-qbe/news-story/9566b14e45d2c807c80fbb87dec6293f

Glasgow, W., & Lacy, C. (2017). It was a hot and steamy night .... Theaustralian.com.au.

Retrieved 17 April 2017, from

https://www.theaustralian.com.au/business/margin-call/it-was-a-hot-and-steamy-night-at-qbe/news-story/df14bf28c917545fa23cad6c78af51cd

Knight, E., & Hatch, P. (2017). QBE chief John Neal's bonus cut by $550,000 after relationship

with secretary. The Sydney Morning Herald. Retrieved 17 April 2017, from https://www.smh.com.au/business/qbe-chief-john-neals-bonus-cut-by-550000-after-relationship-with-secretary-20170226-gulxq8.html

Lacy, C., & Glasgow, W. (2017). Scandal shadow over QBE result. Theaustralian.com.au.

Retrieved 17 April 2017, from

https://www.theaustralian.com.au/business/financial-services/john-neals-undisclosed-affair-casts-a-shadow-over-qbe-recovery/news-story/e946957a8d99f6e241941cfa1a988feb

Pearlman, J. (2017). Affair with personal assistant leads to £340,000 pay cut for Australian boss.

The Telegraph. Retrieved 17 April 2017, from

https://www.telegraph.co.uk/news/2017/02/27/affair-personal-assistant-leads-340000-pay-cut-boss-australian/

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