In 1997, Rebecca Olson had just become chief executive officer (CEO) of St. Clement’s Hospital in Omaha, Nebraska. Many people were surprised when Olson got the job because her management experience consisted of eight years as vice president of a chain of small, “doc-in-the-box” clinics owned by a large HMO. Moreover, unlike all her predecessors, Olson wasn’t Catholic.
Clearly, the St. Clement board had taken a calculated risk in hiring Olson. The board members had quickly agreed on the problems facing the hospital but had difficulty deciding who was the right person to address them. The hospital had been losing market share for years, and several similar facilities had been forced to close their doors. Managed care had led to high turnover among the hospital’s doctors, nurses, and administrators, and patient complaints were rising fast. Olson’s supporters on the board believed she would bring energy, intensity, and creative new approaches to delivering medical care. Others on the board supported an inside candidate, believing the financially fragile hospital needed a leader who knew the institution inside out. Eventually, the board agreed to hire Olson.
A few days after she started work, the board chairman told Olson about a troubling personnel issue. Melanie Wermert, a clerical employee with physical infirmities, was about to file a complaint with the state employment agency accusing the hospital’s vice president of operations, Richard Millar, of sexual harassment and discrimination. Olson had met Millar just a few weeks earlier, had a pleasant conversation with him, and remembered his confidence and quiet charm. Millar, a tall, distinguished looking man in his mid-fifties, had worked at St Clements’s for twenty-five years. He had held almost every important non-medical position, including community affairs director and head of accounting. Millar came from a prominent Omaha family and was the inside candidate supported by the cautious board members. Until the board announced its choice of Rebecca Olson, most of the hospital staff believed Millar would be the next CEO.
As soon the chairman left her office, Olson let her anger bubble to the surface. The chairman and a few others had known about the charges for several weeks but had waited until now to tell Olson. Even worse, the chairman confessed that he had discussed the matter with the previous CEO, who had decided not to get involved because he wouldn’t be able to see the issue through to its conclusion. Olson thought this was simply a cop-out. She also realized that she identified very strongly with Wermert, even though they had never met. Like Wermert, Olson was physically disabled. She walked with a pronounced limp, the result of a freak sledding accident when she was a teenager.
Since Olson had handled several other harassment complaints at past jobs, she understood the problem in front of her. The hospital’s reputation, already hurt by financial problems, could suffer from a scandal. If the state commission found that harassment had occurred, it could penalize the hospital, and the victim could file suit. Olson’s handling of the situation would also color her initial relationship with the hospital staff, its board, and, if the matter became public, the local community.
Olson began working on the problem immediately. Fortunately, the hospital had a process for investigating harassment charges, and she set these wheels in motion. In interviews with the hospital’s outside counsel, Wermert repeated her charges, and a co-worker revealed that Wermert had told her about the incident shortly after it happened. In other interviews, rumors surfaced that Millar had harassed another woman at the hospital, but she had moved out of the state and could not be located. The hospital’s lawyer also told Olson that he suspected his investigation was being impeded because some people were intimidated by Millar. He had also heard allegations that Millar had recently bullied two employees into leaving their jobs because he disliked them.
As Olson heard more about Millar’s vindictive character, she found, to her surprise, that she was growing wary of him, even though this was the last thing that anyone who knew her would have expected. As a child, Olson played sports year-round and, because she played so aggressively, was frequently injured. After the sledding accident, when she could no longer compete in sports, she turned her high school and college studies into intense, competitive events. Some of her medical school professors were tough and blunt, but she was proud that none of them had intimidated her. As a manager, Olson was viewed as direct, forceful, and sometimes harsh. Over the years, she had received several performance reviews suggesting she “tone down” her style, but she hadn’t paid much attention to this advice.
Millar’s tranquility alarmed Olson. She assumed he knew something about the charges against him because he had friends all around the hospital. But Olson saw Millar several times a day, often spending an hour or two in meetings with him, and he always seemed calm and relaxed. One afternoon, she even watched him trying to make small talk with one of his alleged victims. The woman sat rigidly and looked past Millar while he smiled and leaned against the side of her desk. This gave Olson the creeps. Millar didn’t seem to care what he had done or whether he was being investigated. He seemed to think he was bulletproof.
The lawyer’s report left Olson with little doubt that Millar deserved to be fired. In fact, Olson’s gut reaction was that he should not just be fired, but dragged out of his office and thrown into the street. She didn’t want him to get away with his reprehensible behavior and believed it belonged on his permanent record. In addition, firing Millar would also meet the principal demand of the woman who had charged him with harassment. She had indicated that she would not go to the state board if the hospital fired Millar, and this would avoid a lot of ugly publicity.
In the end, however, Olson decided she would not fire Millar and would not charge him with sexual harassment. Instead, she would try to get him to resign. Before asking for his resignation, however, Olson decided to get “all her ducks lined up.” She prepared a detailed report on the investigation. In addition, she spent hours with lawyers, knowing that her actions had to both comply with the law on sexual harassment and also respect Millar’s rights as someone accused of a serious offense. She labored over the severance package so that it reflected the hospital’s implicit obligations to a long-term employee. In parallel with all this legal work, Olson met privately with two board members who were likely to support her plan, and they worked on ways to approach other board members.
Eventually, Olson’s allies on the board met informally with other board members and made the case for easing Millar out of his job. Their arguments were taken from a “menu” Olson and her allies had developed and customized for particular individuals. The arguments included the seriousness of the charges, the likelihood of a debilitating scandal, the possibility Olson would resign, and the need to recognize Millar’s many years of service to the hospital. Finally, at a secret meeting, a majority of the board voted in favor of offering Millar a generous severance package.
Because of Millar’s history of threatening behavior, Olson had a hospital security officer wait outside her office when she met with Millar. The meeting was set for the late afternoon. When Millar arrived, Olson was sitting at her desk with the board chairman next to her. Millar, who thought he was coming to a regular administrative meeting, walked in, looked around, and realized something was up. Then he dashed out of the office. A moment later, he returned with one of his long-time friends on the hospital staff. Millar wanted to have a witness at the meeting.
In carefully scripted words, Olson told him she was asking for his resignation. She described the investigation and its findings. Then she told him about the severance package the board had approved. She finished by giving him a letter of resignation, explaining that if he signed it, this would be his last day of work. He would leave the hospital immediately after the meeting.
Olson was relieved that she had kept her voice from quavering. The board chairman said nothing, and there was a moment of stillness. Millar’s face turned beefy red, and then he lunged across the table and begged the chairman not to let him be fired. The chairman was startled and told Millar to get a grip. Then he said he was very sorry about everything that had happened and suggested to Millar that he should make the best of the situation and get on with his life. Millar sat back and said nothing. He picked up the resignation and read it slowly. As he did, his icy poise returned. He read the letter again, signed it, and left the room without a word.
The next day, Olson told the hospital’s senior staff that Millar would not be returning to work. Her scripted words supported the board’s official position that Millar was resigning. She said the hospital valued Millar’s many years of service, wished him good fortune in his future endeavors, reminded everyone that the work of the hospital had to go on, and announced an interim replacement for him. Some people were surprised by her announcement, but others seemed to have been tipped off by the rumor mill.
Olson’s two months of surreptitious planning had been implemented without a miscue. Within a week, Millar had accepted the severance package. The harasser was gone, Millar’s victim was satisfied, no petition would go to the state employment agency, and the local media didn’t get the story. For weeks, Olson felt she had been walking around in an enormous, thick, heavy coat. Now it was gone.
Discuss your final thoughts and take-a ways on the case. Specifically address,
1. Rebecca’s qualifications for the job
2. managerial success vs leadership success