Here’s the Real Fallout From the Priceline Sex Scandal

May 2, 2016, 4:00 PM UTC Inc. CEO Darren Huston Interview
Photograph by Bloomberg via Getty Images

There are two questions raised by the resignation of Priceline CEO Darren Huston for having an extramarital relationship with an employee:

—When, if ever, is it permissible to date an employee who holds less power in the organization?

—How does the CEO’s violation of the company’s code of conduct affect the organization’s ethical culture, brand, and valuation?

I’ll address each in turn.

Dating a Coworker: What’s the Big Deal?

When psychologist Erik Erickson (not Sigmund Freud, as many would have it) spoke of love and work as two essential components of mental health, I don’t think he meant for them to be found in the same place. The new HBO film, Confirmation, revisits the 1991 firestorm that erupted when Anita Hill, then a professor at the University of Oklahoma College of Law, claimed that Clarence Thomas, then a nominee to the U.S. Supreme Court, had sexually harassed her when he was her boss at the Equal Employment Opportunity Commission.

Hill’s vivid—and at times explicit—testimony before the Senate confirmation hearings catalyzed a national debate about what kinds of romantic relationships, if any, are permissible in the workplace. Hill testified that Thomas made overtures numerous times, all of which she rebuffed. She then experienced tension in their professional relationship and churlish behavior by her boss, and she feared retaliation.

The ethical and legal questions raised by these proceedings have not been entirely settled, but we’re now seeing articles like Chas Rampenthal’s “Is Workplace Dating Really Off Limits?” in Inc., which would have been unthinkable 25 years ago in the wake of Anita Hill’s testimony. With so many of us spending so much time at work, it’s only natural for the workplace to be the arena in which we meet potential mates. Our colleagues get to know us in ways that would take a lot more time to reveal outside of work.

The problem is that most romantic relationships don’t last, and it can be difficult to focus on work when you’re around the person you used to date. (I know this from first-hand experience, which was excruciating.) Even if the relationship seems to be going well, the imbalance of power that exists between, say, a senior vice president and a junior colleague can create the perception or reality of favoritism if the latter gets a promotion or raise, among other problems.

Rampenthal, who serves as General Counsel for, suggests that under some circumstances it may be permissible for one employee to date another, but he warns:

If you have a “C” (think CEO, CFO, COO) or VP in your title, you should always think twice about dating anyone in the workplace, even if he or she is not a direct report or within your chain of command. Even if it does not violate a written policy, your boss (the CEO or the board) might not care, and view it as a lack of senior management acumen.

“Think of it this way,” Rampenthal concludes. “Is the potential relationship worth risking your good job or name?”

But it’s not just the C-suite executive’s interests that are on the line in a workplace relationship. It’s the company’s brand, financial standing, and ethical culture that hang in the balance. That brings us to the second question raised by the Priceline story.


When the CEO Violates Company Values

I’m often asked to address corporations and trade associations on the topic of how to create an ethical culture at work, an issue I spent several years researching for my book, The Good Ones: Ten Crucial Qualities of High-Character Employees. If employees and managers know that the CEO has a wanton disregard for the company’s established values, what motivation do they have to take those values seriously?

According to the Wall Street Journal, former Priceline CEO Darren Huston, who is married, was having an affair with an employee. That employee, the company said, was not under Huston’s direct supervision, but Huston’s behavior was “inconsistent with the Board’s expectations for executive conduct.”

The Priceline Group’s Code of Conduct for employees, publicly available here and stamped with the slogan, “The Right Results the Right Way,” doesn’t single out extramarital affairs as contrary to the company’s values. But it does call upon employees who observe troubling behavior to use one of several whistleblower options, and that apparently is what precipitated Huston’s downfall.

An investigation by the board confirmed the whistleblower’s report, and Huston lost not only his plum job but over $13 million in stock grants. (Those grants would have been worth even more, but the company’s shares slipped almost 3% after Huston’s resignation.)

Profligate behavior from a C-suite executive doesn’t necessarily result in everyone else at the company doing as they please. After all, employees come to work with a commitment to their own ethical principles, and those principles usually coincide broadly with the company’s: Do No Harm; Respect Others; Be Fair. Besides, many—if not most—employees were taught as children some variation of, “Just because your friend jumps off the roof doesn’t mean you have to.”

But when the CEO acts dishonorably, it creates a yawning gap between what the company says it’s about and the character of its top leader. Everyone is flawed in one way or another, but it’s not asking too much to expect the head of a company to embody its values. Self-restraint is a crucial value for everyone in the organization, but it’s an invisible trait, noticeable only when it’s violated.

Darren Huston’s story is a cautionary tale, and ethically intelligent leaders will say to themselves not only, “There but for the grace of God go I,” but also, “That doesn’t have to happen to me.” The ethical culture, reputation, and market valuation of their companies depend on it.

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