By: Patty Prosser
For years, CEOs were viewed as virtually and remarkably untouchable. However, in recent years, CEOs have come under much greater scrutiny, both for the actions they take and those they don’t. And nothing can be more damaging to a CEO’s reputation than allowing a member of his executive team to continue to be a bad actor.
CEO’s need to recognize that “they’re not just managing individuals – they’re curating the leadership culture.”
Even the best CEO can’t shield themselves completely from the fallout of having the wrong person at the leadership table. One bad executive – whether through toxic behavior, poor judgment, or ethical lapses – can seriously harm how employees, investors, customers, and the broader public view the entire organization.
Here’s why:
- Leadership Is Seen as a Reflection of the CEO: Fair or not, people assume that every executive reflects the CEO’s standards and values. A toxic leader suggests the CEO either chose poorly, doesn’t notice, or worse – doesn’t care.
- Culture Is Contagious: A single executive’s bad behavior can pollute company culture quickly. It creates distrust, fear, and disengagement, and people will naturally blame the person “in charge” for letting it happen.
- Inaction Becomes Action: If the CEO doesn’t address the bad leader decisively, silence or slow movement is interpreted as approval. Inaction often does more damage than the original offense.
- Reputation is Collective: When one senior leader damages credibility through mistreatment, unethical practices, or incompetence, it isn’t seen as a one-off. It’s seen as “the kind of company they are.”
Case in point:
Recently, I was engaged by a new CEO to coach a leader who had been perpetuating a toxic work environment for years. This CEO knew that in order for him to establish himself effectively in his new role, he needed to address the issue swiftly. With outside counsel and HR’s involvement, he made it clear to this leader that his past behavior would no longer be tolerated and that he needed to make immediate changes or be terminated.
Although I had my doubts, I agreed to meet with the leader to gauge his commitment to doing the hard work it would take for him to save his job. Surprisingly, he admitted that he knew his leadership behavior had to change. We quickly laid out a very specific plan, with clear expectations, timelines, and measurable goals, that we could start to implement immediately. I am pleased to report that, in this case, this leader delivered in his commitment to turn his behavior around and remains a valued member of the executive team today. Unfortunately, this is not always the case!
When there’s one toxic leader in a company, they can drag down the reputation of even the best bosses around them, and here are some of the repercussions:
- Guilt by Association: Employees and outsiders often see leadership as a single unit. If one leader behaves badly (abusive, dishonest, incompetent), people may assume that the whole leadership team tolerates or supports that behavior.
- Trust Contamination: Trust is fragile. If employees lose trust in one leader, it becomes harder for them to trust anyleader in the company – even the good ones.
- Culture Ripple Effect: A toxic leader often affects the entire team’s morale. Their negativity can make the workplace feel unsafe or unfair, making even well-intentioned managers seem ineffective or complicit.
- Narrative Control: Bad leaders sometimes dominate conversations – they’re louder, more dramatic, or more noticeable. So, the story people tell about “what leadership is like” gets shaped by the worst example, not the best.
- Perception of Inaction: If a CEO doesn’t act swiftly to address the bad leader, employees may think all leaders either agree with the behavior or are too weak to stop it. Either way, it makes good bosses look bad by extension.
Bottom Line:
When a CEO allows bad leadership behavior to persist on his/her team, they face serious risks -not just to morale, but to the entire health and future of the company.
A CEO is only as strong as the team they surround themselves with. One bad leader isn’t just a personnel issue – it’s a direct threat to the CEO’s reputation, the company’s culture, and long-term trust.
If your organization is facing a similar issue or has other leadership development needs, we’d like to help! To learn more about The Center for Leadership Excellence’s Coaching Programs, please visit our website at www.cleindy.com
Patty Prosser is Co-Founder and Coaching Practice Leader at The Center for Leadership Excellence. For more information, contact Patty at 317-727-6464 or at pprosser@cciindy.com.