Case Studies

The CBI scandal highlights failure on every level

by Dan Byrne on Apr 26, 2023

The CBI scandal

The CBI scandal began in the UK last month and is still unfolding. It centres on assault allegations and mismanagement at senior levels.

Once the primary voice of British businesses, and a crucial link between them and the government, CBI has lost favour with both. 

Its reputation has tanked in a few short weeks, and its future is in serious doubt. From the start, better governance could have helped dramatically.

First, a quick recap on the CBI scanal

What is CBI in the UK?

It’s the Confederation of British Industry. Described by the Financial Times as “Britain’s biggest lobby group”, it represents some of the most prominent brands in the UK, many of which are known internationally.

What are the CBI misconduct allegations?

They emerged following an investigation by the British newspaper The Guardian, beginning in March of this year. 

  • There are at least twelve separate allegations of sexual misconduct at CBI.
  • Most involve younger female employees being subject to sexual abuse by older, senior, male personnel.
  • One of the allegations accuses a former board member of inappropriate touching and remarks. 
  • One of the allegations involves CBI director-general, Tony Danker. He has since resigned. 
  • Two of the allegations were accusations of rape. 
  • CBI President Brian McBride has announced multiple dismissals in the last few weeks. 

“We failed to filter out culturally toxic people during the hiring process,” he told the British press. 

Although a far-reaching investigation has been launched, McBride’s comments suggest that the organisation has already admitted to massive wrongdoing.

What has the fallout been like?

Bad – to the point where multiple critics have questioned CBI’s future. 

Multiple significant companies have severed ties with the organisation, including banking giant Natwest, Virgin Media, Aviva insurance company and retailer John Lewis. 

Others have paused relations until the investigations conclude. These include Uber, HSBC and Facebook’s parent company, Meta. 

The real kicker, though, is Britain’s Chancellor of the Exchequer, who said there was “no point” in engaging with the organisation anymore. 

“…We want to engage with a body that speaks for business,” he said. 

In short, CBI was the go-to for British industrial development, networking and relations. Now, that status has been wiped away clean.

So bad governance is to blame for the CBI scandal?

The heart of the blame lies with any CBI individuals found to have engaged in sexual misconduct. Watch this space as that investigation continues. 

But beyond this, governance is a crucial factor in how things went so wrong so quickly. 

Good corporate leaders will ensure that allegations like these are addressed in full as soon as they surface. They don’t attempt to ignore or sweep them under the rug. Unfortunately, trying to sweep them under the rug is still a far-too-common tactic in corporate scandals, and The Guardian’s reports suggest the same is true for CBI.

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What specific failings have we seen from governance?

Employee safety

The claims and corroborations suggest CBI’s leadership had little regard for keeping employees safe from sexual assault. If this is true, the board did not work with senior management to ensure safeguards were in place. 

Ultimately, several women reported feeling unable to speak out or criticise. If this is the case, leaders have a serious problem.

Failure to recognise risk

Senior leaders did not appropriately assess the risk of sexual misconduct activity within their own ranks. This is despite multiple claims and the growing number of worldwide corporate misconduct cases, which, if taken seriously, should have helped prompt some kind of internal check-up at the very least.

This really is the bottom line. Corporate culture comes from the top. If the board and management don’t lead by example, they and the organisation they lead will settle into harmful working methods that will take years to fix. 

Several press reports documenting the scandal have spoken of a “culture of misogyny”. In modern corporate governance, this should ring alarm bells straight away. But in CBI, it was largely ignored no matter how often it was said before 2023.

In summary

The evolving CBI scandal is a massive governance failure. 

In addition to the horrific allegations, corporate leaders within CBI were happy to let a toxic culture develop rather than deal with it at the first sign of trouble.

That is a severe risk that was left unchecked. No stakeholder wants to hear about this kind of thing. If they do, they could sever ties as quickly as possible, like many companies – and the British government – are doing here.

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