James Hardie’s public sacking of Jack Truong is part of a larger trend

The shocking sacking of James Hardie boss Jack Truong is the latest in a series of previously unthinkable public layoffs of CEOs for their behavior.

Boards seem increasingly comfortable not just to part ways with a seemingly successful CEO, but to disclose why. It’s a trend likely inspired by the Me Too movement which saw disgraced producer Harvey Weinstein sacked from his production company in 2017. Weinstein was later sentenced to 23 years in prison.

Truong, naturally, disagreed with the allegations, saying he was “blinded by the accusations and unequivocally rejected the claims made.”

Truong is clearly not a Weinstein (and to be clear, absolutely no such allegation has been made). Instead, James Hardie’s board of directors surveyed over 50 people who worked with Truong on a daily basis; 80% alleged some kind of inappropriate behavior. It seems Truong was just an old school bully and terrible manager, not a Weinstein-style aggressor.

His previous roles included 26 years with manufacturing giant 3M and as head of US operations for Electrolux. The United States is known historically for producing harsher and less pleasant frames; Another executive who fit this mold was the disgraced Al “Chainsaw” Dunlap, a legendary tyrannical cost-cutter who was once hired by Kerry Packer to run his private business and was ultimately jailed for accounting fraud at Sunbeam.

The most fascinating part of Truong’s sacking is its very public nature. James Hardie’s board, who may still bear the scars of his decades-long asbestos scandal, has chosen to side with senior executives rather than the CEO. This is far from controversial and is a common reason to dismiss a CEO (especially when financial performance remains strong – James Hardie’s share price has risen 363% since 2019). The executive upheaval is what led to Steve Jobs being fired from Apple in 1985 (although he was not actually CEO).

The difference now is that boards of directors seem much more willing to be honest about the reasons for layoffs. Ten years ago, Truong’s dismissal would almost certainly have been referred to as a “resignation to spend more time with his family.”

Truong’s sacking comes after the public sackings of the CEO of the financially successful Cleanaway, Vik Bansal, Kieran Wulff of Oil Search (albeit partially for medical reasons) and the infamous (and ultimately unjustified) dismissal of the famous CEO of Cleanaway. ‘Australia Post, Christine Holgate. (Holgate had the opposite problem: She was fired for being too generous to senior executives.)

The key lesson from Truong’s dismissal is that executives have two main roles. The first is to properly allocate capital, a task at which Truong appeared to be relatively good at. The second is to create and guide an exceptional team of leaders. In this regard, it seems he failed.

James Hardie’s board could have taken the easy option – still favored by many boards – of a public resignation and a generous severance package (paid by shareholders, of course). This is what Rio Tinto’s board of directors agreed with former executives Jean Sébastien Jacques, Simon Niven and Chris Salisbury, Jacques being able to keep $ 43 million in incentive shares.

Instead, James Hardie, led by Chairman Mike Hammes, accepted the potential damage to reputation and did the right thing for his shareholders.

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