By the time a board hires outside counsel to investigate a senior executive, the real governance failure has usually already occurred. This is a key lesson from Howard Levitt's extensive board advisory work.
The Illusion of Accountability
Corporate crises rarely emerge out of nowhere. Most are the predictable result of years of institutional neglect: weak oversight, passive leadership, politicized HR structures, unmanaged executive conflict, and boards that have lost the ability to distinguish genuine risk from internal discomfort.
Yet when the crisis finally surfaces, many boards make the same mistake. They focus on the individual executive at the centre of the controversy while ignoring the governance failures that gave rise to the situation.
The result is often a very expensive illusion of accountability. The executive is removed. Headlines quiet down. The board congratulates itself on taking decisive action. External consultants are retained. New policies are announced. Town halls are held. Culture reviews are commissioned.
And eighteen months later, the organization finds itself in yet another crisis. Because the underlying problem was never that individual alone.
Governance Through Fear
Increasingly, Canadian corporations are being governed through fear: fear of reputational damage, fear of social media outrage, fear of employee activism, fear of internal complaints, fear of regulators, and fear of making the wrong decision publicly.
That fear changes organizations. Executives begin managing defensively rather than decisively. HR departments become centres of institutional risk management rather than operational support. Middle managers avoid difficult conversations entirely. Documentation reduces. Performance management weakens. Internal factions grow. Political behaviour flourishes.
Meanwhile, the boards receive a filtered and sanitized version of reality. No one wants to be the person who minimizes a legitimate complaint, but no one wants to be the person who questions whether every allegation represents an existential threat.
Distinguishing Misconduct from Conflict
Not every difficult executive is toxic. Not every aggressive leader is abusive. Not every internal disagreement is retaliation. Not every workplace investigation is truly about workplace safety or psychological health. But once organizations lose the confidence to distinguish between misconduct and mere conflict, institutional paralysis follows.
Some of the most successful executives Levitt encountered were deeply imperfect: demanding, intense, impatient, occasionally abrasive, often politically tone-deaf. But they also built new divisions, drove revenue, rescued failing operations, and made difficult decisions others avoided.
Boards today struggle with that tradeoff. Many directors operate under the assumption that reputational risk must be eliminated at almost any cost. Yet reputational risk cannot be eliminated. It can only be managed intelligently. Strong governance means having the judgment and courage to properly assess risk before reacting.
