Global pizza chain Papa John’s is in a tailspin following its decision to remove founder John Schnatter from day-to-day running of the company for using a racial slur during a conference call.
In the May discussion – which had been convened by the firm’s marketing agency – attendees were supposed to carry out a roleplay exercise designed to help them sharpen their approach to PR crises. During the call, Schnatter said dismissively that KFC founder Colonel Sanders had never been criticised for using the slur in question, which Schnatter stated clearly and unambiguously.
Schnatter’s misstep came as the final straw for his fellow senior leaders, following the founder’s earlier decision to criticise the NFL for not cracking down on black players’ kneeling protests in last year’s US football season. A Washington Post report  notes that Papa John’s stock price plummeted 12 points once news of Schnatter’s use of the slur went viral – then immediately rose by 12 points upon the news of his removal from daily operations.
In a 13 July open letter to investors,  the company’s CEO Steve Ritchie wrote: “Papa John’s is not an individual. [It] is a pizza company with 120,000 corporate and franchise team members around the world. Our employees represent all walks of life, and we are committed to fostering an inclusive and equitable workplace for all.
“Racism and any insensitive language, no matter what the context, simply cannot – and will not – be tolerated at any level of our company. The Board of Directors of Papa John’s accepted Mr Schnatter’s resignation as Chairman of the Board earlier this week. It has also been decided he will no longer be in any of the advertising or marketing materials associated with the brand.”
However, as a 30% shareholder, Schnatter will remain on the board.
Does this show that it is inherently risky for companies to be closely identified with their leaders?
The Institute of Leadership & Management head of research, policy and standards Kate Cooper says: “Quite a few commentators, notably Patricia Pitcher, have developed models and methodologies for what firms need at various stages of their development. Pitcher divided leaders into three categories – which she labelled Artists, Craftsmen and Technocrats  – to convey how leaders with an approach that works for one, specific phase of a company’s life would not necessarily work for later or earlier phases.
“So what we can say on that basis is that when it was an early-stage, homespun startup, Papa John’s needed Schnatter’s creative, entrepreneurial zest and energy. But when it moved into a different phase, becoming a vast multinational, it required the input of different skills and personalities.”
Cooper explains: “by sticking religiously with the founder as a figurehead, the risk is that you will have a highly visible team member who is overly identified with the organisation… and yet the skillsets upon which they have based their own – and the firm’s – reputation are not the ones you need to prepare the firm for future challenges. It’s a problem that crops up with painful frequency within small, family-run businesses: the reluctance of the founder to let go, because so much of their life and ego is tied up in the company.”
She adds: “a certain level of self-awareness – a quality that appears to have gone missing in Schnatter’s case – would enable a founder to grasp that what is good for them may not necessarily be good for the company. So I think that acquiring that level of insight, whereby you are able to separate yourself from the organisation, is one area in which a solution such as coaching could be of terrific help.”
For further thoughts on self-awareness, check out these learning resources from the Institute
Image of John Schnatter courtesy of Kathy Hutchins, via Shutterstock
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