When BlackRock fired two executives last year who had romantic relationships with subordinates, the money management giant did not do it quietly.
The firm ousted both leaders, announcing they broke company rules in memos that were sent to BlackRock’s roughly 16,000 employees. Senior executives and board members discussed the matters and wanted to send a clear message to employees, customers and the public, according to people familiar with the decision.
The public firings reflect a firm determined to show it will police its own workplace. The first of the dismissals took place less than a year after a workplace investigation focused on BlackRock’s Hong Kong office led to the departures of two other employees there, other people with knowledge of the matter said.
BlackRock faces new demands from the public as the shareholder votes it controls and its responsibilities as a corporate watchdog grow. Like other big companies, the giant asset manager also has to address expectations of a younger generation of employees who want to work in organisations that match their values.
“More and more people who are entering the workforce think differently from I did when I was young,” chief executive and chairman Larry Fink, 67 years old, said in a January interview when BlackRock released its quarterly financial results. “I think everybody is looking to be a part of an organisation they want to believe in.”
Fink has told senior leaders that the public firings make clear to staff that they are free to point out problems in the workplace.
The world’s largest money manager with $7.4tn under management, BlackRock faces pressure to demonstrate that it holds itself to the same standards as it does the thousands of companies it watches.
BlackRock, on behalf of the funds it runs, is one of the five largest shareholders in nearly every corporation in the S&P 500. It can cast votes and pressure boardrooms to effect change. It has told companies that workplace practices involving everything from protecting laborers to retaining workers can drive shareholder results, and has encouraged corporations to provide a fuller accounting on these matters.
Fink said last month BlackRock would be inclined to vote against companies with climate risk disclosures it believes fall short. The demands also bring public scrutiny to how the firm conducts itself.
Senior staff have discussed how inappropriate office behavior poses heightened risks to BlackRock’s reputation at a time when the public is more sensitive to power imbalances in workplaces, people familiar with the matter said.
The first high-profile firing last year was of BlackRock’s global human resources head, Jeff Smith. Smith had been a close confidant of Fink, people familiar with the matter said. His office was close to Fink’s in the c-suite at BlackRock’s Manhattan headquarters on 52nd Street.
Smith was stripped of his post by mid-summer.
Smith had romantic involvements with more than one subordinate over time, according to people familiar with the matter. He was called out in a July company-wide memo for an unidentified breach of company policy. At least one of those involvements was a violation of the firm’s workplace rules, one of the people said.
BlackRock requires employees to disclose relationships with colleagues to their bosses and human resources so the firm can decide whether they need to change jobs to avoid conflicts of interest, favoritism or other issues.
The second firing was of a contender to succeed Fink as CEO.
Mark Wiseman, an executive who headed BlackRock’s active equities business and has been married to one of BlackRock’s country heads, was publicly forced out in December for failing to disclose a relationship with another woman. He had been involved for a few months with the woman, who worked directly for him, according to people familiar with the matter.
BlackRock said in a company-wide announcement Wiseman flouted a workplace rule. The woman wasn’t asked to leave, one of the people said.
“It is deeply disappointing that two senior executives have departed the firm in the same year because of their personal conduct,” Fink and President Rob Kapito said in a firm-wide memo in December. “This is not who BlackRock is.”
Smith didn’t respond to requests for comment. A spokesman for Wiseman said he was unable to comment beyond a memo he sent colleagues last year. In that note, Wiseman said he engaged in a consensual relationship without reporting it and regretted his mistake.
The high-level firings took place less than a year and a half after BlackRock had investigated workplace problems in its Asia Pacific headquarters.
In the last quarter of 2018, BlackRock launched a wide-ranging investigation focused on Hong Kong after Fink received an anonymous complaint about aspects of office culture that women felt worked against them, people familiar with the matter said.
The firm opened the investigation two days after Fink got the letter. BlackRock also flew a team from New York into the Hong Kong office and hired an outside law firm to assist with the investigation, people familiar with the matter said. BlackRock looked into issues that included potential harassment, power imbalances and overwork, two of the people said.
People familiar with the matter said two individuals left after the investigation, including Andrew Reynolds, BlackRock’s Asia Pacific chief operating officer. Reynolds, who now works with venture firm Sequoia Capital, declined to provide comment.
After the investigation, Geraldine Buckingham, appointed as BlackRock’s Asia Pacific head in late 2018, and Mark Wiedman, another top executive at BlackRock, had meetings and conversations with Hong Kong staffers to emphasise the importance of culture and the firm’s lack of tolerance for inappropriate behavior.
BlackRock pared back holiday festivities in Hong Kong in 2018 and settled for an in-office gathering for its Christmas party, people familiar with the matter said. It was a departure from the past, when BlackRock had typically booked a venue for a boisterous event with an open bar, and employees were encouraged in different years to wear costumes looking like Minions from the movie “Despicable Me,” or to dress up to reflect their “origins,” people familiar with the matter said.
About seven months later, the first of two top executives was pushed out. In the wake of the firings, some managers at BlackRock have in recent weeks spent more time lecturing staffers about the risk of inappropriate office behavior, a person familiar with those lectures said.
BlackRock is reviewing its policies involving office relationships, another person familiar with the matter said.
—Elisa Cho and Jim Oberman contributed to this article, which was published by The Wall Street Journal