In my book, The Arsonist in the Office , I talk about how the Human Resources department of Wynn Resorts was one of many toxic parts of a troubled company that served as the dating pool for founder and billionaire Steve Wynn. Wynn, according to numerous reports, aggressively and pursued numerous employee for his sexual needs, while some of his executives served as his ‘palace guard’ to protect Wynn and his interests and eliminate any complaints. It had been assumed that most of Wynn’s problems disappeared after a) Wynn himself was exiled from the company and his ex-wife Elaine cleaned house on the Board of Directors to imposed a new attitude and direction and b) a $20 million settlement Wynn Resorts made with the State of Nevada over sexual misconduct allegations.
But this week, things have gotten messier–the Wynn organization’s dirty laundry has been dragged into public for all to see. Wynn Resorts has been scheduled to open a nearly $2.5 billion casino in Everett, Massachusetts, but the Massachusetts Gaming Commission has had a few questions to ask. Now, with those questions, they’ve issued a 199-page report full of answers.
Along with the report will be a 3-day hearing and likely a 3-ring sexually charged circus atmosphere that has the potential to hurt Wynn far beyond reputational issues.
The commission has determined that Wynn failed to disclose allegations of sexual misconduct at the time Wynn was applying for the casino permit.
Investigators found “the significant changes in leadership, policies, structure, and internal controls at the Company do not erase the fact that the corporate failures revealed in this investigation are significant, repetitive, and reflective of the Company’s historical governance practices.”
Additionally, “Inaction and failure on the part of the identified former executives at this publicly-traded Company, which was led by its founder at the time, appear to have contributed to a culture where employees were reluctant to report allegations against Mr. Wynn to management.”
While Steve Wynn is out of the company, the Commission report says that 2 people still active in the company knew about settlement agreements between Wynn and employees. One of those who knew was Elaine Wynn, Steve’s ex-wife.
What’s legitimately at risk to Wynn with this embarrassing hearing? Is the commission report bluster and political pomp and circumstance? Maybe. But the Commission’s Deputy Director Loretta Lillios seems serious in her public comments thus far. “The casino license is a privilege, not a right,” said Lillios. “What happened at the company matters. It matters to the women who have been directly affected by the allegations that gave rise to this hearing.”
Could Wynn’s license be at risk? It’s hard to imagine pulling a gambling license on an almost-completed project, but stranger things have happened. But how will investors handle the news? Wynn has been hurt by concerns about the company’s performance in Macau, so how would uncertainty domestically in new markets shake investor confidence? No one knows for sure.
What is certain is that Wynn’s miserable self-inflicted PR wound continues to grow and they will not go away anytime soon.
While many toxic workplaces are viewed by some in the business community as mainly an issue of employee satisfaction, Wynn’s problems are a great case study in the gambit of problems that emerge with the culture of the organization goes off the rails. They include the following common problems:
- Financial
- Legal
- Attraction and Retention of Employees
- Reputational
- Productivity
Wynn has shown weaknesses in all of these areas and this week’s hearings are one more indicator that the problems are not over yet. Leaders need to get their culture right. When good and decent people turn their heads away from addressing bad behavior, terrible things happen.
Just about every time.
Pete Havel is the Author of “The Arsonist in the Office”. For more information on Pete, go to http://www.arsonistintheoffice.com
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