The scandal seems like a business management case study that would be taught at Stanford’s Graduate School of Business (GSB). However, the drama GSB now faces is real and played out by the school’s dean, Garth Saloner, one of the world’s leading experts on the psychology of power, Deb Gruenfeld, and her husband, James Phills, former faculty director of the GSB’s Center for Social Innovation.
Saloner is known for being a visionary for the school and has transformed GSB into a leader of worldwide innovation. He is an expert on mathematical modeling and game theory, and his ideas helped Netscape persuade federal prosecutors to bring antitrust claims against Microsoft in the 90s. Under Saloner, the school has flourished.
Others do not have such a rosy impression of Saloner. Many feel that his administration is ruled by fear and that he is extremely harsh and difficult to deal with. He is accused of browbeating his subordinates who disagree with or challenge him. In his own words, Saloner has said that, “I’ve been very ambitious and passionate about advancing the mission of the school . . . I strongly believe in getting the whole team aligned behind a focused vision. I have to acknowledge that, although it was definitely not my intention, the process of achieving alignment was sometimes harder on people than I realized.”
In 2011, Saloner and Gruenfeld became romantically involved, while Gruenfeld was still married to Phills. Phills filed for divorce shortly thereafter and his employment with GSB was terminated in 2014 – and that is the subject of his lawsuit against the school. Phills claims that Saloner and Gruenfeld carried on a secret relationship at the same time Saloner was making decisions about Phills’ employment with the school and regarding his housing located on campus.
Stanford, on the other hand, does not believe that Phills’ termination was discriminatory. The school released a statement that, “Several months after the couple’s separation, Dr. Phills’ estranged wife and Dean Saloner, who was widowed, began a relationship. The dean informed Stanford leadership at the very beginning of the relationship, and others in the university took responsibility for final decision-making about matters involving Dr. Phills and his wife. At all times Dr. Phills was treated fairly and equitably.”
During the divorce, which is still pending, and Phills’ lawsuit against the school, several emails and messages between Saloner and Gruenfeld became part of the public record.
As a result of the mess, Saloner announced last month that he was resigning from his post at the end of the academic year. He will continue to remain as a tenured business professor. He released a statement that he did not want “a baseless and protracted lawsuit related to a contentious divorce between a current and former member of our faculty” to harm the reputation of the school.
At the time, the GSB community was confused by the announcement as it was largely unaware of the situation. The story broke later that day. Still, despite the sordid details, many supporters are sad to see Saloner go. Finance professor Peter DeMarzo stated that, “The prevailing mood is disappointment and dismay that we’re having a transition when we have so much momentum.”
Still, others like those who endured the wrath of Saloner, are not sad one bit to see him go.
When asked whether the scandal would harm the reputation of GSB, Professor Joel Pfeffer opined that the school will certainly bounce back as institutions are much bigger than single individuals. He noted that, “The only difference between Stanford and Google is we have a higher profit margin. This school is a success story.”