For much of the time he was American Apparel’s president and CEO Charney owned the title of “Sleaziest Man in Retail.” American Apparel’s Board of Directors backed their CEO through a decade of multiple sexual harassment, labor and abuse lawsuits until recently voting they came to their senses and removed Charney from the company. From a PR stand point this Human Crisis machine was interesting to watch – the same way a train wreak is.
On top of the lawsuits, x-rated rumors have constantly swirled around Charney. He is famous for buying employees vibrators as presents; for asking them to masturbate in front of him; for walking the factory floor in his underpants, and for wearing a sock where the underpants should have been. In 2004, a female journalist for Jane Magazine claimed that he had oral sex with a female employee while she interviewed him.
Charney was also a notorious micro-manager. Earlier this year, he began signing all of the company’s checks—hundreds of them every month. Assistants delivered them to his home, where they would pile up for weeks. Charney purposely held the checks while he investigated whether the amounts were correct. His desire to remain involved in all facets of the business prevented the company from hiring senior executives who could manage its increasingly complex operations. In 2007, after the company went public, Charney had to bring in a chief financial officer. That didn’t last long. He quit a few weeks after Charney characterized him as a “complete loser” in an interview with The Wall Street Journal.
Charney’s antics repeatedly commanded the headlines, but distracted from the company’s deeper HR and operational issues. In 2009, American Apparel was forced to lay off more than half their Los Angeles factory staff after immigration authorities found those workers weren’t authorized to be in the U.S. Then, in 2013, the company built an automated distribution center outside Los Angeles that was supposed to save $5 million a year. But delays, software problems, and insufficient training hampered operations. Some orders were comically confused. One customer received a box with nothing but packing tape.
Charney response was to move into the distribution facility. He brought in a mattress, a hot plate, and had a shower installed. All night Charney slept with a walkie-talkie on his chest in case something needed his attention. Charney regarded this move as a sign of his great commitment. The board saw it as just another symptom of Charney’s insane management style.
The board of directors knew about Charney’s antics for over a decade, so what took them so long to get rid of him? When asked about these early allegations, Allan Mayer, a public relations executive who is now co-chair of the board, said, “One of the things you learn when you do crisis management is that where there is smoke, there isn’t always fire.”
On the other hand, public relations and Fire Safety 101 tells us that smoke is a pretty reliable sign of fire. And Charney certainly gave it plenty of flammable material with a bad case of Founder’s Syndrome. Those who suffer from Founder’s Syndrome have the passion and drive to get a company up and running, but lack the skills to guide it as it grows. Symptoms include micromanaging that drives off virtually every talented executive ever hired. The whole image of American Apparel was supposed to be: “Aren’t we good, making everything in the US and not using sweatshop labor?” Yet every story you hear about Charney is so sleazy that it squanders all the likability that this value statement might have created.
The Crisis Communications Blunder scene won’t be quite as amusing now that Dov Chaney’s not a part of it. We will miss him. But, I suspect American Apparel will not. Let’s see how well they do in re-branding themselves as something other than a showcase for their founder’s antics.