Caught in a messy divorce between professors, Stanford’s business school dean is stepping down

Management trouble at a management institution.
Management trouble at a management institution.
Image: Reuters/Beck Diefenbach
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For a school that teaches the art of good management, Stanford’s elite business school is having a rough time at the top. Yesterday, the school announced that its dean, Garth Saloner, would step down at the end of this academic year in the face of a lawsuit from a former faculty member.

The lawsuit, filed by James Phills, accuses Saloner and the school of dismissing him unfairly after the dean began a relationship with Phills’ estranged wife, Deborah Gruenfeld, who is still a professor at the school.

“As many of you know, the university and I have been vigorously defending a baseless and protracted lawsuit related to a contentious divorce between a current and former member of our faculty,” Saloner wrote in an email to students. “I have become increasingly concerned that the ongoing litigation and growing media interest will distract all of you from the important work that you are doing and unfairly impact this stellar school’s deserved reputation.”

In the lawsuit, which was filed last year in California and examined at length by the business school news site by Poets and Quants, Phills alleges that Saloner didn’t recuse himself from decisions regarding Phills’ employment and housing, and that he was harassed by the dean and the school ”because of his race, gender and marital status.”

Stanford, in a statement, acknowledges the relationship between Saloner and Gruenfeld but denies the accusations in Phills’ lawsuit.

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.

Stanford says Phills ultimately was released after he repeatedly refused to return to Stanford while on leave to teach at Apple’s in-house university.

Phills accessed his wife’s emails and social media accounts in order to obtain some of the correspondence that has become public as a result of the lawsuit; lawyers for Saloner and the university plan a cross complaint alleging a violation of privacy.

It makes something of an ignominious end to what’s been a pretty extraordinary tenure for Saloner. During his six years as dean, Stanford’s Graduate School of Business has cemented itself as the most selective and arguably the most prestigious business school in the world. It has routinely topped Harvard Business School in the rankings, and tends to win out among students who are admitted to both.

Saloner, who will remain a member of the faculty, also has been a spectacularly successful fundraiser, helping to bring in more than $500 million in private funds over the course of his tenure.

A lot of the current gloss on the school has to do with the concurrent rise of Silicon Valley tech companies. But it’s hard to describe his stewardship as anything other than very successful by external metrics.

Neither Saloner nor Phill responded immediately to requests for comment.