Case study chapter 9
Leadership and Organizational Failures Force Change
One of the most significant scandals in sports and education history occurred in 2017 when Larry Nassar, a former sports doctor for USA Gymnastics (USAG), Michigan State University (MSU), and the United States Olympic and Paralympic Committee (USOPC), was convicted of abusing hundreds of athletes under the guise of medical treatment (Udowitch, 2020). In 1987, Nassar began his career with USAG as an athletic trainer, evolving into team physician and attending every camp and practice and managing treatment sessions. In 1997, he became a team physician at MSU. Despite numerous complaints from athletes about his inappropriate behavior over the decades, leaders failed to take effective action, and organizational policies and institutional action were also nonexistent. For decades, Nassar had built a strong reputation because athletes, administrators, coaches, and parents all appreciated his charisma and kindness, which were the opposite of the typically harsh coaches and administrators. His credible reputation even granted him access to treat gymnasts in their residence hall, which survivors note “should’ve been a red flag” (Udowitch, 2020, p. 109).
One year prior to the 2016 Olympics, Steve Penny, the president and chief executive officer (CEO) of USAG, was informed by a visiting club coach of overhearing the athletes discussing Nassar’s significantly atypical treatments. Penny called the athlete’s parents to inform them that they were taking care of it, and said, “We need to keep this quiet. It’s very sensitive. We don’t want this to get out” (Udowitch, 2020, p. 111). A workplace harassment investigator was hired, and a month after the initial report, Nassar was fired by USAG; however, publicly, USAG announced he was retiring and did not inform MSU of the complaints, which allowed Nasser to continue treating athletes there.
USAG, headquartered in Indiana and serving as a national governing body (NGB) for gymnastics in the United States, is responsible for selecting and training national teams for World Championships and the Olympics Games. Although separate from the USOPC, it receives designation as the NGB for the sport of gymnastics. The main responsibility is to help encourage safe participation in the sport of gymnastics (USAG, 2023). Since the public disclosure, USAG has completely altered its leadership and board of directors. After 12 years of service, the president and CEO, Steve Penny, stepped down in 2017, a month after the USOPC requested his resignation. Also, the former senior vice president of USAG reporting directly to Penny was fired in 2018. She noted at the congressional hearing, “He told me to not say anything or do anything because he was going to handle everything going forward . . . he told me he was going to report the concerns to proper authorities, which I assumed included law enforcement” (Associated Press, 2018, p. 1). However, per the state of Indiana law, child abuse or neglect is to be reported to the Indiana Department of Child Services (Kwiatkowski & Evans, 2018). Additionally, the U.S. National Team Coordinator (head coach of U.S. National Team), Martha Karolyi, who owned and operated the Karolyi Ranch training facility in Texas, which had been contracted by USAG, enabled a culture of fear and silence, allowing the power dynamic to prey on defenseless gymnasts (Udowitch, 2020). Overall, the gymnasts noted that the culture of USAG consisted of “fear and intimidation” and was “toxic, manipulative, and abusive” (Udowitch, 2020, p. 105).
Within higher education, MSU launched its own investigation, as did MSU’s athletic governing body, the National Collegiate Athletic Association (NCAA), and the U.S. Department of Education (USDOE). Although the NCAA found no violations of its regulations during Nassar’s destructive tenure, the USDOE did find a lack of action on MSU’s part for the institution’s “systemic failure to protect students from sexual abuse” (Udowitch, 2020, p. 120). The USDOE investigators discovered that MSU did not maintain proper crime statistics and neglected to warn the campus community or safety authorities. Additionally, investigators reported that 11 girls and women had informed university officials, campus security, trusted coaches, and athletic trainers of Nasser’s behavior; however, university professionals reacted with a lack of action, and some athletes were even informed to feel privileged to work with a renowned Team USA doctor.
Since the wake of the scandal, significant changes have occurred at USAG, USOPC, and MSU. At the international and national levels, to avoid decertification from USOPC, the entire USAG board resigned, and USAG filed for bankruptcy. Not only was there a restructuring in leadership, but there were also policy reforms. The organization introduced mandatory safe sport training, mandated enhanced background checks, and established a dedicated Safe Sport policy that defines types of abuse and preventative efforts (Axon & Armour, 2019). Previously, only sexual misconduct was defined. Now, after input from athletes, coaches, survivors, and parents, the policy has jurisdiction over several types of misconduct and abuse, including emotional and physical abuse, bullying, and hazing.
At the institutional level, the USDOE fined MSU $4.5 million (at the time, the largest Clery Act fine) for its failures and ordered MSU to make meaningful changes to how it handled Title IX cases in the future. MSU also agreed to a $500 million civil settlement with over 300 survivors, at the time, one of the largest settlements in university sexual abuse cases. Several high-ranking academic officials, including the university president, Lou Anna Simon, and the athletic director, Mark Hollis, resigned, and the gymnastics coach, Kathie Klages, retired shortly after being suspended by the institution. MSU implemented new policies and procedures for reporting and investigating sexual abuse allegations and established a fund to support survivors. Furthermore, legislation changes occurred in states outside of the headquartered MSU and USAG. For example, Texas, where a USAG training facility was located, passed a bill doubling the statute of limitations, giving child victims of sexual assault up to 30 years after their 18th birthday to sue their abuser and the organization they believe were accountable for the assault (House Bill 3809).
To redeem USAG, USOPC, and MSU, leadership and organizational changes were forced to occur. Garnering full support and buy-in from constituents did not come quickly and has been a learning process. The revitalization of USAG is an example of a forced change, and although positive steps have been taken, only time will tell if the program truly moved beyond the taint of the Nassar events.
Questions for Discussion
From the first moment athletes voiced their concerns, what leadership approach should have been used to handle the situation and all the stakeholders? What leadership approach is best suited to initiate the change discussed in the case study? Support your answer by connecting the details from the chapter to the details in the case study.
What forms of resistance do you think USAG, MSU, and USOPC leaders encountered when trying to lead change? Which strategies did they use to try to mitigate resistance from stakeholder groups? Would you recommend any additional strategies? Support your answer by connecting the details from the chapter to the details in the case study.
1. Overview of the Scandal and Institutional Breakdown
Core Figures and Timeline:
Larry Nassar: Former sports doctor and athletic trainer who began with USA Gymnastics (USAG) in 1987, became team physician at Michigan State University (MSU) in 1997, and served the United States Olympic and Paralympic Committee (USOPC).
Scope of Abuse: Nassar abused hundreds of athletes under the pretext of medical treatment over three decades before his criminal conviction in 2017.
Grooming and Exploitation of Trust:
Nassar leveraged a reputation of warmth, charisma, and attentiveness, purposefully contrasting with the rigorous and harsh demeanors typical of elite gymnastics coaches and administrators.
This credibility enabled him to circumvent clinical safety norms, including treating gymnasts alone in residential dormitories without oversight.
2. Organizational Failures and Culture of Silence
USA Gymnastics (USAG):
Cover-up and Concealment: In 2015, USAG President and CEO Steve Penny was alerted to Nassar's atypical treatments by a visiting coach. Penny told parents to keep the matter quiet to prevent public exposure.
Misleading Separation: Following an internal workplace investigation, USAG dismissed Nassar but publicly announced his departure as a retirement, failing to notify MSU or the athletic community.
Failure of Mandatory Reporting: Under Indiana law, child abuse or neglect must be reported directly to the Indiana Department of Child Services. USAG leadership failed to make this statutory report.
Authoritarian Atmosphere: Martha Karolyi, U.S. National Team Coordinator, ran the Karolyi Ranch training facility in Texas under an established culture of fear, intimidation, and isolation that left gymnasts vulnerable and disempowered.
Michigan State University (MSU):
Suppression of Complaints: At least 11 athletes and women approached MSU officials, coaches, and athletic trainers regarding Nassar's conduct over the years, but no institutional action was taken.
Dismissal of Victims: Athletes were told by institutional figures that they should feel privileged to receive care from an elite Olympic doctor.
Regulatory Findings: The U.S. Department of Education (USDOE) cited MSU for systemic failures to protect students under Title IX and the Clery Act, issuing a record fine. In contrast, the NCAA found no formal violations of its athletic regulations, highlighting major regulatory gaps.
3. Forced Organizational Change and Systemic Reforms
Executive Turnover and Restructuring:
USAG: Steve Penny stepped down in 2017 under pressure from the USOPC; the senior vice president was dismissed in 2018; the entire USAG Board of Directors resigned under threat of USOPC decertification; and USAG filed for Chapter 11 bankruptcy.
MSU: MSU President Lou Anna Simon and Athletic Director Mark Hollis resigned, while gymnastics coach Kathie Klages was suspended and retired shortly thereafter.
Policy and Procedural Overhauls:
Expanded Jurisdiction: USAG adopted a dedicated Safe Sport policy that broadened misconduct definitions beyond sexual abuse to encompass physical abuse, emotional abuse, hazing, and bullying.
Mandatory Protections: Implementation of mandatory Safe Sport training and enhanced background screening across gymnastics programs.
Financial Sanctions and Legal Changes:
MSU agreed to a civil settlement with more than 300 survivors and paid a USDOE Clery Act fine.
In Texas, House Bill 3809 doubled the civil statute of limitations for child sexual abuse, granting survivors up to 30 years after their 18th birthday to initiate legal action against abusers and responsible organizations.
4. Discussion Questions and Strategic Leadership Analysis
Question 1: Leadership Approach from the First Report
Recommended Approach: Servant and Ethical Leadership:
Prioritizing Stakeholder Welfare: A servant leadership framework places the physical, emotional, and psychological safety of followers (the athletes) above institutional preservation or brand reputation.
Adherence to Ethical Mandates: Ethical leadership dictates zero tolerance for abuse, transparent communication with law enforcement, and immediate adherence to statutory child welfare reporting laws (e.g., Indiana Department of Child Services).
Immediate Protective Action: From the first report, leaders should have suspended Nassar pending an independent third-party investigation and removed him from unsupervised athlete contact, rather than orchestrating a quiet exit.
Question 2: Leadership Approach Best Suited to Initiate Change
Recommended Approach: Transformational Leadership & Kotter's Change Model:
Transformational Leadership: Transformational leaders inspire cultural renewal by establishing a clear ethical vision, dismantling cultures of intimidation, and empowering athletes as valued partners.
Application of Kotter's Framework:
Establishing Urgency: Acknowledging systemic wrongdoing openly rather than minimizing liability.
Forming a Guiding Coalition: Populating governing boards with independent experts, athlete representatives, and child safety advocates.
Institutionalizing New Cultural Norms: Transitioning the metric of organizational success from Olympic medal counts to athlete health, dignity, and psychological safety.
Question 3: Resistance, Mitigation Strategies, and Recommendations
Forms of Resistance Encountered:
Institutional Self-Preservation: Fear of financial collapse, sponsor departure, and reputational damage led executives to prioritize cover-ups over transparency.
Entrenched Power Dynamics: Long-standing coaching cultures (e.g., at the Karolyi Ranch) resisted external scrutiny and athlete empowerment.
Cognitive Dissonance / Denial: Nassar's affable persona caused administrators and parents to dismiss early warning signs and resist believing he was dangerous.
Strategies Used to Mitigate Resistance:
Forced Coercion: Restructuring driven externally by threat of USOPC decertification, USDOE investigations, and financial bankruptcy.
Mandated Policy Compliance: Implementation of mandatory reporting, standardized Safe Sport protocols, and leadership turnover.
Additional Recommended Strategies:
Autonomous Oversight: Establish reporting systems managed by independent, third-party bodies with zero ties to national governing bodies.
Psychological Safety Audits: Conduct anonymous, recurring climate surveys to monitor coaching behavior and culture at elite training sites.
Permanent Survivor Advisory Council: Formalize a permanent governance role for survivors to ensure long-term vigilance against institutional complacency.
(Note: While the provided case study outlines the key timeline, institutional breakdowns, and leadership actions at USAG, MSU, and USOPC, applying theoretical models such as Maurer's Three Levels of Resistance and strategic response models often discussed in organizational leadership literature—such as Burton—goes beyond what is explicitly detailed in the text.)
1. Leadership Approaches from the First Moment and for Initiating Change
Immediate Leadership Approach: Servant and Ethical Leadership
Servant Leadership: In high-stakes athletic and educational environments, servant leadership requires leaders to prioritize the physical, emotional, and psychological safety of athletes over organizational brand reputation or financial interests. From the very first complaint, leaders should have prioritized safeguarding the victims by immediately removing Nassar from all unsupervised access and initiating an objective, external inquiry.
Ethical Leadership: Ethical leadership demands absolute adherence to moral and statutory standards. When USAG President Steve Penny was first informed, an ethical approach required immediate mandatory reporting to statutory child protection authorities (such as the Indiana Department of Child Services) and full transparency with Michigan State University, rather than attempting to contain the narrative internally ("keep this quiet").
Initiating Real, Transformational Change: Transformational Leadership & Kotter's Change Model
Transformational Leadership: Real systemic change in an organization characterized by fear, intimidation, and isolation (as observed at the Karolyi Ranch) requires transformational leaders who articulate an inspiring, athlete-centered vision. Such leaders challenge entrenched toxic cultural norms, foster intellectual stimulation, and model integrity to restore legitimacy.
Kotter’s 8-Step Change Framework:
Establishing Urgency: Acknowledging systemic culpability candidly rather than deflecting liability.
Forming a Powerful Guiding Coalition: Including independent child-welfare advocates, athlete representatives, and survivors on the governing board.
Anchoring Cultural Changes: Shifting institutional metrics from elite medal counts and financial sponsorships to athlete health, empowerment, and holistic well-being.
2. Forms of Resistance Delaying Action (The Three Levels of Resistance Framework)
Using Rick Maurer’s Three Levels of Resistance framework, the delays across USAG, MSU, and USOPC can be understood as follows:
Level 1: "I Don't Get It" (Informational & Cognitive Resistance)
Lack of Comprehension of Grooming: Leaders, coaches, and parents struggled to recognize grooming behaviors because Nassar intentionally presented an attentive, charismatic, and benevolent persona that contrasted sharply with demanding coaching styles.
Failure to Grasp Abuse Under Clinical Guise: Because the abuse occurred under the pretext of "specialized medical treatment," administrators failed to understand how clinical authority was weaponized, dismissing early reports as benign misunderstandings.
Level 2: "I Don't Like It" (Emotional & Physiological Resistance / Fear of Loss)
Fear of Reputational and Financial Loss: Executive leadership feared the catastrophic fallout of public disclosure—including loss of corporate sponsorships, institutional prestige, Olympic standing, and severe legal liability.
Culture of Fear and Intimidation: Within training camps like the Karolyi Ranch, athletes and lower-level staff experienced intense fear of retaliation, demotion, or blacklisting if they questioned authority figures, reinforcing a pervasive code of silence.
Executive Self-Preservation: Institutional figures at both USAG and MSU prioritized their own career stability and institutional insulation over external accountability.
Level 3: "I Don't Like You" (Relational & Deep Cultural Mistrust)
Institutional Arrogance and Dismissal of Victims: MSU administrators repeatedly dismissed reports from 11 different individuals, telling athletes they should "feel privileged" to work with an elite Olympic doctor. This reflected an institutional culture that devalued student and athlete credibility in favor of elite status.
Insularity and Mistrust of External Scrutiny: Governing bodies treated outside inquiry, parental concerns, and law enforcement oversight as adversarial threats rather than essential safeguarding partners.
3. Strategies to Mitigate Resistance: Initial vs. Recommended
Initial Strategies Used by Leadership (Defiance & Concealment)
Concealment and Manipulation: Leaders responded to external and internal pressure through avoidance and manipulation (e.g., Steve Penny telling parents to keep quiet, and classifying Nassar’s termination as an honorable "retirement").
Suppression and Non-Communication: USAG failed to report Nassar's conduct to the Indiana Department of Child Services or MSU, allowing him to continue practicing without hindrance.
Coerced / Reactive Compliance: Meaningful structural change was only enacted under external force (USOPC decertification ultimatums, a record Clery Act fine from the USDOE, Chapter 11 bankruptcy, and widespread public outrage).
Recommended Strategies (Standard Organizational Change Responses)
Proactive Acquiescence and Collaboration: Full, immediate compliance with child abuse reporting statutes and proactive sharing of investigative findings across all affiliated organizations (MSU, USOPC, and USAG).
Transparent Communication and Education: Open dialogue with athletes, coaches, and families regarding reporting channels and medical boundary standards, eliminating the ambiguity surrounding Nassar's treatments.
Stakeholder Involvement and Co-Creation: Involving athletes and survivors directly in the design of governance and reporting mechanisms rather than imposing top-down corporate policies.
Additional Mitigation Strategies (Beyond Burton / Standard Texts)
Fully Autonomous, Third-Party Reporting and Adjudication: Remove reporting, investigative, and disciplinary procedures entirely from the jurisdiction of national governing bodies and university athletic departments, assigning them to an independent regulatory entity with binding disciplinary power.
Continuous Psychological Safety and Culture Audits: Implement recurring, anonymous climate assessments conducted by independent sociologists and child protection professionals at elite training facilities to detect toxic coaching practices and isolation tactics.
Permanent Survivor Governance Seats: Mandate permanent voting seats and veto rights for athlete-elected survivor representatives on national governing boards to guard against institutional complacency and historical amnesia.
Restorative Justice and Institutional Truth-Telling: Establish structured restorative justice forums where leadership formally confronts institutional complicity, validating survivor experiences and ensuring structural accountability beyond financial settlements.