Talk is Cheap

Following news of a data breach at British Airways, Charlie looks at incidents seen as the fault of the organisation involved, and the actions organisations can take to show that they are taking such incidents seriously.

One of the news items today is about a hack and data breach at British Airways. The organisation will no doubt apologise and say that it will take steps to ensure that this will not happen again. Do we really believe organisations when they say this or is it our gut feeling that they don’t really care about their customers? This incident is probably just an inconvenience for them and they will most likely do the bare minimum to prevent it from happening again. With this in mind, I thought I would write this week’s bulletin on incidents seen as the fault of the organisation involved, such as corporate wrongdoing, an accident impacting the public or the environment and bad behaviour by a senior manager. How do organisations show that they are really sorry, understand the gravity of the situation and will change as a result?

The standard way to respond to these types of incident is to apologise and say you are taking all the steps necessary so it won’t happen again. This can work, but as the title of this bulletin shows, talk is cheap. So, my thoughts this week are on what actions you can take to complement your communications, in order to demonstrate that you have changed.

This is especially difficult in cases where you have been deliberately dishonest. Your organisation has been caught being dishonest, so how do you demonstrate that you are now honest? A bad example of this is when Volkswagen were caught cheating on diesel emissions and tried to blame it on a few rogue engineers. They were achieving results which other car manufacturers were not achieving without breakthrough technology, so if senior managers didn’t know about the cheating, they were turning a blind eye or not wanting to find out how the results were achieved.

So, what can we do in terms of actions to demonstrate that the organisation is taking the incident seriously?

1. If there were one or two individuals who carried out the rogue deed, you can sack them. When a Starbucks manager caused outrage by having two black customers arrested for loitering in their shop, when they were just waiting for a friend, Starbucks chose to sack the manager. This is fine, but in many cases, the incident is not a one-off act and may be part of corporate culture. Therefore, just sacking a junior manager may not be enough, if the stakeholders see corporate culture as part of the problem.
2. As Volkswagen have had to do, you can sack the entire management team and have them replaced. This also happened to the KPMG partners in South Africa, after they were involved in three scandals involving the signoff of accounts on organisations that failed soon after.
3. The parent company could close down the subsidiary if they feel that the misdeeds of one part of the organisation could affect the whole organisation. For example, the Murdoch Group closed down the News of the World newspaper after the phone hacking scandal, to draw a line under the issue and avoid further adverse effects on the rest of the group.
4. In cases where a senior manager has behaved badly, they can be sacked, even if they are the founder of the organisation or CEO. Uber CEO Travis Kalanick had to resign, following months of chaos and pressure from investors, after a tumultuous six months of scandals. Other CEOs have checked themselves into therapy, including Harvey Weinstein, who did so following accusations of coercing women into sex for film roles. Going into therapy for senior managers and celebrities is a well-worn path to show that they recognise their behaviour is unacceptable and they want to change. It also helps in taking them out of the media spotlight. Whether they come out as changed people is perhaps more debatable.

There are three examples which I think show innovation in devising actions which complement their communications.

1. Starbucks was faced with the very difficult dilemma of showing they were not racist, they also wanted to avoid ongoing boycotts and demonstrations outside their shops and recognised very quickly that any corporate misdeeds involving race can be a highly toxic issue for an organisation. Their decision to close all stores for a company-wide racial bias training was a brilliant way of demonstrating they took the issue seriously. They could have done the training in each individual store over time or not closed them, but the public would not have noticed. They didn’t just say they were doing racial bias training, they were able to demonstrate it by closing the stores.
2. A while ago a company which subcontracted for utilities had one of their members of staff killed onsite. They closed down all their sites for a week and brought every member of staff in for health and safety training. Only once they felt that staff were sufficiently trained did they let them go back to work. This was an extreme action and it must have cost them a lot of money and angered the organisation’s customers. However, it was a very visible demonstration, to both its staff and customers, that they took health and safety very seriously and they saw the need to change current practices.
3. A large company in the Philippines had an oil spill and polluted the local creek impacting the local population. They could have made the problem go away by dealing with government and paying compensation to the Barangay Captains (mayors). They did both of these, but the next day they also deployed almost the entire plant staff, contractors and their families to clean up the river. This was a really visible demonstration that they, as a big multinational, didn’t just pay off officials and government for their error, but cared enough about the local population to deploy their staff to clean up the area affected.

So, as part of your communications plans, getting the right words are important, but it is also a good idea to have a line within your plan which says what actions can be carried out to complement communications and demonstrate that they are sincere.