Companies need to address workplace misbehaviour and build a crisis-resistant culture – or they’ll be risking their reputations.
Inappropriate staff behaviour can plunge a company into crisis – and quickly. Recent scandals involving Hollywood, the Presidents Club and Oxfam have illustrated how inappropriate staff behaviour – even by just a few people – can cause serious reputational harm.
Business leaders involved in the infamous Presidents Club dinner, for example, found themselves not only answering questions about their own conduct at the event, but consequently the conduct and reputation of the organisations they represented.
Business leaders involved in the Presidents Club dinner found themselves answering questions about the conduct of their entire organisation.
Residential Land lost one of its major investors due to the "events and behaviours as reported by the media". Some of Ocado’s customers tweeted that they would no longer shop with the online grocer following its CEO’s attendance at the event.
Following the Oxfam scandal, the charity’s deputy CEO quit over allegations of a cover up while the CEO faced questions from a panel of MPs.
Meanwhile, two senior executives recently left Nike amid a review of misconduct at the sportswear behemoth. There had been conduct inconsistent with Nike’s “values of inclusivity, respect and empowerment” and the company was taking the appropriate actions, said a Nike spokesperson. (It added that there have been no direct allegations against the senior managers who had resigned.)
It is important that organisations create a 'crisis-resistant' culture that flows through the business. According to Jonathan Hemus, Managing Director of crisis management consultancy Insignia, there are three key elements that should be embodied if companies are to create such a culture:
1. Structure – beware of ‘over-centralisation’ and a strict hierarchy. Ensure that senior management is willing to listen to a range of stakeholders and experts.
2. Attitudes – do people feel comfortable sending bad news to the top? Employees of all levels need to feel confident that any bad news they share with decision makers won’t be shot down or disregarded.
Employees of all levels need to feel confident that any bad news they share with decision makers won’t be shot down or disregarded.
3. Values – are you living and breathing your core values as an organisation? If ‘safety’ and ‘integrity’ are front and centre on your slogan, do you live up to these in every situation? If not, then you can’t really call them your values.
The most effective protection against a major reputational incident is to plan for the worst-case scenarios. Providing you know where the potential pain points are, you can prepare and plan your response more effectively.
It is important to train, rehearse and test the people who will handle these different scenarios. Exercising these teams by running mock scenarios they might face will give them the most realistic dress rehearsal for the real thing. It will also build their confidence to do and say the right thing and make better decisions under pressure.
In a crisis your senior management team will be the public face of the organisation. They will have to make big calls that will determine whether your reputation is preserved or, worst case, destroyed. Having the confidence and the capability to do and say the right thing during periods of extreme pressure means that their participation in crisis training and exercising is essential.
A distinction should be made between business leaders who are good in a crisis, and those who are effective leaders when things are going well: the two are not necessarily the same.
In order to influence the crisis narrative, a company’s communication to the outside world should be proactive and speedy. Otherwise the vacuum that you’ve left will be filled by other commentators, who might not speak so highly of your organisation.
Your crisis is guaranteed to escalate if you don’t demonstrate empathy in your communications.
For instance, while the executive director of Oxfam International, Winnie Byanyima, can be commended for the compassion and sincerity she displayed in media interviews, it took over a week for any of these messages to reach public ears. By that time, several celebrity ambassadors had severed ties with the charity, the British government was considering cutting all its funding, and the international media had taken firm control of the story.
Responding quickly and with confidence also demonstrates that you are in control, and taking appropriate action to address the situation. By contrast (although not a result of inappropriate behaviour) KFC’s rapid strategic response to its chicken supply crisis – caused by delivery failures – attracted many plaudits.
And remember: the crisis is not about you – it’s about the people that have been affected by it. Your crisis is guaranteed to escalate if you don’t demonstrate empathy in your communications.
Staff behaviour, of course, is not just a source of potential reputational harm, but can also be an agent of positive social change.
It is ever more likely that disgruntled employees will speak up on wider corporate misbehaviour and push through change.
The Nike senior executive resignations, for example, reportedly stemmed from a group of female Nike employees circulating an informal survey to gather insight into other women's experiences of inappropriate behaviour and discrimination at the company. The survey was brought to the attention of long-time Nike CEO Mark Parker, who initiated a formal review that resulted in the high-profile resignations.
Grassroots efforts are a force that now threatens the comfort of many old-school, outdated corporate values and practices. It is increasingly difficult for corporate leaders to ignore incidences where power has been abused – and ever more likely that disgruntled employees will speak up on wider corporate misbehaviour and push through change.
The recent scandals remind us that we live in a faster, more connected and complex world, says Julia Graham, Deputy CEO at Airmic, the UK association for those with a responsibility for risk management or insurance in their organisation. “This means that changing social and cultural values in one area are more likely to have a knock-on effect. It can be difficult, however, for individuals and companies to join the dots.
“Many companies are still getting to grips with how large the ‘ripple effect’ can be when things go wrong – specifically the way that events in one part of the organisation, for example in one business division or part of the world, can affect and potentially engulf the organisation as a whole,” says Graham.
Changing social and cultural values in one area are more likely to have a knock-on effect.
“For example, as companies have become more mindful of employee diversity and inclusion it has rightly led in some instances to a greater drive to create a socially ‘just’ workplace. This has led, in some cases, to far greater scrutiny of inappropriate misbehaviour that senior managers might have previously turned a blind eye to. So these trends do not occur in isolation – they are systemically linked.”
Recent scandals and the growing practice of employees actively pushing for social and corporate change, naturally raise questions about companies’ corporate governance.
Although there is no silver bullet to how companies can become scandal-free, an Airmic report (Roads to Resilience) highlighted the boardroom behaviours common to companies that kept out of trouble, and listed five golden rules of resilience:
1. good, properly interpreted intelligence;
2. sufficient diversity to avoid group-think;
3. fluid and effective internal communications so information gets where it is needed;
4. rapid crisis response; and
5. regular searching reviews even when things are going well.
Of course, much of this comes back to corporate Boards, many of which are arguably in need of change.
Tom Peters – the American management guru who wrote In Search of Excellence – recently produced a blueprint for what he thinks would be the ideal 10-person, modern board. There should be no more than three people over 60, he said, no more than three MBAs, at least three women, two people under 30, a couple of entrepreneurial types, a design guru, an IT specialist and one person of stature who seems "weird" – Peters suggested a rapper or an artist.
This type of composition wouldn’t suit every company, and nor is it likely to occur over night. If companies’ staff behaviours, values and culture are to be as reflective of society as possible, however, they will need to improve more than just their crisis management.