Confronting the Storm: Can Leaders Survive Corporate Scandals?

Guest post by David Ross is an international corporate peacemaker, strategist, and author of Confronting the Storm: Regenerating Leadership and Hope in the Age of Uncertainty

Who would want to be the CEO of a large company, when finding yourself knee-deep in a highly visible corporate scandal? Imagine the pressure trying to remove your organization as quickly as possible from being a front-of-mind concern for your teams, the media, regulators, shareholders, affected communities, and politicians.

Confronting the Storm: Regenerating Leadership

Maybe that pressure explains the all-too common tactics CEOs employ to get off the front pages such as doubling down on their beliefs that their organization is innocent, that that the harm caused is less than perceived and ridiculing those who have highlighted the organization’s toxic practices. And the most obvious tactic of them all, relying on an expensive communications firm to help ride out the scandal.

So how does this usually work out?

Responsibility is Yours

There are numerous high-profile examples of notable corporate scandals, and it is hard to think of one where the CEO has come out of it with their reputation intact or rebuilt

Take Enron’s CEO, Kenneth Lay, who was convicted of six counts of securities and wire fraud and after the Deep Horizon oil spill scandal, BP’s CEO, Tony Hayward, was dismissed. Similarly, Volkswagen CEO, Martin Winterkorn, resigned from his post and is about to go on trial for his part in the “emissionsgate” scandal.

However, it is possible for leaders to “unfail,” rebuild trust and get things back on track provided they are fully prepared to really confront the issue.

From Outrage to Integrity: The Big Picture

Scandals, if managed proactively and sensitively, can be an opportunity for organizations. But leaders shouldn’t expect them to be resolved quickly, as they often occur because stakeholders feel that something adverse has been imposed on them, or that there has been a collision where the values and goals of the affected are adversely at odds with those of the organization. Something must give.

The sooner CEOs appreciate that the affected are, generally, reasonable people with important insights, the better. They should never underestimate their stakeholders.

Five Steps to UnFail

• Stem the bleeding

It is critical to reduce the intensity of the outrage directed at your organization:

• • listen deeply – to representatives of the affected on their turf, not yours
  • don’t be defensive or disagreeable no matter how hard that feels
  • set expectations that you and your organization take the concerns raised seriously. Intend to do something about it and maintain lines of communication.

• Understand the ‘why’ and act

Appreciate that there may be a myriad of concerns raised by the affected, search for patterns in the data. Plan your response and strategy, accordingly:

• • identify which concerns are legitimate and should be responded to, and which are illegitimate, those that violate human needs, and should not be progressed any further
  • reflect, as an organisation and personally, on what you are hearing – particularly what needs to be confronted about obvious problems, past behaviours or practices.
  • develop a strategy embedded with dignity, valuing the worth of those affected, their groups or communities, and where relevant, the natural environment.

• Proactively and sensitively communicate

Managing perceptions, outside and inside your organization, from the get-go is critical:

• • Sincerely acknowledging the pain caused or poor behaviour exhibited on the part of the organization is essential. Don’t ever blame someone else.
  • don’t underplay the impact.
  • keep the affected updated. Vacuums, otherwise, will be filled with misinformation.
  • communicate how seriously the organization takes the issue, and how it will, humbly, start to improve the situation (hint: with the help of the affected).

• Be disciplined in following through

Conflict doesn’t disappear after carrying out the above steps; it goes underground but will come back to the “boil” if you forget to ‘walk the talk’:

• • share control, don’t impose. Work with the critically affected – those who hold a stake and influence – to deliver your strategy. Seek their feedback to ensure you are tackling the right things-
  • be open and transparent. Don’t ever hide bad news.
  • be held accountable by the affected, involving them in monitoring and evaluating progress.
  • as things improve, don’t take responsibility for success. Improvements achieved are because of them; give humble credit, accordingly.

• Go further, go deeper

Scandals often occur due to organizational culture and deeper beliefs. I often deal with hierarchical cultures at ground zero who come to the realization that their core values of control, stability, and the internal voice of the organization are a formidable impediment to rebuilding reputation.

Confront the cultural problems; align your organization with its changing context.

If you’re not scared of the prospect of your organization being at the centre of a scandal or societal outrage, you should be. But the scariest thing you will confront is yourself and how you impact upon others. Let this be your making.

David Ross is an international corporate peacemaker, strategist, and author of Confronting the Storm: Regenerating Leadership and Hope in the Age of Uncertainty

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