It is inevitable that things will always go wrong in organisations and CEOs will have to deal with corporate scandals at one time or other. Some organisations are a ticking time bomb for internal crises and when the unfortunate happens, it is the responsibility of CEOs to effectively deal with the fallout. While organisations need to have a crisis management strategy, different scandals should be analysed and treated differently. Scandals also vary in terms of responsibility for the wrongdoing (e.g., accidental, negligent, intentional) and a common approach to all scandals won’t work. Many of us remember the Bernie Madoff Ponzi scheme, Enron, Arthur Andersen, and the Martha Stewart Mess. The employees, shareholders and families affected by these events are probably still living with the consequences.
In dealing with scandals therefore, Companies need to consider the characteristics of the brand, the nature of the scandalous event, and the company’s degree of responsibility for it. According to blogger, Syed Balkhi, ( http://list25.com/25-biggest-corporate-scandals-ever/)S scandals in the corporate world, whether centred around corruption, bribery, fraud, or other greed tend to have a significant impact on the economy as a whole, and while most companies are destined to fail at some point, there are a few that do so in such a spectacularly corrupt manner that they make headlines. . The customers , shareholders and employees affected by these scandals may still be living in the fallout of these events.
How to deal with a Corporate Scandal
Step 1. Assess the incident from your stakeholders’ viewpoint not managements. An incident becomes more serious when it is surprising, vivid, emotional or relevant to a central feature of the company or brand. Not all incidents are serious.
Step 2. Acknowledge the problem, express concern for whoever might have been harmed, indicate how it will be investigated, and how future damage will be prevented.
Step 3. Craft a response which will differ if allegations are false or true, the incident was accidental, the result of negligence or intentional.
Step 4. Undertake responses to the incident, often involving communications, marketing and executive expertise. Decisions must be made on the issues that need attention, what level of detail, who should deliver the response, and with what kind of tone.
Step 5. Be seen to be doing something to minimise the scandal and to bring those people that are responsible to account for the damage that has been done.
How to Communicate during a Corporate scandal
A company’s reputation is severely tested during a scandal. A scandal whether short or long lived, affects individuals inside and outside the organization. The first job for the organization is to recognize when a scandal has occurred and the risks involved. All scandals can be controlled; many others can be foreseen but many are not seen until it is too late. When the bomb has dropped Company CEOs need to act quickly to prevent further damage to the company’s reputation.
What to consider in your communication plan
- Take part of the blame (It happened on your watch)
- Don’t speculate about what happened or what could happen, (be in the know).
- Don’t cover up, lie or hedge.
- Don’t hedge sympathy with a “but.”
- Don’t promise anything you can’t deliver.
- Be prepared before giving interviews.
- Get all the facts as quickly as you can.
- If you are the CEO, BE present at all sessions, you are the leader.
- Give the facts.
- Be honest about what you know and don’t know.
- Acknowledge and be sympathetic to human suffering.
- Give all the bad news at once, not in dribs and drabs.
- Set up a rumour control hotline or website or social network site.
- Prepare yourself with answers to a few “difficult” questions since you will be asked these.
Can you apologise enough?
- GM took out a full page ad (December 2008) in which they apologized for betraying their customers.
- A senior official in the Vatican apologized after Pope Benedict lifted the ban on a formerly excommunicated bishop, Michael Williamson, who was acknowledged to be a Holocaust denier. They attributed this mistake to management errors made by Vatican staff and sloppiness in their decision.
- Microsoft apologized for altering a photo in its website that changed the race of one of the people shown. A black man was replaced by a white man’s hand and face in its Polish business units website.
- The President of Toyota. Akio Toyoda, went on an around the world apology tour (February and March 2010), to apologise for the massive vehicle recall that the car manufacturer was carrying out.
Companies that fall from grace need to apologies to their stakeholders. And the bigger the scandal and crisis, the more effort should be put into appeasing your communities.
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