When chief executives go wild
Our history books are full of stories of powerful, tyrannical leaders taking advantage of their subjects. The past few years have revealed corporate execs engaging in insider training, expressing unpopular and controversial beliefs, committing every variety of fraud and being outright bigots and a$$holes. More recently, we’ve seen what seems like an endless parade of corporate leaders sexually discriminating and harassing people in their workplaces or being complicit when other employees have done so. I’m fairly certain that none of these are new phenomena.
Papa John's former chief John Schlatter is the latest boss to cause shame for his company
In the not so distant past, the public often didn’t become aware of incidents until long after they occurred. But in today’s technology-enabled communications landscape, where everyone is armed with a video camera and a platform to communicate instantly to thousands of people with the click of a button, corporate scandals become public in near real-time fashion, putting corporate brand reputation at significant risk. A loose-lipped corporate leader with strong opinions, a loud mouth and a short temper such as Papa John’s founder John Schnatter, or an overly enterprising entrepreneur with questionable ethics, such as Theranos’ Elizabeth Holmes, can cripple – or in the case of Theranos, even kill – a brand. A brand is the relationship and experience a company creates for everyone with whom it interacts, at every touchpoint. When a CEO behaves badly, and the rest of the world finds out, that’s a critical touchpoint that could make or break a brand.
People buy things that elevate their self-concepts. That’s the whole meaning of 'brand.' What an individual eats, drinks, wears, drives, and so on, all say something about their personal values. When someone uses a brand that doesn’t behave in accordance with their values and beliefs, they can feel dissonance and alienation. When a brand’s CEO behaves in a way that’s out of whack with their company’s brand, they can alienate a whole bunch of customers.
While CEO scandals have been going on since time immemorial, it does seem as if there are so many more today. I don’t think there’s more bad behavior. I do think there’s more discovery and expression of it, and it’s pissing us all off (with good reason). Additionally, with the “Weinsteinification” of the workplace and the increasing momentum of the #metoo and #timesup movements, I think we’ve seen an uptick in the number of cases that have come to light. That’s likely because victims are becoming more confident about expressing their concerns and sharing their experiences. While no scandal is good for an organization, scandals involving discrimination and sexual misconduct are among the worst for brands to endure. Insider trading is never good, but that kind of behavior doesn’t seem as bad as when the behavior puts actual human beings in the crossfire. Really egregious instances of sexual harassment and discrimination – when people have been physically, mentally, emotionally and financially hurt – can escalate a brand crisis more quickly than when humans aren’t directly involved.
Brands that choose to put their corporate leaders on display as the face of their brands are at especially high risk for a brand disasters caused by leadership scandals. When a company puts all its branding eggs into a single basket with a single spokesperson, whether that’s the company’s leader or founder, or a paid spokesperson who is synonymous with the brand, it relies too heavily on a single person to be the brand’s ultimate “voice.” Pinning hopes on a single human being to behave 100% in accordance with a brand’s values every minute of every day seems ludicrous in today’s digitally connected way. Humans are unpredictable. We can’t manage their behavior.
So how can corporations protect themselves from their leadership putting their brands at significant risk?
First of all, don’t do bad things. This goes all the way back to having a culture of responsibility that starts at the top of every organization. Every company’s culture is intertwined with its brand, and its public face has to match what’s on the inside of the company. Every company should ensure it’s very clear about its values and beliefs, and that they align with those of its customers, employees, vendors, franchisees, etc. Companies should also build a healthy, accountable corporate culture and make sure everyone is living up to those values, all day, every day — from the receptionist or a line worker all the way up to the CEO.
Second, companies should steel themselves against brand disasters that could occur as a result of bad behavior on any employee’s part. Brands that weather crises almost always have solid relationships and have built up trust and deep emotional connections with their customers and stakeholders over a long period of time. Building those relationships requires developing a strong set of corporate values that match those of the people you want to attract (internally and externally) and using them to recruit, hire, train and reward employees at every level of the organization. Having corporate values that serve as a filter for employee behavior and decision making can help employees, even those at the very top, perform their jobs in a way that aligns with the brand and customers’ expectations.
Finally, when a company faces a disaster caused by one of its leaders, it should follow the following guidelines to increase its chances of successfully emerging with its brand reputation and equity intact.
Take accountability
Companies that immediately admit wrongdoing and take responsibility for their leaders’ actions have a stronger ground to stand on when rebuilding their brands’ foundations. Companies shouldn’t try to hide their leaders’ behaviors, nor should they try to throw those leaders “under the bus.” Companies that accept full responsibility and apologize to victims and bend over backwards to make things right fare much better through crises caused by the negative actions of their leaders.
Show Regard for Humanity
People first. Always. Especially in cases in which people were emotionally, physically, mentally or even financially injured by a leader’s actions, companies must acknowledge that the organization hurt people. The most solid brands are those that don’t only tell the world, but show the world, they care about all the people who were impacted by any action taken by the brand.
Communicate Quickly and Frequently. Control the Narrative
Silence often means consent. When companies wait multiple days to make a statement in a scandal, they appear as if they’re hiding something or that they’re complicit. Organizations that want to endure a brand crisis must swiftly acknowledge not only their awareness of a situation; they should also communicate directly and frequently with their most important constituencies as the situation unfolds. They use active, not passive language (e.g. “we hurt people when we did …” rather than “people were hurt when …”)
Renew Your Commitment to Customers and State Your Plan
Organizations enduring a crisis caused by one of their leaders must also seize a crisis or a scandal as an opportunity to reinforce their positive values and beliefs to their stakeholders. They should state what they really believe and communicate their precise plan for restoring faith and confidence in people for the brand. If there’s an investigation that will take place, the company should explain the details how and when it will occur and how and when the company will report back to stakeholders.
Honor Your Promises
Finally, after the dust of a scandal or crisis has settled, a company should analyze the root causes and create protocols to ensure similar events don’t occur later. Then the company should examine its brand reputation for “damage” and do whatever it takes to restate its commitment and promises to its stakeholders.
Deb Gabor is the founder of Sol Marketing