You know that catastrophe you thought might slam your organization? It happened. You got the dreaded phone call in the middle of the night from your lawyers, your compliance people or (horrors!) the media that (pick one or more): 1. Employees created millions of fraudulent savings and checking accounts on behalf of clients without their consent. 2. Management was bribing officials worldwide to win lucrative contracts. 3. Executives were caught in huge money-laundering and corruption crimes.
During the Tuesday working lunch, Katherine McLane, crisis communications, reputation management expert and founder of the Mach 1 Group moderated a panel of managers who faced these actual serious predicaments. McLane was vice president for communications and external affairs for the LIVESTRONG Foundation during the years when its founder, Lance Armstrong, admitted to doping charges. Among other positions, she was deputy communications director and deputy press secretary for California Gov. Arnold Schwarzenegger and press secretary for the U.S. Department of Education under then Secretary Margaret Spellings.
Theresa LaPlaca, who was hired as the new executive vice president and head of Wells Fargo's conduct management office to help begin company reconstruction (see No. 1 above), says the company has been working to move employees from separated “silos”— who had no idea what others were doing in other departments — to coordinated, collaborative enterprises.
“Changing the culture is a challenge,” LaPlaca said. “It’s really important to me how our team members think about our ethics, our values. … We want our team members to speak up. How are you feeling? How are you being treated? … People are raising their hands. That is success for me,” she said. “Wells Fargo is really committed to rebuilding the trust of our customers, our share holders, our team members.”
“It took Siemens 160 years to build its reputation and five minutes to ruin it. And it will take some years to rebuild that trust in the marketplace,” said Andreas Pohlmann, a founding partner of Pohlmann & Company. (See No. 2 above.) Siemens called Pohlmann in after the scandal to be the chief compliance officer and manage the creation of the company’s compliance and corporate governance system.
“The tone at the top was decisive,” Pohlmann said. “We had to immediately and openly communicate [to the executives], ‘guys it’s over!’ We had to rebuild trust and credibility in the organization.”
LaPlaca said tone at the top also has to affect the measurement of the “mood in the middle. … We ought to be doing those culture surveys. Focus groups and understanding what’s going on way down deep in the trenches to understand what you want.”
“It was key to be very transparent to the outside world … to regain trust in the marketplace,” Pohlmann said. “We were very open and stood up and attended conferences like this … to talk about the root causes of our mistakes and how to build back up our reputation.”
McLane said companies naturally want to withdraw when things go wrong. “They want to stay within their walls and not talk about it until everything is great,” she said. “You don’t have to say everything, but you have to say something. It has to be meaningful and sincere and come from the right person.”
Joao Elek, who until two weeks ago was the chief governance and compliance officer of Petrobras in Brazil, joined the company in 2015 with the mission to unwind bad practices and enhance preventive measures against corruption. (See No. 3 above.) Elek agreed that Petrobas also has to be transparent about its operations and efforts to clean up “the mess,” as he put it. “We had to admit that we had weaknesses in our culture. In our country, careers are very long, heirarchies are very respected. So, if my boss tells me to do something [it’s very important to obey them]," Elek said. “So, how [do we] break this culture? … To implement a new culture, a new way of life?”
Employees have to come forward and not be afraid that the organization will betray their confidentiality, said LaPlaca. “We want our managers to encourage our team members to come to them [with problems]. … It’s going to take years for that culture to change. Our teams are tired. Remind them of [life] balance. … Remind them to take their vacations. … You as a leader have to take your vacation. They’re watching you. … If you’re maintaining a life balance, they will,” LaPlaca said.
Elek agreed that managers have to lead by example. “Managers go through extensive training, and then we roll down to the rest of the company,” he said. McLane said that after a crisis companies want to go back to normal. “But they have to adjust to the new normal. And part of that new normal is how to rebuild trust,” she said.
At the end of the panel discussion, all participants circled back to the principle that all organizations in crisis must inculcate cultures of transparency from the top to the bottom. If you don’t, you’ll be receiving more of those dreaded calls in the middle of the night.