‘SORRY can be a hard word for corporations to say’ – The Economist

22 May 2015 By Northern Lights

‘SORRY can be a hard word for corporations to say’ – The Economist image

Earlier this week I heard one of the most inspiring leadership interviews on the radio ever (go to 2.18 on the link). And the issue he addressed was one that every business needs to think about.

John McEwan, now chief executive of the UK’s largest travel agency consortium, Advantage and formerly managing director of Thomas Cook, spoke about the tragic story of the two young children poisoned by toxic fumes from a faulty boiler at Louis Corcyra Beach hotel on Corfu. At the weekend it had emerged that Thomas Cook – the holiday operator – had been paid £3.5m compensation by the hotel. Yet the children’s family say they received only a tenth of that amount.

For the parents, it was clear that the money was not the issue. What really upset them was that Thomas Cook still did not accept their responsibility – just last week the ceo Peter Fankhauser said Thomas Cook had done “nothing wrong” when giving evidence at the coroner’s court in Wakefield – and the family said that they had still not had an apology from Thomas Cook. More than eight years after the tragedy.

Instead, the father, Neil Shepherd said that Thomas Cook had “hidden behind a wall of silence and refused to answer any questions for almost nine years”.

So what did John McEwan say in his interview that was so inspiring – and I believe will finally have had some kind of influence on the apology that Peter Fankhauser has now made, just a day later?

John McEwan was measured and thoughtful and didn’t dodge the questions. Asked what the issues were and what should Thomas Cook have done, he said

  • When you have a tragedy in a company, think about the human element first, not the legal consequences
  • His personal view was that the board had been guided by lawyers and legal advice. It was clear they were trying to protect their legal perspective and in the process lost sight of the human side and the consequences for the family
  • In significant instances such as tragic deaths, it is for the chief executive to be at the forefront of communications – whether with the media or the family involved. He accepted the tragedy did not happen on Peter Fankhauser’s watch but he implied he felt he should be the face of the communications now
  • Yes it is a matter for the board, both because of the financial fortunes but also it did not reflect well on the company and perpetuated the agony of the family concerned
  • He felt the family should have been consulted as to what they would have liked to happen with the £1.5m donation that went to Unicef. They might even have wanted a charity set up in the memory of their children

He finished by saying if he could give advice to the board, they needed to be more proactive explaining their situation and be more aware of the human dimension and caring for the family. He felt that the apology that came out was functional, with no warmth and very belated.

For other boards, does the ‘human dimension’ matter? Well, yes, it does. Apart from the fact that employees and customers want to work for companies that do the right thing, this lack of communication had a significant financial impact.

According to a Radio 4 reporter in the same report: “Thomas Cook’s shares were down 3.2% yesterday and another 1% today, there has been an outpouring on social media and the FT reported a 20% fall in searches for their holidays”.

Good communications are not nice to have, they are core business.

I personally think lawyers have a lot to answer for in these cases – and you need a strong management team that listens to their advice but then have the courage to do the right thing. And you need a chief executive who also listens to their communications team – this is more on the Barclays theme that I wrote about when Bob Diamond wouldn’t step down.

The Economist reported on the legal aspect: Thomas Cook was no doubt encouraged in its intransigence by legal advice that a real apology might amount to an admission of culpability, bringing with it the danger of a compensation lawsuit. The law here, though, is ambiguous. In criminal cases, an apology can be taken as admission of guilt, says Peter Cartwright, a professor of law at Nottingham University, but in civil cases it need not. Indeed, on occasion, a deftly worded apology can head off the threat of litigation, he says.

Crisis communications is not about fluffy PR and ‘reputation management’. It is doing the right thing – and being seen to do the right thing.

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Written by Northern Lights