Making things right when something goes wrong

Insight

If your company risks being hauled before the court of public opinion because something has gone wrong, it’s tempting to brush over it and hope no one notices – but the surprising fact is admitting failure can actually help build trust.

A common response is to blanket the problem in the hope you can make it go away; ‘we followed the letter of the law’, ‘it’s not a big deal in the context’, ‘we work to the industry guidelines’ and so on. Batten down the hatches and ride out the storm, in some cases that is the necessary action.

But we have all seen the visceral shock on the faces of executives in this now alltoo-familiar scene. The sad thing is, all too often these leaders reflect on how their attempts to position or parlay the blame only made things worse.

It’s not just fear that drives these decisions. There can be major technical obstacles in rectifying a problem and often with unintended financial incentives for misbehaviour too. There is a belief that coming clean will tarnish reputations, invite increased scrutiny and burn future opportunities.  

Oxford University professor Dorothy Bishop reviewed the literature on what happens when scientists face this conundrum, and the results were surprising. 

When scientists’ papers were retracted from journals due to misconduct (Azoulay, Bonatti and Krieger, 2017), their subsequent citations by other scientists did drop, but the effect was smaller when an honest error was involved.

The results were even more pronounced in another study that interviewed 14 authors whose articles were retracted (Hosseini, Hilhorst, de Beaufort and Fanelli, 2018). Despite their assumptions, self-retraction did no damage – in some cases it actually improved their reputations.

This fits with more informal evidence, according to Prof. Bishop. “You demonstrate that you are someone who values scientific accuracy over your success in publishing.” Imagine if this standard was applied consistently by our business and political leaders.

The issue is fundamentally one of trust, and the gap between consumer expectations and what the letter of the law allows. So what is trust, really? Well here’s a useful definition: “Trust is the optimistic acceptance of a vulnerable situation in which the truster believes the trustee will care for the truster’s interests.” 

This suggests trust requires vulnerability from the trusting, and an expectation that the trusted person or organisation has their best interests at heart.

Think about yourself for a moment. Imagine you’re feeling vulnerable, and someone you thought was looking out for you lets you down badly. The likelihood is you don’t just feel disappointed, you feel a much more emotional reaction.  

From this perspective it’s much easier to see why consumers whose data has been lost or health records compromised may react so strongly.

We know that the stigma associated with corporate failure is weaker than it has been in the past. Perhaps that’s due to outrage fatigue. With 20 million customer accounts going missing on a couple of magnetic tapes at Commonwealth Bank of Australia and the details of 75 users exposed by tech startup HealthEngine, data breaches have become so common there’s even a site dedicated to checking if your data has been breached. 

But the truly epic fails, the ones that make and stay in the headlines, and even end up in a Royal Commission, typically occur because the company’s response was seen as inadequate.

If you think about a crisis like this: a chance to reinforce and build an even stronger relationship with key stakeholders like your customers, then it doesn’t have to be that way. In fact, it can be an opportunity.

Singapore Prime Minister Lee Hsien Loong highlighted this when his nation’s digitised health records faced a major attack, with 1.5 million health records hacked. Prime Minister Lee revealed the personal risk he faced as his own records had been stolen deliberately and through brute force. Yet he continued to resolutely and powerfully advocate for the program that had been attacked. 

Prime Minister Lee was extremely proactive in his response, alerting citizens early, despite not having all the information at that stage. People were disappointed, of course. Too often, our leaders lack the courage to get back to the moral high ground when they are at fault. But PM Lee’s open mea culpa on Facebook helped head off that deep sense of betrayal that leads to outrage. In fact, ultimately it bolstered his reputation and helped build a stronger relationship with his citizens.