A new skill has just dropped into the job description of the perfect CEO. It's not good enough to be a great leader, manager or business strategist; deft social skills are now essential and the one that has moved to top of the list is how to say "sorry."
We should consider the cautionary tale of Thomas Cook, the venerable Victorian travel company that chose to soldier on rather than apologize for the death of two children from carbon monoxide poisoning caused by a badly maintained boiler at a hotel in Greece.
A Greek court found several hotel staff guilty of manslaughter but not Thomas Cook. Exoneration from criminal liability (perhaps understandably) sufficiently emboldened CEO Peter Frankhauser to declare at a recent U.K. coroner's inquest into the deaths that "there was no need to apologize because there was no wrongdoing by Thomas Cook." The jury in the civil inquiry demurred, concluding that Thomas Cook had breached its duty of care. It was not the verdict, however, but the stonewalling demeanour of the CEO that caused Thomas Cook stock to plunge, sparking a social media frenzy of outrage and calls for a boycott of the travel company.
An article in The Times, a paper not known for anti-business rhetoric, described Thomas Cooks' attitude toward the bereaved parents as "cold, emotionless and morally shoddy." To make matters worse, it emerged in the coroner's inquest that the firm had received £3-million ($5.7-million) in compensation from its own insurers for the loss of profit to its business caused by the children's deaths. The compensation awarded to each parent was £350,000 and, later, a slightly more contrite Thomas Cook donated £1.5-million to Unicef.
Thomas Cook's behaviour seems a bit like an ambulance driver who, upon arriving at the scene of an accident, proceeds to reverse over the victims while parking. Still, it is easier to jeer at a company for getting it wrong than to provide instruction about how to get it right. Faced with a potentially expensive claim, any responsible CEO summons the lawyers who will tell him that at all costs he must avoid any admission of liability. The problem with fulsome apologies is that they run the risk of reading like a guilty plea, but mealy-mouthed expressions of regret sound so trite they are probably better left unsaid.
In the battle between public relations and litigation, astonishingly, the spin doctors seem to be getting the upper hand. Often, the PR agents will argue that it is right to take it on the chin, as was shown by Mike McCain, the CEO of Maple Leaf Foods when in 2011 an outbreak of listeria in its meat poisoned customers. Confronting the issue of responsibility head on, he admitted that the tainted products had killed people and he apologized. Even better, he looked and sounded like one of the bereaved rather than a furious and embarrassed CEO forced to undress in public. The importance of such a speech is not belittled by comparing it to a piece of theatre that requires genuine acting skill; it could be the CEO's finest (or worst) career moment. An event, such as a mass poisoning, can destroy a company. Staff and customers totally unconnected with the incident will remember how the boss looked and what he said in the crisis.
Maple Leaf recovered but other CEOs have delivered less glorious mea culpas. Later in 2011, Research In Motion (now BlackBerry) co-CEO Mike Lazaridis appeared in a corporate video apologizing for a mysterious BlackBerry service outage. The words were fine but Mr. Lazaridis is not a great performer and he looked very uncomfortable, more like a plumber explaining why he didn't unblock the drain than a CEO acknowledging that his business had temporarily gone off the air. Much worse was the bizarre behaviour of Chip Wilson, the chairman of Lululemon, in response to complaints from consumers that the company's yoga pants were too sheer. He explained in a 2013 Bloomberg interview that "some women's bodies don't work for [the pants]." Adding fuel to the fire, Mr. Wilson then sought to deliver a second "apology" in which he said sorry to his staff for the trouble he had caused, but in a baffling omission, he failed to mention the women he had offended.
The conclusion to a debate about saying sorry could be: "It's the customers, stupid." That answer, however, may be too simplistic in a litigious world where private grief has become intensely political. For a CEO, responsibility ultimately ends on the bottom line. A moral stance that says the public interest is always right could ultimately lead to the bankruptcy of a company, which in the end may not be in the interest of the public. It would certainly not be for the benefit of the staff or the community that the business supports with jobs and taxes.
When the Deepwater Horizon platform blew up in the Gulf of Mexico, BP's response was to throw huge amounts of money at the problem. In an effort to provide speedy redress for individuals and firms injured by the disaster and to avoid litigation cost, BP agreed to an open-ended claims settlement process. It was well-intended but it has turned out to be a terrible mistake and BP has found itself exposed to endless fraudulent claims. At the same time, the company mishandled its initial public response to the oil spill with the CEO, then Tony Hayward, appearing in a personal "soft" interview, saying he wished he could "have my life back." It was the worst of both worlds – a mishandled apology and a ruinous bill.
A more cynical public relations and legal strategist might conclude that the better course of action for BP would have been to orchestrate a slick message campaign expressing buckets of sorrow and a determination to put things right. At the same time but behind the scenes, the company should have fought every single claim down to the last dollar and cent. There is no doubt that BP and its stockholders would be better off today and the state of Louisiana would not have enjoyed a bumper harvest from the world's most profitable disaster. But to be fair to the oil company, it is hard to say sorry when the President of the United States compares an oil spill to the 9/11 terrorist attacks.
Most companies don't have to fight the White House political machine when they make a big mistake, but the option for any business of soldiering on regardless is no longer available. The public arena is everywhere and the private space has all but disappeared. For a CEO to worry whether or not he is loved might seem an absurdly vain preoccupation. Yet, it is not entirely paranoid for him to worry, on occasion, whether he might be hated.
Carl Mortished is a Canadian financial journalist and freelance consultant based in the U.K.