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Getting Through - How Corporate America
Can Earn Back Trust
by Mark Goulston, M.D.
To err is human; To admit and accept complete responsibility for it, divine.
Up until the past several years, companies including Enron, Worldcom, Arthur Andersen and now more recently Bear Stearns, Lehman Brothers, AIG and to a lesser degree GM and Chrysler did not understand how completely devastating betrayal of trust can be. Ironically and sadly, they only realized it when they were devastated in return. Deception compounded by elaborate schemes to cover up and prevent detection ravage the emotional trust at the core of investors, shareholders, employees and ultimately erode public confidence and faith.
There is a way to repair the damage wrought by corporate transgressions. Be forewarned. This solution is not for the faint of heart or the uncommitted.
The four H's: the fallout of impropriety & deceit
When a company, CEO or Board of Directors commits an unethical, if not immoral act, it triggers Four H's in investors, shareholders, employees, and the public at large:
When a company commits or is perceived to commit an unethical action, stakeholders feel Hurt. Their emotional trust is betrayed.
They Hate the company and its leadership for taking away that trust.
Trust is the key factor and the most important element for feeling safe and secure. They worry over what else the leadership may be lying about. Furthermore they are now leery, skeptical and Hesitant to trust anyone or anything associated with the maligned company. If they trust again, they risk being betrayed again. Many investors and employees who have been betrayed in this fashion think that even if they make it through one such deception, they'll be unable to make it through another.
Finally, these people are going to Hold on to resentment. With the passage of time most grudges will subside. Many however may feel powerless to let it go. Consider the investors in and employees of Enron, how they feel and what they currently are enduring. Their struggles and perceptions epitomize the Four H's.
The four R's: damage control and healing the pain
The corrective responses to the Four H's are the Four R's: Remorse, Restitution, Rehabilitation and Request for Forgiveness. If you are the CEO or part of the team responsible for guiding your company or industry through such a crisis, these are the steps you will need to take, (You is used to describe an individual, management team or company).
In order to heal the hurt, the injured parties need to see and feel your genuine Remorse. This means looking stakeholders straight in the eye, seeing the damage you've done, having them see that you see it and telling them that you know what your action did to them. You can communicate this by saying to them: "When we (you and your company) did X, you felt disappointed, betrayed and hurt. And it's going to take somewhere between a long time and never before you would trust us again, because of how devastated you felt because of what we did; isn't that true?" After they concur, follow up by saying to them: "We were wrong and I'm sorry for what we did." Your "I'm sorry" must be simple and clear and not followed by excuses or "but it wouldn't have happened if only ..." This is possibly the most difficult thing to do (President Clinton wasn't able to get closer to this than finally saying after too long delay, "It was wrong."). This may also be why news interviewers frequently ask victims of corporate exploitation if the company ever apologized directly to them. As much as each stakeholder's hurt needs remorse in order to heal, his/her anger needs vengeance in order to be expunged.
Restitution starts when you provide a forum for the injured and aggrieved to verbally vent their outrage, revulsion, disgust, disappointment directly at you for the hurt and pain caused. They need to verbally "punch themselves out" and feel completely drained of all the negative feelings your betrayal engendered. This is the hard part. Picture yourself releasing the steam in a pressure cooker just moments prior to its explosion. If you try to stop the steam, you will get burned. Stand there and listen, empathize and acknowledge without defending yourself. This outpouring of emotion will help calm and quell people's need for revenge. The temperature in the pressure cooker will drop to non-threatening level. With the anger expressed, each will now be open to a discussion of a tangible payback. This restitution will need to replace the chunk of their being they feel you took away through misdeed.
Even with restitution, most will remain hesitant to trust you. This is human nature. It is also human nature to forgive once earned. To overcome this, your stakeholders, partners, customers and peers must witness you actively Rehabilitating yourself. Prove you are sincere through action. Learn how to deal with all challenges to your business without resorting to any immoral or unethical actions. Make sure you're strategies are sound (appear rational), feel right (sit right), and seem doable (realistic). Integrity, a virtuous attitude, consistency and delivered intent build character and overcome the weariness and wariness of those you've hurt in time. Character is what you do when you're disappointed, angry, frightened, bored or swathed in temptation...and nobody's looking.
Corporate culture will need to be addressed from the top down. As the leader, your actions will be scrutinized by all within the company. You must impress upon your team and those looking to you through your words, gestures and actions the new and improved way of handling issues rather than resorting to short cuts and trappings of deceit. Without this demonstrative leadership, stakeholders will believe that you are simply going through the motions to temporarily pacify them. And like an addict you will return to your usual ways when the crisis passes.
Delivering the 3 R's of Remorse, Restitution and Rehabilitation may not prevent the injured from holding on to their resentment. If that's the case, you will need to exercise the 4th R - to Request Forgiveness. Make this request only after you have demonstrated a track record of remorse, restitution and rehabilitation for at least six months (and perhaps even as long as the length of the transgression). Forgiveness, like trust is something that must be earned. One hopeful point to keep in mind: If you demonstrate a solid track record of Remorse, Restitution and Rehabilitation, and then Request Forgiveness and are not forgiven, it is not you that is unforgivable. Your investors, shareholders and employees are unforgiving. You cannot control other's feelings. You can only be true to and control yourself.
Most unforgiving people have become that way after being deceived. Nevertheless most harbor a deep abiding ache to trust and have confidence again. They want to trust; but they need to trust without the fear of being betrayed or hurt again. Your ability to handle this crisis may be the lifesaver they've been reaching for, and the lift needed that will finally allow them to believe in you and more importantly to begin to believe in corporate America again.
Many more articles in Insight & Commentary in The CEO Refresher Archives