While vacationing recently in Palm Desert, we drove through Indian Wells, California. My mind was transported back to another time and place, when I counseled a magnetic CEO who admired the breathtaking beauty and affluence of Indian Wells.
In the Eighties I was public relations counselor to a Dallas-based software company acquired by a global technology firm for the then-princely sum of $800 million. The CEO of my client organization was a former GE planner who trained under the legendary Jack Welch. He was a highly confident, urgent leader who listened intently, spoke with precision and made all the right moves. That is, until the day the acquisition was announced.
It remains fresh in my mind years later: The CEO ushering me into his office, just prior to the public announcement, to report that his triumphant entry into a room packed with hundreds of jubilant employees would shortly turn dark and despairing. As a condition of the merger, he would announce that every employees would be given their walking papers and asked to reapply for their jobs. I remember having no more than a few minutes to gather my thoughts on the crisis about to unfold.
And that’s exactly what happened.
Anguished employees cried out. Some wept bitterly. People poured out of the room as angry recriminations rang out against the CEO. As could be expected, the resulting news coverage was devastating.
The CEO departed the company with $30 million and built a stunning mansion in Indian Wells. His reputation, however, was bankrupt with the very people who delivered his largesse. It was all very predictable, and a great deal of pain could have been avoided.
Truth Cannot Be Silenced
I arrived in Honolulu one summer day in the Nineties on a mission to discover why Hawaii’s telephone company had experienced a sharp drop in profitability and customer satisfaction, and a staggering rise in workplace accidents, lost time due to illness, and scores of unfair labor practice filings among its union employees. Our client project was directed by Hawaiian Telephone’s parent company on the mainland.
Accompanied by Dr. Robert Berrier, a great friend and the preeminent researcher in the field of employee engagement, we traveled the islands to conduct in-depth interviews with finance leaders, customer service specialists, telephone linemen and front-line managers. These interviews were caustic and revealing. They led us back to a common denominator – the leadership behaviors of the CEO.
As we pulled at the threads of truth that emerged in the interviews, we discovered the CEO had woven a tapestry of lies and deceit. While married and living on one island, he was carrying on an affair with a mistress on another island. The employees, predominantly Hawaiian natives whose Polynesian heritage guided their values, their priorities, their interactions with others and their behaviors, knew the truth about his immorality and had no respect for his leadership. The truth could not be silenced.
When we met with our senior clients back in Texas, they received the news stoically, thanked us for our report and terminated the leader that same afternoon. The Hawaiian company quickly regained focus and momentum under a new leader.
“Face reality as it is…”
Fast forward to 2014. I was consulting with leaders of a global bank in San Francisco as we sought to understand why front-line employees had secretly opened scores of deposit or credit-card accounts for customers without their knowledge.
As we pressed for interviews with executive leaders and front-line managers to dive more deeply into what was driving the fraudulent behavior, the heads of risk management and corporate communications pulled the plug on our project. They were unwilling to search for the truth. As the aforementioned Jack Welch once said, “Face reality as it is ... not as you wish it to be.”
It was later learned that the bank pressured employees to meet unrealistic sales goals, spurring them to open millions of accounts in customers' names without their permission, charging improper fees for auto and home loans, and selling unwanted insurance products. The bank agreed to pay billions of dollars to resolve investigations into its sales practices. It also admitted to collecting millions of dollars in fees and interest to which it wasn't entitled, harming customers' credit ratings, and unlawfully using customers' personal information.
Ultimately, the bank’s CEO became a sacrificial lamb forced to atone for a corporate culture driven to excess.
What Does It All Mean?
Decades after the rise of the strategic counselor in public relations and the evolution of the corporate manager as a more enlightened leader, we still experience these reputational gaffes inside great companies. Decisions made at the top can drastically affect employees and public perception and even put an organization into a crisis mode.
Finding truth – it’s a simple thing, really. It starts with listening to your employees, speaking from the heart, considering the effects of potential decisions, studying the implications of certain transactions, and mapping out key stakeholder needs to understand how they may act or react to actions we take. As Jeff Bezos of Amazon once said during the heat of a crisis, you always remember that “Our reputation is what people say about us when we’re not in the same room.”
Here are my key takeaways from these examples:
- Leadership Decisions Shape Company Culture and Public Perception: Critical decisions at the executive level can profoundly affect employee morale and influence how the public perceives the company.
- Ethical Leadership is Fundamental: A leader's personal integrity and ethical conduct are essential in maintaining trust and respect within the organization, which in turn affects overall performance.
- Employee Welfare is Crucial to Organizational Health: Neglecting employee concerns or imposing harsh conditions can lead to a toxic workplace environment and significant reputational damage.
- Facing Reality is Key in Leadership: Leaders must confront and address the true state of their organization, avoiding the temptation to ignore or gloss over challenging issues.
- Listening to Employees Enhances Decision-Making: Proactively engaging with and listening to employees can prevent many internal issues and improve decision-making processes.
- Reputation Management Has Long-Lasting Effects: A company's actions, especially those of its leaders, significantly influence its reputation, which is a crucial asset in the long term.
- The Importance of Strategic Counseling in Leadership: Strategic counselors play a vital role in identifying risks, guiding leaders towards better practices, and helping navigate complex corporate governance issues.
These takeaways emphasize the importance of ethical, reality-based leadership and the power of active employee engagement in building a positive and sustainable corporate culture.
