Saying sorry may be the hardest thing to do but when done from a place of authenticity, it can heal the past and set a new direction for the future. It is a crying shame companies find it so difficult to admit when they have got it wrong until they are forced to do so.
Banking giant HSBC is a case in point, with chief executive Stuart Gulliver issuing a public apology at the weekend over alleged tax dodging at its Swiss private banking arm.
He wrote “we must show we understand that the societies we serve expect more from us. We therefore offer our sincerest apologies.”
The letter added that since 2008, when whistleblower Herve Falciani leaked the data which sparked the row, the bank had “fundamentally changed.” But why did the HSBC not mention back then there were failings, and will people trust an apology that comes only as a result of the bank’s alleged wrongdoing being exposed by the Guardian and other media?
The risk to HSBC is that this public show of penance can look more like an attempt to salvage its already battered reputation.
A genuine apology?
Apologies tend to work only if they are accompanied by radical changes in behaviour. While HSBC says it has turned a corner, it will continue to be tarred by the brush of the banking sector, which has so far failed to adequately respond to the gross excesses of the past.
Only last summer, five years after the global financial collapse, Bank of England governor Mark Carney still felt it necessary to warn that “capitalism is at risk of destroying itself unless bankers realise they have an obligation to create a fairer society.”
The majority of citizens instinctively sense the difference between damage-limitation and a heartfelt apology because they will have experienced both in their own lives.
Many will forgive if they sense a company is showing real humility. It can paradoxically enhance a company’s reputation and sales.
An Institute of Business Ethics (IBE) report on building and restoring organisational trust, says: “Genuine apologies, delivered sincerely, can be liberating, and powerful signals of renewed trustworthiness. Many would also see them as an impressive and competent PR response, too.
“By contrast, self-serving defensiveness and disregard for stakeholders can create long lasting reputational damage, regardless of the legal rationale for the stance, with knock-on effects of shame for employees.
“We believe that when apologies and penance options are available and manageable in terms of implementation and cost, they should be considered as an early and effective indicator of remorse, regret and benevolence, to begin the repair in a timely manner.”
When to say sorry
Companies do these days talk a lot about creating an internal culture where mistakes are part of the learning process and therefore should be shared, but have not generally reached the stage that this also needs to extend to their relationships to external stakeholders.
When they are caught up in wrongdoing, the first response is often to reach for the lawyers and the phalanx of PR advisors to either suppress the information with threats, or seek to plaster over the wound.
There are many reasons for this. Beyond the terror of reputational damage, there are fears of legal action and the primordial desire to hide the shame of being seen to have got it wrong.
But just imagine what the world would look like if people in their individual relationships felt unable to be open and honest about the mistakes they make.
Andrew White, associate dean for executive education at Saïd Business School, says that “despite the harm that companies have caused from an environmental, employee and customer perspective, they have very few ways to say sorry. If human relationships were structured like this, we would have no way of healing from the normal problems and challenges that exist.
“Ultimately this could lead to more relationships breaking down and reduced levels of trust. If we want more humanity, maybe they have be more honest about their imperfections - and we have to, dare I say it, forgive them.”
A study by PwC also says we need to mirror the trust in personal relationships within the world of business, arguing there needs to be “a step change in all relationships within, across and beyond the organisation, taking them to a level that most individuals would hope to have in other relationships outside the business world.”
The authors of the IBE report, Graham Dietz and Nicole Gillespie, say that while taking a legal route may minimise financial risk to the company and help to avoid media exposure, a “relationship approach” is more effective.
While full and frank disclosure of the organisation’s faults may damage trust in the short-term, the IBE says organisations needs to recognise this approach has the best potential for repairing trust in the long-term.
Dietz and Gillespie conclude: “Ultimately, the organisation is in a stronger position to tackle the problems that led to the failure when the causes are openly known and understood, and better able to repair stakeholder relationships when it can be open about what occurred and how it will make amends. The alternative – not to disclose the findings and evidence supporting them – is likely to have an even more negative effect, as it suggests the organisation has something to hide and has not learnt from the failure.”
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