By: Professor Leon van Vuuren, Executive: Business and Professional Ethics, The Ethics Institute

It should have already dawned on every person who keeps abreast of the news that no organisation is immune to ethical failures. And yet, recent examples from the likes of McKinsey, KPMG, Eskom and others seem to imply that it still comes as a big shock when crises arise, and the ensuing scramble only serves to make things worse.

We live in a time where institutional trust is at historic lows, and nothing spreads as fast as bad news. So, why aren’t organisations better prepared?

The fact is that bad things can happen in good companies. Sometimes, the culprit is a rogue or bad apple in a high-risk position, and the ensuing disaster comes as a genuine surprise. Sometimes, though, this is not the case, and the crisis is the result of years of collective wrongdoing in small proportions, the sort of wrongdoing people often call ‘the nature of business in this industry’. A single major incident is often triggered by the culmination of many small past wrongs, like thousands of tiny termites that eventually bring the forest giant crashing to the ground.

The trust crisis this triggers can go far beyond a mere setback and, in some cases, results in the organisation closing its doors.

Window of opportunity

Organisations tend to have a knee-jerk reaction to either fight or freeze. Both reactions lead to uncertainty and suspicion at a time when organisational legitimacy already hangs by a thread. In fact, a delayed or disingenuous reaction can become more scandalous than the scandal itself. This is not necessary.

There is, in every crisis, a small window of opportunity to minimise damage. The last thing an organisation should do at this time is be defensive or silent. This can be extremely challenging, as there is often a tussle between legal advisors who want to prevent any self-incriminating public statements, and leaders who understand that they need to communicate honestly and openly if they wish to regain lost trust. That is why it is a good idea to have a pre-determined plan in place.

Ethics disaster management?

To comply with occupational health and safety regulations, most organisations have disaster management plans: if there is a fire, employees know which stairwell to head to; if there is a power failure, emergency lighting illuminates the exits. But what would an ethics disaster management plan look like? It should, as a starting point, include the following steps:

Get to the truth: All stops should be pulled to ensure identification and confirmation of the nature of the failure as soon as possible.

Self-disclosure: Rather than being caught out by outsiders, organisations should themselves disclose failure once they have established the truth. This will probably earn them more respect than when they are denying, fighting or freezing.

Apologise: Stakeholders can actually be quite forgiving when an organisation apologises for failure, so long as the apology is timeous, sincere and authentic.

Continuous communication: Frequent and truthful company-generated communication should commence as soon as failure has been exposed and continue until fixing or healing is well-advanced. Throughout, the media should not be alienated by acts of arrogance and aggression. On the contrary, journalists should be treated with respect for their right to report, and top leaders should make themselves available for comment as often as possible.

Independent investigation: For serious ethical lapses, external expertise must be commissioned. Internal investigations by the organisation’s forensics or internal audit teams will never have adequate credibility, as they will be seen to be marking their own homework.

Consequence management: Transgressors should be fairly, firmly and transparently brought to book. This is crucial to prevent perceptions that things are being swept under the carpet.

Restitution: should the ethical failure have resulted in one or more stakeholders being financially disadvantaged, provision should be made for restitution.

Preventing re-occurrence: Organisations should be able to demonstrate that they have taken corrective measures that will prevent re-occurrence of the incidents that caused the ethics fallout.

It is important to understand that you cannot talk yourself out of a situation that you have behaved yourself into. But you can be prepared with a plan of behaviour. Such a plan, as outlined here, will not guarantee positive consequences, but may go a long way to stemming the haemorrhaging of stakeholder trust. It could also provide a basis for the long healing process to begin.

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