Repairing reputational damage: don’t go the way of Boeing 

Admittedly, the VW affair was striking in the deception involved, but other corporate breaches have flamed and died away. Who remembers the “horsemeat in beef” scandal of 2013?

I have been reporting on corporate scandals for nearly 40 years. (My first was the mid-1980s Guinness scandal in which several executives went to prison for artificially boosting the company’s shares during a takeover battle.) Why some scandals dominate the news and others don’t depends on many factors, including what else is happening at the time.

However, for scandals that stick, and companies never know when they will, I have observed several practices leaders should follow when their organizations are in trouble.

Recognize the full extent of the problem

The first is to immediately acknowledge the severity of what has happened. Boeing failed to do this. While expressing its “heartfelt condolences and sympathies” to the families of those killed in the two crashes, it said it had been working to “make an already safe aircraft even safer”. The Boeing 737 Max was far from safe. It emerged that it incorporated software that forced the planes’ noses down when they were in danger of stalling, but with a tendency to over-correct. Boeing test pilots had discovered the issue in simulator flights, but the company had failed to act.

Instead of claiming the 737 Max was safe, Boeing would have done better to ground the aircraft rather than waiting for the world’s regulators to do it (which they soon did). It should then have announced an immediate investigation into the planes’ functioning.

Prioritize the people affected

Second, if people have been injured or killed, make them your priority. The textbook airline industry best-practice case was a British Midland aircraft crash on a motorway embankment in England in 1989. Forty-seven passengers died, but 79 survived, many of them injured. Michael Bishop, the airline’s chief executive, went straight to the site to give interviews and supervise the rescue operation. Where injuries or deaths have occurred, companies should immediately announce telephone hotlines for those affected and appoint people to liaise with families.

Keep your teams well-informed

Third, ensure your staff understand what is happening, as they will feel it deeply if their company is being trashed on the news and social media. Top management needs to level with them. In 2002, when Nike was criticized for its suppliers’ use of child labor, Maria Eitel, its vice president for corporate social responsibility, told me that the worst aspect was the effect on employees’ morale. She said: “They were going to barbecues and people would say: ‘How can you work for Nike?” Tell staff the truth and update them on what the company is doing. They are your best ambassadors.