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Abstract - consulation on AI

Culture, leadership, behaviour and values: the reputation blind spots

Posted on 28 March 2024

Companies cannot continue to ignore their biggest reputational vulnerability  

Last week was a bad week for companies forced to publicly reckon with their handling of internal crises.  

Channel 4 apologised for failing to properly investigate allegations made by a former employee against Russell Brand fifteen years ago. It confessed that, in 2009, the allegation "was not escalated to Channel 4's senior management team, nor investigated as it should have been". It also acknowledged that there had been delays in its communication with the employee.   

McKinsey was forced to react to an anonymous letter supposedly from disaffected former partners.  The letter referred to "unmanaged infighting" and called for new senior leaders to replace McKinsey's "stagnant management". The authors alleged that management had pursued growth at all costs, harming employees and damaging McKinsey's distinctive culture. The UK managing partner was reportedly offended that those responsible for the letter had not come to him directly with their grievances.     

Finally, the Confederation of British Industry (CBI) faced further scrutiny for its alleged use of non-disclosure agreements in the wake of multiple allegations of sexual misconduct. This coincided with the first anniversary of its open letter to members and partners confessing that it had "let down its own people" by failing to properly investigate internal complaints. The CBI described itself as feeling "bewilderment, because we, as a board and as a senior leadership team, had believed that the corporate culture of the CBI was in fact strong". 

Therein lies the problem – the risk which lies in any gap between what leadership knows, believes and espouses, and the experiences, perceptions and sentiment of those within their organisations.  

What motivates employees to "speak out"? 

Employees are often described as businesses' biggest asset, and their biggest threat. It has never been more critical for businesses to have important cultural conversations and have them well. In an organisation functioning properly, employees should feel empowered to relay concerns and complaints, and feel confident that when they do:  

  • the information will be relayed to the correct people;  
  • appropriate action will be taken; and  
  • they will be communicated with clearly throughout the process.  

This is especially key in industries and businesses where personal/employment relations are blurred and power dynamics are asymmetric, and work is of a more peripatetic nature.    

Employees who feel respected and heard by their employers are far more likely to be invested in the success of the business - and leadership - and less likely to leave and/or turn against their employer. Even if they do not agree with all management decisions or the stance taken on divisive issues, the more they see and believe in the values and culture of an organisation, understand the rationale for challenging decisions, and feel able to ask questions, the more likely they are to get on board.   

In contrast, disenfranchised employees are far more likely to "speak out" when they are dissatisfied and want to cause pain. Should they do so, they will easily find an audience. Investigative journalists are primed to work up 'public interest' stories that highlight where businesses are falling short, hoping to move the cultural dial by shaming those which are lagging behind, or not living up to the standards they set for themselves.  

Ignoring part of the horizon  

Many businesses are adept at horizon scanning for potential risks but, when they do so, they tend to look outwards rather than inwards. Corporates often deploy significant resource and have highly sophisticated procedures to identify, mitigate against and prepare for potential risks stemming from external factors (war, climate change and shifts in politics and policies). But it seems they struggle to countenance that close and trusted colleagues are capable of misbehaviour, or even misdirection or misunderstanding, and they are doing far less to adequately address potential internal risks. If last week teaches us anything, it is that resilient organisations must look inwards, and must ensure that employee issues are addressed promptly, fully and thoughtfully.    

What should corporates be doing to manage insider risk?  

  1. Knowledge is power: Often media enquiries from 'whistle-blowers' are the first time leaders learn of an issue or appreciate perceptions or patterns emerging. Is the Board receiving the information you would expect it to? It cannot deal with cultural issues if those who are aware of them do not escalate or inform it of patterns of concerns. Are the subjects of complaints (even those which are not upheld) receiving appropriate feedback and training on their behaviour? If those responsible shy away from difficult conversations, the subjects of complaints are deprived of the opportunity to understand how their behaviour is perceived and to listen, learn and adjust. Corporates often have the most difficulties dealing with complaints that stop short of formal grievances. Think laterally around resolving issues, involve the HR team and find opportunities to prevent cultural rot, for example by instigating workplace mediation to encourage open and honest conversations within the security of a confidential process. Organisations which foster an open dialogue with employees maximise the chances that any concerns will be raised (and can be resolved) internally. 
  2. Consistency is key: Articulate your core values and assess your decisions, internal and external, against them. Ensure your policies around conduct in the workplace, relationships at work, discrimination, bullying and harassment are up to date, and act with transparency and consistency when investigating internal grievances or whistleblowing disclosures.  
  3. Speed is of the essence: Investigate issues as they arise and encourage people to come forward with confidence. It is far harder to investigate allegations around events which happened decades earlier as fewer witnesses will be available, memories could be more patchy, and cultural norms and behavioural expectations will have moved on. Provide regular updates. Disgruntled employees who feel like their complaint is not being acted on are more likely to get frustrated and go to the press. Nipping issues in the bud also reduces the risk of leaders receiving anonymised complaints later down the line, relating to allegations around behaviour which have never been tested and are harder to effectively rebut.  
  4. Document your decisions: Record your reasons for difficult decisions. This will help you to answer questions quickly, confidently and consistently if challenged in future. This protects both the business and its employees. Employees are often placed in an unenviable position by poor record keeping, asked – up against a short media deadline – to reflect on behaviour that happened years ago, in a different cultural context and with no evidence.     
  5. Crisis prep: Do the work ahead of time and be prepared to challenge yourself. Many, if not all, reputational crises, stem from failings that are homegrown. Regularly convene and test your crisis team, and ensure there is proper understanding, transparency and trust between HR, Legal and Communications teams. Together, ensure your playbooks and crisis response procedures are fit for purpose, and practise your reactions to the foreseeable risks so that you can spot gaps and learn from any mistakes ahead of time.  
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