Claim credit for anything good that happens, and pass the blame to others. It's been standard operating procedure in politics and business for decades.
But a growing number of CEOs seem to be sorry when something is wrong. Cisco Systems' CEO, John Chambers, apologized to service providers for not catering to their needs. Citigroup's CEO, Charles Prince, traveled to Japan last fall and bowed in public to show regret for the company's regulatory wrongdoings. Meanwhile, Jeff Immelt, CEO of General Electric, has instituted corporate citizenship reports and has said, "If you want to be a great company today, you have to be a good company."
The celebrity CEO is turning into the credibility CEO, says Leslie Gaines-Ross, who researches reputation recovery as chief knowledge and research officer for consulting firm Burson-Marsteller in New York City. "The big trend is [toward] all the CEO apologies," she says. "The words 'we deeply regret' seem to be everywhere."
The Blame's on Me
The accounting requirements of Sarbanes-Oxley are driving the trend in CEO apologies, but for many leaders, so is the realization that the buck has to stop at their desks. Taking responsibility now tops the list of desired CEO traits. "If anybody at Enron had said 'We created a culture that backfired on us,' the public would have been more sympathetic," says Allan R. Cohen, co-author of Influence Without Authority and director of corporate entrepreneurship at Babson College in Babson Park, Massachusetts. "But [Enron] got no sympathy because nobody would say, 'We screwed up.'" CEOs' credibility has taken a hit ever since: Business executives ranked 17th in The Gallup Organization's most recent poll of the 21 most ethical and honest professions.
Apologies create opportunities for companies to heal rifts and minimize damage awards, says Lamar Reinsch, professor of management communication at Georgetown University. Reinsch studies how corporations apologize. CEOs are typically advised for legal reasons to express regret rather than give outright apologies, but the effect can be the same. "In business, as in life, most of us want to deal with people who take responsibility for their own actions," Reinsch says.
The importance of owning up to mistakes isn't lost on small firms. When Burson-Marsteller/WirthlinWorldwide asked 150 Fortune 1000 executives last year to list the steps companies need to take to get past a crisis, an apology from the CEO topped the list.
"It's OK to apologize," says Bob Weinschenk, CEO of Britestream Networks, a network security firm in Austin, Texas. Weinschenk, 43, has apologized to clients in person when Britestream's technological capabilities have been overstated and deliverables haven't been met. He follows an important apology with a handwritten note saying he's sorry and offering his commitment to avoid future mistakes.
Weinschenk says doing business in Asia, where a person's word is his or her honor, has taught him about taking responsibility for company mistakes. He's still bothered by the corporate malfeasance of companies such as Enron. "In many organizations, especially ones that develop high levels of arrogance, there's probably someone at the top who refuses to apologize," Weinschenk says. "In business, credibility has come to the top."
Learning how to word an effective corporate apology is great training during the early years of a company, when investors are few and the media aren't circling. Start running the firm like a publicly held company in terms of reporting to investors and the public. Also, set attainable milestones that don't make apologies necessary in the first place, says Jeff Williams, general partner with VC firm Chisholm Private Capital Partnersin Richardson, Texas.
Showing a bit of contrition and vulnerability as the CEO isn't about "holding hands and singing 'Kumbaya,'" Weinschenk says. "You need to spit out the Kool-Aid and think about the worst-case scenario."
Find an outside advisor who will be honest when senior managers--or you--must take responsibility for a mistake, and think about how you and your managers will hold yourselves accountable in various situations. "People are more cynical and expect more," Gaines-Ross says. "You have to prove [trust] over and over again."
As the CEO apology evolves into an art form, no doubt more leaders will rely on it to drive business in skeptical times. Taking the blame is "a show of strength," Weinschenk says. "There's self-confidence that comes from knowing you can apologize." This kind of thinking hasn't left Britestream in a sorry state: Sales are projected to be in the multimillion-dollar range in 2005.