Elephants traps ahead

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What do a British oil company, an American bank and a Japanese car maker all have in common? Rob Cox on Reuters’ Breakingviews.com believes there is no link. I disagree.

BP, Goldman Sachs and Toyota are linked by a common failure of corporate governance. They did the saving-cost-at-all-costs thing instead of doing-the-right-thing-no-matter-what-the-cost thing.

Johnson & Johnson’s handling of the Tylenol recall in 1982 is a good case study for how to minimize damage to brand and reputation.

The painkiller was recalled when seven people died in Chicago after taking capsules of Tylenol laced with cyanide. At the time it was thought the brand would not recover from the sabotage. However, an extensive product recall followed by a media campaign and the introduction of tamper-proof packaging saw Tylenol return to the market within two months.

Johnson & Johnson handled it so well they were able to enhance their reputation.

BP, Goldman Sachs and Toyota have all made themselves look even more guilty by blaming others, denying any culpability and doing too little, too late.

Any company facing irate members of the public, customers or the press has got to speak openly, candidly and forthrightly to its customers and the wider public about what has happened and what they intend to do to put it right. And a genuine apology is the first place to start.

People recognize that mistakes are made and that CEOs cannot be everywhere all the time. They appreciate being kept in the loop about what’s happening and when things will return to normal. This isn’t the time for corporate deception; it’s the time for common decency.

It is also time to wonder how we have produced a generation of so-called business leaders who seem to have no moral standards and a generation of workers who go along with things they know to be wrong.

The fact that business schools see fit to include modules on ethics as part of MBA courses is probably symptomatic. Some MBA students are even being asked to take “ethics oaths”. But if anybody can reach 21+ years of age and still not know right from wrong, then a classroom course is unlikely to help.