How Companies Should Deal with Historical Corporate Misconduct
🔥 Companies that exist for many years have sometimes committed acts in the past that were allowed and considered normal at the time, but should they have occurred today would be considered as crimes or at least as undesirable, unwanted behavior. For example environmental acts (pollution), humanitarian acts (slave trade), financial acts (tax avoidance), power abuse (monopolies, unfair competition, even current issues with big tech companies (privacy), and more.
How should today's top management of large companies approach, handle and respond to any such dark chapters in the history of their company?
Professor Federman recommends to not take a defensive or strict legal stance, trying to avoid corporate accountability as this almost always backfires. The corporate reputation and trust in the company is at stake and even if it could be legally possible to avoid the company is being held responsible for now, (social) media are these days a powerful tool for various stakeholders and activists to communicate bad corporate practices of the past, demand actions and even organize a boycott. And note that politicians and laws are known to follow public opinion (even if that is often a slow process).
That's why Federman recommends to instead of being defensive:
- Proactively investigate the company's past internally (before external parties call for justice),
- Proactively accept (moral and fiduciary) responsibility,
- Proactively apologize making public statements, and
- Proactively continue to respond and act in meaningful ways, so the company can avoid being accused of meaningless "words without actions".
Makes a lot of sense to me. A "wait and see"-approach will most likely not work out well. As a company you should come up with regrets, apologies and remedies of your own accord.
If you haven't researched beforehand what happened in the past, or if you don't do anything until after a media storm brakes loose, you'll always be too late, much less credible, and your company's and leadership reputation have already been tarnished.
⇨What do you think?
"How wonderful it is that nobody has to wait a second before improving the world"
Anne Frank (1929-1945)
German-Dutch diarist of Jewish heritage and victim of the Holocaust
Source: Federman S., "How Companies can Address their Historical Transgressions - Lessons from the Slave Trade and the Holocaust", HBR Jan-Feb 2020, pp. 82-91.
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Maurice Hogarth
Consultant, United Kingdom
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Accountability for Past and Historical Misconduct The term confirms that the misconduct is something that occurred in the past.
This raises the aspect of at what point does the 'past' become 'historical'? It also raises the point as to what an organisation should be doing in terms of expending time and money on investigating its history and the individuals who were part of it, in order to determine if there are any 'skeletons'?
My immediate approach would be to place 'historical' as being in a different 'time' as indicated, in part, by those people involved being 'retired'. Anything less than that would seem to be essentially 'modern'.
This means that the practice is no longer actioned or sanctioned by the current incumbents.
Is it realistic for the 'organisation' to be proactive in making public its 'skeleton', to what benefit? To promote a tidal wave of vitriol from those social media 'witch-hunters' that take delight in finding 'clay feet' and destroying whether by lie or innuendo?
If the organisation does become aware of a particular 'skeleton' it would seem realistic for it to prepare a defence; presumably based on "Well that's the way things were/were done, back then but this is how things are now".
However is it valid that the incumbents of today, with different mindsets and ethical values, should be either held to account for or apologise for something for which they are neither responsible or accountable? The current incumbents can say that they "... are sorry that such things happened... But they are not accountable for 'apologising' as they were not involved.
This then raises the issue of recompense. For those people directly "worse off" as a consequence of what happened, it would seem ethically correct to offer some form of compensation (not necessarily financial). To extend this beyond the people who were immediately affected seems unrealistic.
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