Surviving a scandal: how to keep morale high in low times

The autumn of 2015 was not the best peri­od for Nico­lai Laude, direc­tor of lit­i­ga­tion com­mu­ni­ca­tions at Volk­swa­gen, to be head­ing out on the town. That Sep­tem­ber, the com­pa­ny had been exposed for using engine man­age­ment soft­ware known as a defeat device to enable its new diesel cars to pass emis­sions tests. This had allowed the firm to sell 11 mil­lion vehi­cles whose out­put of nitro­gen oxides could be up to 40 times high­er than the legal lim­it. 

“I must have had hun­dreds of con­ver­sa­tions when I was out social­is­ing at that time,” Laude recalls. “Peo­ple laughed at me for being a Volk­swa­gen employ­ee. ‘The com­pa­ny that cheat­ed the world,’ they said. It was annoy­ing, tir­ing and demor­al­is­ing. Most of my col­leagues were anx­ious, lis­ten­ing to the media reports and wor­ry­ing about their jobs and the future of their com­pa­ny.”

Four­teen years ear­li­er, Nicole Alvi­no was expe­ri­enc­ing sim­i­lar emo­tions. She was work­ing for US ener­gy giant Enron, which was tee­ter­ing on the edge of bank­rupt­cy after a huge account­ing fraud was uncov­ered.

“I remem­ber the stock price falling, then the lead­er­ship team telling employ­ees that every­thing was fine and that now was a good time to buy Enron shares,” she says. “Two months lat­er, the com­pa­ny was gone.”

More recent episodes that have left the rep­u­ta­tion of a once-admired busi­ness in tat­ters include the depar­ture from fash­ion retail­er Ted Bak­er of its founder, Ray Kelvin, amid accu­sa­tions of inap­pro­pri­ate behav­iour towards staff; a law­suit against gam­ing group Activi­sion Bliz­zard mak­ing sev­er­al com­plaints of “unlaw­ful harass­ment, dis­crim­i­na­tion and retal­i­a­tion”; and rev­e­la­tions of labour exploita­tion in fac­to­ries sup­ply­ing cloth­ing retail­er Boohoo.

To restore con­fi­dence among con­sumers, investors and, cru­cial­ly, employ­ees, each of the above firms act­ed deci­sive­ly. Ted Bak­er arranged train­ing for staff on accept­able work­place con­duct. Activi­sion Bliz­zard hired an inclu­siv­i­ty expert, Julie Hodges, as chief peo­ple offi­cer to insti­gate cul­tur­al changes. And Boohoo com­mis­sioned an inde­pen­dent review of its sup­ply chain, refined its sup­pli­er audits and intro­duced train­ing for gar­ment work­ers.

But it’s also vital for any firm at the cen­tre of a scan­dal to main­tain effec­tive com­mu­ni­ca­tions with its work­force, stress­es Jonathan Hemus, MD of Insignia, a con­sul­tan­cy spe­cial­is­ing in cri­sis man­age­ment. He believes that time is of the essence in pre­vent­ing a scan­dal from crush­ing their moti­va­tion and well­be­ing.

“All employ­ees want to be proud of the com­pa­ny they work for,” Hemus argues. “A scan­dal hits them per­son­al­ly. They’ll feel embar­rassed, wor­ried and betrayed. Com­mu­ni­cat­ing with your employ­ees effec­tive­ly is a top pri­or­i­ty – and you need to do it quick­ly, trans­par­ent­ly and fre­quent­ly. They’ll be ask­ing: ‘Do my lead­ers care about me? Can they over­come what has hap­pened? And do the cor­po­rate val­ues stat­ed on our web­site mean any­thing at all?’”

He advo­cates ensur­ing that all staff have some­one they can approach who’ll keep them informed. Senior exec­u­tives there­fore need to brief line man­agers on keep­ing their doors open and dis­play­ing the right empa­thet­ic skills in the effort to pre­serve team morale. 

Front-line staff, often fac­ing the ire of cus­tomers and clients, should be giv­en a script with pos­i­tive mes­sag­ing. This needs to state what action is being tak­en to address the scan­dal and give assur­ances that the sit­u­a­tion will nev­er recur. 

Hemus advis­es employ­ers in a cri­sis to give their cus­tomer-fac­ing staff “accu­rate infor­ma­tion and a ques­tion-and-answer sheet. Get the tone of voice right. These employ­ees can be your best ambas­sadors in putting across the right mes­sage.”

Sev­en years on from her Enron expe­ri­ence, Alvi­no co-found­ed a work­force com­mu­ni­ca­tions plat­form called Social­Cho­rus (since merged to form First­up, where she remains chief strat­e­gy offi­cer). She says that the most senior exec­u­tive left stand­ing should front up to the work­force as soon as pos­si­ble.

“They need to deliv­er the mes­sage at a town-hall meet­ing or on video,” Alvi­no says. “They need to be authen­tic and empa­thet­ic. They need to address the scan­dal head on and say this is not our cul­ture and it nev­er will be. Employ­ees need to see the emo­tion and feel the human con­nec­tion.”

She notes that employ­ees at a com­pa­ny in cri­sis will expe­ri­ence some­thing like the five-stage griev­ing process pro­posed by the influ­en­tial psy­chi­a­trist Elis­a­beth Kübler-Ross. They will endure shock, denial, frus­tra­tion and despon­den­cy before enter­ing the right emo­tion­al state to see any pos­i­tives in the sit­u­a­tion. 

“After any change, lead­ers need to know where employ­ees are in this process,” Alvi­no says. “There’s no point talk­ing about how great the future will be if they’re still all in the sec­ond stage, for instance.” 

Laude says that the Volk­swa­gen exec­u­tive team’s first attempt to com­mu­ni­cate with staff about the diesel scan­dal was ham­pered by legal restraints and a lack of reli­able infor­ma­tion. 

“At the start, we real­ly didn’t know exact­ly what had been going on. All we could do was give employ­ees the same pub­lic state­ment our lead­ers had made through the media and promise them that we’d inves­ti­gate and pro­vide infor­ma­tion when­ev­er it became avail­able,” he says. “This wasn’t very sat­is­fy­ing from a com­mu­ni­ca­tions point of view.”

What the com­pa­ny did man­age to do quick­ly was roll out train­ing for about 200,000 employ­ees around the world. This reaf­firmed the group’s cul­tur­al val­ues, gave advice on reg­u­la­to­ry com­pli­ance and set out a new code of con­duct. Employ­ees were encour­aged to air their con­cerns and sug­gest cor­rec­tive mea­sures.

The com­pa­ny organ­ised town-hall meet­ings, in which senior exec­u­tives held Q&A ses­sions, and road­shows where its com­pli­ance and integri­ty teams talked of “the new Volk­swa­gen”, Laude recalls.

Alvi­no argues that a cri­sis, if man­aged cor­rect­ly, can even help to bring employ­ees togeth­er.

“If your peo­ple can feel pride in how a scan­dal has been han­dled and some­one down the pub asks them what is going on, they can be an advo­cate for your company’s recov­ery,” she says.

Laude notes that some Volk­swa­gen employ­ees self-organ­ised and set up groups such as “We Love Volk­swa­gen” on Face­book. 

“Our cul­ture has improved because it had to. It was com­mon sense. We couldn’t sur­vive a Diesel 2.0,” he says. “This chap­ter hasn’t closed, and it will be with the com­pa­ny for­ev­er, but it does feel bet­ter – both at work and at play.”