Presidents Club: Learn from the scandal or risk reputational catastrophe

Scandals that tarnish your corporate culture are hard to wash away, says crisis consultant Jonathan Hemus.

by Jonathan Hemus
Last Updated: 01 Feb 2018

When I began my career in crisis management, risk management focused almost entirely on incidents such as oil spills, factory fires and plane crashes. Businesses understood that physical events like these could do them serious harm if mis-managed. Whilst incidents must still be properly managed, there is now a new and more dangerous threat; reputational risk.

Organisations and individuals caught up in the Presidents Club debacle have all felt the impact on their reputation and business. Sir Martin Sorrell, CEO of WPP, which had a table at the event, issued a detailed apology for the 'deep concern and offence' caused. Residential Land lost one of its major investors, Ivanhoe Cambridge, due to the 'events and behaviours as reported by the media'. Ocado was subjected to a social media storm as customers tweeted that they would no longer shop with the online grocer following CEO Tim Steiner’s attendance at the event.

Even Great Ormand Street Hospital was caught up in the reputational fallout, saying: 'Charities are going to have to be very careful. People will step up due diligence. There will be an increased focus on who you take money from and how that money is raised.'

The reason why the Presidents Club scandal has the power to cause more harm to a business than, say, an environmental incident, is because it cuts to the core of what a business (and its senior management) truly stands for. Accidents can befall any organisation but the behaviour of some business leaders at the Presidents Club indicates an arrogance and detachment from what is generally acceptable which, is harder to recover from.

Issues relating to an organisation’s culture or values are usually the most damaging of all.  Phone hacking at the News of the World, the VW emissions scandal and the demise of Bell Pottinger last year are all examples of hugely damaging crises relating to corporate culture. In each case, business leaders created a culture and personal behaviours which were seen to be completely unacceptable when held up to public scrutiny. The Presidents Club is just the latest example.

So how is it that intelligent business men can cause themselves so much self-harm? After all, the scandal that originally broke in Hollywood with the Harvey Weinstein affair followed by allegations about politicians and then the #metoo campaign, provided a loud and clear warning that sexual harassment in business would no longer be tolerated.

Part of the answer lies in the egos of the individuals who indulge in the sort of misbehaviour described at the Presidents Club. Protecting yourself from reputational risk requires you to recognise that you are vulnerable in the first place. Sadly, some of those who attended the Presidents Club will have seen themselves as untouchable.

Thankfully, time is up on events like the Presidents Club and the behaviour associated with it. At the same time, the identikit for successful business leaders is changing. Testosterone-fuelled alpha males with an unbreakable belief that they are always right and the power to make anything happen through force of personality, will find it much harder to succeed in this new era.

Instead, leaders with emotional intelligence, the ability to see perspectives other than their own and a deep sense of values will thrive. Nowhere will this be more valuable than in preventing the kinds of reputational risks so powerfully illustrated by the Presidents Club scandal. 

Jonathan Hemus is managing director of Insignia, a specialist crisis management consultancy.

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