Apologies, Inc.

CEOs should only say they’re sorry if they mean it. And if they have to.

illustration by PJ Loughran

In 1949’s She Wore a Yellow Ribbon, John Wayne gave some stern advice. “Never apologize and never explain,” he said. In the decades that followed many American CEOs, no doubt out of admiration for The Duke, have taken his words to heart, rarely saying they’re sorry. This was a very Western trait. Other cultures, such as the Japanese, apologize frequently. And still do. Sony (corporate) CEO Yutaka Nakagawa apologized last fall for the safety problems caused by their lithium-ion computer batteries.

American CEOs frequently weasel their apologies. In 2006, the Board of UnitedHealth Group Inc. conducted a lengthy investigation to determine if inappropriate or illegal backdating of stock options had occurred and found that the company’s CEO, Dr. William McGuire, had been intimately involved in picking the dates and managing the process. After the December meeting where he was dismissed, McGuire told directors, “I apologize for putting the company through the trauma.” Notice, he didn’t apologize for his actions, just for the problems they caused.

When Sanjay Kumar, the (former) CEO of Computer Associates Inc., was convicted for his role in an accounting scandal that cost investors hundreds of millions of dollars, he was more upfront. “I apologize for my mistakes and ask forgiveness from all involved,” he said. “I know I was wrong and there was no excuse for my conduct.”

Last year was a year of apologies and non-apologies. Celebrities were apologizing all over the place. Mel Gibson and Michael Richards were in the news for weeks with apologies. Congressmen Mark Foley, Bob Ney, and Patrick Kennedy all got into trouble—and apologized. Even the Pope apologized, sort of, after a speech in which an out-of-context quote enraged Muslims. He apologized that they got upset. But when David Edmondson, CEO of Fort Worth-based RadioShack, was found to have padded his résumé last winter—and finally dismissed—he simply left.

››  THE TAKEAWAY

1. A CEO sets the tone for individual employees and the company as a whole.

2. Insincere apologies aren’t just ineffective.

3. Your best move: Don’t do anything wrong in the first place.

Some tight-lipped CEOs may be inspired by John Wayne, but they’re more likely influenced by lawyers. Businessmen and -women we talked to say that lawyers often discourage apologies. Some lawyers admit it. “I think lawyers are hesitant to recommend apologies when we don’t know all the facts,” explains Christie Newkirk, a partner specializing in employment and labor law at Hughes & Luce. “When you’re evaluating whether to recommend an apology, which could affect the company’s liability and reputation, you must be certain of all the facts.” But she is an advocate of apologies in some cases. “In the workplace, apologies can be an important acknowledgment of an employee’s feelings.”

Lou Grabowsky, managing partner of the Central Region for Grant Thornton, agrees and adds that in complex business situations “when you are working to solve problems and there isn’t perfect clarity in the first place about who caused the situation, it may not be clear as to where the culpability lies. You shouldn’t apologize for something you didn’t cause.” 

Experts are also changing their minds about when an apology is appropriate or useful for a company. After the Exxon Valdez oil spill accident in 1989, it became fashionable to the point of being management consulting biblical advice for the CEO to apologize for the company’s actions. A recent study by Weber Shandwick and KRC Research found that CEO apologies “are quickly losing their power to allay public concern.”

When a company has done something wrong or inappropriate, Grabowsky says a corporate apology can be one element of a broader business strategy. “But to be effective,” he says, “it has to be sincere.” Internal and external audiences can spot fake apologies a mile away. Several years ago, a New England public utility company switched more than 20,000 of its customers to a more expensive service option without their permission. When complaints made their decision obvious and public, they acknowledged their action and said they “apologized for any inconvenience.”

Public perception is one thing; internal apologies are a separate matter. Newkirk says apologies in the workplace are helpful and appropriate where the issue is misperception. “I have had many cases where something one executive said offended someone else who complained to the HR department,” she says, pointing out that these can be mishandled and become lawsuits. “When you can get involved early, you can explain to the executive how his or her statements were perceived by the employee and then have the executive talk with the employee, showing that the executive not only heard what the employee had to say but also understood it. The words ‘I’m sorry’ or ‘I apologize’ can be very powerful in this circumstance and prevent a dispute from escalating further.”

This is being recognized in the field of medical malpractice, where for decades lawyers prohibited physicians and hospitals from saying “I’m sorry,” thinking it implied guilt or responsibility. Stanford University Medical Center’s Chief Risk Officer Jeffrey Driver says that an apology “doesn’t change the indemnity but it really reduces your expenses.” Michigan and Chicago Universities are both publishing studies showing that disclosure about bad medical outcomes and apologies can take the anger out of a dispute and significantly reduce the cost of settling a claim.

Some see apologies in a business setting as more art than science. Of course, there are books a CEO can read: The Five Languages of Apology by Dr. Gary Chapman or The Power of Apology by Beverly Engel. They deal with the importance of apology to personal relationships, which are the foundation of trust in business settings. For example, if an executive takes credit for something someone else did, an apology is appropriate and required to repair the relationship and to maintain the executive’s credibility with others.

In situations where a company simply has to make difficult business decisions that affect employees, Newkirk says apologies are not appropriate. For example, when companies close some of their facilities, “People are impacted. Their lives change and are disrupted. There’s a natural tendency for the people who make the decisions to want to say, ‘I’m sorry for making this decision.’” She recommends against that. “You are not sorry you made the decision. You made the decision for good reason, frequently so that the business, and other jobs, will survive.” Her advice in those situations is to convey “that you know this is a difficult time, and you sympathize with the individual employee.”

Grabowsky points out that professional service firms deal with situations where “there’s a lot of grayness,” and the way to avoid having to apologize for things that fall into the “misperception, unethical, or illegal” activity is to “behave so it doesn’t happen in the first place. Do it right and with the proper intent.”

As an accountant and former senior executive of a global company, Grabowsky has a different take on the “art versus science” description. “In delivering professional services, we must also look at what’s called ‘principle-based accounting,’ which adds the exponent to ‘rule-based accounting,’” he says. “When you look at just the letter of the law, you may be tempted to look for loopholes and ways around it. When you look at the spirit or principle, you behave differently.” This, he says, is the crux of how CEOs should be guided in terms of thinking about apologies. The CEO sets the tone. “Most institutions are guided by principles and values,” he says. “When you violate them, you apologize. It’s part of being professional and of leadership.”

Merrie Spaeth is one of the pre-eminent crisis management strategists in the world. After serving as President Reagan’s director of media relations, she founded Dallas-based Spaeth Communications in 1987. She is also a lecturer at Southern Methodist University’s Cox School of Business.

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