Crisis management when a poor culture is the cause by Karen Walker

Poor organisational cultures can cause serious harm to the wellbeing of people, communities, society and the environment, in many different and significant ways. Often the poor culture itself, prevents appropriate crisis responses to associated wrongs.

Framing the situation

Sandra J. Sucher, a professor of management practice at Harvard Business School, says that how leaders choose to frame a crisis, "the nature of the problem the organization is facing", is pivotal to how they think about actions and response to the crisis.

Prior to the Royal Commission into responses to child sexual abuse in many Australian institutions, these organisations typically framed their situation as a 'risk of litigation' crisis.

The natural actions and responses to avoid litigation involve cover ups, denial of wrongdoing, a lot of public relations spinning, and a lack of transparency of any actions taken regarding the perpetrators of crimes. Silencing of victims, paying off victims and their families, and treating crimes as an internal issue to resolve, also typify 'risk of litigation' crisis management.

When the Royal Commission re-framed the crisis as one of ' safety of children' , its' actions focused on those harmed, and ensuring the future safety of children in institutions.

Recently Boeing CEO Muilenburg is reported to have framed the 737 Max safety crisis as "this is a technical problem that we can correct with pilot training." Hence Boeing repeatedly denied the aircraft were unsafe or a threat to public safety, resisting any efforts to voluntarily ground the jets.

The culture and values behind this crisis, is

" Boeing’s purpose is to win by staying focused on beating the competition, through growth fuelled by innovation. Skipping basic steps in the design process in a race to market against its chief competitor, Airbus."

This culture of 'beating the competition', not only resulted in loss of life, loss of trust, financial loss and decreased shareholder value. It prevented an appropriate crisis management response, when the automatic control issue was first reported by pilots.

Framing corporate cultural crises from a 'harm' perspective

Case Study | Tylenol poisoning crisis in 1982, which Johnson & Johnson’s CEO James E. Burke declared a public health problem. Professor Sucher noting this "set in motion all the activities we now associate with J&J’s gold-standard reaction to a crisis in which human lives are at stake: recalling all bottles of Tylenol capsules - against the advice of the FDA; designing new tamper-resistant packaging; and delivering the newly packaged capsules in a period of six weeks.

Burke could have described the nature of the Tylenol poisoning in many different ways: as an assault on the company, as a problem somewhere in the process of getting Tylenol from J&J factories to retail stores, as the actions of a lone killer."

Applying a culture of health lens to crisis management

Harvard's Culture of Healthprogram is about executives and corporate teams "accelerating productivity, reputation, and talent management. Via a movement that maximizes good health and well-being of employees, consumers, community, and environment, ultimately contributing to a healthier population and economy. Every organization – public, private, or non-profit – has an impact on the public’s health."

Health, as defined by the World Health Organization (WHO), is "a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity." All of which are impacted by financial and economic wellbeing.

  • "Employee Health: the treatment of its workers
  • Consumer Health: healthfulness and safety of its products and services
  • Community Health: health and safety efforts in location of doing business
  • Environmental Health: impact of operations on the environment"

For organisations facing a crisis caused by a poor culture, their leaders need to first frame the crisis, by asking who / what has been harmed, and who / what is still unsafe?

Tip #1. Do not frame the crisis as "addressing conduct and culture issues", or "strengthening a code of conduct and ethical framework", as these do not create appropriate thinking, actions and response to cultural crises.

Analogy | The story of our mythical Outback Bank. After the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, its' CEO publicly frames its' culture crisis as one "that can be corrected through strengthening our customer-centricity and risk culture."

Like Boeing's 737 Max safety initial crisis response, this doesn't acknowledge all stakeholders harmed by Outback Bank's culture or address their future safety. The following diagram is a summary of harm experienced by various stakeholders of our fictional Outback Bank, caused by its' culture of 'management by measurement' of sales and growth targets.

A better frame of Outback Bank's cultural crisis, could be one echoing Johnson & Johnson's commitment to citizenship and sustainability.

Going from: "strengthening our customer-centricity and risk culture."

To: "contributing to the financial wellbeing of our customers, as well as the health of our employees, communities where we operate, and the planet."

Tip #2. There's some elements of crisis management that are non-negotiable, when the crisis is caused by an unhealthy organisational culture.

  1. In addition to framing the nature of the crisis, the leader acknowledges and takes responsibility for the harm caused, offering an apology. Supported by a commitment to any appropriate restorative justice for customers and communities harmed.
  2. Be completely transparent and honest. Communicate all relevant details of actions planned and taken, and evidence of progress made, to all stakeholders. 
  3. Like any community, organisations require healing centred engagement when fixing an unhealthy culture.

Employees can experience distress:

  • when personally impacted by unhealthy behaviours or practices,
  • when acting in ways expected by management that harm employees, customers, communities or the environment, and
  • when not involved in, but aware of, colleagues, customers, communities or the environment being harmed by their organisation.

Dr. Stephanie Sarkis, a mental health counsellor, says that part of the healing process is employers:

  • naming the specific toxicity in the culture,
  • sharing the identified root causes, and
  • admitting to any knowledge of, and explaining any failure to act, on both the causes and symptoms.

These actions by employers can help rebuild trust with employees,

but to restore employee wellbeing requires giving them a sense of power and control over fixing something that plays an important part in their life, their workplace culture.

Employers need to go beyond just asking for employee feedback on cultural change and address a power imbalance that usually occurs in cultural change. Too often led by those responsible for harmful behaviours occurring and/or being tolerated.

This requires shifting power to employees, encouraging employee advocacy and their participation in cultural change. Acknowledging significant, positive cultural change in any community is achieved by grassroots, social movements. As Sarkis also notes

"one road to healing is restorative justice - involving everyone in the process of determining how this toxic behaviour will not happen again."

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Karen Walker is an Advisor, Expert and Operative in Strategy Execution, the series of decisions and actions undertaken to turn strategic visions of organisations into reality. An evolving journey of understanding possibilities and using situational awareness to adapt tactics and goals to realise maximum value. 

A specialist in the casino and gaming industry, with extensive experience in the implementation of new and innovative practices and the establishment of greenfield operations, Karen’s career spans senior operational management and leadership, program director, project and change management, and business transformation lead roles, across a number of sectors.