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Greenville Business Magazine

Lessons to be learned from the half-hearted mea culpas of Uber, Wells Fargo, and Facebook

Oct 04, 2018 03:42PM ● By Emily Stevenson
By Adam Steinbach
Assistant Professor, Management Department,
University of South Carolina’s Darla Moore School of Business

If you, like me, found yourself watching the NBA playoffs on a nearly nightly basis this summer, the commercial breaks might have caught your attention almost as much as the action on the court. It was impossible not to notice the corporate apology series taking place during nearly every timeout. 

There was Uber’s new ad, in which the company’s new CEO said they were “moving forward” and we should forget about a range of scandals, including a major data breach and allegations of a toxic company culture.

There was also Wells Fargo’s, in which they pledged they were “earning back your trust” despite allegation after allegation of the company defrauding millions of customers out of billions of dollars over the course of much of this decade.

And there was Facebook’s, in which they wanted us all “here together” on their site again, trusting that privacy has been restored to some of our most sensitive data and that we are no longer exposed to the spread of misinformation on our feeds.

Commercials like these — ones that vaguely resemble apologies but are mostly just attempts to get us to forget their failures and move on — are not necessarily new. But it was still quite jarring to see the mea culpas from these three major companies so frequently over the past few months, often in close succession to one another.

The concept of corporate social responsibility (CSR), or companies going beyond their normal operations to “do good” for the world, has become a major focus in recent years — in practice, the media, and academia.

There is hardly a consensus as to what CSR really means, and evidence is mixed as to whether or not it is truly beneficial for companies or their chosen causes.

Regardless of where you stand on CSR, there should be little disagreement about corporate social irresponsibility, that companies must do all they can to avoid bad behavior.

Corporate social irresponsibility can take on many forms, including but certainly not limited to the type of carelessness that leads to product issues or data breaches threatening customer safety and security, policies and cultures that fail to treat employees properly, or outright fraud and corruption that help undermine our market systems.

These behaviors are unequivocally bad — for the individuals and companies that perpetrate them (at least, when they get caught) and, more importantly, for the many stakeholders that rely on even just a little good faith that companies are not actively harming them.

Yet, in practice, in media, and in academia, we pay comparatively little attention to corporate social irresponsibility — at least until it’s too late. And then even then, we often move on to the next thing almost immediately.

Instead, there is an incredible focus on financial growth, particularly growth that benefits company owners. It is the foundation of much of what we teach in business schools. It dominates the daily conversation on CNBC and other business press outlets. It certainly is at the heart of managerial decision-making at all types organizations.

And while it is very understandable that growth would be the top priority at most organizations, it should not be pursued so intently as to ignore the other stakeholders in the equation.

To varying degrees, this is what happened with all three companies above — pursuing growth at everyone else’s expense — and why they needed to spend millions in advertising dollars issuing their tepid apologies.

What if, instead, they had simply built healthier environments and reward systems for their employees, or respected customer preferences and vulnerabilities associated with their services, or just simply recognized an irresponsible path when they started on it? Everyone involved would be better off, including the company itself, which would pretty likely be on a better growth trajectory at this point anyway.

In this day and age, we are more aware than ever about organizations that are behaving irresponsibly, from public multinational companies to local private entities.

Customers can now more easily band together and hold irresponsible companies accountable through activism and, in many cases, by simply choosing to spend their money elsewhere.

I find myself doing this more and more, choosing local options that seem to put more care into what they offer their customers or selecting establishments where employees are treated well and are seemingly happier to be there.

It is imperative for business leaders to consider all their stakeholders and perhaps re-prioritize them in order to at least help reduce the likelihood of irresponsible behavior from their organization.

This is also a great time for smaller, local businesses to present an alternative to increasingly distrusted and out-of-favor big brands by showing that they genuinely care about more than just financial growth and are instead more focused on building a mutually beneficial relationship with their customers and employees.

Business academics and the press also can focus more intently on linking policies and decisions to irresponsible behaviors in order to shed light on how businesses should responsibly treat their stakeholders.

The entire business community — including consumers — can play a role that, little-by-little, should lead to more responsible conduct and fewer apologies.
Adam Steinbach is an assistant professor in the Management Department of the University of South Carolina’s Darla Moore School of Business. His research and teaching expertise is in strategic management, specifically focusing on the psychological and compensation factors that motivate managerial decision-making and the evaluations made by different stakeholders in response to those decisions.