Business Monday

Honesty is key, say CEOs, in wake of Volkswagen scandal

Ramon ‘Ray’ Abadin, president of the Florida Bar and a civil trial attorney and shareholder at Sedgwick LLP.
Ramon ‘Ray’ Abadin, president of the Florida Bar and a civil trial attorney and shareholder at Sedgwick LLP.

This week’s question: If you were in charge of a company that suffered a scandal like automaker Volkswagen’s diesel emissions catastrophe, how would you go about rebuilding that company’s brand and public image?

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Volkswagen is an iconic brand that suffered from the mistakes of its people. The first step would be to remove those responsible for the cover-up and replace them with employees of integrity. I would rebuild the brand and win back customer loyalty by being transparent and apologetic about the deception.

Ramon Abadin, president, The Florida Bar, and partner, Sedgewick Law Firm

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In situations like the Volkswagen scandal, you have to be brutally honest. You have to resist the temptation to go into hiding or protection mode. When companies do that, they sound like Saddam Hussein’s PR man saying they were clearly winning the war, even as the Americans were all around them.

Brian Brackeen, CEO, Kairos

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I believe that honesty is still the best policy. Admit your mistakes, fire the wrongdoers, and make things right for your customers. Then, remind consumers about the enduring values of your brand through an authentic messaging program.

Carol Brooks, president and co-founder, CREC (Continental Real Estate Companies)

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Full disclosure is essential. Address the problem quickly. Fix it. Make the product better than ever. Above all, be honest with your customers — about what went wrong, why it went wrong and what you are going to do about it. Consumers can be rather forgiving; remember the first-generation smartphones with so many problems? That industry flourished because they paid attention to what went wrong, did not hide behind their mistakes and made the adjustments necessary to win back their customers’ trust and pocketbooks.

Monsignor Franklyn M. Casale, president, St. Thomas University

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When misfortune strikes, a leader should first get an accurate assessment of the situation, find out the root cause and analyze all contributing factors that led to the untoward event. Always be transparent and honest with the public and consumers of that industry. Also, provide compensation and restitution for any damages. Finally, communicate clearly to all possible audiences how and why the mishap will never happen again.

Nabil El Sanadi, CEO/president, Broward Health

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Once you collect the facts, you need to be honest and transparent in communicating with colleagues, customers and the public. Then you must begin repairing the damage from the inside out. In the case of Volkswagen, that could mean regaining credibility through environmental initiatives and educational and philanthropic activities.

Robert Hill, general manager, InterContinental Miami

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Trust is the most important factor in the success and survival of a business. Volkswagen deliberately deceived the public, and it was a big lie, that affected millions of people (not to mention the environment). It’s going to take complete transparency moving forward for people to regain trust in the Volkswagen brand. Volkswagen owes it to their clients to inform them of the step-by-step actions that they are taking to right the wrong and letting them know that they care about what the clients need from them in order to rebuild a relationship.

Miriam Lopez, president/chief lending officer, Marquis Bank

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It’s simple. Do whatever it takes to sustain the organization and protect the brand, the investors and the employees. That means you’ve got to own it. Be transparent. Find the problem, fix it and make sure systems are in place that don’t allow the organization to fall back into the bad habits. In the event that people were injured, whether financially or physically, they need to be compensated, quickly and appropriately. And in the end, it may require that you, as the CEO, offer your resignation so the board is free to execute on its responsibilities to protect the organization’s viability, its stakeholders and employees.

Harve A. Mogul, president and CEO, United Way of Miami-Dade

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It’s important that you know who your stakeholders are and rebuild trust among not just the general public, but with your own employees, customers and vendors. Above all, it’s important to tell the truth and be as transparent as possible. DHL has a strict code of conduct that defines clear ethical standards that span the entire spectrum of our operations on a global scale. It’s like an ethics-based chain of custody, where everyone in the chain — which is essentially every DHL employee — understands they are held accountable for their actions. Companies must understand that only by maintaining their integrity and highest ethical standards at all times can you truly sustain success over the long term.

Mike Parra, CEO, DHL Express U.S.

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The first move a company must make is to be as transparent as possible before the news breaks. Internally, I would supervise my company to begin an investigation to understand what happened and what went wrong, followed by a solid communication plan paired with the legal steps. I would put into perspective several things including what rectifying the situation would mean in terms of the hundreds of thousands of people that rely on the company for their livelihood and shareholder protections. After all, many jobs are at stake. Once the crisis period begins to subside, I would begin taking steps to resuscitate the company’s brand and set new benchmarks for the delivery of product and sales.

M. John Richard, president, CEO, Adrienne Arsht Center for the Performing Arts

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I don’t agree with having an “Ivory Tower” philosophy to running a business. I prefer to “be in the Arena.” As Theodore Roosevelt said during his “Citizenship in a Republic” speech: “It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, and comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows the great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who know neither victory nor defeat.”

Ania Rodriguez, CEO of Key Lime Interactive

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I think the most important first step is to own the mistake and face it. You cannot run and hide from what happened. Next, I would address how it happened and what steps as a company we are taking to ensure it doesn’t happen again. Finally, I would work with my leadership team to work through the resolution, including how to make those individuals and or communities impacted whole.

Rachel Sapoznik, CEO & president, Sapoznik Insurance

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If I were in charge of a company that suffered a scandal like Volkswagen’s emissions catastrophe, my top priority would be to hold all those involved accountable, including myself. I would make the appropriate personnel and organizational changes to demand a culture of accountability and integrity. As we executed on an internal reorganization, I would begin to push a PR and marketing initiative to re-establish brand and product trust and loyalty within the community through the actions taken internally at the company showing our relentless focus to provide the highest quality product in the market. Additionally, I would oversee an aggressive community involvement campaign through a partnership with the EPA to help promote and educate consumers on environmentally friendly programs to help minimize our carbon footprint.

Ginny Simon, founder, CEO, ginnybakes

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