Tuesday, December 30, 2008

Standards of Apology

This article also appears in odwyerpr.com.

Some Observations on the Siemens Case
The state of the apology is faltering. What was once a heartfelt gesture of contrition, the apology has become a tool – an attempt at collecting a “get out of jail free card” by out-of-control entertainers, sports figures, politicians and business executives. Its sincerity has been lost to statements calculated by attorneys and publicists.

Of course, there are still authentic and appropriate apologies out there. Real remorse is evident, real emotion is displayed and, sometimes, real tears are shed. But I’ve read some arguments that, in the U.S. at least, we’ve gone overboard – we apologize too much and too often.

There are some problems with that claim, however. Does every slight warrant an apology? Of course not. I believe that part of the perception of over-apologizing may come from the fact that the apologizer didn’t get it right the first time. He or she had to try it again a second or even a third time. And, with a prolonged news cycle, we may witness the same person answering the apology call multiple times. In addition, I’ve noticed an increasing usage of apologies as instruments of attack. These “weaponized apologies,” as I’ll call them, are used most prevalently by politicians as they deflect criticism and instead demand some reparation from those who crossed them.

But there was no over-apologizing in a huge scandal that just concluded in a $1.6 billion settlement. Siemens, the global engineering powerhouse with interests in the industrial, energy and healthcare sectors, had admitted to years of bribes to secure contracts around the world. “Bribery was Siemens’s business model,” Uwe Dolata, the spokesman for the association of federal criminal investigators in Germany told The New York Times. “Siemens had institutionalized corruption.”

The words sorry, apology or regret are not found in the 26 page press release issued on December 15, 2008 when the Company reached an agreement with U.S. and German authorities following a two year investigation. OK, fine. Still, it should not have taken 22 pages to read that “The Company’s top management is committed to transparency and ethical business…” On the last page of the release, we are told that the events of the past two years since the first arrests “while among the Company’s most challenging moments, served as a catalyst for significant, long overdue changes.”

Indeed, the tone of the Company communications was rather self-congratulatory. At a press conference held on the same day, Gerhard Cromme, chairman of the supervisory board, said that he was “pleased that the criminal proceedings… could be concluded” in “record time, only two years” and that the settlement amount was “below the numbers that were speculated.” And, he noted that U.S. prosecutors said Siemens had undertaken “exemplary investigative and remedial efforts.” The expansive inquiry and organizational changes, he said, could “be seen as evidence that the company’s course of clarifying its structures and change has restored trust.” More than seven minutes into a ten minute speech he said, finally, that “we deeply regret that wrongdoing occurred in the past. But we have done everything in our power to remediate past wrong doing and expose and eliminate its causes.”

Peter Löscher, CEO, later stated emphatically that “Siemens stands for clean business everywhere and always” and that “We stand not at the end of a process but at a beginning.” But, with only a glancing mention of their corporate values, there was a presumption that “all Siemens employees have regained a good portion of their self esteem and self respect.”

Siemens is a venerable company with 160 years worth of technological accomplishments, an astonishing 55,000 patents and 430,000 employees around the world. (In fact, I’m a big fan of their efforts to support science education.) This world-class company missed some opportunities, though, to make a convincing case that it was doing more than just cooperating with the authorities and going through the necessary motions to bring itself into compliance with the law. Yes, actions do speak loudly but so does the manner in which they are communicated.

1 comment:

BobEye said...

Lots of good points here. I wanted to add that when companies have bad news to communicate in their quarterly earnings filings with the SEC, they typically leave it for the fifth or sixth page (sometimes farther down) and make you wade through a litany of inconsequential news that has the virtue (for them) of not being as awful as the stuff any investor would care about. Happens more times than it doesn't. Erodes credibility, I think, and makes corporations seem like late-night infomercials rather than truthful and transparent investments.