Truly Saying, ‘I’m Sorry’
The Toro Co., a lawncare product maker, was once known to be a litigious pit bull when it came to product liability claims. But always heading to court was expensive, with an average cost of $115,000 for handling each case and an average payout of over $68,000. So Toro tried something different: The company decided to first attempt mediation for each claim — and the first step in every case was saying, “We’re sorry.” The last time the company went to court over product liability was in 1994, and average payouts and total expenses have been cut more than 50 percent.
While it would be difficult to tie the drop to just one part of the mediation program, Miguel Olivella Jr., the Florida lawyer who created and still runs the program for Toro, says that saying sorry has helped. In fact, the first time he did it, the plaintiff walked over to Toro after the meeting and said how much the gesture was appreciated.
“As one human being to another, I can understand how their lives are going to be different, how because of their injury that they can’t do what I take for granted every day,” he says. “The representative of Toro can [now] look across the table and say that there’s something that cannot be compensated by money alone.”
Apology can be a powerful force for a corporation, reducing tensions, defusing antagonism, helping both sides see exactly what happened, and even aiding a company in correcting systemic mistakes to avoid problems in the future. But the apology must be real and lead to true reform. As soon as people sense that a mea culpa is no more than a couple of fancy Latin words, their forgiveness will give way to mistrust and anger. And in the process, the company will have betrayed its values and injured itself as well.
Given that all companies are in relationships with many people and that no business is perfect, there’s a good chance they will likely find themselves in situations where societal norms would expect the offending party to offer an apology. But frequently, companies avoid anything that smacks of a formal apology to anyone.
“I think of corporate apologies as plan A or plan B,” says John Kador, author of the upcoming book “Effective Apology.” “Plan A is to hunker down and hope that no one notices; plan B is where you act on the basis of transparency, accountability, humility, and you turn the conditions of accountability and transparency to your benefit.”
Many companies follow plan A out of a fear of lawsuits. “If you ask the question, ‘Can an apology be used against you in court?’ generally speaking, the answer to that is, yes, under American law,” says Jonathan Cohen, a professor of law at University of Florida and an authority on corporate apology. He says that corporate lawyers are generally adamant with their clients to avoid any statement that could be taken as an actionable admission of guilt.
But there are some protections already in place. For example, a majority of states have laws that at least keep healthcare providers’ “benevolent expressions” of sympathy from being used in lawsuits, says Lee Taft, a former trial attorney who earned a master’s in divinity and now helps companies create what he calls “error-response systems,”.
In the case of Toro, Olivella says, the mediation process is legally protected and that statements during it cannot be used in a lawsuit.
Fair Compensation, Not Worry
The University of Michigan Health System, known as a pioneer in the area of making apologies to patients, doesn’t worry about protecting itself if a review shows that a person or a process results in a mistake. Instead, it focuses on fairly compensating patients who have been injured due to a mistake, vigorously defending care when reasonable and learning from the experiences to provide better care in the future. After implementing this policy, new malpractice claims dropped by half from 1999 to 2006, and average processing on claims went from 20.3 months to only eight months between 2001 and 2007.
“In reflecting back over eight years of what we’ve seen, I think the big problem is the knee-jerk [reaction] of the adversarial method as the only means for addressing unforeseen outcomes and medical mistakes not as a tool but as the only tool,” says the organization’s Chief Risk Officer Rick Boothman.
Prior to 2001, Boothman was a trial lawyer who defended the University of Michigan in legal actions. “Early in my career, I tried a case for a different hospital,” he says. “When we won the case, the patient leaned around the podium and said to my client, the doctor, ‘If I had only known everything I heard at this trial, I would never have sued you.’”
“It’s ethically right to do, but it’s also the economically right thing to do,” says Doug Wojcieszak, founder of the Sorry Works! Coalition, which encourages healthcare providers to make broader use of apologies. “It’s one of those rare times when the two meet.”
Fear, Ego and Strategy
Yet the facts alone are not always enough to get some organizations to consider making use of apologies. An unspecified risk officer from another healthcare provider studied the University of Michigan system and tried to implement it, but to no avail, says Boothman. “He couldn’t get past the [hospital's] lawyers,” he says. “The medical staff has all bought into the concept of transparency and honesty, but it’s ‘business as usual’ when it comes to paying off a claim.”
While fear is a powerful motivator, another is ego. Someone must speak for the corporation, and when it comes to an apology, that is often a top executive. “You’ll have someone on the C-level who is used to hundreds, if not thousands, of people quaking in their boots based on every decision [the executive] makes,” says Rachel Weingarten, a business etiquette expert and author of “Career and Corporate Cool”. “And here they are having to grovel and [publicly] admit that they made this huge error in judgment. That is really hard for them to accept.” Sometimes, admitting mistakes can be effective acknowledgment that the executive might not be suited for the position.
“People have a hard time apologizing because we don’t teach it well when they are children,” says Patrick Field, author of “Dealing With an Angry Public” and managing director of the Consensus Building Institute, a dispute-resolution nonprofit.
Between ego, fear, and a lack of societal processes for apology, even when organizations can see that a bottom-line benefit is possible, many will still often refuse to adopt a strategy to uncover problems and apologize. Instead, they rely on apologies with nothing actually behind the words, which can result in even greater public relations problems. In 2007, Mattel recalled millions of toys for design flaws and use of lead paint. After CEO Robert Eckert offered an apology in a hearing before Congress, the senior vice president of worldwide quality assurance blamed the problem on Chinese manufacturing partners. Ultimately, the company had to make another apology — to China itself. The statements, and the company itself, had lost credibility.
“It goes back to the values,” Schreiber says. “I usually talk about first- and second-order values. First-order values are ones you really have; second-order values are ones you espouse because you think they’ll help you in the market. [Mattel's Web site] at the time had a wonderful set of values in terms of responsibility to the customer and only making the finest products. But they weren’t intrinsic to the company, [otherwise] they wouldn’t have behaved like that.”
Compare that example with Johnson & Johnson’s legendary handling of the Tylenol crisis in the early ‘80s, when someone spiked bottles of the drug with cyanide. “They went back to their core credo,” says Elliot Schreiber, clinical professor of marketing at Drexel University. That value statement, dating back to 1943, says that the company’s first responsibility is the people using its products. So CEO James Burke apologized to the public, recalled a product that represented 15 percent of J&J’s profits and helped develop tamper-proof packaging. By following its values, J&J recovered 70 percent of its market share within five months and preserved the value of the brand.
To create a corporate culture that embraces and even wields apology, a company must have a process that extends beyond words to the desire to make good on its mistakes. This can be done by including an acknowledgment of facts, reasonable restitution, the promise not to make the same mistake again and having a plan to ensure better behavior in the future — all of which can enhance public perception and help keep company dollars in the bank.
“In our culture, we’re really focused on forgiveness and we’ve lost what the point is,” says Taft. “Forgiveness is simply an intermediate stop after causing harm. If I’m a corporation, I don’t just want forgiveness. I want to get beyond forgiveness to reconciliation. I want to cement my reputation and maintain my good will.”
*Erik Sherman has been writing about business and technology for more than a dozen years, with articles in such publications as Newsweek, Fortune, the New York Times Magazine, the Financial Times, Chief Executive and Advertising Age. He has also worked a business consultant and spent years in corporate management. He is the co-author of “The Everything Leadership Book” (Adams Media Corp., 2008).
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• Out of the Economic Quagmire - December 11th, 2008
May 1st, 2009 at 5:39 am
This is one of the finest short treatments of a complicated subject that I have ever read. As the author of Effective Apology, one of the books Erik quotes in this post, I know how difficult it is to get through the thicket of apparently competing interests in the quest for transparent, accountable values-driven institutions.
Just one quibble. In the celebrated case of Johnson & Johnson and the Tylenol poisoinings, CEO James Burke did not actually apologize. What would he have apologized for? What he did is accept responsibility for what he could control, express regret for what he could not, and act forcefully on the Credo values that puts the patient and customers first.
Apology is such a transformative process that I think we are better off when we distinguish it from regret, remorse, sympathy, forgiveness, and reconciliation. Interested readers will find more on this topic on my blog http://blog.effectiveapology.com/