Why Actions Speak Louder Than Words: A Tale of Two Crises

In the past two months, we’ve seen two CEOs come under withering fire on the public-perception battlefield. Neither managed their self-inflicted crises particularly well and neither came across as especially empathetic to the people hurt by their decisions. Maybe worst of all, neither truly addressed the cultures of rampant greed that had apparently infected their companies.

But one, Mylan’s Heather Bresch — whom I wrote about last month — saved her job, while the other, John Stumpf of Wells Fargo “retired” in the wake of his bank’s sales-tactics crisis. For anyone involved in the business of crisis communications, it’s instructive to analyze exactly why these situations ended differently, given their many similarities.

The details differ, but not the substance: both Bresch and Stumpf were accused of gouging customers to inflate their companies’ profits. Both paid large government settlements for their company’s misdeeds. Both appeared before congressional committees. And both hired world-class consultants to advise them and mitigate the damage.

But what saved Bresch and doomed Stumpf appears to be how they handled their respective scandals. The Wall Street Journal wrote about what went wrong for Stumpf — whose retirement was almost a foregone conclusion after his horrendous performance during a Senate Banking Committee hearing. Not even a $41 million clawback of his compensation could save his job.

In my previous post I wrote about how I saw Bresch taking actions to change the conversation surrounding Mylan’s EpiPen pricing controversy. In doing so, Bresch retained the confidence of her board of directors — while Stumpf lost the confidence of his. This, I believe, is the key distinction between surviving a crisis and being destroyed by it.

An unscientific search of corporate crises — big and small — over the past year finds more instances of boards defending their CEOs through crises than boards forcing their CEOs out. And in every case where the CEO wound up “retired” — and where malfeasance wasn’t involved — it turns out the CEOs didn’t truly own the problems.

Now, some might argue that Stumpf at least tried to own it. He took responsibility many times. But his actions in no way resembled those of a man taking responsibility — a fact with which Senator Elizabeth Warren bludgeoned him during Senate hearings. Stumpf fired lower-level employees who had simply followed his strategy. He allowed the head of Wells Fargo’s retail banking unit to retire with tens of millions of dollars instead of firing her for cause. In the end, his board recognized his responsibility-taking as lip service and cut him loose.

Bresch, on the other hand, took some action. Even as many claimed it fell far short of what was needed, it allowed her to point to efforts to fix the issue — and to hold on to her board’s confidence. Her words may have been half-hearted, but they weren’t empty.

None of this is to say that I think Bresch — or obviously Stumpf — should be commended for their actions. In fact, given the opportunity to do it all over again, I get the sense that they would, as long as they knew they wouldn’t be caught. I’d like to think these two CEOS are outliers and that more CEOs are like Paul Kusserow, CEO of Baton Rouge-based Amedisys Inc., who won widespread respect after his actions following the recent floods in Louisiana.

Here’s the bottom line: Good CEOs take action because they know that when a crisis strikes, empty words don’t get it done.

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