Crisis Management and How to Apologize to Your Customers
Reflecting on recent Wells Fargo crisis shows how failing to take ownership immediately, or have a crisis management plan in place, is much more costly in the long run.
Everyone makes mistakes. How we handle our mistakes and crises, though, has a vastly different impact on our reputations, customers and long-term businesses.
Take a look at the recent Wells Fargo scandal. There is no denying that the firm was engaging in unethical businesses practices when they opened more than 2 million loans and bank accounts in customers’ names, without customers knowing about it. And continued to do so for more than 4 years, before finally being punished in 2016.
As if the fiasco wasn’t damaging enough, it’s what didn’t happen that cost the bank the most.
CEO, John Stumpf, initially tried to pass the guilt on to lower level employees rather than acknowledging the real culprit—executive decisions and unreasonable goal setting for branch representatives. He continued tip-toeing around questions and the issue for weeks—even as Congress investigated and investors, including large shareholder, Warren Buffet, expressed their displeasure and stocks tumbled. The full-page newspaper apology did not include a signature.
Only, after testifying before Congress, did Stumpf finally step down as CEO, citing that he felt he was too much of distraction.
Where is the apology?
This scandal—though large and ugly, could have looked so very different. Wells Fargo could have taken immediate responsibility for its actions and issued an apology before the story even broke. (Allegations first surfaced in 2013, but nothing changed at the top.) Wells Fargo had plenty of time to plan their response and take action. Instead, they fired more than 5,000 lower-level employees.
It’s a shame, really. Wells Fargo is one of the few banks that weathered the financial crisis, with a CEO at the helm who had grown the bank to one of the largest financial institutions in the world.
Sadly, the reputation is tarnished for a long time. Earning customers’ trust is challenging enough. Earning it back is harder still.
At BETTISON, we believe in dealing with crises before they blow up is always the best policy.
Acknowledging a crisis the minute it is discovered or uncovered admittedly involves costs, strategy and planning. In Wells Fargo’s case, it would have required bold leadership—willing to do what was ethical and in the long-term best interest of its stakeholders and customers. Willing to say, “Sorry. We made a mistake.”
If your organization has something challenging to share, or a crisis is looming or even already occurred, confidentially consult with a communications strategist and media relations expert right away. The things you do at the beginning of an unfolding issue lay the groundwork for a positive resolution. Alternatively, a misstep at the beginning may cause the problem to continue longer than it should.
After all, if people can’t trust you to tell the truth, what can they trust you with?