When your com­pany is caught up in a scan­dal, it can turn your en­tire life up­side down – even if you were not in­volved. How do you as an em­ployee re­cover from such a stress­ful event?

Finweek English Edition - - Front Page - By Amanda Visser

when a cor­po­rate scan­dal is ex­posed, the fo­cus is on the com­pany – its re­ac­tion to the scan­dal, pub­lic opinion of the com­pany and whether it will sur­vive the scan­dal. But very lit­tle is said about the im­me­di­ate emo­tional im­pact of the scan­dal on the “in­no­cents” within the com­pany, or the fu­ture im­pact on their ca­reers.

In re­cent times South Africa had its fair share of com­pany scan­dals, with the lat­est be­ing when au­dit firm KPMG ad­mit­ted that some of the work it did for, amongst oth­ers, Sars, “fell con­sid­er­ably short of KPMG’s stan­dards”.

As a con­se­quence of its pub­lic an­nounce­ment, sev­eral se­nior lead­ers of the firm have left, with the com­pany be­ing threat­ened with le­gal ac­tion.There are even ru­mours that it may be black­listed, which means it will no longer get con­tracts from cer­tain stake­hold­ers in fu­ture.

The down­ward spi­ral

Conroy Fourie, in­de­pen­dent coach, says once the “in­sid­i­ous im­pact of the un­ac­cept­able be­hav­iour” reaches break­ing point and all is ex­posed, peo­ple who felt se­cure sud­denly find their world crash­ing down around them.

“The fall­out from the pub­lic ex­po­sure of un­trust­wor­thy, per­ceived im­moral be­hav­iour trig­gers an end­ing.The mys­ti­cal spell has been shat­tered. Peo­ple ex­pe­ri­ence shock, and may still briefly flirt with de­nial,” says Fourie. (See graphic be­low.)

Emo­tion­ally, peo­ple be­come numb at this stage. Then anger sets in.There is ex­plicit or im­plied blame, and em­ploy­ees may feel that “oth­ers have done this to us”. They may start blam­ing them­selves – even beat­ing them­selves up – for not see­ing it com­ing, for not speak­ing up, or for not try­ing to leave when the first ru­mours started.

“Dis­trust may be­come per­va­sive [...] By now the stress re­sponses have im­pacted the af­fected peo­ple to such an ex­tent that their abil­ity to re­main creative in their jobs have been com­pro­mised. They may be­come im­mo­bilised by fear.”

Fourie, who calls him­self a change and tran­si­tion cat­a­lyst, says the em­ploy­ees then feel they have lost support from within the com­pany, and if friends and fam­ily start ask­ing dif­fi­cult ques­tions, the in­no­cents may feel that they them­selves are un­der at­tack.

Prof. Leon van Vu­uren, ex­ec­u­tive busi­ness and pro­fes­sional ethics di­rec­tor at The Ethics In­sti­tute, says the real dan­ger is when peo­ple be­come de­spon­dent and the de­spon­dency turns into ap­a­thy. It may even es­ca­late to the point where af­fected em­ploy­ees sab­o­tage the com­pany. “When peo­ple reach that stage, they feel en­ti­tled to free­bies, like steal­ing time and prop­erty such as sta­tion­ary from the com­pany.They feel the com­pany owes them,” he says.

The neu­tral zone

Peo­ple may even ex­pe­ri­ence de­pres­sion and anx­i­ety about their fu­ture. Even­tu­ally, they reach the point that Fourie calls the “neu­tral zone”.

In the neu­tral zone, peo­ple re­alise they need support. “Make use of what­ever support struc­tures your or­gan­i­sa­tion has in place, such as con­fi­den­tial em­ployee well­ness ser­vices,” he ad­vises those who are caught up in such a sit­u­a­tion. Fourie says any or­gan­i­sa­tion of worth will make it an ab­so­lute pri­or­ity to shore up em­ployee support struc­tures to an even higher level dur­ing this time of or­gan­i­sa­tional trauma.

Em­ploy­ees in or­gan­i­sa­tions such as KPMG are likely to be peo­ple who con­sider them­selves to be re­source­ful and self-re­liant. “Now is not the time to let ego trip you up, caus­ing you not to en­gage with support struc­tures.”

Van Vu­uren says it is vi­tal for those re­main­ing in the com­pany to get im­me­di­ate, hon­est com­mu­ni­ca­tion about how the fall-out will af­fect them.

They want to see trans­par­ent man­age­ment con­se­quences, such as the bad ap­ples be­ing named and shamed, and they want an im­me­di­ate and sin­cere apol­ogy.

“If a com­pany does not re­act swiftly to calm the wa­ters, the good ones will leave im­me­di­ately,” says Van Vu­uren.

The new be­gin­ning

Fourie ad­vises peo­ple not to make rash de­ci­sions. “Get your­self back on track in per­form­ing your job tasks as pro­fes­sion­ally as pos­si­ble, even if you may have be­gun the process of di­vorc­ing your­self from the or­gan­i­sa­tion to find an­other av­enue for the ex­pres­sion of your pro­fes­sional abil­i­ties.”

Aca­demics at the Har­vard Busi­ness School re­cently did a com­pre­hen­sive study on the ef­fect on ex­ec­u­tives from scan­dal-rid­dled com­pa­nies and how they are per­ceived in the job mar­ket.

The re­search in­di­cated that ex­ec­u­tives from such com­pa­nies pay a penalty in the job mar­ket, even if there was clearly no wrong­do­ing on their part.

“Over­all, these ex­ec­u­tives are paid nearly 4% less than their peers. Given that ini­tial com­pen­sa­tion in a job strongly af­fects fu­ture com­pen­sa­tion, the dif­fer­ence can be­come truly sig­nif­i­cant over a ca­reer,” the study found.

The team noted in their ar­ti­cle – The Scan­dal Ef­fect pub­lished by Har­vard Busi­ness Re­view – that stigma, which may be fair or un­fair, un­der­mines a per­son’s cred­i­bil­ity in the so­cial role they are at­tempt­ing to play.

The aca­demics looked at “or­gan­i­sa­tional stigma”, which oc­curs when a com­pany’s ac­tions are widely seen as fun­da­men­tally flawed or im­moral. Peo­ple who have worked for a tainted com­pany will find it quite dif­fi­cult to shake the stigma as­so­ci­ated with their for­mer em­ployer.

The Har­vard re­search team found that con­sid­er­a­tions such as the cul­ture of the coun­try where the scan­dal oc­curred, the role, se­nior­ity and gen­der as well as the level of ed­u­ca­tion of the in­no­cents and the in­dus­try cul­ture all play a part in the peo­ple’s abil­i­ties to bounce back.

The Har­vard study refers to three steps to bounce back from a cor­po­rate scan­dal:

Forthright­ness: Truth is the best friend of the in­no­cent; Rep­u­ta­tion: Draw on your own rep­u­ta­tion and le­git­i­macy from peo­ple who be­lieve in you; and

Re­hab: Take a re­hab job that you can do with one hand tied be­hind your back – the pur­pose is to cre­ate a per­sua­sive story to com­pete with the scan­dal nar­ra­tive.

Fourie says re­main­ing lead­ers should be role mod­els and an in­spi­ra­tion to oth­ers in the af­ter­math of a scan­dal. “If you as­sess the sit­u­a­tion and be­lieve the com­pany can re­cover, and you want to re­main, com­mit to be­ing part of the so­lu­tion. If you can­not, and want to en­gage in bad talk, it is time to move on.”

Van Vu­uren warns that com­pa­nies with fear-based cul­tures are “sit­ting ducks” for eth­i­cal vi­o­la­tions. Writ­ing poli­cies that al­low and en­cour­age peo­ple to speak up and not to hide mis­takes may take a month, but es­tab­lish­ing a trust-based cul­ture takes years.

“Now is not the time to let ego trip you

up, caus­ing you not to en­gage with support struc­tures.”

Leon van Vu­uren Ex­ec­u­tive busi­ness and pro­fes­sional ethics di­rec­tor at The Ethics In­sti­tute

Conroy Fourie In­de­pen­dent coach

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