Winning - Jack Welch [55]
Now, not all organizational crises have a public face. A middle manager leaves and takes his team with him. The reorganization of a business or unit causes enormous upset and turmoil. A big customer defects with complaints about your service. A fired employee makes angry charges of discrimination by senior management.
Even if the media has no interest in these events, your people will.
The same principles still apply.
Openly discuss the situation. Define your position. Explain why the problem happened and how you are handling it.
And just as with big, public crises, don’t ever forget you have a business to run. Make sure you are running it.
Assumption 4: There will be changes in processes and people. Almost no crisis ends without blood on the floor. Most crises officially end with a settlement of some kind—financial, legal, or otherwise.
Then comes the cleanup, and cleanups mean change.
Processes usually get overhauled first.
With the time card situation, for instance, we instituted Policy 20.11, which formalized all dealings with the government. The policy was excruciatingly detailed, requiring us to cross every t and dot every i. I am no fan of bureaucracy, but the time card situation demanded just such a process fix.
Sometimes, however, process fixes are not enough. We had had a policy about improper payments on our books for more than thirty years—Policy 20.4 to be exact—that was supposed to prevent bribery. But it didn’t help us back in 1990, when a regional sales manager for Aircraft Engines conspired with a general in the Israeli Air Force to divert money from major contracts for GE to supply engines for Israeli F-16 warplanes.
This was no small-potatoes operation. The two men had set up a joint Swiss bank account and a fake contractor in New Jersey to cover their tracks. The media coverage around the world lasted nineteen months, through congressional hearings and a criminal trial against the GE employee, Herbert Steindler. At the end, he went to jail, and we paid the government a $69 million fine.
In this case, the problem was not process, but people not enforcing an existing policy. No one in the business actually knew what Steindler was up to, and none of them gained a penny from the scheme, but some ignored warning signs that something was amiss. Eleven people had to resign, six were demoted, and four were reprimanded.
Crises require change. Sometimes a process fix is enough. Usually not. That’s because the people affected by the crisis, or sometimes those just watching it, demand that someone be held responsible.
It sounds awful, but a crisis rarely ends without blood on the floor. That’s not easy or pleasant. But sadly, it is often necessary so the company can move forward again.
Assumption 5: The organization will survive, ultimately stronger for what happened. There is not a crisis you cannot learn from, even though you hate every one of them.
From the time card crisis, we learned that when you deal with the government, there can be no looseness with regulations, even if it means installing lots of detailed bureaucratic procedures. That’s the price you pay for doing business with public agencies.
From the compressors situation, we learned to bite the bullet early on product recalls. Doing that cuts your losses and pays off in consumer goodwill.
From Kidder Peabody, we learned to never buy a company with a culture that didn’t match ours.
From the bribery case, we learned that policies age and even die unless managers work constantly to keep them alive.
After a crisis is over, there is always the tendency to want to put it away in a drawer.
Don’t. Use a crisis for all it’s worth. Teach its lessons every chance you get.
In doing so, you’ll spread the immunity.
There will always be crises.
And