As fallen corporate reputations litter the sidewalks of business districts across the globe, the Financial Times reminds us of the UK government’s 2007 Corporate Manslaughter and Corporate Homicide Act. The Act creates accountability for fatal accidents caused by the “gross failings” of managers. While steep fines may seem like punishment enough, they only scratch the surface of damage this Act can do to a company’s bottom line.
Potentially far more damaging, however, if much less well known, is the additional sanction of a “publicity order”, requiring every offender to effectively advertise its own conviction.
So-called “naming and shaming” has its origins in medieval punishments such as pillory and the stocks, where petty criminals were publicly humiliated. The judge-ordered adverse publicity envisioned by the corporate manslaughter act will be equally capable of causing lasting damage to the half dozen or so organisations expected to be convicted of corporate manslaughter each year.
As the main body that advises on criminal sentencing policy has said: “A publicity order is considered to be an effective deterrent, potentially exceeding the effect of a fine, as it can impact upon the public reputation of an organisation through damage to consumer confidence, market share and equity value.”
History proves that bad press is not easily overcome. And for some, it’s an insurmountable task—think Enron or O.J. Simpson. For those willing, and able, to forge the long road back to consumer trust, the first place to look should be behind. Often, the path that led a once-successful company awry strayed from the proven traditions that brought success in the first place.
As companies today face difficult decisions that often pit short-term solvency against long-term strategy, they would be wise to revisit their founders’ intentions . . . before they end up having to advertise their mistakes.