Marriott CEO Demonstrates Authenticity

A Forbes article calls him an “authentic leader” and applauds his video about the business. Marriott CEO Arne Sorenson begins by talking about his appearance: he is undergoing treatment for pancreatic cancer.

Sorenson gives the bad news directly: the company hit from COVID-19 is worse than the impact from 9/11 and the 2009 financial recession combined. He compares the worst quarter in the company’s history—about a 25% revenue decline—to the almost immediate 90% decline today.

Towards the end of the video, Sorenson is visibly emotional as he talks about employees losing their jobs.

Discussion:

• What principles of delivering bad news does Sorensen use in the video?

• How well does Sorenson balance emotional appeal, logic, and credibility in this message?

• In addition to authenticity, what other leadership character dimensions does Sorenson demonstrate?

MLB Players Dispute Response to Cheating Scandal

Several players have criticized how Major League Baseball Commissioner Rob Manfred handled the recent cheating scandal. Calling the Houston Astros’ sign-stealing “the biggest scandal in the sport since the steroid era,” an ESPN writer concludes that “fallout continues.”

In an interview, Manfred explained the decision to recall the Astros’ 2017 World Series title and how the first apology didn’t go over very well. Manfred referred to the World Series trophy as a “piece of metal.” Mike Trout of the Los Angeles Angels spoke against Manfred’s reference:

“For him to devalue it the way he did [Sunday] just tells me how out of touch he is with the players in this game. At this point, the only thing devaluing that trophy is that it says ‘commissioner’ on it.”

Manfred has since apologized:

“In an effort to make a rhetorical point, I referred to the World Series trophy in a disrespectful way, and I want to apologize for that. There’s no excuse for it. I made a mistake. I was trying to make a point, but I should have made it in a more effective way.”

NBA star LeBron James weighed in on Twitter, encouraging the MLB to “listen to your players speaking today about how disgusted, mad, hurt, broken, etc etc about this.” As expected, some appreciated his perspective, while others didn’t.

Manfred image source .

Discussion:

• What’s your view of the controversy? Are you also critical of Manfred’s handling of the situation?

• How well did Manfred handle the criticism of his “piece of metal” comment?

• Should LeBron James have entered the debate, or should he have avoided it, as some suggest? Why or why not?

Dupont Announces New Leadership

Dupont has a new CEO, and he looks a lot like a former CEO. Ed Breen was previously appointed CEO in 2015 and was replaced about a year ago. He has been serving as chief executive and will now serve in both roles.

Breen describes the company’s position:

“While we made some progress in 2019, we did not meet our own expectations and we now need to move aggressively to secure our foundation for growth. We have solid businesses, but, as we discussed on our recent earnings call, we need to accelerate operational improvement and make sure we are taking appropriate action to deliver on our commitments for the year.”

In a press release, the company also names a new CFO, Lori Koch, who was previously the head of investor relations.

Image source.

Discussion:

• Analyze the press release: audiences, organization, content, and so on. What business communication principles are followed, and how could the statement be improved?

• Compare this release to other leadership change announcements. How does it differ? Consider the tone and quotations.

Carlos Ghosn's News Conference

Former head of Nissan Motor Co. and Renault SA Carlos Ghosn delivered a news conference from Lebanon after his escape from Japan. Ghosn was arrested in Tokyo in 2018 for misreporting income and misusing company funds. He left through a well-orchestrated exit in a box by private plane to his home country.

In what the Guardian calls “a lengthy and often rambling press conference in Beirut,” Ghosn spoke in four languages to defend himself. He criticized the Japanese criminal justice system and accused the Japanese government of working with Nissan executives to conspire against him.

Ghosn was adamant about his innocence:

“I don’t consider myself as a prisoner in Lebanon. I prefer this prison to the one before. I am ready to stay a long time in Lebanon, but I am going to fight because I have to clear my name.”

The Japan Times reports that the new conference “will have done little to turn the tide of public opinion in Japan and restore his reputation, which has been tainted by his alleged financial wrongdoing.” A former prosecutor in Japan said, “Ghosn didn’t have anything substantive to say. If he wants to restore trust, he shouldn’t do a self-absorbed speech like he did, but he should calmly make specific explanations and present evidence supporting those explanations.”

Discussion:

• Watch parts of the news conference. How well does Ghosn restore his image and prove his innocence?

• How should Ghosn communicate differently if he wants better outcomes?

Boeing's Crisis Communication Plan

During the holiday break, several news items about Boeing were relevant to business communication and character. In one article, the New York Times revealed internal Boeing documents showing a company trying to rebuild its image after two MAX crashes within a year..

The documents give us an inside view of how the company plans to use persuasive strategies to win back customers. In one graphic, we see customers’ willingness to fly. In another, we see customer concerns and ways Boeing can address them, for example, with FAQ cards, “pilot confidence videos,” or personal connections (for example, “Flight attendant offers comfort and information on the safety of the MAX”).

Discussion:

• What persuasive strategies does the company plan? Try to find examples of logical argument, emotional appeal, and credibility.

• What are the consequences of this information becoming public? Does it likely endear the public to the company’s concerns, embarrass the company, or something else?

Accountability in the News

Two situations this week remind us that CEOs should take accountability for mistakes in their companies.

On an investor call, Home Depot CEO Craig Menear said retail theft is on the rise:

“This is happening everywhere in retail. We think this ties to the opioid crisis, but we’re not positive about that.”

Menear faced criticism on Twitter for blaming the opioid crisis rather than taking responsibility for product loss at a warehouse.

On another call, Costco CFO Richard Galanti talked about losses because of a website crash:

"It was unfortunate. Despite all the efforts to have plenty of processing capacity, if you will, there was something that occurred." He also acknowledged, “[W]e did leave something on the table.”

In both situations, the executives could be more direct.

Discussion:

• Do you agree with my assessment? Why or why not?

• What evidence should Costco provide to back up its claim?

• What else could the executives have said differently? (Hint: Note Galanti’s use of passive voice.)

• In addition to accountability, what leadership character dimensions are illustrated by these examples?

JPMorgan Recorded Phone Conversation

Jimmy Kennedy, an African-American former National Football League player, tried to open a private wealth account at JPMorgan but had trouble getting attention. He recorded a conversation with an African-American employee, Richardo Peters, who said, “You’re bigger than the average person, period. And you’re also an African-American. We’re in Arizona. I don’t have to tell you about what the demographics are in Arizona. They don’t see people like you a lot.”

In a New York Times article that published the recording, Peters recounted a specific example of discrimination against a Black customer. When he was trying to bring on another new client, who had received a large settlement, his manager said, “You’ve got somebody who’s coming from Section 8, never had a nickel to spend, and now she’s got $400,000, What do you think’s going to happen with that money? It’s gone.” His manager’s position was that the customer would not invest money with the bank.

Other incidents at the bank led to Peters’ termination, and he is suing for racial discrimination. JPMorgan also recently settled a class-action lawsuit for $24 million to Black employees who claimed discrimination: according to a New York Times report, “in some cases by isolating them from colleagues and dumping them in poorer branches.”

A few days later, CEO Jamie Dimon addressed the situation in a memo to employees.

Discussion:

• How do you assess this situation at JPMorgan? Read more in the NYT article.

• A February Essence article describes and praises JPMorgan’s Advancing Black Pathways program to support the Black community. What’s your view of the effort in light of this news?

• How do you assess CEO Jamie Dimon’s response in the memo? We don’t see the entire memo, but CNBC posted quotes.

Data in the Uber's Safety Report

Uber published its first safety report, and the company is lauded for its transparency. A Wall Street Journal article leads with the number of sexual assaults reported during the last two years: 5,981. Of course, any number is too many—no one should be assaulted in an Uber or anywhere else. And sexual assaults are notoriously underreported, so we have no idea how many have actually occurred.

At the same time, a skeptic might want to know the total number of rides in order to put the number of reports in context. The report does provide this information (see the report for footnotes):

View fullsize

The report makes additional attempts to put the numbers in context:

All of that work culminates in the Safety Report that we are sharing with you, the public, today. To put US safety challenges in context:

• In 2018, over 36,000 people lost their lives in car crashes in the United States alone (3)

• Approximately 20,000 people were the victims of homicide in 2017(4)

• Nearly 44% of women in the US have been a victim of sexual violence in their lifetime—which means that more than 52 million women live with that experience every day (5)

Every form of transportation is impacted by these issues. For example, the NYPD received 1,125 complaints of sex offenses in the transit system during the same time period covered by this report.(6,7) In the United States alone, more than 45 rides on Uber happen every second. At that scale, we are not immune to society’s most serious safety challenges, including sexual assault. Yet when collecting data for that portion of our report, we found there was no uniform industry standard for counting and categorizing those types of incidents.

The 84-page report is incredibly detailed and includes external reports for credibility and the number of charges for various types of assaults.

Discussion:

• Analyze the report: the audience, communication objectives, organization, writing style, format. What works well, and what could be improved?

• Does the context in these examples convince you that the numbers aren’t so bad? Why or why not?

• Otherwise, how well does Uber address the safety issues? How do you assess the report credibility? What other questions do you have?

Why Entrepreneurs Don't Learn from Their Mistakes

A Wall Street Journal article describes research about failing entrepreneurs. The results are sobering: start-up business owners don’t seem to learn from their mistakes.

Francis Greene, at Edinburgh University Business School, explains several reasons for lack of learning. First, when entrepreneurs start new businesses, they have a different context and different customer, so any lessons learned from previous businesses might not apply. Greene also says that businesses typically “limp along”; during this slow-close process, it’s difficult to identify what the real problems were.

Finally, as you might expect, we have psychological barriers for failing to learn from failure. We tend to simplify reasons and blame external factors.

Greene suggests taking time to explore what happened after a business failed and ensuring that we have the industry expertise to succeed in the next venture.

Failure image source.

Discussion:

• This reminds me of Amy Edmondson’s HBR article, “Strategies for Learning from Failure.” What similarities and differences do see in their research findings and recommendations?

• When have you failed? How did you learn from the experience? Can you identify ways to learn better in the future?

Prince Andrew's BBC Interview Does Not Go Well

Prince Andrew took a BBC interview to explain his relationship with Jeffrey Epstein, who had served prison time for having sex with a minor. The Duke of York spent a night at Epstein’s mansion, which some victims called a ”House of Horrors.” The Duke is shown in photographs, along with photos of young women coming into and leaving the house. One woman claims that, when she was 17, she was forced to have sex with Prince Andrew. Since that time, Epstein committed suicide in jail, where he was facing sex trafficking charges.

Prince Andrew told the BBC interviewer, “I kick myself for on a daily basis because it was not something that was becoming of a member of the Royal Family and we try and uphold the highest standards and practices and I let the side down, simple as that."

When asked about his stay at the mansion, Prince Andrew replied, "It was a convenient place to stay. I mean I've gone through this in my mind so many times. At the end of the day, with a benefit of all the hindsight that one can have, it was definitely the wrong thing to do. But at the time I felt it was the honourable and right thing to do and I admit fully that my judgement was probably coloured by my tendency to be too honourable but that's just the way it is."

He also referred to Epstein’s behavior as unbecoming: “Do I regret the fact that he has quite obviously conducted himself in a manner unbecoming? Yes.” When questioned, he said, “I’m sorry. I’m being polite. I mean in the sense that he was a sex offender.”

Responses to the interview have been negative. Since the interview, AON, Cisco, KMPG, and a British charity have removed or are considering removing their brand affiliations with the prince’s name and his work.

Prince Andrew has since tweeted his sympathy and decision to “step back from public duties for the foreseeable future.”

Discussion:

• Describe the arguments for and against Prince Andrew’s decision to take the BBC interview.

• Looking at the BBC interview, do you think he could have handled the situation better? What could he have done differently?

• Analyze the prince’s tweet. What’s your view of that decision and communication? How well is the prince managing the fallout?

• What leadership character dimensions are illustrated by this situation?

Fabricated Letters to the SEC

The U.S. Securities and Exchange Commission is planning a policy change that, as a Bloomberg article describes, “would shift power from investors to corporate boards” and “limit[s] the power of dissenting shareholders.” Unfortunately, when Chairman Jay Clayton announced the change, he cited several fabricated letters of support to the SEC.

The SEC failed to recognize that many letters followed a similar template and included a random line in the mailing address—“A Coalition of Growth Companies.”

Clayton was impressed that the SEC heard from such a variety of people, such as veterans and retired police officers, but people contacted said they didn’t write the letter or agreed to having their name on a letter without understanding the implications.

The Bloomberg article reports Clayton’s response:

The SEC declined to comment on any irregularities with the letters. In a Tuesday interview, Clayton sidestepped a question about how the agency ensures comment letters are genuine. He did emphasize that the regulator’s potential revamp of shareholder voting rules are proposals, adding that there will be ample time for people on both sides to weigh in before any changes are finalized.

“We welcome input in all ways,” Clayton said in the interview with Bloomberg Television’s David Westin. “On this issue, where there are a lot of different views and a lot of different interests, we encourage people to come in and talk to us, send us their comments.”

Discussion:

• How does something like this happen? Who is responsible?

• Assess Clayton’s response. How well is he handling the situation? What, if anything, should he do differently?

• What leadership character dimensions are illustrated by this situation?

EY's Training Program Considered Sexist

Ernst & Young delivered a training program for female executives about a year ago, and it’s coming back to bite them. Critics say the program was sexist and cite the following as an example:

In the session in question, attendees were told be “polished,” have a “good haircut, manicured nails, well-cut attire that complements your body type,” it states on Page 36 of the 55-page handout. But that’s followed by a warning: “Don’t flaunt your body―sexuality scrambles the mind (for men and women).”

The criticism became public because a former partner is suing the firm for harassment.

In response, EY said, “Any isolated aspects are taken wholly out of context,” and that the program received positive evaluations. They did, however, say the program “is no longer offered in its current form.” The company also issued this statement:

“We are proud of our long-standing commitment to women and deeply committed to creating and fostering an environment of inclusivity and belonging at EY, anything that suggests the contrary is 100% false.”

Discussion:

• Read the former partner’s letter to EY. What are her strongest and weakest arguments? What is your overall reaction to the letter?

• What’s your view of the company’s response?

• What leadership character dimensions are illustrated by this situation?

Boeing CEO Responds to Questions

This week, Boeing CEO Dennis Muilenburg answered lawmakers’ questions about the two Max 737 plane crashes in the past year. Facing families of deceased passengers, Muilenburg began his testimony with an apology:

“I’d like to begin by expressing my deepest sympathies to the families and loved ones of those who were lost in the Lion Air Flight 610 and Ethiopian Airlines Flight 302 accidents, including those who are here in the room today. I wanted to let you know, on behalf of myself and all of the men and women of Boeing, how deeply sorry I am. As we observe today the solemn anniversary of the loss of Lion Air Flight 610, please know that we carry the memory of these accidents, and of your loved ones, with us every day. They will never be forgotten, and these tragedies will continue to drive us to do everything we can to make our airplanes and our industry safer.”

One of the most tense moments was when Senator Ted Cruz questioned Muilenburg (see video). Muilenburg also faced criticism as he was leaving. The mother of a victim of the second crash responded to his invoking his Iowa farm background:

“Go back to Iowa. Do that.” She also said, “I don't feel like you understand. It's come to the point where you're not the person anymore to solve the situation."

Discussion:

• Watch more of Muilenburg’s testimony. What are some examples of questions he addressed well, and how could he have done better?

• How well does Muilenburg balance emotional appeals, logical arguments, and credibility in his testimony?

• What leadership character dimensions are illustrated by this situation and by Muilenburg’s testimony?

• Muilenburg’s interaction with the mother is a difficult situation for anyone to handle, and we can certainly understand her grief and anger. How would you have responded?

  CNN reports:

  “In response, Muilenburg said he respects her viewpoint. "But I want to tell you the way I was brought up. And I'm just being honest here about it. I learned from my father in Iowa ... when things happen on your watch you have to own them and you have to take responsibility for fixing them," he said.

Astros Executive Fired After Yelling at Female Reporters

Brandon Taubman, assistant manager of the Houston Astros baseball team, was fired after comments made to female reporters. The situation became more complicated because the team, at first, criticized a Sports Illustrated reporter, Stephanie Apstein, and called her article, “misleading and irresponsible” and a “fabrication.”

In the team club house, after a game, Taubman yelled at the female reporters, “Thank God we got Osuna. I’m so f------ glad we got Osuna!” The MLB suspended Osuna for 75 games because of a domestic violence charge, and the Astros took a PR risk in hiring him. A Sports Illustrated writer criticizes the team’s decision:

But in truth, the Astros' front office acts as if it is tired of being yelled at about this subject. They want to be allowed to play their baseball games and pop their champagne without being forced to think about anything that happened away from the ballpark.

The team’s first response of defending Taubman didn’t stick. They later issued a statement apologizing to both the group of female reporters and Apstein.

Ernst & Young is scrubbing its website of ties to Taubman, who worked for the firm. EY is facing its own trouble following criticism about a training program for women.

Taubman image source.

Discussion:

• What’s your view of the situation—both Taubman’s outburst and the Astros’ response?

• Analyze the team’s statement. What leadership character dimensions does this illustrate, and how does it fall short? What could be improved?

• Did EY do the right thing by trying to disassociate with Taubman? Why or why not?

WeWork: "Humbler"

Several articles in the past few weeks have scolded WeWork CEO Adam Neumann and the investors who followed his story.

The Wall Street Journal was the first to describe Neumann’s odd behavior and published another article, “WeWork Investors Turned Off by ‘Sloppy’ IPO Filings.” The recent article explains one problem in the filings (shown below):

“A section headed ‘illustrative annual economics’ that assumed 100% workstation utilization vanished, for example, as did two graphs portraying a typical location going from ‘-$’ to ‘+$,’ with no y-axis showing the actual dollar amounts being depicted.”

A New York Times article, “Was WeWork Ever Going to Work?” criticizes investors for missing obvious problems with the company’s initial business plan, such as the reliance on start-up revenue when most entrepreneurial ventures fail. According to this report, it took people finally looking at the data to realize how much We is losing and how hard it will be for the company to succeed.

The article includes other examples of investors’ blind exuberance:

“It is not merely money that separates the ruling class from the rest of the country. Often it seems as if it is the gaping difference in the application of common sense. Ultimately, it was the bankers, technocrats, statesmen and acolytes of the data-junkie class who were willing to believe that Elizabeth Holmes, a 19-year-old college dropout who thought a black turtleneck would make her Steve Jobs, was going to revolutionize blood-testing. It didn’t seem to matter that she could not deliver any real evidence to prove it.”

An Inc. article, “The Future of WeWork: Leaner, Humbler, and Duller,” suggests a new path for We. The author suggests less hype, fewer employees, and more discipline for the company to survive.

WeWork image source.

Discussion:

• Who do you blame for WeWork’s failed IPO?

• If you believe the New York Times article, investors are gullible. Do you agree with this assessment? If so, why might this be the case?

• Read the “Note”—the fine print—under the table, shown above. How do you interpret this information?

• What should We do now to build credibility and save the business?

Third CEO Announcement This Week: Wells Fargo

Wells Fargo announced a new CEO: former BNY Mellon, Visa CEO Charlie Scharf. According to a Bloomberg report, Scharf is “quiet-ish” and known for being “direct and willing to clean house”

Scharf joins Wells Fargo as the company battles scandals beginning in 2016, when about 2 million fake accounts were discovered. Since then, the company has faced additional ethical questions and hasn’t fully recovered its image.

In its news statement, Scharf expressed his enthusiasm for the new job:

“I am honored and energized by the opportunity to assume leadership of this great institution, which is important to our financial system and in the midst of fundamental change. I have deep respect for all the work that has taken place to transform Wells Fargo, and I look forward to working closely with the board, members of the management team, and team members. I am committed to fully engaging with all of our stakeholders including regulators, customers, elected officials, investors, and communities.”

Scharf replaces General Counsel C. Allen Parker, who was appointed interim CEO, after Tim Sloan left in 2019.

Wells Fargo image source.

Scharf mage source.

Discussion:

• How well did the Wells Fargo news statement meet its communication objectives?

• The news statement doesn’t mention Wells Fargo’s troubled history. Should it? Why or why not?

• Industry insiders expect Scharf to make significant changes in the organization. If you were considering a position at Wells Fargo, how would this news affect your decision?

WeWork Co-Founder and CEO Steps Down

WeWork announced that Adam Neumann will leave his position after controversy about the company’s financial situation and the co-founder and CEO’s behavior. Within a week, the company went from preparing for an IPO to facing criticism that led to this ouster and a delayed public offering.

The company valuation has been reduced from about $47 to $15 billion based on governance issues and what the Wall Street Journal calls “ballooning losses.” The Journal also reported on Neumann’s “eccentric behavior,” including a heavy-party lifestyle that recently involved bring marijuana on a plane to Israel and saying that he might like to be the prime minister.

In its news release, WeWork provided scant information and a few quotations, including this from Neumann:

“As co-founder of WeWork, I am so proud of this team and the incredible company that we have built over the last decade. Our global platform now spans 111 cities in 29 countries, serving more than 527,000 members each day. While our business has never been stronger, in recent weeks, the scrutiny directed toward me has become a significant distraction, and I have decided that it is in the best interest of the company to step down as chief executive. Thank you to my colleagues, our members, our landlord partners, and our investors for continuing to believe in this great business.”

Neumann image source.

WeWork office image source.

Discussion:

• Compare the company’s news release to others announcing CEO departures. How does this one differ, and why would the company take this approach?

• What are the communication objectives of Neumann’s statement? How well does his quote meet those objectives? What else, if anything, should Neumann say or do?

British Airways Labor Dispute Arguments

On Thursday, British Airways pilots went on strike for the second time this week, grounding about 1,700 flights. Wanting a greater share of profits, pilots have turned down the company’s offer of 11.9% in pay increases over the next three years.

Typical in these situations, the union and company blamed each other. The union, the British Airlines Pilots Association (Balpa), claims that company management chose to cancel flights instead of negotiating with them in good faith:

“Balpa set a gap between the first and second periods of strike action to give BA time to work with us to settle this dispute with their pilots. We had today been exchanging new ideas to do that via [the arbitration service] Acas and so it irresponsible and inconsiderate to its customers that BA has pulled out and decided to start cancelling flights now, just to save money on compensation. BA did not respond to our latest proposals before cancelling these flights.

“Passengers who will be affected by these cancellations should know that we have given BA multiple opportunities to work with us so we could call off this action.”

The company blames pilots for walking out:

“It is now a month since we shook hands on a pay deal. We urge [Balpa] to call off their strike and return to negotiations.

“To give our customers as much certainty as possible, we are now contacting all those affected to offer them a full refund or a rebook on an alternative date, destination or airline. We are very sorry that Balpa’s actions will affect thousands more travel plans.”

Discussion:

• How effectively does each side express its perspective in the above quotes?

• Research both sides of this debate. What are Balpa’s strongest and weakest arguments? What are BA’s?

• What persuasive strategies does each side use in its arguments: logic, emotional appeal, and credibility?

Backlash After President Trump Fundraiser

Equinox and SoulCycle customers are not happy about a fundraiser for President Trump sponsored by the companies’ owner, the chairman of a real estate firm. Threats of boycotts and cancelled memberships provoked quick responses from both companies.

SoulCycle CEO Melanie Whelan also said, “SoulCycle has nothing to do with the event and does not support it. … We know who we are and we know what we believe in, and nothing will ever change that.”

Capitalizing on the brands’ distress, other fitness companies are offering discounts and free trials to try to win business.

Soul Cycle image source.

Discussion:

• More company executives feel inspired towards political activism. What are the advantages and risks?

• Did the real estate company owner, Stephen Ross, act inappropriately by hosting a fundraiser? Why or why not?

• Analyze the companies’ statements. What persuasion strategies do they use to rebuild each brand?

• Compare the statements. Does one work better than the other? What criteria do you use to compare them?

Another Blackface Disaster

Belgium’s Africa museum hosted an event for which people arrived in pith helmets, blackface, and other offensive and stereotypical clothing. Understandably, the Congolese community is upset. As one representative said, "Ethnic, exotic or African is not a costume that you can put on and take off.” You can read about Belgium’s occupation of the Congo to understand the history.

The party was organized by a separate company, Thé Dansant, and one organizer defended the party: “Even if one person painted his face black, it was not meant to be offensive. Many people of African origin were enthusiastic about the concept and were present.”

So far, the Royal Museum of Africa is trying to distance itself from the event and hasn’t issued a statement or apology.

Museum image source.
Party image source.

Discussion:

• What’s your view of Thé Dansant’s response?

• What is the museum’s accountability? What should the leaders do or say?