An Institute of Business Ethics (IBE) report on building and restoring organisational trust, says: “Genuine apologies, delivered sincerely, can be liberating, and powerful signals of renewed trustworthiness. Many would also see them as an impressive and competent PR response, too.
“By contrast, self-serving defensiveness and disregard for stakeholders can create long lasting reputational damage, regardless of the legal rationale for the stance, with knock-on effects of shame for employees.
“We believe that when apologies and penance options are available and manageable in terms of implementation and cost, they should be considered as an early and effective indicator of remorse, regret and benevolence, to begin the repair in a timely manner.”
The view that apologising is a sign of weakness or is the line of last resort obscures the commercial benefits that may accrue.
The Nottingham School of Economics studied the effect of an apology on disgruntled customers after they were let down. They found that more than twice the number of unhappy customers are willing to forgive a company that issues an apology over one who offers them a monetary compensation.
Other studies show that medical malpractice suits in the US, for example, drop when doctors apologise. And where litigation does take place research has shown that physician apologies for medical errors decreases the average payout by $32,000.
Back in the business world the 1984 Bhopal gas disaster which killed 3,000 people and injured or maimed 40,000 others presents a salutary lesson on the role of a corporate apology – or lack of it in this instance.
According Jeff Helmreich, assistant professor of philosophy and law at the University of California Irvine, Union Carbide who owned the factory that was the subject of the disaster could easily have apologised without opening itself up to litigation.
“Every study shows that when a corporation apologises they’re much less likely to be sued, to be protested, to be opposed in various ways.
“Apologising… tends to mollify people and end conflict.”
But he admits the kind of people who get to the top of a major corporation aren’t usually the types to put themselves in a position where they’re conceding the moral high ground, even when it makes business sense.
“Corporation leaders have the same human instinct that prevents people from apologising: simply the desire not to subordinate and indebt oneself to someone else…. That’s a reversal of respect and certain hierarchies that people find very difficult even when there’s no legal cost.”
For Union Carbide, it never apologised though did agreed to an out-of-court settlement of $470m in 1989 and was subsequently taken over by Dow Chemical.