Two years ago, and again earlier this year, Airbus was fined for the multi-year, multi-national bribery campaign it ran a decade ago. The victims were worldwide, from the U.S. and Britain to Kazakhstan. Lies were rampant and national security was risked.
The fines weren’t pocket change - $3.9 billion in 2020, the largest international fraud fine in history – and $16 million this year as a continuation of the original fine. They were also just the tip of the spear for changing how Airbus conducts business. The company cleaned house at the executive level and, as part of the 2020 agreement which led to the billions-dollar fine, changed many processes and procedures.
But the company’s response to the latest fine should make stakeholders and shareholders leery that changing the faces at the big table may not have changed company culture as much as policymakers, military leaders, and taxpayers have been led to believe.
Here’s the opaque MBA word salad the company issued after the most recent fine. It fails almost every test of leadership communications:
The Company has taken significant steps since 2016 to reform itself by implementing a benchmark compliance system underpinned by an unwavering commitment to integrity and continuous improvement.
These are nice words. But there was zero concrete ownership of the bribery campaign, no explanation of what the compliance system is, and no concrete examples of how the compliance system and the “unwavering commitment to integrity” are being executed. Stakeholders and shareholders were also not provided any insights into why we should trust anything this government contractor says, given the company’s recent lawless history.
The one thing Airbus got right was to not dodge blame. But even the acceptance was overwhelmed by the failures on every other part of the statement.
This is a review on a subcomponent of crisis management: the conscious, self-inflicted wound. Here's a template for leadership to correct a failure in organizational behavior:
● Start with simply and clearly owning past failure.
● Note that the offending individuals have been removed and new processes are in place.
● Name concrete steps in the “benchmark compliance system”
● Demonstrate an “unwavering commitment to integrity.”
Extreme Ownership across the entire organization
Forgiveness of a misdeed is more easily bestowed following the repentance of the “sinner.” Yes, legal counsel will forever advise against the public apology to limit liability. And they are right: extreme ownership is going to cost. But the mea culpa may very well be less expensive than the standard duck and deny because people understand that mistakes happen – and cover-ups should not.
Malfeasance should not come as a surprise in “crisis management” and the best organizations will make plans for adverse events or man-caused disasters as the cost of doing business.
Perpetrators in your organization may not think they are law-breakers; they are just getting the job done. This was the claim of Catholic bishops who hid clergy abuse in the second half of the 20th century. In the first half of that century, Nazis said they were following orders; the argument led to many people going to jail. Going back more than a thousand years, when King Henry II wanted to get rid of the “meddlesome monk,” three of his knights murdered Thomas Becket, the Archbishop of Canterbury, in 1170.
The path back to building trust with stakeholders and shareholders starts with an honest and transparent apology. Truth is simple. “I did nothing wrong and promise never to do it again,” is the traditional lawyer lip-service. But authenticity is the leader’s watchword today. God and grammar are in the details. Use the first person singular (the boss is responsible for all the organization does or fails to do): I did it.
Active voice: yes ‘mistakes were made’ but ‘I am responsible.” (That passive voice that upset your English teacher sounds slippery in the real world.)
I broke it. I own it. I’ll fix it. That’s why King Henry II submitted to being whipped by the Bishops after Becket’s death. And it’s why, as Maurice Schweitzer, et. al. write in Harvard Business Review in “The Organizational Apology,”
Consider the well-received statement made by GM’s Mary Barra after the company’s 2014 recall of faulty ignition switches—a problem the company had known about, but not acted on, for 10 years: “Today’s GM will do the right thing…I am deeply sorry.” Barra also told employees that the violation was “unacceptable”; 15 leaders deemed responsible for the cover-up were let go.
New Accountability
Enhanced public accountability is necessary after the moral course correction to answer what may be the most market’s most important question: “How do we know that this will not happen again.?” This is especially important for defense contractors, who take public money for public service – and, in Airbus’ case, risked the national security of at least one major client (America).
Changing the name of the company is often a first step in the new direction. For example, ValueJet became AirTran when safety problems crashed a commercial jet. The reformed carrier was later acquired by Southwest Airlines.
But changes should be more than cosmetic branding. Training, 360-degree reviews, and outside ethical auditors should be used as internal checks and outside oversight. The politics of ‘multiple points of accountability’ must be recognized. Stakeholder activists – trade association, vendors, customers, local communities, and governments must now be added to the interests of the stockholders of the offending corporation. (This should scare any government contractor CEO straight.)
Unfortunately, enforcement of ethical policies must often be externally motivated and reinforced, at least at first. Airbus was forced to have an external eye on its activities as part of the 2020 fine and agreement; senior executives must therefore show stakeholders and shareholders that its internal processes are strong enough to be again trusted. In this case, it’s not just important for taxpayers and government officials; internal audiences like directors, managers, individual contributors, vendors, and contractors must likewise receive and internalize the message.
A strong Airbus statement would have concretely explained what some of its changes were and how those will make the company a stronger, more ethical partner to those countries (clients) it shafted.
Honesty as Policy
Business should be a force for good; for virtuous behavior, growing the economic pie, and – for contractors – making countries safer at the right price. This is a habit developed in practice by staff who understand boundaries and the law’s spirit.
Like most international conglomerates, Airbus is going to make ethical, process, and human mistakes. But the current monetary fine comes less than three years after a major fraud punishment. This is mere months after Airbus lobbied the European Union to not sanction Russia’s titanium exports needed in their manufacturing. Airbus’ leadership appears to behave well below ethical norms.
As my Busch School colleague Dr. Anthony Cannizzaro, an international business expert, told me for this piece:
"Transparency is essential for good corporate governance in multinational corporations – bribery distorts market transactions, destroys trust, increases costs and raises questions on value."
And that’s exactly the problem. Airbus lacked transparency, destroyed trust, and risked national security as a defense contractor. A slick press-release and smooth-talking academic dancing are among the worst ways to deflect the continued reminder of its bribery campaign, especially when the company continues to make moves that are against Western defense interests. As it seeks more taxpayer dollars, the company may find that its culture is alien to American taxpayers and lawmakers.
