THE BLOG
22/07/2011 18:35 BST | Updated 21/09/2011 06:12 BST

The World's Most Precious Commodity: Confidence

The phone-hacking scandal reminds us how much the world depends upon one commodity. Not money - confidence. So what if a crisis of phone-hacking proportion was unearthed in your business?

The phone-hacking scandal reminds us how much the world depends upon one commodity. Not money - confidence.

Without it, we flounder. When it is absent from our personal lives, we will lose sleep, experience increased stress and die earlier. But when it disappears from business, particularly global enterprises, vast tsunamis of uncertainty will sweep across the planet, markets will fall and currencies will crash.

Creating confidence is a slow and deliberate process. You simply can't rush into it. People do it through their manner, their language, their choice of words, their constancy in times of change, their quiet smiles, their knowing glances, and their firm handshakes. People spread confidence.

Businesses do it by doing the right thing always. And where it emerges that they have done the wrong thing, by dealing with those crises confidently.

What if?

So what if a crisis of phone-hacking proportion was unearthed in your business? What should you do to prevent confidence bleeding away?

Start by privately establishing the full facts. If you discover wrongdoing in one part of your business, find out how widespread it is. Bring someone in who will search for the truth without fear of favour. It should be someone you trust and a person with a ruthless determination to find out the truth. Always assume that if it happened in one place then it will have happened elsewhere. And remember that people whose livelihoods are threatened will use everything available - obfuscation, delay, deception, blame - to survive.

Next, consider his or her findings. In all likelihood, there will be culpability. We live in a Newtonian world; when things go wrong we expect blame to be attached to someone. So take all necessary action. Make no excuses. You may lose valuable staff, people you trust, people you depend upon. But hanging on to those that created or presided over the rot will simply cause it to spread to other parts of your business. It may be out of the office but it will live on in the culture - in a tolerance of inappropriate behaviour.

Now tell everyone what you have done. You could conceivably keep it quiet. But there's a rule about these things: anything that could damage you will damage you at some point. That which you hide will become a hostage to fortune. So make it all public: what you found, when you found it, what action was taken, who has left and why. And apologise deeply.

But you're not finished. Go inside the organisation and talk to every member of staff. Depending on the size of your enterprise, you may have to do it through a variety channels. Face to face is best, even if it takes time. Set out how what happened deviated from what you would have expected. Make clear what steps you took to remove the problem and what you intend to do to ensure that it is far less likely to happen again.

Depending upon what has happened, you may well have let people down: customers, business contacts, sponsors. These people require special attention. They need to be assured that you acted as soon as you became aware of the problem. Humility is appropriate. Even though you may have had nothing to do with the situation as the owner or the MD, you will still bear some responsibility. Something in your systems failed. Something in the culture you have fostered make it possible for errant behaviour to grow. And you failed to identify the issue before it became a cancer.

Now pause. Look around you. Confidence will have fallen. Those who tell you that it hasn't are either telling you what you would want to hear or simply don't know. If you have acted quickly and decisively enough, you may have prevented the worst. But proceed carefully now. Where people may have consumed your products and paid little attention to how you worked, now they will scrutinise you closely. Every word you utter as a senior leader - or the leader - will be pored over. Your key moves will be pondered. You are on trial.

If you are lucky, if your organisation took you at your word and if your ruthless determination is true, then you may move on and prosper as before.

Resist the allure of the easy-out

Should it happen to you today or next week, don't be tempted by the allure of clever moves.

We may talk about Bad Apples who spoil things for the rest of us. But most of us know that people rarely operate alone. Or if they do, they've been able to do so because something in the culture somehow has given them permission to act.

Equally, we may be tempted to try to hang on to people who should have known what was happening - and indeed, we may be able to bat off calls for the resignation of top staff - but it comes at a price. Around the decision-making table, advisers may persuade you that you can hold out and protect the mildly culpable. Don't be tempted. The message you send to your staff is as damaging to the signal you send to your customers. Fuzzy actions erode certainty.

In a world defined by uncertainty, no business wants doubt to be associated with their brand. Where there is choice in the market, consumers will choose another company. And where this applies to governments, they'll choose another party.

Of this you can be sure.