In our last post, we looked at the unfolding drama of the News of the World telephone hacking scandal and how it highlighted the increasing awareness of the business impact of behaviours.
So how does News International, seen through the lens of the news reports, compare against our criteria for the Cost of Behaviour? There are two sets of costs – the “hard” costs, actual outgoings as defined by Crosby, and the “soft” costs, the behaviours that either contributed, or (hidden) have yet to be recognised. We won’t cover all the criteria – just a selection of headlines:-
Direct Costs – these are the ones that Crosby originally identified
Actual Financial Expenses - The massive expenses of closing down NoW.
Consequential Costs
Opportunity Cost - Losing financial control of BSkyB - a huge loss for the Murdoch family
Customer Recovery Cost - Wait and see just how huge this may be
Customer Loss Cost - All those NoW and disgusted Times readers
Compliance Costs
Enforcement Costs - All those lawyers and private detectives – wow! - All those payments and kickbacks coming home to roost. - Jail for some – more to come probably.
Behaviour Costs – may either have contributed to or will add to Direct Costs
Relationship Costs
Conflict Costs - Who is telling the truth? How long will it go on?
Secrecy Costs - How does closing the NoW compare to owning up in 1988? We bet no one looked at this - we suspect that no one dared (see Adduced Behaviour)
Egotism Costs - Surely not? Or did key people think they were above the Law?
Blame Costs - Who will ever trust who again?
Organisation Costs - How many people are currently not doing the jobs the Shareholders think they are paying for? How much talent is heading off elsewhere?
Comprehension Costs
Focusing Costs - What did News International think the problem really was? And when and why did that change? Has it really?
Ignorance Costs - The problem for James Murdoch is that if it isn’t this ...
Incompetence Costs - ........ it will be seen as this
Avoidance Costs - Who, and how many, actively kept their heads down?
“Bottle” Costs - What will all this eventually cost the “whistleblowers”?
Motivation Costs
Energisation Costs - How will the leadership of News International regain the respect and the trust of their key management?
Initiative Costs - Did all this happen just because a small number of individuals “got out of control”? Does anybody think so any more?
Mis-Incentive Costs - How were the people directly concerned being “rewarded” or “recognised”? What effect did this have? And now?
Judgement Costs
Micro-Dumbness Costs - Sending investigators after plaintiff’s lawyers.
Macro-Dumbness Costs - Trying to play the “Deniable Plausibility” game in a ship full of professional leakers.
Stupidity Costs - Simple - doing illegal things.
Adduced Behaviour Costs - How much of all this might have been caused or made worse by reluctance of key executives to tell the Murdoch Family news they thought they would not want to to hear.
Consensus Fallacy - Tom Watson MP’s “Omerta” theory? We think possibly not.
It is clear from even this cursory analysis that although the direct costs have been massive the worst is yet to come when the Costs of Behaviour come to be counted. The big question is how this organisation is going to be able to become effectively functional again after all the damage to relationships, motivation, trust and perception of judgement.
This is a leadership disaster which will require the shareholders to take a long and hard look at the whole top layer of management. How many individuals will be able to demonstrate that they are truly not contaminated by this affair? How many chose carefully not to see or not to hear? How many did not have the courage to challenge what they did see or hear? How many may now be found to have acted as craven courtiers grovelling before the thrones of the powerful?
We do not think the answers will be encouraging – just think back to the aftermath of the last Media Mogul scandal. The challenge for News International will be to transform the quality of internal communications and relationship management starting from the top down. That will take a lot of courage – have they got it – is there anyone left on the bridge to exercise it?
On a broader scale, we think there may be big questions to be asked about the influence and control that majority shareholder individuals should be allowed to have in public companies.
The Cost of Behaviour is a powerful tool to test and challenge the perceived organisational health of a company. In Comparative Competitive Strength terms, News International conducted itself as it saw itself to be, as an Excellent company – they were mistaken. As the tawdry reality has turned out, they had the management and operational culture, the smug arrogance, the undisciplined under achievement of a Comfortable organisation and will now find themselves a Constrained business as the massive costs of this debacle slowly and inexorably roll in. Tragic, avoidable and wasteful.
The Cost of Behaviour is brought to you by Steve Goodman, Tony Ericson, Terry Murphy and Barbara Craven, the founding partners of Achievement Coaching International where we help businesses to learn different thinking to enable different actions that deliver the different resultsthat Make the Big Differences that Transform Results.
This series looks at the corrosive and far reaching effects for business profitability, and even survival, of failures in behaviour. It challenges all those that believe in “don’t rock the boat”.
You might also be interested in our "Excellence Quartet" of blogs promoting the cause of Excellence as the key to prosperity. We publish regular articles using a recent business/financial topic to highlight different perspectives and conclusions to those obtained by conventional thinking and techniques. You can read the other four blogs at our web site link page.
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