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For a Corporate Apology to Work, the CEO Should Look Sad

By Sarah Green Carmichael

Straight up, we made some mistakes,” Whole Foods co-CEOs John Mackey and Walter Robb said in a video apology in response to an overcharging scandal.

“We weren’t prepared for the crisis, and we dropped the ball,” wrote Airbnb CEO Brian Chesky on the Airbnb blog in 2011, after a guest trashed a host’s home.

“This should never have happened. It is simply unacceptable,” said Mary Barra, CEO of GM, in one of several public apologies in the wake of safety scandals at the automaker.

The corporate apology, once a relative rarity, has become a normal part of business discourse. Stuff happens, and then we say we’re sorry for it. But just because corporate apologies have become commonplace doesn’t mean they’re all created equal.

Two new studies shed light on what makes some apologies effective and what makes others backfire.

First, Leanne ten Brinke of the UC Berkeley Haas School of Business and Gabrielle S. Adams of the London Business School examine how expressions of emotion affect corporate apologies. Publishing in the journal Organizational Behavior and Human Decision Processes, they present the findings of two studies.¹

In the first study, they looked at how investors reacted to real apologies from executives. They examined 29 online videos of apologies made between 2007 and 2011. Using an established system for distinguishing facial expressions (the Facial Action Coding System, or FACS), their researchers watched each video second by second, without sound, and tracked the expressions that flitted across the executives’ faces. Were they frowning? Smiling? Looking sad? Then Brinke and Adams looked at what happened to the company’s stock price after the apology. They found that for those leaders who had apologized with a smile, the stock price dropped—perhaps because the leader seemed insincere delivering his apology, or even seemed to be enjoying the suffering his company had caused. The more the person smiled, the worse his company performed.

For the leaders who appeared genuinely contrite, at first it seemed like there was no impact on stock price: The company neither performed worse nor performed better. “Normative emotions simply allow the company to move forward,” they write.

But then the researchers took a closer look at CEO apologies, specifically—16 out of the 29 cases. They found that when an apology was delivered by a CEO who looked sad, the company’s stock price actually rose post-apology. They determined that “a good apology can build investor confidence,” especially in the long term.

To investigate this further, Brinke and Adams conducted an experiment in which they hired an actor to portray an airline CEO apologizing for a computer malfunction that canceled 140 flights, stranding thousands of passengers—a scenario based on a real Alaska Airlines snafu. They made sure his fictional apology contained all the verbal elements of a good apology: the components previous research has identified as being central to repairing relationships, including an explicit “I’m sorry,” an offer of repair, an explanation, taking responsibility, and a promise of forbearance. They then recruited subjects to watch this fictional CEO apologize—either happily, sadly, or neutrally. When the CEO appeared sad, participants rated him as more sincere and were more likely to want to reconcile with him. When the CEO delivered his apology with a smile on his face—or, interestingly, a neutral expression—the study participants were less likely to trust him, and the apology even seemed to exacerbate their negative feelings.

Even seasoned leaders are likely to find delivering an apology to be an uncomfortable experience, and when we feel uncomfortable, a normal reaction is to grimace, laugh awkwardly, or even try to break the tension with a joke. Leaders (especially Americans) may also feel they can’t show too much sadness or anguish but instead must present a positive front at all times. The research by Brinke and Adams reminds us how these understandable impulses can backfire.

Another paper that appeared in the Journal of Corporate Finance adds an interesting wrinkle to this subject.² Researchers Don Chance, James Cicon, and Stephen P. Ferris examined 150 press releases from 1993 to 2009 to examine how companies fared when they blamed themselves for poor performance as opposed to blaming external factors. They found that while companies are twice as likely to blame external factors when things go wrong, passing the buck results in continued financial decline. Conversely, companies that take responsibility for their missed earnings stabilize and eventually see an uptick in financial performance. (Interestingly, both groups were about equally likely to fire their CEOs.)

Why? After eliminating numerous factors, the researchers conclude that being honest and specific about the source of the problem—both characteristics of self-blaming statements—not only cheers up investors, it likely helps the company turn around the issue more quickly. Conversely, the companies that blamed external factors were often vague (blaming “economic forces” for instance) and seen as less honest (since many of their wounds had actually been self-inflicted).

The message is loud and clear: When you mess up, admit it. And look appropriately sad about it.

SARAH GREEN CARMICHAEL is a senior editor at Harvard Business Review. Follow her on Twitter @skgreen.

Notes

1.L. ten Brinke and G. Adams, “Saving Face? When Emotion Displays During Public Apologies Mitigate Damage to Organizational Performance,” Organizational Behavior and Human Decision Processes 130 (2015): 1–12.

2.D. Chance, J. Cicon, and S. Ferris, “Poor Performance and the Value of Corporate Honesty,” Journal of Corporate Finance 33 (2015): 1–18.

Adapted from “Research: For a Corporate Apology to Work, the CEO Should Look Sad,” hbr.org,
August 24, 2015 (product #H02AMD).