KPMG chair’s resignation shows the need for empathetic leadership

03 March 2021 Consultancy.uk 3 min. read
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Last month, the UK chair of the global accountancy firm KPMG, Bill Michael, told his staff in a meeting to “stop moaning” about the pandemic. Employees expressed shock at his comments that were also leaked online. Soon after, he apologised and resigned from his position.

It is a classic case study that shows the changing corporate environment. The old order of corporate leadership that said “pull up your socks” is no longer desired and tolerated. There was a time when treating employees like robots to serve the customer was the norm. The customer was the only stakeholder that mattered. The overarching strategic focus was to build a positive relationship with the customers, even at the expense of worsening the relationship with the employees.

But due to the proliferation of social media channels, employees as a stakeholder group has risen in prominence. News about how a business treats its employees reaches the customer and more importantly the general public, impacting a brand’s reputation. Employees vent about their bosses, unfair supply chain practices are uncovered and industry bodies call out rogue companies for poor practice on social media – these stories can go viral such as in the case of KPMG where the video clip of the meeting was released. 

Farzana Baduel, Chief Executive Officer, Curzon PR

In turn, customers use the information to decide who they do business with. According to a 2018 study by Accenture, 65% of consumers are attracted to organisations that treat their employees well. Combine that with a 2018 Stanford study on CEO activism that revealed that people stop doing business with companies because of the position a CEO took on a public issue. “Hot button issues are hot for a reason,” wrote the researcher. 

And there is not a more hot issue at the moment than mental health and wellness in the times of Covid-19. During the pandemic there has been a lot of struggle and hardship in everyday lives. People lost their loved ones, their jobs, entire sectors like travel and hospitality have been destroyed, people are coping with home-schooling and taking care of vulnerable older relatives at home and the resultant impact on mental health.

But the struggles also gave rise to a sense of belonging and community, of people feeling more empathy for each other because everyone is struggling. There has been a cultural shift with speaking about mental health being normalised and the sense of shame and stigma around it being rightly discarded. For a business leader to then make those comments and to say “stop moaning” about the pandemic is quite clearly tone-deaf. 

Companies know and understand that they would need to take action against such comments to show that they stand for people and purpose -- not just profits. Impact on a brand's reputation matters more than ever today. 

Even so, the best form of crisis management is crisis prevention where you mitigate risk by horizon scanning. Just like Covid-19 has been called a white swan event – a crisis that was predictable and preventable, so was the KPMG crisis. If employees are struggling, so are leaders and businesses. There is a lot of anxiety and insecurity, and in such a case, it is understandable to lead from fear and go in defence mode.

Doing a risk audit, creating contingency plans and crisis simulations, broadcast and speaker training for the executives and issue management could have prevented this. Not just this, for any business to recover from a crisis, it is important to deal with people's urgent needs first. Hence, teaching leaders the importance of compassion and empathy especially during hard times like right now would help them, their organisations and their employees thrive. 

An article by Farzana Baduel, a crisis communication and PR expert. She is the CEO of Curzon PR, a London-based PR firm working with clients globally.