Response compounding the damage


Air New Zealand took a hit to its reputation after it was revealed the national airline, through its gas turbines unit, has been working with the Royal Saudi Navy. It is controversial because the Saudi Navy has been enforcing a blockade on the war-torn nation of Yemen, including stopping food and medical supplies – causing human rights violations.

The Prime Minister said the issue ‘doesn’t pass New Zealand’s sniff test’ and senior government leaders called it both “alarming” and “unacceptable”.

When I grew up, it was drummed into me that when something bad happens, it’s your response that matters more than the incident itself. In the case of Air New Zealand, their response is compounding the damage to their reputation.

Over the last 20 years, the external environment for corporate and public organisations has become more difficult. Risks to reputations are more immediate and more public. Cohorts of customers or stakeholders can damage reputations (fairly or unfairly) very quickly.

Air New Zealand deserves some empathy as they navigate their way through the issue. It has apologised, stopped working for the Royal Saudi Navy, and started an investigation.

However, if they had responded differently some of the impact could have been mitigated earlier.

First, Air New Zealand’s leadership doesn’t appear to be taking genuine ownership of the problem. I have heard comments along the lines of ‘it was before my time’, ‘stopped it as soon as I heard’, ‘a junior comms person did not escalate the issue’, ‘haven’t had time’, ‘contract too small to get to CEO desk’, ‘there has been some poor judgements at lower levels’, ‘it was a third party contractor’, ‘there is no cover up here’, ‘no, we won’t commit to providing documents’.

What we haven’t heard from the Chair or CEO is ‘this sits with me, it is up to me to fix it, and I will fix it’. That is taking ownership.

Second, Air New Zealand’s approach appears to be one of conflict avoidance. They’ve apologised, but haven’t provided enough information to ensure a balanced perspective. Given the amount of consternation from our politicians, perhaps a national discussion is needed, including who we trade with and how.

Handled properly, providing some balance can add value to the debate and help move things on to a more productive footing and ensure all parties are held to the same standard.

Third, the company’s publicly available documentation reveals the usual corporate governance policies and values such as honesty, integrity, courage and sound judgement.

How does this event fit with those policies and values? And what are the consequences of not meeting its own standards of behaviour?

One wonders if an examination of the culture of Air New Zealand and the alignment between its words and actions is as important as PwC reviewing its gas turbine contracts.