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After the Debacle: How News Corp Can Rebuild Trust

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NewsCorp executive and scion James Murdoch, the man who oversaw the News of the World (NOTW), said the leadership of the now shuttered British tabloid "failed to get to the bottom of repeated wrongdoing that occurred without conscience or legitimate purpose." But many wonder, amid a parade of arrests and revelation, whether the phone hacking and bribery at NOTW are truly the actions of one NewsCorp enterprise or an example of the company's overall corporate culture.

Events to date demonstrate that even experienced messengers, like those at NewsCorp, can struggle when the spotlight turns on them. This is why a recent report by the Ethics Resource Center's Fellows program -- Accepting Responsibility Responsibly: Corporate Response in Times of Crisis -- advised Boards to put a crisis plan in place before disaster strikes.

But for the Murdochs and their executive team, the time for planning ahead has passed. Now investigators, elected officials, and the general public rightfully want to know why the families of murder victims and soldiers were targeted by hackers. However contrite or creative its explanations for past acts, this is the time for NewsCorp to build a new corporate conscience. NewsCorp is now literally fighting for its life. The best defense, as we have seen with companies that have survived such crises, is not to spin its story, but to start writing a new one.

But when asked by Members of Parliament if editors at other NewsCorp operations were reviewing their newsrooms to insure NOTW-type tactics were not being replicated, Rupert Murdoch answered "No, but I am more than prepared to do so." The future of NewsCorp depends on just how prepared Mr. Murdoch really is. That review is just as critical as any other measure to NewsCorp uses to restore its name.

To address the growing perception this problem reaches well beyond one paper, the company must revisit and reassert its corporate values. NewsCorp must spell out for every employee the core belief, from its very own standards of conduct that "Compliance with the law is crucial to the reputation of NewsCorp and its business units." The challenge is making clear those are not just words on a page.

NewsCorp must go beyond the newsroom, and into the boardroom, to create real reform.

Our research suggests that NewsCorp can restore its good standing by embracing some cornerstone measures:

  • Publicly reaffirm the primacy of its "Standards of Business Conduct" as the foundation for employee conduct all the way to the Executive Suite and provide employees. Live up to them.
  • Set a tone at the top that consistently reinforces these values through both words and deeds. Tell employees, shareholders, and customers how company standards are guiding your decisions during this crisis.
  • Hold accountable individuals at every level of the organization who have violated standards of professional conduct. Employees need to see that your company will conduct a fair investigation to identify the individuals who have been involved in this scandal.
  • Renew attention to organizational culture and root out mixed messages or subtle signals that might open the door to misconduct.

Not only can such measures restore public respect, but our 2009 National Business Ethics Survey® found that good conduct becomes self-reinforcing. In a strong ethical culture where employees are more committed to the company, workplace misconduct can be reduced by as much as 50%.

Full-page newspaper ads and even personal apologies to the victims of this scandal look impressive. But post-recession consumers, who are more aware of the character of a parent company than ever before, are unlikely to be persuaded by gestures. Real recovery for NewsCorp will take time, discipline, and a concrete, top down commitment to ethical business conduct.

Patricia J. Harned is President of ERC, which recently published Accepting Responsibility Responsibly, a report on how ethical values can guide an organization through crisis.

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