One Disaster Leads to Another: The Loss of Thomas Cook
Following the recent news of Thomas Cook's collapse, Charlie looks at one possible contribution to their failure.
I am always sorry to see the demise of a company, especially a household name such as Thomas Cook. The loss of 9,000 jobs in the UK, another name off the high street, the repatriation of 150,000 holiday makers, and even my brother has been moaning that his Spring holiday to Turkey is cancelled and he will have to book with someone else. The cause of Thomas Cook’s demise is well documented; too much debt and a failure to adapt to changes in the holiday marketplace. One contribution to their failure which caught my eye, was the case of Robert and Christianne Shepherd, which Thomas Cook majorly mishandled. I wrote a bulletin in 2015 on how they had mishandled this situation after Robert and Christi’s death to carbon monoxide poisoning whilst on a Thomas Cook holiday.
Back in 2015 I wrote: ‘Occasionally in the news you hear a story and wonder how the organisation can get it so wrong when the solution seems so obvious. Thomas Cook’s handling of the deaths of Robert and Christianne Shepherd nine years ago is an example of a company which got its crisis management very, very wrong and caused major damage to its brand and reputation. The simple solution was for the company’s CEO to apologise sincerely to the family and accept responsibility for the deaths of the two children. It had taken them nine years to eventually agree to do this and within the last couple of days the CEO has been on television apologising to the family saying he would also be doing this face-to-face in private.’
The cause of the death of these two children, which also almost caused the death of the parents, was carbon monoxide poisoning from a faulty boiler in their holiday apartment in Corfu. It is interesting that Thomas Cook didn’t own the apartments themselves, but they were owned by a third party. Although the customers were Thomas Cook’s, the people responsible for the maintenance of the boiler were a third party. Whenever I am training, I always point out ‘you can outsource the activity but not the risk’. Thomas Cook’s health and safety procedures were found to be inadequate and they had not spotted the faulty boiler. So, the actual organisation which caused the death of the children, wasn’t Thomas Cook.
As far as I can see, all the family wanted was for Thomas Cook to admit responsibility for these deaths and for them to apologise. They weren’t looking for a multi-million-pound settlement or for people to get long prison terms, but just a simple, sincere apology. You often read in the newspapers about similar cases where there has been negligence which causes a death. The family would like to know why their loved one died and for the person responsible to admit their mistake, look them in the eye and apologise. What you end up with instead is an expensive court case which drags on for years, the victim is forgotten, and the family is unable to move on. When the case is finally settled, the only person who seems to come out well is the lawyer who has made a large amount of money in fees. Even if the family does eventually get some kind of settlement, either an apology or a financial settlement, they feel the apology is made under duress and the money is ‘blood money’ and won’t bring their loved one back.
This particular case has been made worse by the recent handling of the event by Thomas Cook. It has come out during recent court cases, that Thomas Cook were given £3.9m by the company which owned the apartments, but gave a much smaller compensation payment to the family. They decided to donate £1.5m of the settlement to charity without consulting the family, and the CEO was quoted saying ‘it was not Thomas Cook's fault’ in court. Once you are in the spotlight during a reputation crisis, you have to be hypersensitive about every action you carry out as it could make the situation worse.
How much better would it have been if soon after the event Thomas Cook apologised to the family face-to-face and paid a substantial compensation? The loss of reputation and the money spent would then pale into insignificance, in comparison to the money they have now spent and the damage to their reputation.
Being in a crisis situation puts a focus on the DNA of a company, and under pressure companies and CEO's revert to their real selves, rather than the face they put on for customers and the outside world. When we see the way Thomas Cook refused to say sorry to the Shepherd family for nearly 10 years, pocketed most of the compensation paid to them by the hotel, and as we have seen in the news recently, the huge pay packets the Directors paid themselves, even as they must have known that company was failing, this says to me that there was something rotten and self-serving in their senior management culture. If this was the true nature of the management team behind the customer facing facade, then perhaps it was not surprising that the company failed. In the end, during many of these company collapses, the management ride into the sun with their pockets lined but with tarnished reputations, leaving employees to find new jobs and customers to make alternative arrangements.
Where is Charlie today?
In the air - Charlie has just departed Dubai International Airport, having just delivered BCI Introduction to Business Continuity Management courses in Botswana.
Here he is earlier in the week handing out Scottish Shortbread to the winner of the course quiz!