Shooting yourself in the foot reputationally and managing to unite a whole country against you takes some doing these days.
Companies are becoming much better at managing their reputations, and perhaps also more cautious in their decision-making, having to pay due respect to stakeholders’ potential reactions to corporate activities.
Businesses are more likely to find themselves in trouble due to accidents or poor operational choices, naive misjudgements, overconfidence, misreading the market or public opinion, or making snap decisions under pressure, but not so often in premeditated ways.
That’s why the recent P&O Ferries controversy in the UK is so interesting – the company has landed itself in hot water (if you’ll pardon the pun) almost deliberately. Its decision to sack 800 seafaring staff without warning or consultation was not something you see every day in that part of Europe.
Moreover, as The Guardian’s Nils Pratley put it when talking about P&O CEO Peter Hebblethwaite’s recent parliamentary grilling: “It’s hard to recall a chief executive who has admitted that his company carefully assessed its options and decided that breaking the law was its best bet.”
In his remarks to outraged politicians, Hebblethwaite was candid: “There’s absolutely no doubt we were required to consult with the unions. We chose not to do that.”
There have been many other occasions where companies making similarly cynical decisions have explained them away as an oversight or a mistake by an underling, but there was none of that here. This is therefore a rare event indeed, and a PR nightmare to treasure.
P&O’s rationale for the mass sacking was that COVID and other factors had weakened it, and its very survival was at stake – an existential crisis. Replacing longstanding expensive crew with staff sourced through a cheaper agency would dramatically reduce its labour costs, giving the business greater financial viability going forward.
However, P&O was legally bound to consult the unions, even though it admitted they would be wholeheartedly opposed to its plan. Figuring it wasn’t worth bothering having that talk, P&O skipped the consultation and went straight into full sacking mode, leaving the unions, politicians and various others furious at such a display of heartless corporate arrogance.
While saying he was sorry, Hebblethwaite admitted he would make the same decision again, winding up his opponents still further but resolutely sticking to his guns about safeguarding the future of the business.
There’s something genuinely atavistic about P&O’s attitude. It harks back to days when some companies would take unilateral action with genuine contempt for their stakeholders and the rule of law, not even trying to justify their decisions. No doubt this still happens today, but you see less of it than in previous years because for many the reputational and legal repercussions are too high.
One very interesting question is how the idea of breaking the law actually came to be a serious option in P&O’s decision-making framework. One would like to think that many companies would not even have it on the table for a significant decision, considering themselves obliged to act according to the law, just like their counterparties in a contract would be expected to do. It works both ways.
So where did this option come from? One possible scenario is that it was handed down from either a P&O executive like the CEO himself, or someone even higher up at the company’s Dubai-based owner DP World. It doesn’t sound like the kind of thing a corporate HR or PR team would suggest from the ground up, but that’s not impossible either. Whatever the case, it was presented, considered and chosen as a strategic option.
On a wider basis, questions also need to be asked about P&O’s strategy and stakeholder engagement efforts in the preceding years, including with the unions and UK Government. Could it have done more? Almost certainly, and from a big picture perspective there is a lot to unpack here. If any company finds itself in a situation where its leaders think breaking the law is their best option, then a lot of things have gone wrong beforehand.
The question now is how this plays out over the coming weeks and months, and whether P&O essentially gets away with it. The UK Government and the unions have moral force on their side, but the situation is muddied by the complexities of international maritime law and the ships being registered outside the UK. Beyond tourists, P&O is a major carrier of freight across the English Channel, and any sanctions on the company would presumably have supply chain consequences at a time of widespread geopolitical and economic uncertainty.
Reputationally, while P&O may only suffer from a token number of cancelled bookings, its relationship with its home government is trashed, and it will take a long time to recover. The company may well survive and prosper over the decade ahead, but people have long memories, and P&O now requires a sustained effort to regain public trust.
As a final note, credit in all of this must go to P&O Cruises, which has no corporate affiliation with P&O Ferries apart from the ‘P&O’ in the name, and is in fact owned by Carnival Corporation. Realising the imminent danger of reputational collateral damage, P&O Cruises got on the front foot by launching a PR and marketing campaign to distance itself from the blighted P&O Ferries brand. In one snappy tweet, P&O Cruises said: “Our names may both begin with P&O, but that’s where the similarity ends.” Smart move.