What BP Could Learn from Goldman Sachs About Crisis Management

Ever since the Tylenol pill tampering decades ago, the conventional wisdom has been: do as much as you can as quickly as you can, apologize, own up, accept responsibility-in short, act like a good corporate citizen. Research on recovering from service failures in consumer interactions provides similar advice; apologize and try to make things right. Although it started off with some finger-pointing, BP now seems to have done all that--to little avail. And then a word in a New York Times headline about the crisis caught my eye: "remorse" (as in BP expresses remorse).

My Stanford colleague Lara Tiedens' research has shown that people are rated more positively when they express anger compared to sadness or remorse (or even cool detachment, as the recent commentary on Obama illustrates). Expressing anger apparently makes people appear powerful, while sadness and remorse conveys weakness--and we want our leaders to be confident, forceful, and act as if they are in control. Other research shows that in negotiations, people who confronted angry opponents made larger concessions than those facing either non-emotional or happy ones. That's because, as one article noted, people use others' emotions to infer their limits, so "negative emotions serve as a call for mental or behavioral adjustment, whereas positive emotions serve as a cue to stay the course."

Unlike consumer products companies, BP operates in an oligopolistic industry with, for the most part, rising demand. Its brand image may not be so crucial.

Compare BP's situation with that of the the financial services industry. I didn't watch every minute of Goldman CEO Lloyd Blankfein's testimony, but what I saw and read about it didn't show much "remorse" or, for that matter, much sense that he or Goldman had done anything wrong. Jamie Dimon of JP Morgan Chase? Same thing. John Stumpf, CEO, and Richard Kovacevich, Chairman, of Wells Fargo actually expressed outrage that Wells would be required to accept federal funds.

Let's be clear. Goldman apparently traded against its clients'--both purchasers of mortgage pools and issuers of bonds--securities. All of the banks, to one degree or another, have been "reluctant" to modify home loans, resulting in an epidemic of foreclosures. Recently, information has surfaced that suggests that packagers of mortgage securities misrepresented the facts (such as the loan-to-value ratio) about mortgages in the pools. The financial meltdown cost trillions of dollars and threw many millions out of work. But for the most part, the finance CEOs did not brook abuse from the various Congressional committees, but instead, explained that their behavior (taking the other side of a trade) was necessary for the functioning of the financial markets and they were doing their best to mitigate damages.

While Tony Hayward's job tenure is discussed in the press, Goldman's management team is intact, profits are up, the stock price is recovering, and even its clients have remained loyal.

There's an important, albeit not necessarily "nice" lesson in all of this. What you and your company does obviously matters. But how you present what you do, how you explain your actions, and the emotions you display, matter also. Maybe if BP had acted more like Goldman and its peers--who, by the way, have not volunteered $20 billion, admitted guilt, or anything else--after the grumbling and complaints about arrogance, it would have been better off. At least that's what social psychological research--and the contrast with the banks--seems to say.