Lessons from Guaranteed Rate’s leadership comms crisis

Tips on addressing leaks, aligning with legal and more.

In today’s modern workplace, much energy is often spent espousing the values and benefits of wellness. When these precepts are followed through on, they’re undoubtedly valuable. But when leaders talk a big game externally that they contradict internally, employee backlash is inevitable.

That’s exactly what happened at Chicago-based mortgage lender Guaranteed Rate. A recent report from the Chicago Tribune portrays two sides of CEO Victor Ciardelli. On one hand, he says all the right things when speaking about the values of wellness and stress reduction at work. On the other, the report includes several employee complaints that portray him as a verbally abusive bully who lashed out at employees when things didn’t go his way. Among them were alleged outbursts of anger from Ciardelli directed at employees, in some cases so intense that one staffer consulted a suicide hotline. Sources also describe the work environment at Guaranteed Rate as rife with sexual harassment issues and an HR department that didn’t take complaints seriously.

Guaranteed Rate denied these allegations, putting on a full-court press of reputation management that included a survey with over 80 current and former employees. In written responses to the paper, the company also threatened to sue for the Tribune defamation. Ciardelli suggested that disgruntled employees weren’t able to succeed in a demanding work environment.

Despite his steps to mitigate the impact of these allegations, it’s clear that Ciardelli’s attempts at crisis management only amplified the negative allegations. It’s a reminder every organization needs to have the mechanisms to communicate about an internal crisis in place, including contingency plans for handling leaks, leadership alignment and considerate executive comms.

Perceived hypocrisy is likely to be leaked  

Much of this story centers on the disconnect between Ciardelli’s public comments about Guaranteed Rate’s internal culture and the testimony of former employees. This feeling of disconnect seemingly drove employees to leak information to the media about internal problems.

Mike Paul, president of Reputation Doctor, said that companies need to be honest with themselves about what material can be leaked.

“If any one of these allegations are true, that alone could sink your reputation, Paul said. “You can’t put spin on it. That’s fake, and you can’t be associated with fake.”

Trust and culpability need to own the day in practice, not just in the platitudes of canned statements. Closing this gap will minimize the likelihood of perceived hypocrisy, which will then minimize leaks. There are also practical steps organizations can take to stop leaks in their tracks, including robust reporting mechanisms surrounding suspected leaked material and well-defined and clearly communicated parameters and consequences for potential leakers.

“You need to be able to walk the walk of ownership,” continued Paul. “If not, you’re going to further hurt people.”

While Guaranteed Rate had a thorough response to the allegations, Vocatus CEO and executive partner Ray Hennessey added that it’s buried under all the negativity created by leadership in the first place.

“The narrative reads like a well-sourced indictment of a CEO and the culture he created,” said Hennessey. “Who wants to work for a boss who calls employees’ work a ‘disaster’ and belittles and berates people?”

Guaranteed Rate now must grapple with following through in its response, showing its work and platforming people who live that culture.

“They will need to continue to get their broader team as more visible representatives of a positive work culture,” Hennessey explained.  “They will need to work hard to reinforce the image they want to project as a caring, but hard-charging workplace.”

Aligning with legal to minimize legalese

It’s notable that Guaranteed Rate mobilized its legal team quickly to defend the company’s interests actively—so quickly that the details of its offensive approach are included in the reporting. It’s also worth considering the fallout the optics of such a move might have on the company’s image and ability to recruit and retain employees.

While it’s normal to work with legal on statements like this, overused legalese can sap them of any authenticity or resonance with the audience.

“If the goal is just to vomit a bunch of words that are nothing, it stands to hurt you further,” said Paul.

It’s on communicators to help legal and leadership think about the court of public opinion as well, emphasizing that people are especially adept at picking up on spin and falsehoods. If audiences turn on you, it stands to hurt the business in the long term. Practically, this can comms include working with legal ahead of any crisis to know what responses will look like, a strong relationship between the two departments to know who is speaking out on what matters, and having the right legal minds in place to know what information should be shared and what doesn’t need to be.

“If you don’t understand what your reputation means, you don’t understand trust,” Paul said. “Trust is even greater than dollars because, in the business world, trust is what gets you those dollars.”

Leadership deflection only makes matters worse 

The Tribune report stands out from other leadership crises because it contains lengthy statements shared by Ciardelli himself. It’s worth considering whether the CEO’s words created more risk for the company in the wake of this crisis:

“We hold ourselves and our team members to an incredibly high standard and are not apologetic about that,” Ciardelli said in his written responses, sent through the outside law firm retained to handle communications with the Tribune. “We also recognize … that to achieve great success, one must embrace a full ownership for their actions, both successful and otherwise to achieve growth and most important optimally serve our customers. We promote a transparent culture that supports all our team members toward that goal and welcome constructive criticism. As a result, we are not for everyone.”

These statements starkly contrast the many allegations in the Tribune article. Words that don’t translate to tangible action only stand to dig the hole deeper.

“Who said that a mea culpa is the worst thing that you can do?” said Paul.

“There’s not just one or two, but many people that have an accurate perception of your company as an unsafe place to work. Not owning up to it doesn’t put the fire out — it fuels the fire. Rebuilding a corporate reputation starts with fixing the root of the problem.”

Sean Devlin is an editor at Ragan Communications. In his spare time he enjoys Philly sports and hosting trivia.

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