In the age of YouTube, it's understandable that CEOs would think video is the best way to issue an apology. Business leaders who mess up and want to take ownership for it seem to want their companies to appear not only personable and accessible at a time of corporate crisis, but digitally savvy as well.
But a new study from researchers at the University of California, Berkeley and London Business School finds that it's all too easy for a video apology to actually make things worse. In a paper being presented at the Academy of Management conference in Orlando Monday, the researchers studied how company stock prices responded to 29 video apologies made by CEOs or other corporate executives over the past five years. They included memorable on-camera admissions from former JetBlue CEO David Neeleman following the airline's 2007 flight fiasco, former BP CEO Tony Hayward in the wake of the 2010 oil spill, and Netflix CEO Reed Hastings after his company's 2011 debacle over a price hike.
The study found that, while much of what the executives' said had a relatively minor effect on their companies' stock prices, inappropriate facial expressions were "greatly detrimental" to share prices. "A brief leakage of disgust, or a misplaced smile, can damage fragile relationships and send stock prices plummeting," the researchers write. In this context, it's downright cringeworthy to watch back Hastings' apology, which was widely criticized and preceded the company's decision to reverse course on its strategy.
To come to their results, the authors asked people trained in the practice of coding facial expressions to scan each frame of the apology videos with the sound off so as not to be influenced by the speaker's words. The video was broken into 30 still frames per second and the coders analyzed both the lower and upper face separately for each one, looking at how long the speaker wore expressions of happiness, sadness or disgust. Then, they compared the different expressions with the company's stock returns on the day of the apology and the day after.
Expressions of happiness and disgust were correlated with negative stock returns. Obviously, smiles don't go well with apologies; and prior research has linked disgust with insincere ways of showing remorse. Meanwhile, sincerely sad expressions did not boost stock returns, but did keep them from falling further.
The findings aren't necessarily surprising--we all know sincerity is a good thing when saying we're sorry. But they do caution leaders that the reflex to pull out the Web camera in today's YouTube-loving, social media-driven world might be worth reconsidering. CEOs can carefully script their words, especially with the help of a good legal and P.R. team. But most of them aren't actors, and it's much harder to control the furrowing of an eyebrow or a twitch of their mouths than they may think.
Jena McGregor is a columnist for On Leadership.