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Spain Mourns The Loss Of Those Who Lost Their Lives On The Germanwings Airbus
Lufthansa Group CEO Carsten Spohr. Photograph by David Ramos — Getty Images
Commentary

What business leaders can learn from the Germanwings crash

Apr 03, 2015

Airlines are rushing to adopt a two in the cockpit rule to address the alleged murder of 150 people by one Germanwings airline pilot. The solution is necessary but it's a mechanistic one. Even if airlines adopt a three pilot rule or better pilot screenings, the solutions won’t address the heart of the horror.

People are not static, and in large corporations, almost no one really knows that much about the inner lives of their coworkers. And human resources departments can be especially out-of-the-know. There are Dilbert cartoons about these phenomena: The employee who leaves for vacation but no one notices; the boss who can’t remember his direct reports' names.

But people are not designed to live—or thrive—in alienating environments. Unfortunately, too many companies are built that way and, over the long run, it hurts their bottom lines.

On March 31, the New York Times reported that, in Lufthansa's case, the airline knew about the co-pilot’s depression. What we don’t know is whether someone from the company who cared about him was regularly checking in to speak with him, understand the pressures he felt, and assess his state of mind.

Maybe you’ve never met a rude customer service representative. I certainly have. A negative customer service experience generates a visceral reaction, one that tells you to stay away from the company. With a little effort, any customer can slow down and say something to change the mood and make that employee laugh. But for days on end, no one they work with, or for, may do that.

In New York, there was a court case a couple of years ago that dealt with a nanny who murdered the children under her care. Her employers didn’t seem to know the depths of her emotional issues.

Alienating work environments are proliferating. While social media is designed to connect people, it seems to also have the opposite effect. At lunch with a few others last week, it was hard to hear the conversation at my own table because a woman nearby was complaining loudly about being disrespected by someone on Facebook.

At a meeting with a few corporate board members the other day, I was talking about an OECD study Fortune recently reported on that addressed U.S. millennials’ disappointing skill levels in reading comprehension, math, and simple computer processing. A few board members raised the issue of younger people and their devices – and their inability to communicate in in-depth ways. This just makes the issue of alienation all the more important for companies to address today.

At that same meeting, I experienced another issue that, of course, continues to plague half the population and creates negative work environments. I made a point and, later on, the male colleague sitting next to me was credited for my thoughts. Yet another person at the same meeting who I have spoken with on many occasions was confused about whether he had previously had a discussion with me about something or if it was with another woman. (We don't look alike.) But I understand why this happens—when people see you as a label (in this case: woman) rather than as a unique individual, it can all blur together.

We all do that far too much; not see each other. And the tone is set at the top of any organization.

I keynoted at the Vail Leadership Forum in June 2004. In that speech (which, no doubt, was much more successful because it followed the cocktail hour), I talked about how important culture was to the functioning of a company and, therefore, the oversight of boards. That may seem obvious now and—following Enron and WorldCom, as it did—universally accepted. But it was not. The chair of the Mercer Delta consulting firm at the time, David Nadler, who sat on a panel later in the conference, said that boards did not need to dive so deep.

That’s changed since then at the best run companies, but in far too few.

Bullying in the workplace continues to go largely unaddressed. I wrote about this for Fortune in April 2013. Yet workplace cruelty can wound people so severely they may never recover.

So what can boards do?

Support efforts to reform tax rule 162(m). IRS rule 162(m) allows companies to deduct CEO salaries over a million dollars as long as that pay can be justified as “performance based.” Compensation consultants cite 162(m) as the reason so many CEOs are paid based solely on quantitative measures like EPS (earnings per share) rather than considering the intangible factors that result in long-term value, perhaps long after the CEO is gone. Senator Jack Reed has introduced measures that would end deductibility above $1 million and thus remove the problem. The latest try failed in the Senate last Friday. But it’s really important that boards get behind the change so their hands are not tied by a rigid tax code and so they can feel free to hold CEOs accountable for corporate culture, a less quantifiable metric.

Understand how people really treat each other. Corporate culture impacts the lives of employees and their families. It impacts workers' creativity. It impacts the experience of customers. It even has an effect on litigation costs (think about the large financial firms), health costs, and other costs to society. It ultimately impacts the valuation of the company. Companies would profit if more corporate boards spent time discussing how to create a company that is a haven from mindless mechanization. People are not machines, robots, or interchangeable parts. That recognition should be front and center in every conversation in the boardroom. Companies should also hire CEOs who care about people and want to build a sustainable corporate culture.

Put your money where your mouth is. Companies should invest in their employees and reward managers who are self-aware. They shouldn't pay bonuses to CEOs who do not support this ethos.

When Chuck Prince was the CEO of Citi, he undertook ethical reforms in 2005, and the training he instituted was focused in the right direction. But Citi's compensation programs and its business bets didn’t align with the training he implemented and he was not able to create an ethical, supportive work environment. Based on interactions I have had with some of his staff, it seems that Prince was the victim himself of an unsupportive workforce. He is not the only CEO I’ve known to have suffered a similar fate.

It’s human nature to go for the easy, plug-and-play solution. In the wake of the Germanwings' crash, we would be missing out on the good that can come from the most tragic of circumstances if we take the easy way out.

Eleanor Bloxham is CEO of The Value Alliance and Corporate Governance Alliance, an independent board education and advisory firm she founded in 1999. She has been a regular contributor to Fortune since April 2010 and is the author of two books on corporate governance and valuation.

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