An apology can be an essential means of repairing trust and rebuilding damaged relationships. Yet we don’t always apologize effectively, according to Jeswald Salacuse, a distinguished professor at the Fletcher School of Law and Diplomacy, Tufts University, and a faculty member of the Program on Negotiation at Harvard Law School. We spoke to Salacuse about how best to show contrition.
Negotiation Briefings: When are apologies important in negotiations?
Jeswald Salacuse: Apologies are particularly important when you or your organization has done something to injure relations with another party and you need to repair that relationship before you can make a desired deal or regain valuable cooperation.
NB: Can you give an example?
JS: In 2004, after discovering that Citigroup’s private banking division in Japan had deliberately violated the country’s financial laws for some time, the Japanese government closed down the operation, a decision that significantly reduced the bank’s revenues. Charles Prince, Citi’s CEO, flew to Tokyo to try to negotiate a reopening. At a large press conference, he took responsibility for Citigroup’s actions, promised reforms, apologized for the bank’s behavior, and then, in a traditional Japanese act of contrition, bowed deeply from the waist, eyes fixed on the ground.
By that evening, photos of Prince’s bow of apology had created a stir. The New York Times called it “a bow seen around the world” and “an unusually public mea culpa” by a firm that more typically “circled its wagons when criticized or preferred closed-door resolutions.” Certain U.S. executives questioned the appropriateness and dignity of one of the country’s biggest banks “groveling” in front of a foreign audience. But the bow worked: Citi and Japan reached an agreement to reopen the private banking division.
NB: Why was the bow so effective in resolving what was essentially a legal problem?
JS: In the United States, many lawyers reject the idea of an apology for wrongdoing, fearing it will later become the basis of a lawsuit. Negotiators need to weigh this legal concern carefully against the advantages to be gained from an improved relationship that an apology might yield.
Prince quite rightly didn’t view the dilemma he faced as merely a legal problem. More fundamentally, he recognized, it was a relational problem—a loss of trust— between Citi and Japan, the kind that only he, as Citi’s top leader, could fully resolve. As he said in a Times interview, “We’ve been kicked out of the private banking business in Japan because the regulator has said we’re not fit to run that kind of business. . . . It’s embarrassing. That’s a big deal; that’s a really big deal.” His realization led him to judge that the benefits to Citi of reopening private banking in one of the world’s biggest economies outweighed any costs that might result from an apology.
The credibility of an organization’s apology depends crucially on the level from which it comes. Given the gravity of Citi’s actions, an apology from anyone but the bank’s top leader would have been considered an insult by the Japanese government and pathetic by the public. The same principle would hold true elsewhere. Suppose the U.S. Equal Employment Opportunity Commission discovered that a division of your company, without your knowledge as CEO, has systematically underpaid female employees. In addition to making up for lost compensation, to begin rebuilding employee trust, any apology would need to come from you, not just the head of HR.
NB: What are the elements of an effective apology?
JS: Your apology should generally include five elements. First, acknowledge the offense with a clear statement of responsibility. (“Our private bank helped clients launder funds illegally,” for example, rather than a mealy-mouthed “It is regrettable that regulatory violations occurred at our bank.”) Second, explain why the offense happened, such as, “Our executives failed in their duties to oversee the bank’s compliance with Japanese law.” Third, express remorse or contrition: For instance, “We are very sorry that we failed to comply with Japanese banking regulations.” Fourth, include statements of actions taken or to be taken to correct the situation, such as, “We have fired the executives involved and are tightening internal controls to ensure regulatory compliance.” Fifth, make a strong, clearly stated commitment not to allow similar offensive acts to happen again.
NB: Prince’s bow suggests that there’s a cultural element to apologies. A bow wouldn’t be advisable in the United States, for example.
JS: Prince knew that the Japanese government would never permit a reopening of its private bank without a firm commitment from Citi to clean up its act. He likely hoped to convince the Japanese of Citi’s serious intent not to break the law again, thereby satisfying the fifth element required of an effective apology.
He also realized that communicating that message meaningfully was complicated by cultural differences between Japan and the United States. To overcome this barrier and connect with his intended audience, Prince chose to adopt a Japanese form of apology.
It was possible some in Japan might have interpreted the bow as an insincere, blatant attempt to manipulate them, a reaction that likely would have thwarted his goals. Fortunately for him, the Japanese accepted the bow as part of a sincere apology; it therefore helped to rebuild the trust that is so vital in finance. Prince’s action effectively communicated his intended message.
