Section 172 of the UK Companies Act promotes the importance of a director acting in a way which would be most likely to promote the success of the company. This includes having regard to a number of factors including “the need to foster the company’s business relationships with suppliers, customers and others” and “the desirability of the company maintaining a reputation for high standards of business conduct.”
Whilst subject to American rather than UK legislation, United Airlines this week demonstrated the way in which failing to adhere to such principles can have an immediate consequence, not least in terms of share value. Overbooking is common practice in the airline industry but the story of the United Airlines passenger who was forcibly removed from an overbooked plane and the way in which the company handled the aftermath shows only too well what can happen when common practice gives way to a lack of customer care.
Reading the online commentaries it is interesting to see how many times empowerment, or the lack of it at least, has been cited as the reason for the story unfolding in the way in which it did. When businesses are looking to foster good relationships, whether it be with suppliers, customers or other third parties, the key is in the word relationships. Empowerment, enabling others to act is one of the five practices of great leaders. When people are empowered then they are far more able to act in order to create great outcomes, to build relationships and to further the good reputation of the business.