Thomas Cook Group faces serious risks to its brand image

May 18, 2015

A highly damaging story had developed following the way Thomas Cook dealt with the deaths of two children on a package holiday in Corfu. The personal tragedy also threatens the reputation of the organization

The developing story

Approximately ten years ago, a family holiday turned to tragedy.

Last week [13th May 2015] an inquest in Wakefield Yorkshire found a verdict of unlawful killing, and that Thomas Cook had failed in exercising its duty of care.

Thomas Cook responded by sending a letter of apology to the parents who claim to have seen it only through journalists covering the story.

According to The Guardian

According to The Guardian, The apology was reportedly sent by Thomas Cook’s chief executive, Peter Frankhauser, two days before it was revealed that the company received £3.5m in compensation from the owners of the hotel in Corfu where the tragedy occurred in 2006.

Christianne and Robert Shepherd, who were on holiday with their father and his partner, were overcome by fumes from a decrepit boiler.

Sharon Wood and Neil Shepherd said in a statement on Sunday that they had not received the travel company’s letter, and had only been shown it by reporters. “It is disgraceful that after all we’ve been through Thomas Cook are still putting us last in the equation.”

The popular press began to call for reparations from Thomas Cook to the family.

Background to the Thomas Cook group

Over the last decade the company’s fortunes have fluctuated wildly. The venerable firm of Thomas Cook was the prey of financial takeovers which resulted in considerable reconstruction, although the value of the historical brand has been recognized.

Harriet Green was appointed CEO in 2006 at around the time of the Corfu affair. Her leadership has been widely acknowledged as the outcome of an outsider successfully brought in with fresh ideas for rescuing the new company.

In earlier posts, I wondered whether she would be able to make an impact on the strongly entrenched corporate culture.

Hariet Green was replaced in November 2014 by Peter Frankhauser. The company stated that it needed someone more familiar with the leisure industry. Exit Harriet with a controversial golden goodbye, and promotion for the Thomas Cook insider from his role as Chief Operating Officer.

The sleeping crisis for the Company

For the company, attention to the Corfu hotel tragedy may have been replaced by concerns for more pressing strategic and financial difficulties. But the family fight for support began to attract media attention. Four years after the fatalities, [in 2010] the BBC had reported that:

a Greek criminal court [has]convicted the manager of the Louis Corcyra Beach Hotel in Gouvia and two other staff of manslaughter. The travel representatives of Thomas Cook were not changed.

Thomas Cook said in a statement: “What happened in Corfu was a tragedy and the thoughts and sympathy of everyone at Thomas Cook will always be with the family and friends of Christianne and Robert Shepherd.

“We have always maintained that this tragic accident was the result of a unique set of circumstances, none of which could be the responsibility of the company or [of its representatives]

“We believe that they should never have formed part of this court case.”

Further delays had resulted in appeals for the intervention of The Prime minister David Cameron before legal aid was provided.

An embarrassing development at the inquest

As the inquest proceeded this month, it emerged that Thomas Cook had received compensation from the owners of the hotel. At the same time, the company sent a letter ‘saying sorry’ to the parents who had themselves narrowly escaped death in the original incident. The parents claim they learned of the letter from journalists covering the story.

“We are all deeply shocked and saddened”

I have not [yet] been able to read the letter. The company is refusing to comment further, although through a spokesperson has announced how deeply shocked and saddened the company remains over the tragic events.

Questions for students of leadership and CSR

Can you ‘read’ the story in terms of dilemmas facing Thomas Cook and its leadership?

What might have been unintended consequences of the decision to remove Harriet Green as CEO?

How might you as a new CEO dealt differently with the emerging story?

Why?

To be continued


Thomas Cook: Harriet Green takes on a historic culture

October 15, 2013

Harriet GreenThomas Cook is an iconic name among British travel agencies. Its new CEO Harriet Green faces tough times for the travel sector as well as having to deal with a resilient corporate culture.

Some years ago I researched the company after reading a historical biography. I was struck by the corporate culture, which reminded me of the provincial ‘assurance companies’ at the time, loyal staff, solid and traditional in its values. Harriet Green faces interesting challenges.

A recent interview in The Independent sketches the leader and her possible dilemmas.

The shelves are wedged with books, as you would expect for a history graduate, and another nod to the past is mounted on the wall overlooking Ms Green’s shoulder: a sepia-tinted portrait of Thomas Cook himself.
She hopes to take a leaf out of the founder’s book. In 1841, the Baptist preacher arranged to take a group of temperance campaigners to a rally 11 miles away, charging a shilling each to cover rail fare and food.
More innovation followed over the decades. Thomas Cook was the first company to develop travellers’ cheques, a low-cost airline and the round-the-world trip. Now Ms Green is leading the march for new products beyond the company’s sun, sea and sangria core. That means city breaks and winter sun and catering better for discrete categories of holidaymaker, such as Nordic divorcees.

She has closed shops but refashioned others, which look “a lot more Apple than travel”. Sunseekers can now load their vacation wishes on to an iPad and take them home to discuss with the family.
Ms Green has been vocal about women putting themselves forward for top jobs, and wrote to Frank Meysman, Thomas Cook’s chairman, to tell him she had the skills he needed even though her background was in electronics, not travel. “I felt I had enough experience, that I would be pacy, resilient and be able to generate belief,” she says. Thomas Cook shares fell when her appointment was announced – but have risen tenfold now.
“You ask any chairman, any chief executive: it is about getting women, from 13-year-olds to 25-year-olds who take business degrees, to think running a business is good and positive and fun.”
Ms Green climbed the corporate ladder starting as a trainee at Macro, which distributed semiconductors, and rising to be UK managing director. Her next company, Arrow Electronics, gave her a larger canvas. After setting up its European network, she travelled to Africa, Asia and America.

“My last meeting is usually at six or seven and then I do my reading and emails. I make a commitment to everyone I’ve ever worked with that every email they send me will be responded to in the day. I’m the only chief executive I know who does all her own emails – that is something very personal and important to me.”

Ms Green has shaken up her senior team at Thomas Cook, with a third of her lieutenants promoted from within and a third new appointments.

Leaders and leadership

Some aspects of culture in the company seem to have survived. I noted the mention of the founder’s portrait in the article cited above. It’s the one that was an ever-present ghost of Thomas Cook in the old corporate headquarters.

As for emails: I applaud Harriet Green’s energy. But with 30,000 staff with direct access, I wondered about the cultural discouragements still present to deter most employees attempting to communicate ‘over’ a line manager. Maybe that’s how the emails arrive in manageable numbers each day?