It is a truism that companies that have lasted 100 years tend to be those built on a foundation of ethical principles. Thomas Cook is one of those.
But recently it has declined and is in trouble over its handling of the case of two children dying on one of the holidays it arranged.
Why is this?
Some believe it is because of the reign of lawyers – the company had become so entrapped in legalistic thinking that it had lost its ‘humaneness‘. In this post, I try to look under the surface of this, and find a lot more.
Panels from the Thomas Cook Building in Leicester, displaying excursions offered by Thomas Cook
In the mid 1800s Thomas Cook of Leicester began organising excursions, using the then-new transport technology of the railways. Such excursions were a new innovation, and proved immensely popular.
His first excursion was to assist 540 Temperance campaigners get to a rally. Cook saw the potential the railways offered in providing the benefits of travel for the ordinary working person. He organised excursions throughout Britain, and especially up to Scotland. In 1851 he organised excursions to the Paris Exhibition, so that working men and women could get there.
Thomas Cook was motivated, not primarily by money or reputation, but by causes that were close to his heart. As Jack Simmons wrote, in Thomas Cook of Leicester,
“To another man, it would have been a great business opportunity. That never came first with him – though he did not ignore it altogether. To fire his enthusiasm, a project had to appeal to his ideals, his emotions; and the concept of the Exhibition, to promote international goodwill, did that strongly. …”
Thomas Cook was a Baptist Christian who took his faith seriously enough to let it affect his life and motivations. Since, at that time, the poverty that resulted from over-consumption of alcohol was a major social evil, he was active in the Temperance Movement. However, instead of being legalistic and instead of trying to ban alcohol, he tried to make good, attractive alternatives available. Excursions was one such alternative.
Image from page 303 of “Cook’s practical guide to Algeria and Tunisia” (1908)
Cook was willing to leverage new technology, not for technology’s sake, nor even to enhance competitiveness, but because it enabled him to bring good to people. He thought carefully about what his customers would need, meticulously planning his excursions, working hard to provide ‘extras’ that he knew would be appreciated by his customers. For example, he painstakingly produced an excursion handbook for each passenger, which contained not only interesting facts about the journey, but also explanations for those new to excursions. Later, he would take the trouble to arrange hotel accommodation at an inclusive price – he is the originator of the package tour. As Simmons continues,
“He was also much stirred by the thought of moving thousands of working men and woman up to London [from the English Midlands] for the purpose of enlarging their experience, of giving them something to remember all their lives.”
To this end, he was willing to risk his own capital when others were more legalistic or cautious.
Thomas Cook established the company that bears his name. Because financial reward was not his first concern, he did not make a fortune from it. Instead, what he established was the new idea of giving ordinary working men and women the advantages and benefits of travel. It was his son who made money, and made the business grow, to be one of the largest tour operators in the world.
It was care that set Thomas Cook’s excursions apart from others, and until recently the tour operator he founded had the reputation as a caring company, a ‘family-friendly’ company that people could trust. The values of those who lead an organisation can persist a long time.
But perhaps not forever …
Recently, the company founded by Thomas Cook seems to have lost its way and its values.
In 2006, a family on a holiday, arranged by Thomas Cook Travel with a Corfu hotel, were overcome by Carbon Monoxide poisoning from a faulty boiler, and sank into a coma. When the adults regained consciousness, they learned that the two children, Bobby and Christi Shepherd, had died. They hold Thomas Cook Travel responsible for the deaths, because of inadequate safety management, and an Inquest into the deaths found the children were “unlawfully killed” and that Thomas Cook had “breached its duty of care”.
The family received £350k in compensation from the hotel. The Thomas Cook company refused initially to even apologise. And then news emerged that the company had itself received compensation from the Corfu hotel of £3.5M for loss of reputation and legal costs – ten times that awarded to the children’s family. When this became public, Peter Fankhauser, CEO, issued a belated apology and offered to send half the compensation it received to the children’s charity, Unicef.
All this shows an attitude very different from those of Thomas Cook’s founder 150 years before.
As a result its share price tumbled, and inquiries on its online website fell by 20%, while a new Boycott Thomas Cook page received thousands of ‘likes’.
The reputational damage is enormous. Ian Griggs of PRWeek commented (May 20, 2015),
“The great British public plays a critical role in allowing brands to prosper or collapse after a crisis. … there are things we find intolerable and children dying needlessly is one of those things.”
He cited a tweet by Alistair Vince, of Watch Me Think:
“Don’t know who is advising you Thomas Cook but I’d fire them. Disgraceful response, company reputation in tatters. Pathetic.”
Ian Griggs continues,
“So will we forgive and forget? It depends on what Thomas Cook does now. A reluctant apology extracted in the face of a media storm is a very shaky start in reinstating trust.”
Then he makes the interesting point,
“As a nation we respond well to humility; even if Peter Fankhauser didn’t want to imply his company was to blame by offering an apology to the parents of Bobby and Christi Shepherd, a little humility would have gone a long way in showing his company actually cared. The Unicef donation smacked of a quick fix that missed its mark.”
Inquest into deaths of Bobby and Christi Shepherd concludes they were unlawfully killed. Statement from their mum: pic.twitter.com/AkxXAXRJRY
— Danny Savage (@dannysavage) May 13, 2015
Thomas Cook has lost its ‘humaneness‘, remarked John McEwan, a former senior employee of Thomas Cook, on the BBC’s Today programme on 20 May 2015. He believes that though Thomas Cook was “a very caring company”,
“My personal view is that they have been guided by lawyers, by the legal advice they have been given … They have been very clear in trying to protect their position from a legal perspective. What’s been lost sight of is the human tragedy here.” See GlobalLegalpost
It seems that the values of the company have changed, away from ‘humaneness’ and a desire to bring advantages to ordinary people, to legalistic self-protection. It is when lawyers are in charge that apologies become reluctant and demands for compensation are resisted.
Phil Hall, founder of PHA Media, made the point:
“[Thomas Cook]’s core customers will not be lawyers, but the man on the street, and you have to look at how they would react to the case. You have to show humility and you have to say sorry properly.”
Lawyers are not bad people, and they are important in an organisation. What went wrong was that the company paid too much attention to the legal aspect, and forgot the ‘humane’ aspects on which they had been founded. For sustainable success, all the aspects must be active and work together.
Herman Dooyeweerd was a Professor of Jurisprudence at the Free University of Amsterdam, but he knew well the limitations of legalistic thinking and the importance of other aspects. He was also a consummate philosopher, who investigated the structures of reality in a way few others have done, and delineated fifteen aspects that guide our activity and make it meaningful.
He concluded that the legal aspect has no more importance than any other. Close to it is the aesthetic aspect of style and harmony, and ahead of it are the ethical aspect of attitude and the ‘pistic’ aspect of belief, vision, loyalty and trust. (For the full 15 aspects, see Aspects of Reality As We Experience It.)
Dooyeweerd proposed that when we function well in all aspects then sustainable prosperity is likely (in its fullest sense including peace and justice, as captured by the Hebrew word Shalom and the Arabic word Salaam). When one aspect is unduly elevated in importance and other aspects are ignored, then that prosperity is jeopardised and, over a period, declines irreversibly.
Thomas Cook as founded 150 years ago, fared well in most aspects:
As a result, Thomas Cook’s company gained and retained success.
Sadly, this deteriorated. Its vision shifted subtly, from serving others to serving and protecting itself, and this had an impact on all its other aspects. Its concern to bring benefits of travel to those who could previously not afford them, became merely a badge from its history. Its concern to provide good service deteriorated to being merely a means to competitive self-advancement.
So its functioning in the ethical aspect of self-giving contracted, and the space left by this was filled by an enlarged emphasis on the legal aspect. The erstwhile harmony of the company was affected, and the idea of aesthetic enjoyment of customers became commercialised, reduced to the demands of the economic aspect. The economic aspect became the dominant measure of success. The social aspect deteriorated, so that the importance of relations with customers shifted subtly from a good in itself, to serving economic interests. They suffered at the hands of an overweening legal aspect – as we see in the reluctant apology and attitude to compensations.
This is not to say that legal issues are unimportant. They are. It is right that lawyers should have significant influence in any organisation, because every organisation must do what is just and function in a legal context. But when legal issues become more important than ethical issues, than ‘humaneness’, a decline has already set in. The “humility” that both Griggs and Hall emphasise is a mix of the ethical and pistic aspects.
The moral of this Thomas Cook Corfu deaths account is that those who set the tone of an organisation should be always alert to how the organisation is functioning in all its aspects, especially those of vision and humaneness (pistic and ethical).
Lawyers who have influence in any organisation should be always keenly aware that not everything can be reduced to legal issues, and that undue emphasis on legal considerations can jeopardise the values and vision of the organisation.
This is especially true when those who lead the organisation have a background in law. They should, therefore, ‘bend over backwards’ to ensure that the whole organisation is permeated by a vision of a Good that transcends the organisation and is not self-centred, and an attitude of humaneness and self-giving that tempers the strict demands of laws and rules. In short, humaneness, humility and all the other aspects.