Google's recent response to a viral anti-diversity memo shows a major shift from focusing on the customer to focusing on employees and company culture, says Shane Green president and founder of global consulting firm SGEi.
Google distanced itself from the memo and refused to back down from its decision to fire the author, even though it received intense backlash, Green tells CNBC Make It.
Other companies, he says, should take note of this when dealing with public outrage.
"Customers are more forgiving than employees," says Green, who has consulted for clients such as the NBA and BMW. "How employees are treated determines if they stay at the company … and how they treat customers."
Here are three crucial steps he says business leaders should take when responding to a scandal:
1. Acknowledge the mistake
Green says that companies must acknowledge a mistake particularly as it impacts the company culture. "Google did it perfectly," he says. "[The CEO] acknowledged the conflict with its values."
Green points to Wells Fargo, which has been embroiled in a fake account scandal. The bank had an incentive in place, which encouraged employees to hit high sales goals and open new accounts. This reportedly led to employees creating more than 2 million deposit and credit card accounts that were not authorized by patrons, in order to generate fees and revenue for the company.
Though Wells Fargo's CEO said he wasn't aware of the bank's sales practices until 2012, he knew of specific cases apparently as early as 2002.
Once this became public knowledge, "people started to pick up on it and say, 'Hey, this isn't in line with your company values,'" says Green.
In contrast, he says, Google was the first one to point out that the memo did not align with the company's beliefs.
"Google really came to the heart of it," he adds, by "acting and reacting quickly."
2. Protect your employees
"Don't throw your employees under the bus," says Green.
As the Wells Fargo account scandal was being uncovered, the bank's leaders blamed its workers and fired over 5,000 employees. Yet "the CEO resigned with a huge payday," says Green.
Volkswagen acted in much the same manner during their emission scandal, says Green. The company was caught cheating on American air pollution tests between 2008 and 2015. Once this became public knowledge, says Green, senior executives "threw their engineers under the bus," rather than take ownership of the issue.
"The number one thing [these executives and CEOs] did wrong was to not take the blame," says Green. "Support your employees. How you stand behind your employees is very important."
Google for example, stood behind the many employees within the company that felt targeted by the memo. In a company blog post, Google's CEO Sundar Pichai said that the writer was fired for "advancing harmful gender stereotypes" in the memo and that employees "shouldn't have to worry that each time they open their mouths to speak in a meeting, they have to prove that they are not like the memo states."
Google also took it's employees feelings into consideration when the internet giant canceled a highly anticipated meeting discussing gender issues, after some workers expressed concern over online harassment they were receiving.
3. Listen to your workers
Green says that business leaders should "invest and communicate with employees" when a company is embroiled in a scandal, as Google did. They must also show their employees "humility and honesty," make sure there are actions that are being taken and "work with employees to turn it around."
In fact, in Wells Fargo's case, Warren Buffett told the new CEO Tim Sloan to "move quickly and to ask a lot of the team," to help the bank get back on track.
Green adds that "[company] values are how you act and interact." In order to promote strong values across the board, it takes strong leadership and connecting with employees. He points to Uber's ongoing search for a new CEO to revamp the company after months of scandal.
"The Uber scandal became big because they had weak leadership and it's been two to three months where nothing major has been done," he says.
The ride hailing apps most dangerous issue is how they connect with employees through this post-scandal process, says Green. "Yes, Uber is still making money but what's the company morale?"
Finally, Green says that companies will increasingly be forced to shift the focus from customers to employees, especially as millennials enter the workforce. Why? Because young professionals are "so much more purposeful and selective," he says.
However, he warns that cultural change takes strong leaders who are willing to communicate with their employees and actively "engage the team in the process and the conversation."
"You can't change the company culture by sitting in your executive suite," says Green.
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See also:
Female Google engineer on viral memo: 'I was painfully unsurprised'
The US has a shortage of tech workers. Here's how kids and schools can solve the problem
Millennials are more likely to prefer being fired over text or instant message
