Not every public apology from a CEO resonates — which is why a recent memo from Poshmark founder Manish Chandra stands out, says a leadership expert.
Poshmark, which was acquired for roughly $1.2 billion by South Korean internet company Naver Corporation in 2022, is an online marketplace for buying and selling new and secondhand clothing. Anyone who sold a piece of clothing on the platform for more than $15 paid a 20% fee to the company, until October 3 — when the company shifted part of the fee off the sellers, and onto the buyers.
Customers revolted, leaving Poshmark sellers stranded: For many, the loss of sales was worse than any savings they pocketed from the reduced fees, Chandra wrote in an apology blog post last week.
“We have decided to revert to our original fee structure effective October 24, 2024,” he wrote. “The outcome of the change did not meet our expectations and I sincerely apologize for the disruption and impact that this has had on you. We hope this decision reflects our commitment to listening and evolving based on your feedback.”
That’s a rare effective CEO apology, says Talia Fox, a leadership strategist, author and head of KUSI Global, an executive consulting firm. The Poshmark community seems to agree: Users posted on the company’s Reddit forum with comments like “This is such good news!”, “So happy!” and “Maybe I’ll get some sales again.”
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Public apologies tend to fall short because simply saying “I’m sorry” isn’t enough, Fox tells CNBC Make It. But Chandra was “agile enough to address [the mistake], change it and then admit that it didn’t turn out the way that they wanted,” she says.
Chandra bullet-pointed the exact ways he planned to “make it right,” including offering a “rebate the difference in seller fees on listings created or edited during the fee change period” and getting rid of the buyer’s fee.
“Gone are the days where we can just have wordsmithing that sounds great,” says Fox. “Even the smallest gesture … some tangible incentive that backs up the apology [can go a long way].” Let your employees and customers both know “what’s in it for them,” she adds.
‘Not everyone is going to be happy’
An effective apology doesn’t necessarily mean a perfect one: In the vast majority of apology-worthy situations, a CEO’s response won’t please everyone, Fox says.
“New Poshmark fees were ridiculous for buyers but then just returning to original fees feels even more upsetting as a seller,” one social media user posted to X . “How could you not find a happy medium? You lost buyers now [you’re] going to lose sellers.”
“I’m getting whiplash,” another person commented on Reddit. “Time for Manish to turn over the reigns to someone else.”
To determine your best path, prioritize the people who matter most to your company’s longevity, says Fox: “There is a time where there are certain people that need to be happy in order for you to continue to be profitable. And the sellers on Poshmark need to be happy, because that’s basically their model.”
Chandra’s swift apology and recommitment to Poshmark’s sellers falls into a three-part formula that Fox advises executives to use when they’ve made a misstep or are facing a difficult situation: TCT, which stands for timing, culture and track record.
“Timing is to really look at what else is going on [and ask yourself], ‘Is this the best time to make a change in the culture?'” says Fox. “And then the track record, have you made other changes that didn’t go well, or were there other changes that you didn’t pull back on? And then that can drive how you’re going to strategically manage an apology.”
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