Posted in Doing the right thing, Ethics and Crisis Management, Honesty and directness in dealing with a crisis, Penn State, Protecting the organization at any cost?, Sacrifice the Little Guy, Throw an employee under the bus, Uncategorized on November 19th, 2011 by mnayor

(Or What I learned from Abu Ghraib)

Watching TV commentary and reading newspaper and internet accounts of the awful Penn State story, I am puzzled. Yes, there has been some effort to uncover what occurred, but very little in the way of reporting why the sexual abuse lasted so long, with so many people in authority knowing about it. And yes, Joe Paterno was fired and two other officials at the University indicted for perjury. But very little has been made of the responsibilities these people had, except for one person.

I’m not anti Joe Paterno. He’s probably a great guy and obviously a great coach. However, I have seen comments in defense of Joe that he had done what he was legally required to do. Not a very high bar for sure. What I am against is shining a spotlight on the low man on the totem pole. Throw him or her under the bus. The reputations of the organization itself and its various chiefs are much more important to preserve than that of the little guy who nobody ever heard of. Among reputable high-minded individuals, it puzzles me indeed that reputation preservation always trumps honesty – especially when honesty would do more to preserve reputations than buck passing.

So, who is that one person who is getting all the attention? Mike McQueary, who witnessed Jerry Sandusky in the showers with a boy, was a 28 years old graduate assistant at the University. Granted he wasn’t a youngster but he certainly wasn’t a seasoned member of the staff. There were certainly older and more entrenched members of the Penn State coaching staff. In fact, everyone else must have been an authority figure to him. Not easy to tell someone older and more powerful than you to cease and desist. In a perfect world yes Mike McQuaery might have stopped the actions of Sandusky and called the police. In a more realistic world Mike McQueary was brave enough to report the incident to Joe Paterno. A lesser human being might have forgotten what he had seen. Instead we read headlines like McQueary Action Drags Penn State to Shame. Every accusation that has been leveled at McQueary can be leveled at Joe and everyone else on up the line. What we have is clearly an attempt to scapegoat a very important matter instead of confronting and dealing with it head on.

You can hear on the sidelines of any Penn State game coaches yelling frantically to players to MAN UP. Penn State, heed your own advice.

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Posted in Crisis Communication Response, Doing the right thing, Ethics and Crisis Management, Olympus Corp., Penn State, reputation management, Sacrifice the Little Guy, Taking Responsibility for actions of an organization or its employees on November 19th, 2011 by mnayor

Two scandals this week couldn’t seem more different. One involves allegations of pedophilia sex at a university, Penn State and the other financial shenanigans at a large Japanese corporation, Olympus Corp. Most in the public relations field would exclaim that both matters require “crisis management”, but there is a closer commonality than that. We have to look at the underlying cause of these scandals to see what they share in common.

In many crisis situations the crisis comes about by an outside force or a factor beyond an organization’s control or ability to anticipate. There are, of course, natural disasters. There can be strikes, new legislation, unexpected competition, employee dishonesty, product contamination and the list goes on. Most organizations are “forgiven” or the matter is soon forgotten if the issue is dealt with promptly. Even the BP Gulf oil spill has receded from our memories because the company dealt with the calamity, no matter how ineptly.

But certain “crises” are either created or exacerbated by an organization itself. There are many participants, willing or scared or just amoral who put the organization first. These types of issues should not be looked upon as crises but as severe ethical failures. Oftentimes the principal players either feel they have no choice, or stick their collective heads in the sand or worst of all, feel they won’t be caught and therefore have no compunction about doing what they see as best for the organization. This is what Penn State and Olympus have in common –people have done something unconscionable and others who know about it do nothing or as little as possible. No one wants to be a whistle blower. Willingly or unwillingly, everyone wants to be a loyal team player.

From politicians to entertainers to corporate CEO’s, there is an ever-growing tendency to believe “I can get away with it”, or “it’s not my problem”, or “let’s not rock the boat” or “I’m not going to stick my neck out”.

These days the words “ethics” and “morals” are used interchangeably Elijah Weber described the difference this way:

“Morals, quite simply, are beliefs about right and wrong conduct….They do not require reason, consistency, or thorough analysis in their initial shaping or practical application…. I can believe that lying is wrong because my grandmother told me it was, and that is what I believe. No further justification is required. Ethics, on the other hand, is a reason based cumulative system of moral decision making. It is built upon one or a few basic principles and requires that we be thorough, honest, and comprehensive in making statements about right and wrong. Ethics is about building the kind of world we want to live in, and developing a consistent process by which to achieve this. Ethics is an advanced expression of morality.”

I like this analysis of ethics: a few basic principles that require that we be thorough, honest, and comprehensive in making statements about right and wrong. It is about building the kind of world we want to live in…Do we wish to live in a world where we turn a blind eye to child sexual abuse? Do we want to turn a blind eye to Ponzi schemes and product failings and financial manipulations built on sand that will have severe consequences to investors, employees, and consumers? I think not.
No one is naive enough to think that every company, every charitable organization, every university will adhere to the straight and narrow but wouldn’t it be refreshing if we could count on ethical behavior most of the time. Wouldn’t it also be nice if every honest whistle blower who performed a public service wasn’t maligned and attacked as a weasel or turn-coat? Wouldn’t it be interesting if every organization that breached ethical norms, faced its predicament responsibly Since it is not possible to have a perfect world, shouldn’t we at least shine a spotlight on those who perpetuate bad conduct no matter how revered, competent and respected they may have been?

I fear that the opposite usually occurs. The whistleblower is a turncoat. The person who tried to do the right thing didn’t do enough. The head honcho and the organization are protected as best as possible. The little guy gets thrown under the bus.

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Posted in Anticipating A Crisis, Bank of America, Banking Industry, Business Crises of our own making, Business Crisis Management, Crisis Management Consulting, Crisis Management Response, DECISIONS IN A VACUUM, Excessive consumer fees, negative publicity on November 6th, 2011 by mnayor

The first time I noticed the flagrant imposition of an additional fee for a business service was when ordering Broadway tickets on line. It was a six dollar “service fee” per ticket. I paid the fee but was puzzled. I was paying the company for a service which they were in business to provide. Strange. Do architects charge an extra fee for putting their plans on paper?

Since then of course things have gotten much worse for American consumers. Airlines seem to charge for everything except the air you breathe, and probably don’t, in order to avoid a debate on how inferior that air is. Everywhere you turn there are extra fees for services and “things” that were once free. Understandably businesses and industries are trying to maintain their financial positions. Many want to bring back the good times when they were flush. Because of the weak economy, and the higher cost of resources, they must extract more from the customers who keep them in business in the first place. Obviously, much analysis has gone into the “cost” (interpreted to mean loss of customers and bad press) of implementing new fees. It is clear that most businesses are willing to sacrifice a certain percentage of customers who will bolt in anger, if the economics work.

But it appears as if we are entering into a new phase of business/customer relations. Customers are fighting back, asserting essentially that business has to have skin in the game too. In bad times business cannot expect to maintain the same level of profits or to ride on the backs of consumers in order to do so. Case in point: Bank of America’s announcement in September that it was going to impose a $5.00/month fee for debit card use. A debit card fee is a charge for you to access your own money for commercial or other financial transactions. It is the same money you have deposited with a bank and the same money it needs to conduct its lending business.

Some analysis definitely went into the Bank’s decision. New regulations have reduced the payments merchants pay the Bank for processing debit card payments and BofA didn’t want to just absorb the loss of income. Fair to say that many other banks also entertained the idea of customer debit fees. Some have implemented them. But, after witnessing the backlash from BofA customers, many backed off. BofA itself announced at the end of October that it would allow customers to avoid the fee if they maintain a minimum balance, or arrange for direct deposit of paychecks or use BofA issued credit cards. But just a couple of days later, it fully capitulated to the pressure and scraped the plan in its entirety.

Unlike Netflix which lost 800,000 customers after announcing a 60% price increase a couple of months ago, BofA will likely weather the storm without a major loss. Why? First, it announced its new fee well in advance and wasn’t the only bank contemplating debit fees, so it didn’t look like the only bad guy. Secondly, many of its customers are locked in to BofA with automatic bill paying, multiple accounts and complicated relationships. Unraveling a bank relationship can be complicated. Finally, BofA certainly calculated the loss of customers it would have to endure if it implemented the plan and decided it was worth it. Now that it has jettisoned the fee, many fewer people will transfer their banking relationship. But unquestionably, some damage has been done. There is a strong movement currently underway in the country to pursuade the public to withdraw from national banks and transfer business to community and regional banks and local credit unions.

People are no longer rolling over. They are fighting back, and businesses should realize that weathering an economic storm (or a regulatory reversal) is something to which all segments of society are subject. One segment is not entitled to be made whole at the expense of another. Profits made in good times cannot always be sustained – especially if they can only be sustained on the backs of others who are suffering just as much. Businesses and industries should be rewarded for innovation and creativity, for new and better goods and services, not for figuring ways of squeezing the hand that feeds them. The moral of the story is quite simple: a business can create its own crisis by being too greedy. Before making a dramatic decision that could adversely effect one or more of your stakeholders analyze both the short-term and the long-term costs. Many of your investors may also be your customers. Aiming for profit maximization may not necessarilly please everyone, especially if bonus maximization is the underlyiong motivation and result.

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