FAILURE TO ANTICIPATE: THE WALMART EXAMPLE

Posted in Anticipating A Crisis, Anticipation, Business Crisis Management, corporate integrity, Crisis Communication Strategy, Crisis Management, Crisis Management Planning, Doing the right thing, Ethics and Crisis Management, Honesty and directness in dealing with a crisis, Wal-Mart on May 3rd, 2012 by mnayor

On April 22nd, 2012 The New York Times broke a huge story on Wal-Mart’s Walmex subsidiary. The subsidiary is alleged to have systematically engaged in bribery in order to grease the wheels of  its store expansion program in Mexico. Two of its most senior executives have been directly implicated in the scheme and the subsequent cover-up. The fallout has been dramatic including upcoming Congressional and Justice Department investigations and investigations within Mexico, a precipitous drop in Wal-Mart’s stock price, and perhaps worst of all, a huge black eye to WalMart’s reputation for integrity.

 This is a story that will not go away soon, even with the short collective memory for which the U.S.public is noted, and even with the perception we have, mistaken or not, about how business is done inMexico. The investigations and potential lawsuits will wend their way forward but Wal-Mart has an immediate problem: how to revive its reputation which was essentially snuffed out by one newspaper story. Unless there are very clear explanations that go beyond mere flim-flam, cut your losses Wal-Mart. Cooperate with investigations to ensure that they are completed rapidly. Develop your best explanations. Negotiate your fines for violating the Federal Corrupt Practices Act. Make restitution wherever it is required. Terminate those who were complicit. Get your house in order as quickly as you can.

 But this article is not about what to do now. It is about what should have been done. Wal-Mart’s story is as old as the hills. It is the same story as Richard Nixon and Watergate, Bill Clinton and Monica Lewinsky, Enron, Goldman-Sachs. And on and on and on. It is the story of hubris. It is the story of deceit. It is the story of the ostrich.

 Faced with a calamitous issue, a powerful person, a powerful company, a powerful country is most likely still to believe that there is a good chance of getting away with something. Lie low and time will make the issue recede into history. Put a band aid on and no one will dare to pierce your impenetrable shell. What would have happened if Wal-Mart had entertained a genuine independent internal investigation when it had the opportunity, and made those findings known to the Justice Department and toMexico? There would have been a much smaller story. Wal-Mart would at least have been accused of being honorable. Its reputation for integrity would have been burnished. It would have paid a price but perhaps not as steep a price as it will now pay.

 Why don’t people get it? Because there is a gambler in all of us, even when the odds are poor. Is there a chance we can get away with something? Let’s give it a try. What do we have to lose? Ask Richard Nixon. Ask Bill Clinton. Ask all those who have tried to wheedle their way out of messes only to get caught. Ah but then again there is always that other guy, the guy who got away with it. We should follow him. He’s a smart guy. He knew the angles. If he could do it, we can too.  Right now things are calm. Let’s not rock the boat. But in the long run the straight-shooter almost always wins.

Crisis management is not only activated when a cris occurs. It begins prior to a crisis in order to avoid a crisis or lessen its severity. Preparation and right-thinking separate those companies and organizations from those that merely kick the can or determine to ignore or purposefully hide a potentially serious issue.

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GO FOR THE LOW MAN ON THE TOTEM POLE

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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