PENN STATE AND OLYMPUS CORP.: WHAT THEY HAVE IN COMMON

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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CRISIS MANAGEMENT VERSUS HUBRIS

Posted in Business Crises We Create, Business Crisis Management, Crisis Communication Failures, Crisis Management Services, Crisis Mitigation, David cameron, News of the World, reputation management, RUPERT MURDOCH on July 18th, 2011 by mnayor

Does history merely repeat itself instead of teaching us anything? Based on business news about movers and shakers one could deduce that many corporate executives just don’t get it and never will.

After the debacle of 2008 when many financial CEO’s were caught in the proverbial headlights, you would think that a tough lesson would have been taught – and learned. Instead even Teflon-coated Warren Buffet decided that his power, authority and standing in the world were enough to allow him to initially stonewall the public about his executive Dave Sokol’s purchase of Lubrizol stock. Not to be outdone Rupert Murdoch has raised the bar even higher.

In a scant two weeks his empire, headed by the subtly named The News Corporation, has experienced what many would not wish on their worst corporate rival. After approximately four years of an on-again, off-again Scotland Yard investigation of phone hacking by News of the World tabloid, that paper has folded, Murdoch’s attempt to acquire the remaining interest in British Sky Broadcasting (BSkyB) has been aborted, and a slew of his corporate executives have been arrested, resigned or otherwise had their reputations besmirched. Rebekah Brooks the CEO of News International, the parent of the late News of the World resigned in disgrace, after two attempts at resignation that were not accepted by Murdoch. Also, Les Hinton, publisher of the Wall Street Journal tendered his resignation the same day.

The details of the outlandish accusations are certainly important but how they were handled by Murdoch is equally important and instructive. For a “media” guy, you would think he would know how to handle as big a story as this. Instead, up until yesterday we heard nothing from Murdoch – and then when we did, we heard the hrrumphing of a corporate big-wig instead of the measured pronouncements of a savvy media executive. Last week Murdoch flew to England from the U.S. Very quickly News of the World was closed, after a 168 year life. Yesterday he told a reporter for the Wall Street Journal that the matter was handled “extremely well in every way possible”. He further stated (apparently referring to his upcoming testimony before Parliament’s select committee on culture, media and sport on July 19th at which initially he and his son, James, declined to appear) that he was eager to address things said in Parliament some of which “are total lies”. Finally, he refuted the allegation that he might spin off his newspaper operations into a separate company as “total rubbish”. He did visit the family of Milly Dowler, the thirteen year old who was killed and whose phone was hacked; and extended apologies to the family. This last weekend he placed full page apology ads in British newspapers.

What kind of media executive fails so miserably in handling a business crisis like this? Who leaves a yawning time gap of two weeks before stating anything? If we assume the complete innocence of a CEO, we would then expect that leader to dig for the truth and let the public know immediately. Silence can only foster the impression of knowledge and guilt. An announcement that the matter is being extensively investigated and that such conduct is not tolerated in the organization goes a long way to safeguarding one’s reputation and possibly the organization itself (many pundits found the sudden closure of News of the World suspicious, based on protecting the Murdoch empire from legal liability). There were and may still be ways to staunch the bleeding, but it may now be very difficult to do. Clearly Murdoch did little or nothing immediately. As a result his empire is suffering and will continue to do so, as stakeholders in Britain and worldwide continue to question his tactics and the integrity of his enterprises.

Many people in the newspaper industry who have been interviewed about the phone hacking scandal find it implausible that editors and publishers wouldn’t know about the sources of stories. They must have known about the hacking and therefore it was both a bottom up and top down conspiracy. Rupert Murdoch may have had knowledge and thus the reason for the code of silence to date. It will be interesting to hear his testimony. At all costs he must avoid appearing out of touch with his businesses, imperious because of his power, or delusional that his connections will protect him. From David Cameron on down, the flight to high ground has begun.

Events seem to be gathering speed as this is being written for publication. Rebekah Brooks was arrested and released on bail. The leader of London’s Metropolitan Police Services, or Scotland Yard, Paul Stephenson, and his deputy have stepped down under growing allegations that the respected organization was very cozy with members and agents of the Murdoch empire; and more information is surfacing about David Cameron’s personal relationships and frequent meetings with similar individuals.

As individual reputations begin to crumble, little effort seems to be directed towards salvaging the Murdoch enterprises, some of which are very much worth saving. Placing someone who is untainted in a position of authority would appear to be necessary and Joel Klein would seem to be the man to take charge right now. The businesses must be separated from the personalities and be made to run as business as usual. There is no sense in allowing individuals – any individuals – to drag down an entire business empire. Klein has a good reputation (a lawyer who was head of the New York City School System until he joined Murdoch), and can direct the “clean” Murdoch business units on a steady course until the mess can be sorted out or until it at least simmers down.

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CHRISTIAN DIOR – MEET CHARLIE SHEEN

Posted in Charlie Sheen, Christian Dior, Crisis Management, Crisis Management Consulting, managing your reputation in good times as well as bad, negative publicity, problem employees, reputation management, THE RHODELL GROUP on May 11th, 2011 by mnayor

Ah, to be blessed with an employee as talented as John Galliano. The problem is the more creative and (in)famous an employee is, the larger his head becomes and the more difficult it is for a company to reign in the beast.

What to do with an uncontrollable employee who is as much or more in the limelight as the company itself. The first rule of thumb is that the COMPANY is more important in the scheme of things than the employee (unless they are one and the same. See Martha Stewart). Certainly a Company can turn a blind eye to little things if those things do not really reflect poorly on the Company. After all you can’t go around canning every employee who gets a speeding ticket.

Nevertheless, there are very visible employees who act out in public and when such actions reflect poorly on the Company, emphatic, decisive action must be taken. The public for the most part applauded the actions of Christian Dior. John Galliano, its head designer, was canned on February 28th for making racist and anti-Semitic remarks caught on video. But prior to that, on February 25th, he had been suspended (pending the results of an inquiry into the matter) for assaulting a couple in a Paris bar, using similar anti-Semitic and racial slurs.

Now, here’s the rub. Did it take a venomous and outrageous video to get Dior to take its final action or was Dior at that point already. Perhaps the Company had already chosen the guillotine for Galliano. And if so, good for them. But the small time lapse brings up the real issue which should count as a lesson for most companies.

Most corporate executives when faced with a crisis like the Galliano affair want to accomplish two things: 1. Look like they are doing the right thing and 2. Salvage the talent in order not to harm the company. It’s the old slap on the wrist routine with fingers crossed that no one is really watching. In the case of Dior only a few days elapsed from the time of the first reported incident to the announcement of his firing. Assuming Dior had no prior information that executives chose to ignore, let’s give the nod to Dior, for realizing that there are thousands of talented designers out in the world waiting to be discovered and for decisive action that reflected very positively on this venerable house.

Contrast this with the affaire Charlie Sheen. On March 7th it was announced by CBS and Warner Bros. Television that Sheen had been fired from the hit TV show Two and a Half Men. It is not necessary to catalog the antics of Sheen over the last months to the present. Suffice it to say that the drunken rampages, coked up babble and other extraordinary behavior reflects a troubled, delusional mind and reflects poorly on both CBS and Warner. But what reflects even more poorly on them is their handling of the crisis. Inaction and vacillation seemed to have guided them until they were backed against a wall. The most telling comment to be made on behalf of the companies was that he was a good employee, was never late, knew his lines etc.

Having your cake and eating it too, is not always possible. A more respectable and man-up approach would have been to at least put Sheen on indefinite suspension from the onset until he got the help he needs. This would have shown more concern for the actor as an individual and would have shown that doing the right thing was more important than squeezing out as many episodes as possible before the implosion. Look where it got CBS and Warner. Egg on its face as well as a suit.

But that’s human nature. No one wants to self immolate. Companies almost always want to salvage what they can. But the moral of the story is that when you do take the right course of action, you almost always live to see another day. Perhaps bruised but with more dignity and respect. Just make sure your employment contracts allow you to make subjective judgments about the injury to your reputation that an employee is creating. An employee’s job description should always contain the obligation not to undermine, and even to bring honor to, your institution. Christian Dior – what would you have done?

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THE DIFFERENT USES OF REPUTATION MANAGEMENT

Posted in managing your reputation in good times as well as bad, publicizing good works, reputation management, the benefits of doing no harm on February 1st, 2011 by mnayor

In times of business crisis, many executives turn to reputation managers or public relations consultants to stem a tide of negative publicity, staunch the flow of bad press or put a spin on events that will make their companies look better. But managing your reputation is far more than that. Many companies understand the benefits of continual reputation monitoring as an integral part of their successful management and capitalize on good news on a regular basis.

Why are so many companies today fighting fires instead of basking in the sunlight of good press? Perhaps it is because from the inception of our country the concept of capitalism has been somewhat muddled. Capitalism envisions private ownership and means of production with the resulting benefits or profits to those same private owners. It is the counter theory to government control. Capitalism is also a theory of freedom – free markets and freedom from undue government interference.

Our founding fathers did not, in all likelihood, support these great ideas for the purpose of allowing private enterprise to take advantage of the public. Of course, our history is replete with charlatans and snake oil salesmen. After all, “there’s a sucker born every minute”. But one would be hard pressed to believe that an overriding principle of capitalism is to milk the public for private gain. Instead, capitalism is a catalyst for stimulating individuals to take risks and seek their own rewards by providing for a free market and private profit. Hopefully, those who engage in capitalistic endeavors are creative, savvy, have a competitive advantage, a better product, or better marketing and distribution channels.

An adage that actually predates the Hippocratic Oath is “First, do no harm” or primum non nocere. Its meaning is obvious, especially in the medical profession. But it certainly has applicability to the business world as well. In the quest for profits, a business should “first do no harm”. Unfortunately, for some the quest for profits is overriding and justifies questionable actions. The potential for profit is great and the risk either small or not easily measurable.

While the vast majority of business managers do not have a wish to do harm, how can a business capitalize on that achievement with the public? Actually much can be made of doing no harm: honors from customers, industry awards to managers, press releases announcing “50 Years of Service to the Airline Industry”, and so on. Naturally, new improvements in existing products are another whole source of good press.

So, doing no harm can in fact enhance a reputation. But doing “good” can enhance it even further. New innovations and developments, acquisitions, a new plant, support for local and national charities, management participation on government advisory panels, the list is endless.

Reputation management is an ongoing process. It is not something that is rolled out in emergencies to provide cover. In order to capitalize on a reputation – first, do no harm. The rest will follow.

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