NICKEL DIMED AND FIGHTING BACK

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.

Tags: , , , , , , ,

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.

Tags: , , , , ,

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.

Tags: , , ,

THE NEGATIVE PUBLICITY ENIGMA

Posted in Anticipating A Crisis, Business Crises of our own making, Business Crises We Create, Business Crisis Management, Corporate Crisis Management, Crisis Communication Strategy, Crisis Management, Crisis Mitigation, negative publicity on December 1st, 2010 by mnayor

Robert Walker wrote an article recently in the New York Times Magazine section entitled Good News, Bad News, about the negative publicity the GAP received over its attempt to change its iconic logo; and, in general, the fallout or lack thereof that can be expected from negative attacks.

He’s got a point. The old adage that any publicity, negative or positive, is good publicity is certainly not always true. But some forms of negative publicity don’t always do harm. Such is the case with the GAP logo fiasco.

What forms of negative publicity can hurt an organization? Clearly, reports of poor goods and/or services can be harmful. Reports of Johnson & Johnson’s tainted products over the last year have not helped its image. Reports of poor airline service have the effect of customers shopping for alternatives. A hotel devastated by a hurricane or earthquake or a terrorist incident has the same effect.

Stories about poor management will also turn customers off. Look at the banking and investment banking industry. All of these kinds of negative publicity have the effect of creating a crisis, and require skilled crisis management to counter the effects. The crisis management needed has to tackle two fronts: operationally to truly “fix” the problem and crisis communication to inform the public.

But there are other forms of negative publicity that don’t affect products, services or management, such as the GAP logo situation. True, some people were offended or reacted poorly to the proposed change, but what of it? It would take an extraordinarily sensitive GAP shopper or potential GAP shopper to boycott GAP because of this event.

A business crisis is one that effects a company’s reputation or bottom line. Did an unpopular proposed logo change genuinely affect GAP’s reputation? Did it affect the company’s bottom line? I think not. If it did, it was very short-lived and very ineffective. In fact, most stories about the incident stressed the many attributes about the business, its clothing products and its branding success. While GAP would most likely have opted for no publicity over its logo, no harm was done.

The moral of the story? Manage well. Provide excellent products and services. You may still be unable to avoid negative publicity or a crisis that is beyond your control but if your base is solid you will weather the storm.

Tags: , , , , , ,

WHAT TYPE OF RESPONSE DOES YOUR CRISIS NEED?

Posted in Crises Communication, Crisis Communication Failures, Crisis Communication Response, Liability Communications on November 10th, 2010 by mnayor

On November 4th, a Rolls Royce engine on a Qantas A380 Airbus blew apart near Singapore. While there were no deaths or injuries there will likely be financial consequences to the three main players in this story: The Australian airline itself, Qantas; Airbus, the pan-European aerospace company; and Rolls Royce Group, plc the manufacturer of the Trent 900 engines.

There has been much press about the incident and the consequences would appear to be a direct function of how quickly the problem is diagnosed and resolved. Qantas and Rolls Royce are both busily inspecting and analyzing specifications, tolerances and operations that could affect performance.

Because Qantas has the most direct relationship with passengers, it has been the most visible and, seemingly, the most direct and quickest in taking action in this crisis. It has taken its fleet of six A380’s out of service at least temporarily and has made major efforts to redeploy aircraft around the world. Additionally it has provided its passengers with a multitude of assistance in order to avoid as much disruption as possible. Its website has detailed instructions to aid passengers.

Rolls Royce made a statement on November 4th and published it on its website.It stated that safety was its first priority and calmly explained that it has “well established processes to collect and understand information relating to the event and to determine suitable actions”. It then finished with a list several self-serving statements about how terrific the company is, the most recent expenditures on R&D, its revenues and its order book. Its November 8th statement advised that it was working closely with Airbus, and that the incident was unrelated to any of its other engines. While the statements exude a coolness and stiff upper lip mentality that Americans are not quite used to, they also reflect competence and a no-nonsense approach that should reflect well on the company, if it is able to determine and fix the problem in a matter of days.

Finally, turning to Airbus itself, the manufacturer of the A380, a search of its website uncovers nothing. There is a highlighted special report on the latest updates on the WTO Boeing-Airbus dispute but no reference to the Qantas incident. The Press Centre tab brings up many articles, all good, about Airbus. A search of its website does not uncover one mention of the incident.

Three different companies, three different types of response. And perhaps rightly so. Obviously, the closer to the consuming public the more urgent the need for a corporate public response. In the case of Qantas there are passengers who need to be immediately tended to. And potential customers need to be considered. One step down is Airbus whose customer base is the airlines themselves, a much smaller market in numbers. At the bottom rung is Rolls Royce whose customer base is tiny. The bottom line is that crisis communication has to be tailored to the complexity of the situation, a company’s responsibilities, and its stakeholders. Crisis communication is not one-size-fits-all. Less communication and more technical expertise and greater effort to solve the problem would have been far more preferable in the BP Gulf oil spill debacle.

Rolls must make good. Qantas can always buy different planes, although it might take awhile. Airbus could always buy different engines, although that could take awhile. Both Qantas and Airbus could suffer financially in the process but can always rebound. But Rolls will certainly suffer the most if it doesn’t fix the problem fast. Strange that it would be criticized for its lack of communication at a time when 100% of its energy appears to be devoted to fixing the problem, as reported by The Wall Street Journal writer Daniel Michaels, on November 9th. Crisis management is more than communication. If Rolls Royce makes a quick diagnosis and resolves all issues expeditiously, it should be praised for its efforts.

Tags: , , , , , , ,

CRISIS MANAGEMENT AND THE BLAME GAME

Posted in Business Crisis Management, Crisis Communication Implementation, Crisis Communication Response, Crisis Communication Strategy, The Blame Game on October 5th, 2010 by mnayor

Over time, crisis management pundits have considered many types of responses to a crisis and have sometimes recommended actions and reactions that today seem out of step with effective solutions for most crisis situations. These out-of-step solutions fall into two categories: 1) stonewall the media and the issue will eventually die without you fueling the topic; and 2) a strong defense is a good offense, namely attack the accuser, deny the issue or point the finger elsewhere.

In today’s media jungle, stories don’t die. If something doesn’t pass the smell test, someone in the media is going to pursue it. Ignoring a crisis by ignoring the media doesn’t cut it. And if the media doesn’t pick up on an issue, the public certainly will, via Facebook, U-Tube, Twitter or some other yet to be invented faster-than-light communications vehicle.

In times of crisis most corporate managements would prefer to avoid the limelight, deal with its issues, solve its problems and escape negative publicity. Understandable, but dealing with a major crisis like an ostrich is terribly risky and makes a company look like it’s not owning up when the crisis is exposed.  

So let’s assume you are willing and able to deal head-on with the public. Most senior executives are used to being in control. They pull the levers, call the shots and aren’t used to being told what to do. There is a tendency to be defensive. “I nurtured this baby, I grew it and I know how to defend it”.  The reaction often lacks finesse. Instead of appearing open, the reaction is authoritarian. Instead of appearing honest, the reaction is defensive and oftentimes gravitates towards the blame game or, just as bad, the rationalization or justification game. 

All of these “public” reactions can hurt your organization, because you will have missed the point. There is a problem. Acknowledge it. The problem has ramifications. Acknowledge them. No one is interested in finger-pointing or excuses, even if you are correct. There is time for that.  Don’t act like the whiney school kid or the weasel that can’t or won’t take responsibility. The public expects companies and organizations to man-up. Period. Man-up and get moving so the problem can be fixed. The public respects organizations (and their spokespersons) that emanate competence and authority.

When BP went to Capital Hill to testify back in May, 2010 they were joined by Halliburton and Transocean, Ltd., two of BP’s subcontractors. All three looked foolish because of the finger pointing and denial that ensued. What to do?  Act like a responsible citizen whether you are at fault or not.  A responsible citizen acknowledges the problem and positions itself to take whatever action it can to help fix it. It investigates and determines the best course of action based on its expertise. The public needs to know you are responsible citizen. You convey that when you take immediate, competent action.

But what if you are not to blame? If you aren’t, good for you. It will come out in the end but as an immediate step the public needs to know that you recognize yourself as a player with a role, and that you willingly undertake that role for the public good. Expensive? Perhaps. Worth it. Most often a resounding yes, in terms of public perception and goodwill. If you are to blame the same holds true. Your legal team and your insurance advisors may have made it clear that you cannot say anything that admits culpability. Even so you can act as the same responsible corporate citizen as you would if you were not to blame. You can act sensitively, you can investigate and you can devote whatever resources you have to help fix the problem and keep the public informed regularly along the way.

Preserving your reputation and directing your efforts to problem-solving are the first order of business. Assessing blame comes later and is best left to third parties. No one ever looks good saying it is someone else’s fault. An insurance investigation, a public hearing, a regulatory investigation, a private investigation that is made public are just some of the opportunities you have to provide input to show the root causes of a crisis. Let a neutral source absolve you of blame. In the end it carries far more weight, and is more persuasive and acceptable.

Tags: , , , , ,

ANTICIPATION

Posted in Anticipating A Crisis, Crisis Communication Planning, Crisis Communication Response, Crisis Communication Training, Crisis Management Planning on September 3rd, 2010 by mnayor

This post is about crises that require that you and/or your organization be in the public eye. In a previous post the observation was made that you should try to control the dialogue, as long as you don’t overly rush and sacrifice accuracy. All that is true but in many cases you may have to open yourselves up to questions, and the questions may be hard ones. So not only is it important to craft your message honestly and pick your messanger carefully, but it is also important to ANTICIPATE.

That seems easy enough and many organizations do that but the method is usually very haphazard. A bunch of people get in a room and the leader says “what do you think They’ll ask?” And then the brainstorming begins and people feel obligated to spout something out. After an uncomfortable length of time when the perticipants have spent their energy, someone says “Ok, I think that does it” and that does do it.

Not good! First you should list your stakeholders and one by one list those issues in which each is primarily interested. Investors – the bottom line; employees - job security; customers – continuity of supply; suppliers – change orders and continued ability to pay. There are those in the organization who know the stakeholders best. Pull them into the room to tell you. Role-play. List the issues and develop the answers. Finally, brainstorm to develop everything and anything that might go wrong. Anticipate the worst. The crisis gets worse, competitors ponce, the news media tries to hang you out to dry. Make the list and try to develop the reaction. You won’t be able to anticipate every scenerio or have an answer for everything BUT the process will prepare you and get you close enough to most issues so you won’t be caught in the headlights.

Finally, the chief operating officer should certainly be your front-(wo)man. Nevertheless we all realize, and it is not expected, that the CEO is all-knowing. Mayor Bloomberg has a brilliant strategy of talking to reporters about key situations, giving the broad-brush information or account and then handing over the microphone to his deputy – the police commissioner, his financial chief, his environmental guru or whoever is the person with the handle on the situation. This has a dual-fold impact: the matter has the attention of the very top, and the organization has the expertise and knowledge to provide the public with detailed information. Oftentimes it may be necessary even for the deputy to surround himself with additional experts and rely on them to feed information or come forward and provide the additional information directly. That is why it is very good training to have your employees particpate in meetings and have some experience in speaking in front of a group. You never know when they will be needed.

Tags: , , , ,

THE PUBLIC FACE OF CRISIS MITIGATION

Posted in Anticipating A Crisis, Corporate Crisis Management, Crisis Communication Implementation, Crisis Management, Crisis Management Planning, Crisis Management Response on March 27th, 2010 by admin

Pre-crisis mitigation doesn’t have a public face. It is comprised of all the efforts and planning necessary to either avoid a crisis or mitigate its consequences when one occurs. Everything from identifying and buying the appropriate insurance to fire drills fall under this umbrella.

Post-crisis mitigation is an entirely different matter. The crisis has hit the fan and there is much work to do. Naturally the first item of business is confronting the crisis head on, dealing with the issue and taking corrective action. Equally as important is taking on the public. This is oftentimes not as easy as one would think. Very talented people can grapple with the identification of and the solutions to a crisis, yet are completely flummoxed by the requirements for dealing with the public. Read more »

Tags: , ,
Blog WebMastered by All in One Webmaster.