Insignia Talks

…about the power of communication to create, manage and protect reputations

When LA Fitness threatened to enforce its contract with a heavily pregnant woman who had fallen on hard times, it may have had the letter of the law on its side.  But once the story became public, it was found guilty in the court of public opinion.

LA Fitness is just the latest business to find out that protecting reputation means doing the right thing in the eyes of the outside world, not simply complying with regulations or the law.

Ten years ago, LA Fitness’s dispute with a customer over whether her gym contract could be enforced would have been a private customer service issue in which the company held the balance of power.  Today it requires crisis management skills, is conducted in public and public opinion has far greater influence.

This transparency needs to be understood by businesses and factored into their behaviour, decision-making and communication. The imperative to act in a way that matches the  expectations of external stakeholders is largely driven by the power of social media.  In the old days, customer complaints could be dealt with in private and media criticism dismissed as tomorrow’s fish and chip paper.  Today, because of Twitter, Tripadvisor, Google et al, customer service – and crisis management – has become a spectator sport.  Worse, the spectators actually influence the game.  Whether businesses like it or not, this is the reality.

This transparency has raised the bar in terms of ethical and acceptable corporate behaviour – it’s much harder to do bad things and simply get away with it (which, of course, is a good thing).  It also means that the need for thorough crisis  management planning is more pressing than ever: reputational risk assessment, social media monitoring, scenario planning and realistic social media simulations should all form part of this.  A slow or inappropriate response to a crisis will be punished with damage to reputation.

LA Fitness appeared to be forced into a u-turn, and  this never looks good.  Ultimately, the key for businesses is to control the crisis rather than let the crisis control them.  Being able to perceive a crisis from the outside in and acting quickly and appropriately when company behaviour clashes with public expectations is essential to preserve corporate reputation.

Jonathan Hemus

www.insigniacomms.com

As I glanced through the statement issued by Costa Cruises in the wake of the dreadful Costa Concordia accident, I noticed how it ticked the golden rules for crisis communication: concern and empathy for human life in para one; actions to address the situation in para two; messages about minimisation of environmental impact in para three.

So far, so good.  And then, in para four, I read this:

“preliminary indications are that there may have been significant human error on the part of the ship’s Master, Captain Francesco Schettino, which resulted in these grave consequences”

It is the earliest and most explicit attempt to blame an employee for an incident that I have ever seen, and at best, I view it as an extremely high risk crisis management strategy.

Here’s why:

• it creates the impression of a business willing to jump to conclusions before all the facts are known, rather than keeping a cool head
• it infers that the business’s top priority is protecting its own commercial interests and will use any means to do this, rather than focusing all attention on the human impact at this early stage
• it implies a separation between company and employee which could be seen as artificial
• it portrays an unflattering picture of a large business prepared to cast an individual employee adrift when the going gets tough
• it creates further fuel for an extended crisis – controversy – as the captain denies the accusations

And what if investigations conclude that the captain was not to blame?  In this situation, Costa Cruise’s early pronouncement would be hugely damaging to reputation.

Effective crisis  management is of course about using all means at your disposal to protect corporate reputation.  But that doesn’t mean applying the most expedient and pragmatic message without careful thought. Statements and pronouncements from media spokespeople must be delivered with a clear understanding of not just the immediate term impact, but also how the business wants to be regarded a year later.

As a final point, history shows that businesses which pin crises on “human error” have frequently created the conditions in which human error is likely: insufficient training, a culture of profit before safety or an environment in which front-line employees are afraid to voice concerns, are all conditions which make a “human error” much more likely.

So, even if Costa Cruise’s allegation turns out to be true, it may still not be enough to protect its reputation.

Jonathan Hemus

www.insigniacomms.com

Blackberry looks set to once again prove the crisis communication adage that it’s not really the crisis which damages reputation, it’s the way in which you respond to it.

On this basis, Blackberry is set to suffer major harm to its reputation (and its business fortunes)  based on a tight-lipped approach to communication and a failure to use social media to communicate its response to the current problems.  Gordon MacMillan’s blog posting on The Wall sums it up perfectly for me – it’s well worth a read: I’ll simply say that I endorse every word and would also add the following.

Swift crisis communication

Any organisation which wants to protect its  reputation in a crisis must be geared up to communicate quickly and expansively in the event of an incident.  For most organisations that must include social media: it’s where the crisis plays out, it’s where customers go to seek information and vent their spleen, it’s where the media turns for information.  And it’s where businesses can quickly exert influence over the communication agenda, and listen and respond to the concerns of its stakeholders.

Social media in crisis communication

In today’s online world, I would contend that even an organisation without a consumer face should have the ability to utilise social media in the event of a crisis.  But if you’re a consumer brand (which Blackberry has chosen to become) you certainly should have this capability.  Moreover, if you’re a  consumer brand in the telecoms space whose devices facilitate communication by social media, I find it truly staggering that you would ignore these channels when your reputation is on the line.

Not only does it go against the guiding principles of effective crisis communication, but it also calls into question whether the Blackberry brand really is at the heart of social media (and therefore the consumer landscape), or not.

Crisis management training

Organisations at the leading edge of  reputation protection have already integrated social media into their crisis communication planning and are running realistic crisis exercises with social media as a core element.  All businesses need to embrace this approach – and quickly – or else risk being overwhelmed by the kind of crisis communication challenge currently facing Blackberry.

Update: 15.20 13 October

Blackberry has now begun the social media fightback with a YouTube video apology from CEO Mike Laziridis in which he admits “we’ve let you down” and commits to more pro-active communication.  Its content, tone and messages are spot on.  But at least 48 hours too late.

Jonathan Hemus

www.insigniacomms.com

Yesterday we considered the crisis communication lessons that businesses could learn from the News of the World hacking scandal.  Today, guest blogger Nick Woods, head of Publicis Consultants, considers how the paper might recover from its current crisis management challenges.

If you believe Rousseau, man is essentially good. He, or she, has flaws but the start point is that they are born good.

Your view on how this applies to Rupert Murdoch, Rebekah Brooks, Andy Coulson, Glenn Mulcaire or the coppers that sold stories is yours to ponder but it raises an interesting point about brands.

Very few brands are ‘born good’, rather they are created with the express purpose of making money for their owner.  But that doesn’t mean they shouldn’t do good, as the NotW is proving – doing good isn’t just a useful pillar when things begin to go wrong it also provides a new potential strategic direction.

The News of the World has, undoubtedly, behaved appallingly and it seems likely we’ll see inquiries, new laws and hefty punishments for those who thought they were above the law.

But, as Colin Myler said in his letter to staff yesterday, the paper has also done some very good things:

“We are the paper that campaigned to enshrine the Military Covenant in law, fought for ten years to establish Sarah’s Law into legislation, the paper of Children’s Champions, the paper that has fought tirelessly against bullying and so much more.”

On top of these they have been one of Help for Heroes’ leading champions; the irony of last night’s reports that they also hacked into the phones of dead servicemen is lost on no-one.

This ‘good’ work could form a part of the brand’s recovery (and recover it surely shall – I predict a circulation spank this Sunday and then a full recovery over subsequent weeks with advertisers quietly returning).

The paper will undoubtedly have to be contrite, apologise and maybe wear some sack cloth, cover its head with ashes and do a fair amount of public wailing but it will also, eventually, need to move on and one possible route is an even more campaigning future.

This is a paper which is read by around 7 million people every Sunday, not just an impressive figure but a powerful one. This is a paper courted by politicians of every hue because of its influence over so many. This is a brand with an enormous opportunity to re-define its entire brand story, to put its shady and seemingly illegal past firmly behind it by finding a new narrative to follow, a narrative that is entirely positive.

If you look across British life there are lots of areas we could improve and if you begin to break it down even simplistically into political, environmental, social, technological, legal and economic, you can probably come up with a few yourself. Now imagine the most widely read newspaper in Britain running multi-platform campaigns in some of these areas.

I know some are talking about the ‘end of the News of the World’ but they’re kidding themselves. Some people there have behaved abominably and will, rightly, suffer the consequences. But like all crises this one represents an enormous opportunity and maybe it’s the NotW’s opportunity to redefine itself as a brand ‘for good’ in both senses.

As we observe News International’s phone hacking crisis lurch from bad to truly horrendous, it’s tempting to feel a little smug, safe in the knowledge that nothing quite this awful could ever affect our business.  But whilst the alleged behaviour of the newspaper and its private investigators sinks below the behaviour of the vast majority of corporations, there are nevertheless lessons in crisis management that businesses would do well to heed.

1) Your corporate culture has the power to create or prevent crisis

Reports from ex-News of the World journalists and other sources indicate that reporters were under enormous pressure to come up with the next scoop, whatever it took.  This would likely lead to an atmosphere where the end result is all that matters: this is exactly the culture in which crises can flourish.

In a corporate environment, similar issues can arise.  A blinkered focus on the bottom line – “I don’t care how you do it, just hit the number” – or an unwillingness to hear about problems which may hint at broader failings - “just sort it out” – are examples of this.

The best crisis management is crisis prevention: this requires leaders to set and exemplify the right culture.

2) Denial is your greatest enemy (part one)

The News of the World appears to be suffering from denial in both senses of the word.  Its initial response was to deny that widespread hacking had taken place. That early denial has been thoroughly undermined by subsequent developments. The effect is that the credibility of the newspaper’s subsequent statements are diminished.  Worse, the paper is seen as either incompetent or disingenuous in making the initial claim.

Businesses must heed this important crisis communication lesson: never make a public statement unless you are 100% certain of its truth. Ignore this, and serious reputational damage will inevitably follow.

3) Denial is your greatest enemy (part two)

Denial that there was a problem may be one of the key reasons why the News of the World has been unable to get to grips with its reputational challenge.  Businesses can suffer the same fate.  When a negative situation faces a corporation there’s a temptation to dis-believe or ignore it: leaders can find it almost impossible to comprehend that such a thing could afflict their business.  The problem is that until you recognise and acknowledge a problem, you cannot deal with it.  Beware corporate denial at all costs.

4) Pay special attention to the internally generated crisis

The News of the World is facing a crisis of its own making, created by the behaviours of its own employees.  This makes its crisis communication challenge so much harder.  The same applies to other businesses: accidents, natural disasters, even terrorist attacks all constitute crises and require professional management.  But the fact that the organisation in question is also a victim of the event gives them a degree of sympathy and understanding in responding to it. Don’t abuse this position: many businesses have suffered sgnificant reputational damage not because of the crisis itself, but because of the way in which they have mis-managed their response to it.

Far more challenging though is the self-inflcted crisis, where no one is at fault but the organisation itself.  Exacerbating this is the fact that many businesses fail to plan thoroughly for the internally generated crisis (it’s much more uncomfortable to contemplate management fraud or sexual harassment than it is to plan for a fire).

Businesses must avoid being blind-sided by internally generated crises by properly considering them as part of their reputational risk assessments, and testing their ability to respond via a well-conceived programme of crisis communication training.

Manage the crisis – don’t let it manage you

The News of the World has failed to apply effective crisis management to the phone hacking saga: the crisis seems to have managed it rather than the other way round.  And that really is the final learning for all businesses: effective crisis communication is about recognising a problem quickly; taking decisive action to address it; and communicating pro-actively to stakeholders to protect relationships and reputation.  News International appears to have failed on all counts.

Jonathan Hemus

www.insigniacomms.com

When the BBC’s Panorama programme apparently showed Primark’s use of child labour in Bangalore, the retailer’s reputation took a serious hit.  With the recent BBC Trust report concluding that footage of boys checking stitching on Primark products was “more likely than not” “not genuine”, it is now the BBC whose reputation is under the microscope.  Indeed this is especially challenging for the BBC whose brand is associated with trust, integrity and high editorial standards.  As we have seen in previous incidents, when a crisis strikes at the heart of an organisation’s brand essence, it has the power to do more damage than would otherwise be the case.

Primark meanwhile has taken the opportunity to seize the communication agenda and lead the post-report debate (in contrast to the policy of non-engagement advocated by a recent Economist article).  Central to this is its microsite “Primark and Panorama; the true story” .  It includes:

• YouTube footage created in a reportage style which seeks to reveal the alleged falsehoods in Panorama’s original programme
• a detailed statement in response to the BBC Trust’s ruling (and a link to the full report)
• a timeline of events
• an ethical trade factsheet
• the opportunity for people to post comments to the site
• a “contact us” section for bloggers, the media, NGOs and other interested parties

The site serves as a template for other businesses wanting to pro-actively manage issues, rather than simply react to them.  Primark clearly made a decision to treat the publication of the report as an opportunity to surround stakeholders with materials and messages supportive of its position.  Using an online platform to host these materials and messages means that anyone interested in the Primark perspective can use it as a “one stop shop”.  Note also how Primark has made good use of search engine marketing to guarantee prominence for its point of view: search for “primark panorama” with Google and at the top of page one is a sponsored link to the microsite.  Without this core resource, Primark would still have been represented in the post-report discussion, but in a less prominent way.

I applaud Primark for the way in which it has exerted control of the communication agenda, but would also sound a word of warning to other businesses before replicating its response in totality.  In communication there are grey areas between influencing, spinning and manipulating. By failing to allow comments to be posted to its YouTube footage and by claiming that the BBC Trust had found that the footage was “fabricated” when the actual ruling fell short of stating this, Primark could be accused of over-stepping the mark. 

It’s also worth noting that the company’s robust and strident response carries an element of risk as it means that any future transgressions will be an even bigger story than would otherwise be the case.  With this in mind, Primark needs to plan both operationally and reputationally for the fact that it is a highly visible media target.

Finally, I would observe that an organisation’s crisis communication response needs to be in keeping with its usual tone of voice.  That’s why Ryanair can be bullish in response to a problem whereas Virgin Atlantic would tend to be more empathetic.  The way in which Primark has communicated following the Panorama programme mirrors its positioning as a down to earth, straight forward brand, underlining the fact that for crisis communication to be truly effective, it must be authentic.

Jonathan Hemus

www.insigniacomms.com

I attended a conference earlier this week at which the head of corporate communications from a UK police force described the overwhelming media interest in a high profile murder investigation.  In particular, she  explained how the names and personal details (not necessarily accurate) of two people were communicated by the media within hours of their arrest and then widely circulated by social media.  This happened despite the fact that the names were not revealed by the police (and that one of them was never charged with any offence). 

The speaker explained how this experience has led to an increased understanding within the Force of the importance of involving communication professionals before an arrest is made in high profile cases.  It struck me that this has broader implications for crisis communications at all organisations.

It’s already well understood by PR people that social media has increased the pace and spread of bad news and that this imposes new standards for effective crisis communication.  But to what extent has this been recognised by our operational colleagues?  Scrambling to react to operational decisions with a communication dustpan and brush was never a very good idea.  Today it is an almost impossible task.

The only viable option is  for communication people to be involved in the planning of major announcements and to have a real influence over how and when they happen.  This is the only approach which offers the opportunity to properly shape how a story plays out and its impact on organisational reputation.  Organisations which fail to embrace this reality and continue to view communication as a purely tactical activity are more likely than ever to suffer serious reputational damage. 

Jonathan Hemus

www.insigniacomms

News that FIFA President Sepp Blatter is under investigation regarding alleged corruption further plunges football’s governing body into crisis communication mode. 

It’s not the first sporting body to face challenges of this kind.  Indeed, it’s a sad fact of modern sport that all governing bodies will have to deal with corruption issues from time to time: cricket, tennis, snooker and horse racing are just four of the high profile sports that have grappled with corruption allegations in recent years.  But FIFA’s challenge is even greater for one important reason: the alleged corruption is not amongst its players, but within the organisation itself.  As a consequence, time is running out for the organisation to seize the initiative and commit to the changes necessary for it to restore trust.

As someone who advised the International Cricket Council when it first grappled with match-fixing allegations, I know that it’s possible for organisations to recover their reputations, but it requires commitment, courage and communication.  Commitment to rid the sport of corruption.  Courage to take difficult short term decisions in the interest of long term reputation protection.  Communication to give stakeholders confidence that the organisation is genuinely honest, transparent and open.

More than anything, successful crisis communication requires leadership.  And when the current leadership is itself at the heart of the crisis, it often requires a new chief to lead the change. 

As FIFA faces the biggest reputational threat in its history, football fans around the world must hope that this crisis turns out to be the catalyst for a more credible organisation in future.

Jonathan Hemus

www.insigniacomms.com

Kraft took another battering from MPs this week as the Business, Innovation and Skills Committee said that it had “significant concerns” over its takeover of Cadbury in January 2010.  Rumblings from employees and unions continue, whilst the media delights in giving Kraft a hard time (the Mail on Sunday in particular has ensured that Kraft CEO  Irene Rosenfeld remains in the headlines for the wrong reasons month after month after month).

Kraft’s frustration at this continued criticism is obvious.  Quoted in the Financial Times, Rosenfeld said: “We have clearly shown ourselves to be good stewards of the brands, and yet the continuing assault has been somewhat surprising”. 

So why is Kraft still generating negative headlines almost 18 months after the takeover and how can other businesses develop and implement change communication to avoid the same fate?  It seems to me that there are three key reasons behind Kraft’s change communication challenge:

1) Inadaequate understanding of the communication context

2) One expedient message eroded trust

3) A reticence to fully engage with stakeholders

Let’s take a look at these, one by one:

1) Context

Cadburys is an iconic British brand.  It has connotations of warmth, family and wholesomeness.  It has a corporate history of philanthropy, community and inclusiveness.  It is a symbol of the once great Midlands manufacturing base.  All of these factors mean that it is dear to the heart of many Brits.

As a consequence, a takeover by a global US corporation was bound to be met with concern, resistance and fear.  Understanding the perspective of affected stakeholders is essential to shape any change communication programme, but Kraft seemed to be unaware of these views or at the very least misunderstand their significance.  You won’t please all of the people all of the time, especially at a time of change.  But understanding their views and a plan to avoid turning sceptics into sworn enemies is the least you should aim for.

2) Trust

Saying what people want to hear makes communication so much easier.  But only if it’s true.  So when Kraft initially promised to keep Cadbury’s Bristol factory owner and then announced that it was unable to do so after the takeover, it made its change communication task inordinately tougher.  This perceived duplicity reinforced negative pre-conceptions and meant that future commitments were viewed with cynicism.  Recent evidence seems to suggest that Kraft is making good on its post-takeover promises; but the trust that it lost early on with that one inaccurate statement is almost impossible to regain.  The lesson?  Never jeopardise long term trust and credibility with a popular promise that you may not be able to keep.

3) Stakeholder engagement

A perception has grown that Kraft is stand-offish, or even evasive.  Irene Rosenfeld in particular has been criticised for her unwillingness to face parliamentary committees or engage with the UK media.  In many ways, this problem has been created and amplified by the first two issues.  Nevertheless, a greater willingness to listen and talk with stakeholders would  position Kraft more sympathetically and help to ensure that its messages are properly heard.  For other organisations facing similar challenges, remember that communication is an essential part of effecting successful corporate change.   And research shows that typically businesses under-communicate by a factor of ten during change management programmes.

Since its takeover of Cadbury, Kraft seems to have made good on its commitments: most importantly for chocolate -lovers, Dairy Milk remains on supermarket shelves, its original recipe preserved.  Its problems were created in the very early stages of this story when it failed to fully appreciate the landscape in which the takeover occurred, and reinforced negative perceptions with a promise it couldn’t keep. 

The bottom line for other businesses enegaged in change management is clear: get your change communication right from the very start, or gear up for a challenging issues management programme in the months and years that follow.

Jonathan Hemus

www.insigniacomms.com 

Communication professionals like myself have long fought to establish PR as the equal of advertising.  This has led to countless debates about effectiveness, return on investment and evaluation.

Now that the battle is won (I think), have we actually shot ourselves in the foot? I ask this question as a result of talking to a regional newspaper editor recently.  His view is that PR people have so comprehensively won the argument, that when the economy contracted, businesses were confident that advertising budgets could be slashed and PR relied upon instead.

So far so good for the PR profession.  But the effect is that the very publications, TV and radio stations that PR people are trying to  reach are being starved of advertising revenue and forced to cut their frequency, pagination…or go out of business altogether.

The ultimate scenario could  be thousands of PR professionals hugely skilled in reputation management and businesses totally convinced of the power of PR…but nowhere for their stories to appear.  Of course, there are new and direct channels available, in particular online reputation management, and these are undoubtedly powerful means of commmunicating a corporate reputation.

But perhaps we do need to be a little wary of pushing the PR message to the extreme: we might be better served in the long term by suggesting to colleagues and clients that they spend a little more on advertising.  I can’t believe I just wrote that.

Jonathan Hemus

www.insigniacommms.com