Insignia Talks

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

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

The report into Heathrow’s crisis management response to pre-Chrismas snow has just been published.  It makes me weep. 

Organisations like BAA should not require a major crisis to introduce professional, thorough and up to date crisis management processes.  And if these were not in place for an organisation at the very hub of the UK’s infrastructure, then how many other businesses are operating without the  requisite crisis preparedness?

Key observations and recommendations in the report include:

The potential impact of bad weather was not fully anticipated - avoid this by conducting a thorough reputational risk assessment which considers the worst case rather than hopes for the best

There was a failure of communication within BAA and with the airlines – work out who your “partners” would be in a crisis and meet with them beforehand to agree how your crisis communication can be clear, consistent and aligned

Crisis management procedures were not clear and required simplification –  first off, ensure that crisis management procedures exist and then audit them for clarity and simplicity.  Brief them in and test them with desktop exercises and then simulations

Messages to passengers were confused and contradictory – make sure you develop communication channels and approval procedures beforehand.  Align messaging with those of your partners.

There was inadequate resource planning – crises demand extraordinary amounts of human resource.  Anticpate this and have contingencies in place to add additional people to your normal team.

There was insufficient testing and training of the crisis management processes and team – centuries of experience have shown that being taught a skill and then practising it leads to better performance.  Crisis communication is no different

BAA has committed £50 million to implement the recommendations contained in this report.  Its chief executive, Colin Matthews, called it “a pivotal moment for the airport and its reputation”.

But BAA doesn’t really need to read this report – its painful experience in December would have been catayst enough for a changed approach to crisis communication.

This report is much more relevant to all those organisations who have not suffered a crisis in the last couple of years.  So, here’s my heartfelt request: please read the BAA report; please act on it. 

There’ll be a number of businesses who fail to do so and we’ll be reading the reports outlining their crisis management learnings in a year’s time.  A copy and paste of the BAA version should probably do the trick.

Jonathan Hemus

www.insigniacomms.com

A recent article in the Economist reported that the best response to inaccurate online rumours was to ignore them, and instead communicate a barrage of good news.  This, the article contends, is the best form of issues management.

I only half agree.

Certainly, building a positive perception based on a strong and compelling corporate narrative should be the priority for any business which values its reputation.  Brands such as Virgin, Apple and Tesco have consistently communicated their vision and values to their stakeholders. 

As a consequence, stakeholders have a very clear understanding of who they are, what they do and what they stand for.  Crucially, their experience of products and services reinforce the messages they have received (where the experience fails to live up to the words, a business creates a transitory image, rather than a substantial reputation).

But where I disagree with the article is in the suggestion that untruths should always be left uncorrected.  Unchecked rumour, gossip and innuendo can become accepted as fact and cause significant damage to corporate reputation.

Here are three steps to define an appropriate response to an inaccurate allegation:

1)    Be aware that the allegation exists

Effective online reputation management depends upon knowing that there is a possible problem: many organisations have been unable to regain control of a situation simply because they became aware of it too late.  Ensure that you have thorough on and off line monitoring in place so that you can spot an issue before it becomes a crisis.

2)    Evaluate its potential influence and impact

Deciding which allegations to respond to and which to ignore requires you to assess the influence of its originator.  A lone blogger is probably worth leaving alone; it would be foolish to ignore criticism from the BBC’s Robert Peston.  Knowing beforehand the online influencers who really affect your stakeholders means that you can make well-informed judgements. 

Assessing the potential damage of the allegation will also help to determine your response.  Mild criticism of a product is part of day to day business life; allegations of endemic corruption call for pro-active crisis communication.

3)    Calibrate your response accordingly

Sometimes, a policy of non-engagement is indeed the right decision: a high profile response may create the oxygen of publicity that a scurrilous allegation requires.  On other occasions, a professional and straight forward response within the forum in which the comment appeared will help to balance the debate. 

If that’s insufficient, a statement to the media and reassuring messages via your own communication channels (websites, blogs and Twitter feeds for example) may be the best way to get your perspective across, without directly engaging with your misguided critic. 

In extreme and rare circumstances, legal action may be necessary to remove a clear untruth.  Be aware though that action of this kind often leads to exactly the kind of widespread publicity that you were seeking to avoid and trigger a much bigger dose of crisis management than the original allegation ever could.

There are no hard and fast rules for dealing with inaccurate criticism, despite what the Economist article suggests.  Judgement will always be required to do the best thing to protect the value inherent in your corporate reputation.

Jonathan Hemus

www.insigniacomms.com  

Transformational corporate change is notoriously hard to achieve.  Comfort with the status quo, denial of issues holding the business back and an in-built fear of change mean that staff often resist a new direction, or at the very least fail to engage with it.

As a consequence many change programmes fail, primarily due to inadequate communication.  So, overcoming resistance and securing the commitment of employees to embrace and support the change is essential.  The starting point for creating momentum is strong dissatisfaction with the status quo, and recognition that it is not sustainable.  Once this is established, a programme of change communication which reveals and secures buy in for the new direction can follow.

So, once Nokia’s recently appointed chief executive Stephen Elop completed his initial review of the under-performing company, he knew that the first communication with his people would be crucial.  It needed to shake them out of any complacency or comfort zone, make them face the reality of Nokia’s challenges, reject “business and usual” and build an appetite for change.  In the face of this, he drafted his “burning platforms” memo, swiftly followed by the announcement of a partnership with Microsoft.

Read through the “burning platforms” memo: it’s a well conceived and beautifully written piece of communication.  It embraces many of the techniques that are essential for engaging communication: it tells stories to bring messages to life (the man on the North Sea Platform), it uses evidence and examples to substantiate key points (making it much harder to question the validity of his argument) and it’s personal and authentic.  Above all else, it’s clear and direct (no meaningless management-speak here).  It is a hugely powerful example of change communication.

When the message found its way outside of Nokia and into the mainstream media, many felt that for Nokia, change communication had morphed into crisis communication.  A message intended only for internal audiences was suddenly visible to journalists, investors and competitors.  There is of course a lesson here.  Whereas traditionally, internal communication could remain exactly that, nowadays the use of emails, intranets and social media for employee communication mean that it’s much easier for internal communication to go external.  In fact, the best policy is to expect that this is exactly what will happen.  Based on this assumption, the safest approach is never to say anything in an internal memo that you wouldn’t be happy seeing on the front page of the Financial Times. 

I have a hunch that Stephen Elop understands this very well, and that the “unplanned” leak of his message to staff may in fact have been his intention all along.  What better way of shaking the company out of its torpor than the very public revelation of its challenges to the outside world? 

Some commentators have seen Stephen Elop’s communication as high risk and ill-conceived.  I disagree.  Mr Elop’s frank communication gives his business an opportunity to change and therefore a chance of future success.  High risk?  Maybe.  But not as high risk as saying and doing nothing.  

Jonathan Hemus

www.insigniacomms.com

BP and Toyota are living proof that a mis-handled crisis causes long term damage to a business’s reputation.  It’s not just the enormous drain on management time and the cost of putting an incident right in the short term that make crises so harmful.  It’s the after effects that linger and taint a business for months, sometimes years.

Take BP which announced its annual results this week (a loss of $4.9bn).  The announcement also included news that the Gulf crisis has cost the company $41 bn.  And the BBC’s business editor, Robert Peston, estimates that the incident will cost shareholders $40bn in lost dividends.  It’s pretty clear then that the Gulf crisis has cost BP an awful lot of money.

But ineffective crisis management has also caused long term damage to reputation.  What’s the first thing that springs into your mind when someone says “BP”?  Most likely a burning oil platform, dirty beaches or oil-sodden birds.  Those images are reinforced by the media: this morning’s announcement of BP’s results on BBC Breakfast was accompanied by those very images.  BP is currently defined by its  crisis and it’ll take a long time to move beyond it.

Toyota faces similar challenges. Bloomberg reported this week that it had endured a 16% fall in the value of its brand, which is estimated to be worth $25 billion less today than it was a year ago. 

Again, that’s significant and very real financial damage in addition to the direct cost of its global recall in 2010.  But that’s not the end of the pain.  Toyota found itself in the media spotlight again last week when it announced a recall of 1.7 million vehicles amid concerns of a possible fuel leakage.  Would other automotive brands have generated  the same amount of coverage when announcing a similar recall?  Very unlikely.  As with BP, the Toyota narrative is now partially defined by its mis-handling of an earlier crisis.  The company would rather talk about something else, but external stakeholders keep tying everything back to its crisis management problems in 2010. 

The bottom line is that crises are expensive and time-consuming to manage in the short term.  But they pose an even greater risk to long term reputation.  Taking steps beforehand to minimise the potential for crisis is essential.  Thorough reputational risk assessments, proper crisis management and crisis communication plans, media training, tests and rehearsals and, crucially, a culture which encourages the identification and resolution of potential problems must all be embraced if businesses are to properly protect their reputation. 

Jonathan Hemus

www.insigniacomms.com

News about Steve Jobs’ health-enforced absence from Apple and its impact on the continued success of the business shows just how important the human element is in reputational risk management.  The problem is that too many businesses choose to ignore it.

It’s relatively easy to contemplate operational risks – fire, flood, IT failure – especially if they are seen to come from outside the business (“Acts of God” are especially easy to countenance).  Risks related to people – and in particular those that are internally generated – are much more uncomfortable.

The idea that people in our business could engage in corruption, fraud, sabotage, harassment or unethical behaviour is tough to think about, let alone plan for.  It’s almost as unpalatable to consider the absence of a key executive, whether through illness or sudden departure to a rival (and of course, solutions to this problem are not readily available).

But organisations that fail to account for human risks in their crisis communication plans leave themselves seriously vulnerable to reputational damage.  Internally generated crises are often the most challenging to deal with, and the most harmful to confidence in a business, as Apple may find out to its cost.   

Acts of God are by their very definition unavoidable whereas human crises can often be prevented – or at least mitigated – with effective management.  Businesses that want to ensure that their reputations are well protected need to make sure that their people-related risks are managed just as thoroughly as their operational risks.

Jonathan Hemus

www.insigniacomms.com