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

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 

Sony is not the first company to suffer from hacking, nor is it the first to lose the email addresses (and possibly credit card details) of its customers.  So why are publications like the Financial Times suggesting that its reputation could be seriously damaged?  The answer lies not so much in the security breach of the Playstation 3 Network, but with Sony’s approach to crisis communication once it became aware of the problem.

As  a guest on BBC Radio Five Live’s Victoria Derbyshire programme today (27 April), I was joined by a number of Sony customers, all of whom were concerned about the security breach.  They talked of a lack of trust in Sony, not because of the breach itself, but because of the way they perceived the company had responded to it – with six days of silence.  This is a lesson for all businesses dealing with a crisis: it’s not the crisis itself that damages your reputation; it’s the way that you are seen to be addressing it. 

It also shows that a lack of communication is often interpreted as revealing a  company that is in disarray, doesn’t care or is keeping secrets.  None of these perceptions are helpful when you are in crisis management mode and seeking to protect your reputation.

Sony’s statement contains many elements required of a textbook crisis communication response: an apology; details of the action being taken to address the problem; empathy for the impact on customers; and the involvement of independent experts to help address the problem.  So in this case, the crisis communication challenges are not really about the content of Sony’s statement, but its timing.

It’s  interesting to note that like Toyota which was also criticised for a slow communication response in the light of last year’s product recall, Sony is a Japanese business.  The Japanese business culture may work against a swift and open approach to crisis communication (the same observation was made in the aftermath of the recent earthquake).  Equally, technological companies often wrestle with the idea of early communication: their tendency is to seek every last piece of information about a problem (and ideally resolve it) before saying anything.   The difficulty with this approach is that it may result in an impeccable technical solution, but a severely damaged reputation.  It is this fate that Sony is currently fiighting to avoid.

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  

When Tony Haywood said that he’d like his life back, a catastrophic crisis got much worse.  When Maclaren announced a recall of supposedly dangerous pushchairs in the US, but failed to do so in the UK, there was public outcry.  When Kraft indicated that it would keep Cadbury’s Bristol factory open but then announced its closure once the takeover was complete, it turned issues management into crisis management.

All three sealed their fate by ignoring a crisis communication mantra that underpins reputation protection.  It is  to always consider the crisis from the outside in, and communicate messages which reflect the interests and concerns of your stakeholders. 

In priority order, these are:

• People
• Environment
• Property
• Finance

In BP’s case, its oil spill affected people, the environment and property: all communication needed to reflect this.  Tony Haywood’s comment on how the situation affected him, jarred badly in this context.

For Maclaren, a perception that its recall decision was guided by financial considerations was damaging to a reputation founded upon caring for young children.

And Kraft discovered that a pragmatic approach to communication which appeared to serve its business interests but resulted in many job losses , caused as many problems as it addressed.

The suggested prioritisation of key messages in a crisis might appear to be obvious, or at least intuitive.  But remember that in a major incident, it’s often the CEO who is wheeled out to face the media. What are they most used to talking about? Money, the topic of least interest and maximum friction in a crisis.

Media training and crisis simulations can help to engrain the right messages in the minds of senior executives ahead of a real incident.  Communicating them consistently and effectively at that time is one of the keys to reputation protection.

Jonathan Hemus

www.insigniacomms.com

Christmas 2010 will be a tough time for anyone who lost their job in the aftermath of the global recession.  The fallout from the credit crunch means that many organisations had to implement cutbacks, redundancies and closures in 2010.  And, unfortunately, there’ll be more to come in 2011. So this is a time when effective change communication is essential, firstly to ensure that those affected receive timely and appropriate information, but also to preserve corporate reputation.

Here are four principles that should guide communication of difficult company news:

1) Always put your employees first

Employees must be your top priority: brief them first and show respect and dignity throughout the process.  Hearing that you may lose your job is bad enough: even worse is feeling that one’s employer doesn’t care enough to share the news personally, transparently and at the earliest opportunity.  It’s the time when the cliché “our people are our most important asset” is put to the test.  Tales of job losses communicated by text message reveal the real attitude of management in the worst cases.

2) Consistency in messaging between stakeholders is crucial

Whilst employees are the priority, a meticulous plan for communication with other stakeholders must also be developed.  It’s important for your credibility that customers, suppliers, investors and other stakeholders hear the news from you, not a third party.  Equally important is consistency of message.  Whilst you need to tailor messages according to the stakeholder group, contradictions or clear inconsistencies can turn issues management into a crisis.

3) Plan for media interest

If you are a significant business making sizeable cuts, it’s very likely that news will reach the media whatever you do.  As a consequence it probably makes sense to communicate pro-actively so that you control timing and content of the message.  If you are lower profile or your cutbacks are less severe, a reactive statement designed for use in response to media enquiries can be sufficient.  Always ensure that anything your media spokesperson says to the press is aligned with messages to staff and other stakeholders.

4) Ensure that actions match words

Communication will only be successful if you do what you say you will: stakeholders will be watching out for any inconsistencies. Kraft’s takeover of Cadbury is a case in point.  When the US company announced the closure of Cadbury’s Bristol site having previously indicated that it would remain open, its reputation suffered as a result.

Communicating bad news is tough and often unpleasant.  But doing so professionally is the only option, not only to protect your corporate reputation, but also in the best interests of those affected by the announcement.

Jonathan Hemus

www.insigniatalks.com

As Christmas draws ever closer and Santa receives letters (and now emails) from expectant children, the UK’s most famous toy store, Hamleys, finds itself in issues management mode.

Its decision to promote the store with events featuring live reindeer and penguins has resulted in negative press coverage and its reputation under online attack.  There are learnings in this issue for any organisation that wants to protect its reputation:

1)      The importance of reputational risk assessments

A reputational risk assessment should underpin an organisation’s overall crisis management plan.  But it is also enormously valuable when applied to any major announcement.  Identifying potential downsides and making plans to manage them reduces the potential for an unexpected crisis.

2)      Beware behaviour that conflicts with the essence of the brand

Behaviour that seems to run contrary with what people understand or associate with a brand is often the most damaging to reputation.  A key part of the Hamleys brand is about bringing magic, happiness and joy into children’s lives.  Any insinuation that it is engaged in heartless or even cruel activity towards animals presents a very unhelpful contrast.

3)      Listen to what is being said about you

Criticism of Hamleys’ plans was growing on Twitter last week.  One of them said “Hamleys: are you reading these tweets?  If so, please change your mind about using live animals”.  Make sure that you are indeed monitoring what is being said about you on and offline.  It gives you an insight into how stakeholders are feeling and provides an early warning of potential problems, rather than being plunged into crisis management when the issue explodes.

4)      Engage in discussion

When Hamleys added a statement to its Facebook page explaining its position, scores of critical comments were posted in response.  If you decide to use your Facebook page for crisis communication and leave it open for feedback, play a part in the subsequent discussion so that the page is not entirely dominated by critical comments.

5)      Reputation management goes beyond meeting legal requirements

A key element of Hamleys response to this issue is that its use of animals is entirely legal and that they will be cared for in the appropriate way.  Effective reputation management means going beyond what is required by law or regulations, and behaving in a way that meets your stakeholders’ expectations.  Doing so will reduce the likelihood of having to manage a crisis and will certainly be in the best interests of your long term reputation.

The issue facing Hamleys once again reinforces the increased vulnerability of organisations to online campaigns.  Issues can turn into crises much quicker and spread much further fuelled by social media.  Recognising this and acting accordingly, is essential for reputation protection.

Jonathan Hemus

www.insigniacomms.com

It’s the final day of our 28 day review of organisations in crisis management mode, and it’s a quick post before the day is done.  But fear not, we’ll be analysing the month of crises and issues and posting our insights and recommendations early in November.

The final organisations under the media spotlight and engaged in crisis or issues management are:

The Royal Navy: military; security, safety and environmental concerns as submarine runs aground

Catholic Church: religious organisation; criminal act – former priest jailed for child abuse

Legal & General: financial services; management failure – financial figures released two weeks early in error

Kent Count Council: local government; cutbacks – 1,500 job cuts announced

These four organisations are among more than one hundred who found themselves in the media spotlight over the last 28 days.  As a consequence, they all had to take steps to protect their reputation: not all of the incidents involved nuclear submarines, but every organisation concerned was fighting to prevent their situation going ballistic.

Jonathan Hemus

www.insigniacomms.com

George Osborne attempted one of the enduring principles of crisis management in announcing public sector cuts yesterday: set expectations and aim to exceed them.  In the lead up to the announcement we were bombarded with messages that could be summarised as “expect the worst”.  So, whilst there was little to cheer about in the Chancellor’s announcement, it was probably not quite as awful as we might have imagined.

Even more successful in applying this principle to crisis communication were those involved in the Chilean mine rescue.  The likelihood that the miners would not be rescued until Christmas was communicated loud and clear in the early stages of the rescue operation.  The complexity and magnitude of the engineering challenge was emphasised time and time again.  So, when the miners were released in October it was rightly viewed as a cause for celebration.  And the upbeat mood was created not just because of the joy of the miners and their families, but also because of the success of the rescue team in beating the expected timeline against the odds.

Contrast this with BP which constantly sought to minimise the scale of its oil spill and the magnitude of its impact, and over-promised the speed with which the leak could be plugged.  It was one of many factors which contributed to the enormous damage to BP’s reputation.

Here are three golden rules to help set expectations in a crisis:

1)      Speed is important, accuracy is essential: the pace of crisis escalation is such that organisations must be geared up to respond at lightning speed in the event of an incident.  But never, ever communicate a piece of information that has not been verified, or commit to an action or deadline that you are not 100% sure you can deliver against.

2)      Pro-actively communicate your commitments and your timeline: make public your timeline for action and communication.  Remember that this commitment must be one that you can meet, and hopefully exceed.  Communicating this information helps you set the agenda, take control and reduces the amount of time you will spend reacting to stakeholder questions about current status.

3)      If the timeline changes, say so and explain why: in the best case scenario, you will improve upon the expectations you have set: communicating this fact provides a ray of good news at a difficult time.  But even if the news turns out to be worse than you had envisaged, you need to tell people the updated situation.  Not doing so risks harming the reputation of the organisation by positioning it as secretive, dis-organised or disingenuous.

It’s the penultimate day of our review of organisations in crisis and issues management mode.  The organisations trying to set expectations as they endure the media spotlight today are:

Nokia: telecoms; financial/people – announcement of 1,800 job cuts

Dyfed-Powys Police: policing; operational competence – police watch dog describes its investigation of a rape claim as “inept”

Toyota: automotive; safety – new product recall

BP: oil; environment – lawsuit filed regarding “”unlawful harm” to endangered wildlife

Jonathan Hemus

www.insigniacomms.com