Insignia Talks

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

News that Yahoo’s CEO, Scott Thompson (photo), has stepped down following accusations that his CV featured a fake computer science degree reinforces the importance of factoring people issues into crisis management planning.

Organisations often find it easy to produce crisis communication plans for external events such as accidents, fires, natural disasters, IT failure and even terrorist attacks. But “softer” issues affecting people – fraud, bullying, corruption, personal scandal and so on – are much less comfortable to consider.

Despite this, it’s essential that people-related issues – especially those related to senior management – are incorporated into reputational risk assessments. Some businesses feel squeamish about thinking the unthinkable, but failure to do so can leave them highly exposed if the worst should arise.

I’ve been working with a couple of clients recently who have overcome their unease with imagining despicable behaviour by senior management and as a result have increased their resilience to reputational risk. With the first one, we have scenario planned exactly how they would respond if its CEO was accused of corrupt practices. With the second we have conducted a crisis simulation in which a board director is arrested by the Serious Fraud Office.

Both organisations have strong reputations for integrity and ethical behaviour, so why would they put themselves through this pain? The answer is that they understand that the impact of a people-related crisis can be far more damaging than a crisis event which strikes from outside. Especially when integrity lies at the heart of their brands.

Yahoo faces a tough challenge as it manages the sudden departure of its CEO and the transition to a new leader. Businesses which want to minimise the impact of such an event should spend time planning for management behaviour that they can scarcely contemplate.

Far from being a sign of weakness or even guilt, it demonstrates professionalism and means that the future actions of one rogue individual are much less likely to damage the entire business and everyone else who works for it.

Jonathan Hemus
www.insigniacomms.com

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

Concerns and coverage about potentially faulty breast implants produced by French company Poly Implant Prothese (PIP) continue more than two weeks after the story first broke.  This is a long time for a crisis to be in the media spotlight and indicates that crisis communication has been sub-optimal at best.

Indeed, a statement from the Independent Healthcare Advisory Services, the trade body which represents private clinics, accuses the government of communicating in a way which leaves people “feeling more confused and anxious now than before”.  It’s another reminder that effective crisis communication is essential when people are concerned for their health.

Women have been bombarded with mixed messages, which only increase their worries. While the UK authorities assert that there is no need to remove implants, countries such as France, Venezuela, Germany and Czech Republic have suggested that women have their implants removed as precautionary measures. According to the Lancet Medical Journal, it is ‘quite literally incredible’ for UK health officials to expect women not to worry.

The communication problem has been further exacerbated by the many and varied media spokespeople who have appeared on our televisions and radios over the last few weeks.  Everyone from the Medicines and Healthcare products Regulatory Agency (MHRA) through to individual cosmetic surgeons, trade associations, agony aunts, celebrities, government and patients have had their say.

So what makes for an effective media spokesperson during a health scare? We investigated this subject a couple of years back when, together with the University of Wolverhampton, we conducted research into swine flu communication. We looked at a range of spokespeople and used focus groups to assess their effectiveness and the reasons for their success – or lack of it.

The research clearly showed that high profile spokespeople have enormous power to reassure and inform the public in the event of a health scare.  Equally, they have the ability to cause unnecessary confusion, distress and concern if they fail to communicate effectively.  They need to recognise that this position of power also brings with it responsibility

We also identified the personal ingredients which defined a successful spokesperson at the time of a health scare.  Expressed as an equation, they are:

CS + SA + PA + AA = Reassurance (where CS is Credible Spokesperson, SA is Serious Appearance, PA is Personable Approach and AA is Actionable Advice)

Equally, credible spokespeople – doctors, scientists, academics – who provide worrying insights without clear and actionable advice can cause significant public anxiety. Given the impact that this communication has on the public, there’s a strong case for saying that people who are unable to match up to this set of criteria should not be put in front of the media during a major health scare.

Media training can help to identify whether a spokesperson is up the job or not, but also requires the potential commentator to be honest with themselves about their capabilities – or have a colleague who’s sufficiently honest and courageous to tell them the truth.

Having the ability to communicate effectively with the media is important at all times, but when your communication skills can affect the decisions someone makes about their health, I’d suggest it’s essential.

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

With news that a “rogue trader” is responsible for a $2 billion loss, it is clear that Swiss bank UBS faces a huge crisis communication challenge.  A number of factors make this challenge even tougher than might otherwise be the case.

Preserving UBS’s reputation

Reports that the unauthorised trading was not picked up by UBS’s internal controls could suggest that the real crisis communication challenge centres not on the $2 billion loss, but in preserving the organisation’s reputation as a well managed, secure and professional operation.  These qualities need to be at the heart of any bank’s reputation and so any crisis which indicates their absence poses a major threat.

A lack of credit in the bank

A stock of reputational goodwill can be enormously valuable in a crisis: this can be built up with the right actions, relationship-building and pro-active communication ahead of time.  Unfortunately, UBS has a rather low stock of reputational credit currently.   Recent losses on toxic assets, a tax evasion dispute in the US and job cuts all contribute to an organisation which is low on reputational capital.  This is an unhelpful context from which to engage in crisis communication and protect reputation.

Tight-lipped communication

UBS has been extremely guarded in its crisis communication response with its most visible  presence being a 63 word statement about the issue on its website.  Others have been less tight-lipped. Ratings agencies, academics, journalists, financial analysts and other commentators have been quick to fill the vacuum.  Whilst this is undoubtedly a complex situation and the presence of lawyers will loom large, in a crisis of this magnitude, it is rarely the right strategy to stay so quiet.

Pro-active crisis communication required

The crisis poses a major challenge for UBS and threatens serious damage to its reputation and long term business (its shares dropped by 11% on the day that the news broke).   A pro-active approach to crisis communication may not be enough to fully preserve UBS’s reputational value, but I firmly believe that without it, the damage will be much more severe.

Jonathan Hemus

www.insigniacomms.com

For a country whose econony relies on tourism, there’s no bigger crisis communication challenge than dealing with a fatal shark attack.  So it’s little wonder that the Seychelles’ crisis media spokesperson, tourism chief Alain St Ange, sounded under pressure when conducting media interviews about the death of British tourist Ian Redmond.

What is surprising though is that he should have made so many fundamental and damaging mistakes in the way he handled his media interviews.  A thorough reputational risk assessment should identify the crisis scenarios capable of seriously damaging a reputation so that thorough crisis communication training and planning can take place ahead of  a possible crisis event.  Either a shark attack had not been identified as a potential risk (a serious oversight) or insufficient crisis media training had taken place to identify and prepare a spokesperson to deal with such an event.

So where exactly did Mr St Ange go wrong?  Listen to this early BBC interview which illustrates the following errors:

1) Inappropriate balance between messages about the victim versus messages about the Seychelles

Whilst Mr St Ange expresses sympathy for the victim and his family, this is out-weighed by messages focused inwardly on the Seychelles.  This smacks of self-interest and self-justification.  He twice describes the country as being “innocent” as though apportioning (or avoiding) blame is the priority at this stage.  More than this, his attempt to position the attacker as a “foreign shark”  and by inference not the responsibility of the Seychelles, stretches credulity.  The impression created – rightly or wrongly – is that the spokesperson cares more about the impact on business in the Seychelles than the human tragedy.  In other words, the exact opposite of what he should be communicating.

2) Inappropriate tone of  voice

It’s not just what you say, it’s how you say it.  Mr St Ange fails to convincingly communicate compassion in his tone of voice.  Instead, he sounds business-like, matter of fact and slightly brusque.  The impression is  of someone slightly irritated that he is having to deal with a problem (and the media), rather than someone who cares deeply about what has happened.  Some may argue that the fact he is not a native English speaker is a key factor in his vocal delivery.  I say that’s not good enough: when your reputation is on the line, you cannot afford to field a spokesperson who is unable to create the right perceptions among viewers and listeners.  Crisis communication training is essential to identify and enahnce the skills of your crisis spokespeople

In this later clip, again featuring Alain St Ange, a further problem arises:

3) Poor preparation leads to unwanted headlines

Mr St Ange continues to defend the actions taken by the Seychelles to protect tourists, but in an apparently throw away remark – again communicated in a casual tone of voice - he concedes “we did try, but maybe not enough”.  Guess what the headlines were after this interview?  Almost universally, along the lines of “Seychelles tourism chief admits we could have done more”.  My criticism is not so much the message itself – acknowledging mistakes and committing to address them can be a very powerful and engaging message – more that it appeared to emerge in an unplanned way.  More than this, it seemed to conflict with earlier messages which sought to distance the Seychelles from blame.  To be successful, crisis spokespeople must know exactly want they want to communicate in a media interview and be pro-active in getting those messages across.  Consistency of message is crucial: media interest in crises can be sustained much longer in the event of mixed or conflicting messages.

The role of spokesperson in a crisis carries significant responsibility.  In addition to successfully communicating important information to stakeholders, the impression they create will influence longer term perceptions of the affected organisation.  Choosing the right person for this task, training them properly and providing them with the right messages can make  the differnce between preserving reputation, and seeing it severely damaged.

Jonathan Hemus

www.insigniacomms.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

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

Qantas chief executive Alan Joyce has delivered a masterclass in crisis communication in response to the emergency landing of its damaged Airbus A380.  In particular, he has acted in accordance with three of crisis management’s golden rules:

1)      Manage the crisis in accordance with the organisation’s brand values

As viewers of Rainman will know, safety is at the heart of Qantas’s reputation.  Preserving the essence of the corporate brand under pressure from a crisis is a major challenge, but a key priority for any business.  Joyce has pulled off this feat by making passenger safety the guiding principle underpinning everything he has done and said.

2)      Fill the information vacuum

Alan Joyce was quick to meet with the media and make a public statement.  In doing so he positioned Qantas as being in control and the pre-eminent authority on the situation.  The company’s website includes clear and comprehensive information about the latest situation.  Alan Joyce’s assured media performances, his words and actions will almost certainly protect, maybe even enhance Qantas’s reputation.  By contrast, Rolls Royce has been invisible.

3)      Be seen to be taking action

Whether operationally necessary or not, Qantas knew that grounding its fleet of A380s was essential to maintain passenger confidence and trust.  Of course, it will cost money in the short term, but it says all the right things about the company’s priorities and is absolutely essential for its long term reputation.

Chief executives earn (and sometimes lose) their spurs in the heat of a crisis.  Alan Joyce has passed this test with flying colours and as a consequence has protected the value – reputational and financial – of the Qantas brand.

Jonathan Hemus

www.insigniacomms.com