Tuesday, March 30, 2010

Crisis in Rome

Joe Ferullo’s blog on the National Catholic Reporter March 29 was titled “Crisis Mis-Management."

Joe, you wrote about the “grey suited men and women. . .” who have been practicing the “precision art called crisis management” since at least the Watergate Era. I would like to correct one thing in that statement – some of us wear the business uniform of Blue Blazer, TV-blue shirt, red tie and grey slacks! I just didn’t want to mislead anyone that we all wear grey suits.

Whether you are Catholic or not, I would encourage you to read what Joe had to say at: http://ncronline.org/print/17622.

Joe points out there are two “simple” Golden Rules: Get the bad stuff out there and get it out there fast.

It’s not quite that simple, but it’s not rocket science, either.

When something goes horribly wrong, or even a little wrong, the story will spread, potentially world-wide, quickly. The only thing that can slow it down is if there is something a little worse going on at the same time. Your horrible news may get pushed aside by someone else’s more horrible, or at least more bizarre news.

Either way, you have a choice – let someone else tell your story their way – or tell it your way, first. That part of Joe’s message is spot-on.

But the next step, and timeliness is equally important, is to take responsibility for what went wrong. So far, the Catholic Church and its worldwide leader have not done that, yet. Joe writes that “sounds counter-intuitive.” He compares what ought to be done to the natural instinct to “circle the wagons” and wait for the trouble to subside. There is a fallacy there, however. It is rare for a negative news event to blow over without at least causing some, often times, significant damage.

Now I’m getting a little jaded in my older age. After more than 45 years in the news business and helping clients as a so-called crisis communication expert, I’ve come to realize that most people don’t get as worked up about someone else’s misdeeds as the media and the pundits. In fact, I’m not sure that most devout Catholics are all that alarmed about allegations their spiritual leader, Pope Benedict XVI, failed to act years ago to stop sexual abuse by a local Priest.

It is a serious issue. No one should be allowed to hurt children, or anyone else for that matter.

But, it is not a new problem, and in several Catholic diocese across the United States, the Church has paid millions of dollars in settlements in civil lawsuits in recent years. I fear that if a Catholic church member does not know someone who was abused, this issue will be only a short-lived concern. That is not a slur on Catholics, it is today’s human nature, no matter what religious beliefs people have or do not have.

However, it still behooves the Roman Catholic leadership to take some basic steps to fix the perception of Priest child abuse as well as stop the problem itself, and explain what it is doing to make sure it never happens again, without swift and decisive action.

Friday, March 26, 2010

Has Tiger Said Enough?

No one should be surprised that the media, almost all forms of it, are still complaining that Tiger Woods has not answered all their questions -- particularly what happened the night he drove his SUV into a fire hydrant and tree in front of his Florida home.

I must confess, I too am curious. Maybe its because I spent more than 30 years in the news business.

However, in the job I have been doing for nearly 20-years, I have come to believe there is a limit, no matter what the public or its alleged representatives in the media say.

When an organization or an individual gets into trouble, there are some basic principles that apply and have not changed much since our founder Bob Irvine wrote the first book on crisis communications in 1988 -- WHEN YOU ARE THE HEADLINE.

The individual or the leader of the organization must step up and take responsibility for what happened or what went wrong . . . the sooner the better.

Then he or she must express their regret, their apology, their sympathy, whichever is appropriate and follow that with a statement of what they are going to do to fix the problem.

If it is a company that made or distributed a defective or contaminated product, they must admit it happened -- it's okay to explain how it happened -- and then it is essential the spokesperson explain what has or is being done to make sure it never happens again.

If its a case of individual misconduct -- ethical or moral -- the person responsible needs to own up, apologize and in as few words as possible explain what he or she is going to do to make sure it never happens again.

THEN, they have to live up to that public commitment.

It is often more important for public people, public organizations and companies to "do the right thing" than to keep talking about.

Monday, March 15, 2010

Run Away Toyotas: Real or Hoax

Probably some of both!

Over the years, Chicago police have investigated vehicle crashes involving Chicago Metro Transit buses. I recall reading a story, based on such a wreck a few years ago, in which a police spokesman said the "official" police report of the bus-car crash indicated there were 8 to 12 passengers on the bus,

However, within hours of the story making the local radio news, more than two or three times as many persons showed up at area hospital emergency rooms claiming injuries from the bus crash.

It is possible some gold-diggers have faked Toyota throttle problems, hoping to make a buck from the international car company. And now there are a number of plaintiff's attorneys trolling for clients to sue Toyota. If history repeats itself, the plaintiff's attorneys will get a lot more out of the legal system than will Toyota owners.

Over the years, there have been occasional vehicle accidents in which, usually older drivers, have stepped on the accelerator when they thought their foot was on the brake peddle...and a wreck resulted.

Even so, it seems very likely that some Toyota's have had throttle problems and the company has to keep investigating to be sure they know what happened and then work even harder to reassure car owners and potential buyers the problem is fixed and won't happen again.

Meanwhile local, state and federal authorities must respond quickly to each alleged incident, and with an open mind and thorough investigation, sort out the real problems from the fakes and report their findings to the American people.

Friday, March 12, 2010

Bankruptcy Communication: How NOT To Do It

Recently a private business club we belonged to, padlocked the doors after dinner hour on a Saturday evening, and Monday morning filed Chapter 7 Bankruptcy.

There had been rumors for three months that the member-owned organization was about to fail and would not survive beyond March, 2010, but there was no prior communication with the members, who purchased the operation a few years ago from a national business club management company.

The Board and management’s role in the demise of the club is a separate discussion. But the lesson for every other business and even some non-profit organizations is the subject for today’s post.

The Jefferson Club was a convenient and comfortable place for business men and women to meet for breakfast, lunch or dinner. The food was good, the service was marvelous, the environment pleasant and professional, and you could TALK and be HEARD in the dining room and meeting rooms.

And we particularly enjoyed using it for crisis management training that we offer here in Louisville, KY. We have clients from around the world fly in and spend two, three and sometimes more days in crisis communication and crisis management workshops and table top exercises and for media training and coaching.

It just so happened that I called the receptionist Monday at mid-morning to make a lunch reservation and got a recording inviting me to push “one” to make a reservation. I assumed the wonderful lady that normally answered the phone was on another call or helping a member. So I intended to wait a few minutes and call back.

Before I got around to calling back, I got a call from a friend asking if I had heard the club was “gone?” I tried the phone again and got the same recording inviting me to leave my reservation request. I went to the website, and it was gone – no information, just the logo and the words “Under Construction.”

I tried calling the business manager and got his voice mail inviting me to leave a message. I called the President of the Member Board of Directors. The temptation is great to name and embarrass him, needless to say, he was too busy to take my call, according to his assistant, and ignored my request for a call-back.

So, what should have happened? What should you do if your organization is faced with Chapter 7 or Chapter 11 bankruptcy?

There are some basic things. Let’s begin with Chapter 7 – the “end” of the organization with no possibility of reorganization. By the way, the things I’m going to outline here are the same for a Chapter 11 “reorganization” bankruptcy. There are just a few more things you will want to do if you’re going into Chapter 11.

First of all, identify all of your key audiences, and then plan a communication strategy. Bankruptcy doesn’t just come out of nowhere. There is almost always time to get ready.

Timing is critical. You should communicate to each of those key audiences, directly. They should not have to hear about your business failure from the media or the rumor mill. And they usually cannot be informed in advance.

But, the Jefferson Club should have:
1. Prepared a letter from the Board and mailed to members/owners on Saturday, so it would be delivered Monday, the day of the court filing.
2. Had a statement ready to activate on the website home page immediately after the filing was in the County Clerk’s hands.
3. Had a new message recorded and ready to activate on the answering system, explaining the club was not open and not going to reopen.
4. Invited employees to a meeting with a representative of the organization to answer questions and provide out-placement support and counseling.

That is the very least that should have been done.

If you’re facing Chapter 11 Bankruptcy, you have to be careful what you say – the lawyers will guide you – but you need to be prepared to explain what’s happening to employees, vendors, customers/clients and reassure those audiences that the purpose of the Chapter 11 filing is to help get the business back on its feet.

And, as much as is possible reassure the workforce that some or more will still have jobs during and after the reorganization and reassure customers that you plan to continue doing whatever it is you do – make widgets, provide a service, meet customer needs.

Heaven forbid you should ever face a business bankruptcy, but if you do, we can help.

Wednesday, March 10, 2010

NASCAR Is Inviting A Lawsuit

Let’s give Toyota a rest today and pick on NASCAR. If you’re not a stock car racing fan, NASCAR is the sanctioning body for the largest automobile racing league in the United States.

Because of the economy and some rules changes, including major changes in the design and limits on the race cars themselves, attendance and profits were down last year.

The NASCAR management team was criticized by the fans and teams for “ruining” the racing and the family company that runs NASCAR didn’t make as much money last year.

So, before this season began at Daytona in mid-February, the President of NASCAR announced the loosening of some of the rules. One of those rules changes seemed to clear the way for “drivers to be drivers” as one sports writer reported.

In the past couple of years NASCAR said it would not tolerate drivers running into each other on purpose and coupled with other changes, the racing was not as “exciting” as it had been in the past.

With the relaxed rules and the apparent blessing of NASCAR officials, two drivers got mad at each other last Sunday during a race in Atlanta. One young driver bumped a veteran driver and put him into the wall, ending the older driver’s chances of winning.

It took more than 100 laps to repair his car, and without any chance of accomplishing anything else, Carl Edwards went back onto the track with the obvious intent of “getting even.” It took him a lap to accomplish his goal, but he finally caught up with Brad Keselowski and ran into him at nearly 190 miles an hour, sending his car flipping into the wall.

No one got hurt, this time. But a year ago at Talladega, Keselowski put Edwards into the wall within sight of the finish line. Edwards was leading until he got booted. Keselowski won the race and seven spectators were injured by flying debris.

This is not a fight during a hockey game. If two players want to knock their teeth out, let them, as long as they keep it out of the spectator seats. It’s hard to keep the on-track fight on the track.

So what does this have to do with crisis management? A lot!

NASCAR has basically invited an aggressive plaintiff’s attorney to file a lawsuit against the sanctioning body and one or more track owners, alleging they have made it unsafe for fans to enjoy their favorite sport.

If the case is filed in a court somewhere outside the Southeastern United States, NASCAR could lose, or at the very least, spend millions of dollars defending itself.

Many organizations make decisions every day that could invite consumer, investor, employee or regulator legal action. They make decisions without considering all of the legal and public relations issues. NASCAR is just the latest to do it so publicly.

What do you think?

Monday, March 8, 2010

You're Kidding: Negative News Is A Crisis Risk?

Negative publicity or “bad press” is now recognized as a potential risk to business, according to a story in PRWeek this week.

It apparently became official when Goldman Sachs included it in their February 26 ‘2009 10K’ filing. The Wall Street Journal reported the risk of “adverse publicity” was now on Goldman Sachs radar.

The Journal cited Goldman’s 10K as saying managing negative news coverage “is time consuming and expensive.” The filing ads, it can “have a negative impact on our reputation and on the morale and performance of our employees, which could adversely affect our businesses and results of operations."

Ed Canaday, Goldman Sachs Vice President of media relations, said it was the first time the company has officially recognized the risk of negative news coverage, but apparently would not elaborate.

This makes me wonder where they have been getting their crisis consulting and planning advice, because the Institute for Crisis Management has included a section on “Seriously Negative News Coverage” in almost every crisis communication plan we’ve written for almost every client from international manufacturing, to higher education, to healthcare, small businesses and not-for-profits.

And we’ve included that “risk” and how to prevent it, where possible, and how to manage it when it cannot be avoided, in our client crisis plans since at least the early 90’s.

An organization doesn’t have to do anything wrong to become the target of an investigative reporter or other negative publicity. Just last year, a small, family-owned sausage making company in Cleveland, OH was smeared across the local media, accused of running a “smelly” business that was damaging the already declining neighborhood.

After months of harassment from the county health department and several stories about the foul odor, police found the decomposing bodies of eight women in a neighboring house and back yard. Eventually the man who lived in that house was charged with 8-counts of murder. And the next door business is still recovering from the undeserved bad press.

And, when the business or organization does do something wrong, managing the negative public reaction is just as important as fixing whatever went wrong in the first place.

If your crisis communication plan does not have contingencies for negative news coverage, deserved or not, then you need to call the Institute for Crisis Management 502-587-0328.

Friday, March 5, 2010

New Japanese Interest In Crisis Management

Executives of Japanese companies have discovered crisis management, according to the Wall Street Journal. In the wake of the Toyota recalls, negative news coverage and loss of market share, leaders of Japanese companies are expressing new interest in crisis management planning and training.

Crisis communication management is still a relatively new field, first taking root in the United States in the late 80’s, the product of the fertile minds of three men – USC Professor Emeritus Dr. Ian Mitroff, ICM founder Bob Irvine, author of the book When You Are The Headline, and Jim Lukaszewski.

When I joined ICM in 1994, there was almost no awareness of crisis communication outside North America. Our colleagues in Canada and Mexico were first to inquire about what we were doing here in the U.S. and were among the first to come to Louisville to participate in the ICM Crisis Communication Certification Course which has been offered four times a year since the early 90’s.

By the early 00’s PR practitioners and other executives from South America, England, Germany, France, Italy, Qatar, Australia, the Philippines, South Africa, Nigeria and Lagos, among other countries. began coming to learn more about crisis communication and crisis management.

As more and more American businesses were acquired or merged with foreign companies, the challenge of preventing and/or managing crises became more difficult. The difference in cultures made it more difficult for American trained managers and executives of foreign owned companies to prevent crises and manage those that could not be prevented.

The Firestone ATX tire debacle is a perfect example. The manufacture of defective tires was first documented in 1993, but nothing was done until a whistle-blower called a Texas TV station in early 2000 and the resulting story forced the government to step in and order a recall.

Japan is getting hammered because of its “top down” management approach, but many European companies are guilty of the same mindset. The result is information and decisions are not always communicated downward, and information that might help stop problems doesn’t make its way “up” to the decision makers.

The Institute for Crisis Management is a pioneer in training corporate executives to prevent and manage crises that cannot be prevented. We not only provide comprehensive crisis communication management training here in the U.S. but we take our crisis training abroad, ranging from Halifax, Nova Scotia to Sao Paulo, Brazil.

Tuesday, March 2, 2010

What's Old Is New Again

Two things caught my eye in the media today, (well several things did, actually, but these two are fodder for a blog post!).

PRNews published its annual list of “Corporate Social Responsibility” award winners and in the introduction to the March 1, 2010 edition, the magazine’s editor talked about the “economic chasm” the country is climbing out of. And observed, “a fundamental change in thinking is sweeping through the business world: The concept that profits are not enough to keep organizations at the top of their industries. . .”

Meanwhile, in the competing PRWeek, there is a story about General Motors kicking off a “Vehicle Plant Tour” to “better engage its employees and their families. . .” The idea is to give its 40,000 remaining plant workers “direct access to the latest models.”

My dad worked for the General Motors plant in Bedford, IN until his retirement. When I was young, GM hosted an open house for employee families, and I looked forward to seeing where my dad worked. In those days in Bedford, GM was seen as a good corporate citizen, although that term had not yet been used. In the mid-60s, GM also had a travelling show that came to town, with specially designed trucks and displays called GM Futurama II. It was another way for employees and their families to connect with the company.

In the 40-plus years between then and now, the leaders of most organizations (not all) forgot about their employees and their families and the communities in which they operate. In recent years I have listened to executives complain that their employees and host communities don’t appreciate them nor the jobs they allow them to fill.

By choice, our company focuses on helping organizations prevent crises, and help them better manage those they cannot prevent. It never ceases to amaze me how well some companies and other organizations get through their disruptions, when they have “banked” goodwill with employees, suppliers, partners, community leaders, bankers and customers. At the same time, it never surprises me at how much harder it is to get past a business crisis when the organization has no existing goodwill with its key stakeholders.

The editor of PRNews concluded: “With trust in business at a low ebb, many organizations have realized that goodwill toward stakeholders and their communities is a concept whose time has come—it’s crucial in rebuilding trust and lifting reputations.”

I can only assume the editor that wrote that is too young to remember the “concept” once was the bedrock of good leadership.

By the way, congratulations to the CSR winners!