Force For Good Communications

How can Facebook and JP Morgan win back your trust?

It wasn't supposed to happen this way.

Facebook launched perhaps the most anticipated IPO ever and instead of the moonshot many expected, it fizzled like a rocket from North Korea--and has since completely imploded. First, Facebook executives made a decision shortly before the IPO launched to increase the number of shares floated, greatly increasing the odds that demand wouldn't keep up and the share price would fall. Then, the big day came. The stock price initially went up by about 10 percent, as individual investors finally got their chance to buy a piece of the dream, but within hours the share price was plummeting. As Facebook stock continued to sink on its second and third day, allegations arose that Facebook insiders (and execs at Morgan Stanley, the underwriter of the IPO) had revised revenues projections downward but didn't inform the market at large. Now the SEC is investigating and the inevitable investor lawsuits have been filed. The prospect of a protracted legal battle has become a thick cloud hanging over Facebook the Stock, a discouraging prospects that will continue to dampen enthusiasm in the investment for some time to come.

Meanwhile, J.P. Morgan has become the poster child for a new chant from the Occupy Wall Street crowd: "We told you so." Just when you thought the Big Banks had been chastened by the near collapse of the world financial markets followed by massive bailouts of those deemed "too big to fail," JPM announces a multi-billion-dollar loss from speculative trades in risky derivatives, the same stupidity that led to the financial meltdown in the first place. The so called "London Whale" trades undermined JPM CEO Jamie Dimon's case that banks should be freed from Dodd-Frank regulations enacted following the bank bailouts. Dimon went from the financial industry's most persuasive advocate to being perceived as the very embodiment of the "Bankster" the Occupy crowds would like to burn at the stake.

So what can Facebook and Morgan do to win back your trust? That's the subject for my next few posts. Your ideas welcome!

-Jon Harmon

Goldman won't regain public trust with Wall of Secrecy

What do companies need to do and say to win back pubic trust?

Jordan Kimmel of Trust Across America posed that question to me this week on his radio program on Voice America. Here's the link to listen to the interview.

Jordan asked me about winning back trust after a crisis and about my experience in the Ford-Firestone mess that is the basis for my book, FEEDING FRENZY. And we talked about the turmoil inside Goldman Sachs after former executive Greg Smith took quite a public parting shot in the form of an op-ed in the New York Times. (Smith's piece has since led to a global torrent of negative press and opinion against Goldman and its brand of "pirate capitalism.")

Goldman CEO Lloyd Blankfein

I pointed out that the heart of Smith's accusations against Goldman's corporate culture is the violation of customer trust, of putting profit ahead of customer interest. But even worse, I noted, is a bigger cloud hanging over Goldman, the violation of public trust. It's now clear that Goldman played a key role in the financial crisis that precipitated the global Great Recession, especially in regard to the clever packaging of derivatives built around shaky subprime mortgage disguised as AAA-rated investments.

The American public is incredibly forgiving when the leaders of an organization express remorse and a sincere commitment to change behavior for the better. But contriteness is not the message coming out of Goldman.

Furthermore, in today's world, transparency is an essential element of corporate social responsibility. Goldman's corporate culture is built on impenetrable secrecy. And there's little reason to expect the curtain to be lifted any time soon.

It's only March, but put Goldman Sachs down as an early contender for Force for Good's 2012 PR Disaster of the Year.

- Jon Harmon

When should you ignore the lawyers and apologize?

When is an apology helpful? When might an apology prove damaging?

A PR pro who is aiming to repair damage to trust and reputation will likely give you different answers to these questions than a lawyer aiming to limit liability. In many, if not most cases, reputation trumps liability. It’s better to sincerely apologize and attempt to move forward in restoring trust in your organization than to stubbornly remain silent. Losing in the court of public opinion can prove more damaging than losing in a court of law. And refusing to apologize may even prove harmful in the courtroom, perhaps leading an unsympathetic judge or jury to pile on punitive damages to what they see as an unrepentant offender.

Keeping this in mind, I offer the following two-question test to help you decide when an apology is in order, courtesy of Eric Zorn in today’s Chicago Tribune. (Zorn brings up the subject because of criticism Republican presidential candidates have directed at President Obama following his apology to the people of Afghanistan for the inadvertent burning of some copies of the Koran. Regardless of your own political views, Zorn’s simple test is helpful to the corporate communicator deciding whether to push back against the lawyers and recommend a public apology be extended.)

1. Did you (or those who represent you or answer to you) do or say something that caused discomfort, or worse, to others?
2. Would you undo this act if you could?

A “yes” to both of these questions indicates an apology is almost surely in order. Note that the harmful act need not have been deliberate; and if it was indeed unintentional, you clearly should mention that fact in your apology.

Note also that your social responsibility, if not your legal accountability, often extends beyond your own company and its employees—your dealers and even your suppliers may be considered part of your extended organization in the eyes of the public. A socially responsible company holds its dealers and suppliers to the same ethical standards it follows itself.

Finally, Zorn reminds his readers not to offer one of those mealy-mouthed non-apologies that includes caveats like “… if anyone was offended” or is written in a non-accountable passive voice: “mistakes were made.”

And finally I offer these Force for Good posts from the past on the still-pertinent issue of the apology:
When is an emotional apology just too much?

When is an apology a better response than trying to argue the merits of your behavior?

How long do you have to be sorry?

-Jon Harmon

Silence worsened sordid Penn State scandal--2011 PR Disaster of the Year

The real tragedy of the scandal at Penn State is that so many of Jerry Sandusky's alleged acts of predatory sexual abuse over the years could have been prevented if university officials had not tried to keep it quiet. Hoping to avoid an ugly incident, their silence led to arguably the worst scandal in American sports history ... and made for an easy choice for the Force for Good's 2011 PR Disaster of the Year.

Time and again, the lasting impact of a crisis is made worse by those first on the scene hoping to sweep it under the rug. How many times have you you heard, "The coverup was worse than the crime?"

Bold prediction: this won't be the last time a scandal is made far worse by embarrassed officials trying to make it all go away. Don't let it happen at your company. Work with senior leadership to develop a rigorous crisis management plan built around smart, proactive crisis communications to all stakeholders.

Click here for five years of truly memorable recipients of FFG's PR Disaster of the Year.

- Jon Harmon

GM learns from Toyota's mistakes with sure-footed crisis response to Volt fires

GM moved quickly to diffuse a potentially devastating crisis by continuing to learn from Toyota--in this case, avoiding Toyota's mistakes at the beginning of its own product crisis last year.

Media pounced (as they inevitably do) on GM soon after the National Highway Traffic Safety Administration launched an investigation into the Chevy Volt, an advanced plug-in hybrid electric car. A Volt had caught fire three weeks after it had been crash tested, touching off a crisis with far-ranging consequences: to GM (while not expected to make a positive contribution to GM earnings for many years, the Volt is the most visible symbol of the potential of the new GM, reborn after the bankruptcy of the old one), for the Obama Administration (which rightly has taken credit for saving thousands of American jobs with its rescue of GM), and for the nascent electric car industry (which are almost universally powered by lithium ion batteries similar to the ones used in the volt).

Remember that reports of flaming laptop computers originating from over-heating lithium ion batteries forced Dell in 2006 to initiate the largest recall in the history of personal computers.

The most important action for GM was to commit to do the right thing, not just set out to prove that the Volt was a safe vehicle, I told Keith Naughton of Bloomberg news as the crisis unfolded:

"They’ve got to demonstrate that they’re putting their customers’ safety first,” said Jon Harmon, a former spokesman for Ford Motor Co. and author of “Feeding Frenzy,” a book about the Ford-Firestone crisis of the early 2000s. “The focus needs to be on getting to the bottom of this, not trying to prove that they’re right.”

To GM's credit, the company reacted in mostly the right ways--cooperating immediately with NHTSA investigators to understand the cause of the fires while working to reassure the public. The fires had occurred after the crash-tested Volts had been parked without fully discharging the batteries, GM said--and the company would not only get the word out to its dealers and other auto service centers on the necessity of discharging the batteries after a collision, but they would develop an onboard system to slowly and safely discharge the batteries after a crash. And they offered loaners of good-old fashioned petrol-burning GM cars to Volt owners who didn't want to keep their cars while the company was sorting out the problem and the fix.

GM's only misstep was when GM CEO Dan Akerson said the company would buy back Volts from concerned customers, comments the company's PR people quickly clarified (the loaner program had been launched to quell customer concerns and the company has every intent to quickly understand and remedy the problem which would take away the need for any buy-back program).

Toyota in contrast had stone-walled investigators and the media when reports began to surface of complaints of unintended acceleration in a number of Toyota and Lexus models. After much criticism put a significant dent in its sterling reputation for quality and customer satisfaction, Toyota reversed course and began handling the crisis with laudable care and attention. Ultimately, the company was vindicated in its insistence that no computer or electronic malfunction was occurring. But that did not excuse its initial behavior in brushing off reports of its cars speeding up on their own, and undoubtedly that first impression left lasting scars on Toyota's reputation.

GM's adroit handling of the Volt crisis has rightly earned high marks and the contrast with Toyota's bumbling crisis response duly noted (for example, in the Los Angles Times).

- Jon Harmon

New candidates step forward ... for PR Disaster of the Year

The last few weeks have brought us a rush of new, worthy candidates—for Force for Good's annual PR Disaster of the Year award.

Herman Cain—no matter what you believe at this point, it is clear that the Cain campaign has been clueless in handling a crisis they should have seen coming. With 10 day's notice before the publication by Politico October 31 of the first allegations, how could Cain be caught flat-footed and ill-prepared? The steady drip, drip, drip of new accusations (we've seen this movie before, twice: It's Tiger Woods and Anthony Weiner, all over again) makes it clear this story isn't going away and Cain's various responses—angrily lashing out at reporters, trying desperately to change the subject, defiantly attacking one of his accusers as a "troubled woman," are all wrong, wrong, wrong.

Penn State—the sad, sordid tale of sexual abuse allegedly perpetrated by longtime assistant football coach Jerry Sandusky should have ended in 1996 when Sandusky was first caught showering with a boy; police were notified but no charges filed. Or in 2002 when a graduate assistant coach walked in on Sandusky in the shower with a boy, he told head coach Joe Paterno who reported the charges up to the Administration but didn’t notify police, confront Sandusky or otherwise follow through on his obligations to the community to stop a predator. Yesterday, university officials abruptly cancelled Paterno’s weekly press conference, only adding to the uproar. Today, the 84-year-old Paterno announced he will retire at the end of the year, surprising no one. The real tragedy is that so many at the university remained silent while Sandusky continued to molest at least eight boys.

Greek Prime Minister George Papandreou, who in a quieter year might be running away with the award. With rioters in the streets of Athens a daily event protesting austerity measures that will end the gravy train for a coddled public in an IOU economy, Papandreou surprised his fellow leaders in the Eurozone by saying he would put Greek's last-chance bailout up for referendum. Hmmmm, seems like all those riots would give one pause before putting further-but-necessary austerity moves up for public referendum. Then, when Germany, France and the rest of the Eurozone made it obvious that their generous deal would be rescinded, Papandreou did an about-face and cancelled the referendum--nothing like promising a vote to a riotous public and the reneging, throwing gasoline on the fire. Papandreou was forced to resign to be replaced by ... no one yet. This being Greece, a new coalition government has yet to be formed amid more squabbling.

These newbies to PR disaster join entrenched candidates Wiener (who exposed himself as a liar), Lindsey Lohan (can’t seem to stay out of trouble), Dominiquec Strauss-Kahn and his accuser (he is at best a lech accused of much worse, but her story fell apart and he returned to France where he will apparently not be President), and the Boston Red Sox / Atlanta Braves (historic chokes by both teams--okay not so much a communications issue, but disasters nontheless).

Jon Harmon

Crisis media relations made easy: Keeping COOL on the HOT Seat

"Keep your head when others around you are losing theirs." It's sound advice for the crisis communicator, but easier said than done.

The secret is preparation. Start with a thorough crisis vulnerability audit covering your company's operations, products and people. Then develop a detailed crisis communications plan with variations included for each significantly different type of crisis envisioned by the audit.

Then remember that the actual crisis that strikes won't be at all like any of the scenarios you envisioned. A crisis creates a whole string of moments requiring on-the-spot good judgment from the person leading crisis communications. But you'll be much more ready to exercise good judgment and a steady hand if you have previously taken the time to develop your crisis plan.

If you have little media-relations experience handling combustible issues and preparing for an all-out corporate crisis seems over-whelming, you'll do well to read Judith Hoffman's concise and well-reasoned Keeping COOL on the HOT Seat: Dealing Effectively with the Media in Times of Crisis. Just released as a revised fifth edition, this handy paperback provides wise counsel to the communicator that is both up-to-date and timeless.

The beauty of this book is its simplicity. Hoffman breaks down the daunting specter of a crisis--and the role of a crisis communicator in confronting it--into a series of short, easy-to-understand mini-chapters that collectively can help a novice make sense of it all. Yet a more seasoned public relations pro will also find it to be valuable because it's all so spot-on.

Keeping Cool walks the reader through the basic elements of crisis planning, along with the basics of crisis media relations. It is full of practical advice, including these 10 C's of Good Crisis Communications:

• Be cooperative.
• Provide control.
• Demonstrate caring and concern.
• Demonstrate competence.
• Be credible.
• Be consistent.
• Be clear.
• Be concise.
• Remain current.
• Act calm (keep your cool).

She advises against trying to be "cute or clever" and to avoid the always deadly "No comment."

This is all great advice and it's a solid reminder of the basics of crisis communications. Those who read and abide by the principles in this book will better serve their organization in the sudden event of a crisis.

What's missing is exactly where I began this post--the crisis audit. Hoffman skips over the need to dissect the organization for vulnerability on various fronts. Often, the crisis audit will detect deficiencies that, once addressed, may help an organization avoid a crisis in the first place. And different types of vulnerabilities may require somewhat different crisis plans (for example, an explosion in a plant will require a different response plan than would a string of complaints of sexual harassment).

Hoffman's book alone won't prepare a novice communicator for any emergency, but Keeping Cool readers will be far better off in an emergency for having read her book.

- Jon Harmon

Disclosure: Judy Hoffman includes a nice reference to my book, Feeding Frenzy, in her book which I'm happy to quote here:

"To get a true sense of what it is like to be on the "hot seat" in the midst of a raging crisis with national and international attention, read this book. Mr. Harmon was the head of Pubic Relations for Ford Truck in 1999 when this high-profile case broke. If there is even a possibility that your organization could be in such a high visibility position with your products deemed a safety threat to a large population, you owe it your self to know how these things work."

Real lessons in crisis management: Olive Garden recovers nicely from anti-flag flap

After an initial misstep, Olive Garden corporate has recovered well and looks to be putting an unwelcome controversy behind it.

Yesterday, news broke that an Olive Garden restaurant in Oxford, Alabama, had refused to allow a Kiwanis Club to include their American flag at a banquet there. Eighty-year-old Kiwanis Club member Marti Warren was outraged, “This is not my country. This is not my country I grew up with,” she said. “I was so angry. I felt like I had been slapped in the face.”

Unfortunately, Olive Garden's first response to the flag flap was weak and only made matters worse. The restaurant chain released a statement aiming to explain away the controversy. After noting that "like all Americans we have nothing but the utmost respect and admiration for the American flag and everything it symbolizes," the company then offered this ham-handed explanation that, predictably enough, only fanned the flames: "To be fair to everyone and avoid disrupting the dining experience for all other guests, [the Oxford restaurant is] unable to accommodate flags or banners of any type in the dining room."

Remember that crisis management is not about winning an argument debate-style. It's about winning over hearts and minds. Cold, hard facts often don't effectively counter emotional complaints. And how is this for emotional imagery on the side of the aggrieved Kiwanis: Without a flag at the Kiwanis banquet, Warren said she asked club members to close their eyes and picture the flag waving in the wind as they said the pledge of allegiance.

Soon the internet was abuzz with boycott threats. Conservative-leaning bloggers were quick to impugn the restaurant's motives in excluding the Star and Stripes. "Far-left Olive Garden," began one report.

But today is a new day and more seasoned PR pros evidently won out at Olive Garden corporate.

Olive Garden SVP Bill Holmes called Warren yesterday to personally apologize and promised to fly down to Alabama first thing Monday to personally apologize to the Kiwanis Club. Olive garden also revised its statement, with an apology (and not just the "we're sorry if anyone was offended by our innocent action..." apology all too common these days; see my earlier posts here and here. And he agreed to return to Oxford Nov. 4 to speak at the next Kiwanis Club meeting.

Much better, Olive Garden. Marti Warren, for one, is satisfied. "I feel grateful of all the people who stood with me and that changes were made," she said.

- Jon Harmon

Rocket scientists provide sweet vindication for Toyota

Sweet vindication. That's what Toyota is feeling today, but they're smart enough not to gloat.

A study by the National Highway Traffic Safety Administration and the space agency NASA released today finds no electronic defect in more than 3,000 complaints against Toyota alleging sudden acceleration.

Toyota recalled more 8 million vehicles worldwide in 2009 and 2010 to fix two mechanical defects--sticky accelerator pedal assemblies and floor mats that could trap the accelerator pedal in the down position. But critics continued to call for further investigation into possible glitches in the electronic throttle control that could cause the cars to unexpectedly speed up. 

Toyota certainly dragged its corporate feet and stonewalled at the early stages of what became a full-blown crisis. Customer complaints were ignored. Not surprisingly, Toyota's intransigence deepened the crisis. 

But sometime last  February, the company astutely changed its crisis management strategy to go to extraordinary lengths to demonstrate a renewed commitment to customer satisfaction and safety. At the same time, Toyota went "all in" in taking a hard-line fiercely denying that there could be an electronic defect at the center of the storm.

It was a monumental gamble. What if NHTSA and NASA today issued a report finding an electronic bug? The company would be excoriated for failing to fix the problem 12 months ago, and would face enormous liability for any accidents that had occurred during those 12 months.

As it is, Toyota has been vindicated. Sure, the plaintiff lawyer shills will continue to cry foul and call for further investigation. But really, after people who literally are rocket scientists have painstakingly reviewed case after case, interviewed thousands of drivers and examined thousands of vehicles, plus conducted numerous experiments--can anyone really doubt their verdict?

- Jon Harmon

What's the new gold standard in crisis PR?

For decades, conventional wisdom too often has judged an organization's response to a crisis by comparing it to two archetypes of crisis communication response: Johnson & Johnson's Tylenol crisis of 1982 and the Exxon Valdez oil spill of 1989.

As I wrote in the preface to FEEDING FRENZY: 

In the case of the Tylenol poisonings, the company is said to have acted swiftly and courageously in recalling its product, communicating effectively, then reintroducing Tylenol in tamper-resistant packaging, leading ultimately to an increase in its market share. And in the case of the Valdez oil spill, Exxon is depicted as being slow to act, indecisive and callous, stonewalling and recalcitrant, only stepping up to its full responsibility to the Alaskan environment after being skewered in the court of public opinion and seeing its corporate reputation suffer.

Like all archetypes, each of these benchmarks are more purely black or white as case studies than they ever were in real life. For example, in oft-repeated mythology, upon learning of the poisonings in Chicago, J&J's CEO acted "immediately" to order a complete recall, thereby creating the "24-hour standard" for action in a crisis. In actuality, J&J CEO James Burke learned of the deaths on Wed. Sept. 30, 1982 and did not convene a meeting on the problem until the following Monday. Since all of the initial poisonings had taken place in Chicago, J&J made the logical decision to ask stores in the Chicago area to remove the capusules from their shelves. But the following week brought news of a poisoning in California, prompting the company to voluntarily recall Tylenol nationwide. James Lukaszewski calls the Tylenol legend a "fairytale." Jack O'Dwyer and Tony Jaques also cite numerous faults in J&J's response in the 1982 crisis. But they are decidedly in the minority--the web is full of positive references to the "Tylenol crisis case study" (Google brings up 53,800 references, nearly all gushingly positive). 

Also to be noted are other hazards in lookng to J&J for inspiration on how to quickly rebuild a brand after a crisis. J&J's fabled 1982 recall was in response to the despicable actions of an unknown assailant--not mistakes the company had made. So it wasn't too difficult to win over public sympathy. As Eric Dezenhall wrote:  "A company attacked by a criminal will be forgiven more quickly than one accused of being the criminal."

 

Perhaps a more useful case study would be to examine how J&J succeeded in creating the powerful and enduring consensus of the "Tylenol gold standard of crisis management."

J&J itself has failed to live up to its own myth. J&J was recently accused of having hired contractors to pose as shoppers and quietly buy up medicines suspected of being dangerously defective rather than undertake the expense of a recall. In testimony to Congress last month, J&J CEO William Weldon denied the "phantom recall,' but did concede that "We let the public down."

Likewise, Exxon undoubtedly did many things right after the Valdez spill that were long ago dismissed as irrelvent to the enduring lesson of the myth.

Now that we are three decades removed from the Tylenol and Valdez crises, it's clearly time to look to more recent cases to guide contemporary crisis work, if for no other reason than because the communication environment has changed so radically since the 1980s. The crisis managers at J&J and Exxon did not have to deal with 24-7 news cycles, let alone pervasive and uncontrollable social media. J&J's response time in 1982 would be seen as far too slow today--and the company would not have been able to perpetuate a myth after the fact that it acted "immediately." The Internet today records real-time events for scrutiny forever more.

It's not hard to find contemporary examples of crisis communication failures--BP and Toyota come quickly to mind. Indeed, we see the Valdez disaster slowly passing from popular memory. But J&J's lock on the "gold standard" continues to endure. That's because the response to a complex crisis is rarely, if ever, so perfect. Communications professionals and crisis managers are better served by case studies that examine the good and the bad, the correct and the errant, in a multi-dimensional and lengthy crisis.

- Jon Harmon