Monday, August 30, 2010

I'm an Adult: Treat Me Like One

When a Mom sees her teenage son standing before her, pawing the ground with the bottoms of his shoes and staring intently at their tops, she knows something is up, right?

Similarly, when a cable customer reads a letter that begins, “At Time Warner Cable, we strive to bring you the best products and services available,” the hairs on the back of the neck immediately rise. You know that by the end of this letter you’re going to be paying more for cable. When you get to, “We’re making adjustments effective with your next billing statement,” they don’t even have to say the prices are going up. And, in fact, this Time Warner letter never does.

Beyond an insistence on telling the truth, if we have a No. 1 rule of how to communicate serious messages, it’s probably, “Don’t insult your audience’s intelligence.”

We propose the following maxim to any company that must tell its customers or others news they’re not going to want to hear:

• If you give someone necessary bad news, they won’t like it but they’ll get over it.
• If you give someone necessary bad news in a way that treats them like they’re stupid, your relationship will never be the same.

One week after buying a Baton Rouge company called Lewis Computer Services and telling the staff it had no plans for layoffs, Missouri-based HealthcareFirst laid off one-third of the Lewis employees. “We realized we did have some overlap in employees and we made adjustments,” said the HealthcareFirst CEO.

There are only two ways to interpret that statement: (1) Our pre-acquisition due diligence was so shoddy, we didn’t know we had duplication, or (2) we lied.

Mergers and acquisitions inevitably cause anxiety among the staffs of both the acquiring and acquired sides, and that’s unfortunate. But losing the trust of the employees is worse.

And then there is United Airlines, whose United Express left a woman sleeping on a plane for four hours after landing. United usually wants its United Express passengers to think they’re flying its Friendly Skies and not those of some contractor. But when something goes wrong it’s suddenly, “We are working closely with our partner Trans States Airlines to investigate the cause and remedy the situation...” Apparently United neither maintains the standards for United Express nor stands behind its service.

Thinking back to our guilty teenager, it’s likely his parents would begin a conversation by saying, “Whatever you’ve done, just tell us. It’ll go a lot better for everyone if you just come clean and don’t treat us like fools.”

That’s intuitive with parents. Why is it such a hard lesson for companies?

Monday, August 23, 2010

Lawyers vs. Communicators in a Crisis

The frequent conflict between the advice of lawyers and that of communicators is one element of an interesting New York Times story on handling terrible news. The piece uses the BP, Toyota and Goldman Sachs debacles to tell universal lessons of crisis communications.

Here’s the link to the story, but if it’s too long for you, below are some excerpts and good quotes from well-known crisis communications professionals. http://www.nytimes.com/2010/08/22/business/22crisis.html?_r=1&hp=&pagewanted=all
Paragraphs that do not quote someone directly were taken verbatim from the Times story.

As conventional wisdom has it, the three companies at the center of these fiascos worsened their problems by failing to heed established protocol: When the story is bad, disclose it immediately — awful parts included — lest you be forced to backtrack and slide into the death spiral of lost credibility.

“Companies that typically handle crises well, you never hear about them,” says James Donnelly, senior vice president for crisis management at the public relations colossus Ketchum… There’s not a lot of news when the company takes responsibility and moves on. The good crisis-management examples rarely end waving the flag of victory. They end with a whisper, and it’s over in a day or two.”

Measuring success in a crisis

“The two things that are very hard to survive are hypocrisy and ridicule,” says Eric Dezenhall, a communications strategist in Washington. “It’s the height of arrogance to assume that in the middle of a crisis the public yearns for chestnuts of wisdom from people they want to kill. The goal is not to get people not to hate them. It’s to get people to hate them less.”

[BP] had to contend with a classic corporate quandary of balancing advice from counselors with starkly different considerations, according to people familiar with BP’s deliberations who requested anonymity because the advice was confidential.

In times of crisis, communications professionals and lawyers often pursue conflicting agendas. Communications strategists are inclined to mollify public anger with expressions of concern, while lawyers warn that contrition can be construed as admissions of guilt in potentially expensive lawsuits.

For BP, this tension burst into view in May, when executives went to Capitol Hill with officials from two of its contractors: Transocean, which owned the offshore rig that exploded, and Halliburton, which aided BP in drilling. Executives from the three companies each disowned culpability while pointing fingers at one another.

“What that screamed is the lawyers are in control," says [former Merrill Lynch media relations vice president Eddie] Reeves. "All it did was get everybody all the more peeved at them.”

People will forgive an honest mistake but not a dishonest cover-up

Of Toyota, Reeves said, “When you’re in the mix of these really obtuse situations where nobody really knows the facts, in some sense the facts are less important than your posture toward the facts. People are reasonable. They know companies make mistakes, and people will forgive an honest mistake. They will not forgive a dishonest cover-up.”

Yet seeking a way around a painful public reckoning appears to be a nearly universal approach to corporate crises. In the long run, the best course for an embattled company may be swiftly owning up to its errors. But to human beings stuck with the task of disclosing embarrassing details here and now, dissembling and delaying may beckon as the easiest way to get through the day.

Children stuck on scary roller coasters sometimes close their eyes and wait for the ride to end. So, apparently, do grown-ups heading giant corporations in crisis. This is the conventional explanation for how three enormously successful enterprises managed to prolong and deepen their public relations agony.

“These companies made the same mistakes,” says Howard Rubenstein, the public relations luminary who represents the New York Yankees and the News Corporation. “They broke the cardinal rule of crisis management: They didn’t seem to have a crisis plan in hand. They sought to minimize the extent of their problems, and they never seemed to display an understanding for the situation they were in.”

Tuesday, August 17, 2010

No Guarantees in Life

We often remind clients that crisis communications is an art, not a science. Even with the benefit of experience, we never know exactly how choosing one course of action over another will work out. The Hewlett-Packard/Mark Hurd soap opera underscores the point.

The H-P board of directors fired former CEO Hurd on Aug. 6 for…well, the ambiguity in the explanation of Hurd’s firing is part of the story. In any case, he was fired over events having to do with a sexual harassment lawsuit filed against him by Jodie Fisher, a former actress who had been contracted by H-P to schmooze with executives at company parties.

The New York Times on Aug. 10 implied that the H-P board of directors had followed the advice of an APCO Worldwide consultant when it decided to fire Hurd. That seemed odd, and when we reviewed some of the coverage online before writing this blog, we saw that the Times had issued a correction making clear that APCO had not recommended the firing.

But the consultant did write a faux news story to show what ongoing coverage of a sexual harassment investigation of Hurd might look like, and apparently that was influential in the board’s decision. Writing this kind of story is a common technique to help a client see how its situation might be perceived by journalists. It can bring focus to the decisions that must be made, and we have used it several times to good effect.

Whether the board made the best decision in firing Hurd is beyond our scope. The point is that, as bad as things have gone for H-P since its decision, we cannot know if they would have been just as bad or worse had the board taken the alternative course and endured the drumbeat of negative coverage predicted by APCO.

Where the H-P strategy fell apart was in its execution. In a crisis, decisive action clearly articulated is required to get people to believe you and believe in you.

Even though we cannot know in advance the outcome of a particular course of action, once a decision is made, it’s important to commit to the strategy. It is essential to speak with one voice and tell a consistent story during a crisis. Talking to the news media should not be a democratic pursuit.

The H-P board failed in this regard. A series of anonymous and amorphous tales emphasizing different reasons for Hurd’s firing made the board’s decision-making process appear muddled and opened the door to criticism from Hurd’s supporters.

In what the New York Times called “a stream of leaks from both sides,” Hurd and H-P have dragged out the corporate melodrama to their mutual detriment. Story after story has offered anonymous quotes from “a person familiar with the situation,” “people with knowledge of the board’s thinking” and “a person close to Mr. Hurd.”

Neither side can lay claim to the high ground or to much credibility.

The H-P board may have been given excellent advice, and the directors may have made a reasonable decision. But because they failed to follow through on the strategy, we’ll never know.

After all, it’s an art, not a science.

Tuesday, August 10, 2010

An Ounce of Grace, a Cup of Perspective

Other than a good ethical compass, there is probably no more valuable attribute during a crisis than a sense of perspective. Anyone who can keep a level head on his or her shoulders when under the glare of spotlights generally reveals character traits the public will applaud and admire.

Examples of grace under pressure can be seen in the reactions of three people who this summer were unexpectedly thrust onto the national stage.

Major League pitcher Armando Galarraga and umpire Jim Joyce were forever joined in baseball lore when Joyce’s erroneous call with two outs in the ninth inning denied the Detroit Tigers’ pitcher a perfect game. For those in baseball, that’s not your basic inconsequential blown call.

Fans were outraged. TV couldn’t stop showing the replay even on non-sports shows. But the two men at the center of the hubbub showed calm and perspective. When Joyce saw the evidence of his mistake after the game, he immediately went to the Detroit locker room and apologized to Galarraga. An umpire apologizing to a player? Never happens. It’s surprising the stadium didn’t crumble.

For his part, the young Venezuelan showed more maturity and graciousness than anyone else in the ballpark, if not all of Michigan. He accepted Joyce’s apology with a hug and said, “Nobody’s perfect,” perhaps an ironic play on words. The next night, when Joyce manfully refused to skip his turn umpiring behind home plate, Galarraga delivered the Tigers’ lineup card to him in the pre-game meeting, and they smiled and talked. Talk about a “teachable moment.”

Shirley Sherrod’s 15 minutes of fame was somewhat more serious. Much has been written about the unconscionable mistakes made by Agriculture Secretary Tom Vilsack, the Obama Administration and the national NAACP for falling prey to a right-wing blogger’s hoax and rushing to the judgment that Sherrod had made racist remarks in a local NAACP speech. We’ll look instead at how Sherrod handled the situation.

Before it was discovered that the blogger had edited Sherrod’s remarks to the NAACP in Coffee County, Georgia, to make them appear racist rather than the redemption story they actually were, Vilsack publicly and unceremoniously fired her from her job as the USDA rural development officer in the state. When the hoax was exposed the next day, the Secretary, the national NAACP and even the President apologized, and Sherrod was offered a new position.

So how did she react? She said she did not need an apology from the President. “You know, he’s the President of the United States. I would not want him to apologize to me.”

And after she got the apology anyway, she said, “I didn’t feel I needed that to feel whole or better,” she said. “If in any way what I’ve gone through can help move people in this country to a better understanding of each other, I’m willing to do it.”

No bitterness. No making the President or even Vilsack grovel. Come down to rural Georgia and see what this place is like, she said to the President. Let’s learn from this and move on.

Even though Sherrod, Joyce and Galarraga may be “the small people,” as BP Chairman Carl-Henrick Svanberg would say, they may offer lessons for corporate titans under stress.

When a person responds to adversity of any kind with dignity and a perspective that acknowledges theirs is not the biggest problem in the world, the public’s appreciation and admiration is huge.

Wednesday, August 4, 2010

A Season of Discontent: Tiger, Toyota, BP

“I want to find out what your thinking was…Did you learn anything?”
The voice of Tiger Woods’ father Earl in Nike TV spot

From late 2009 through the first half of 2010, not a day passed without news coverage of at least one of three purveyors of really bad crisis communications. It began with Tiger Woods’ post-Thanksgiving crash and has continued beyond the resignation of BP CEO Tony Hayward. In between, Toyota bridged the gap between the other two.

Everyone knows each of these folks made lots of mistakes. It might be useful to look at some of the mistakes they have in common. If people as smart as these guys are screwing up in the same ways, then some of the fundamental lessons of how to communicate when you’re in trouble aren’t getting through. No doubt there are others, but these stand out:

Failure to understand that the truth will come out.

Who did Tiger think he was fooling by cloistering himself after the news broke of his Escalade smashing into the neighbor’s tree? Information abhors a vacuum. Especially in a celebrity-driven case like his, silence just feeds speculation, reliance on less-than-reliable anonymous sources and the enlargement of any morsel of fact into a major story.

With BP and Toyota, the cover-up centered more on minimizing the damage they knew, or should have known, they had caused:

“The Gulf of Mexico is a very big ocean,” said Tony Hayward. “The amount of oil and dispersant we are putting in it is tiny in relation to the total water volume.”

Toyota clung to the improperly-installed-floor-mat explanation of its sudden acceleration problem well beyond the time the National Highway Transportation Safety Administration (NHTSA), not to mention the public, had concluded a sticky-accelerator also was involved. Even now there are unresolved issues about the actual cause of some of Toyota’s problems, and the company may not have been totally wrong. But its long refusal to acknowledge any alternative view came across poorly.

When you’re trying to explain bad news (or bad behavior), you rise or fall on your credibility. In all three cases, principal players sacrificed long-term credibility for the hope of minimal short-term gain.

Underestimating the importance of working with – and being seen as working with – the authorities.

Sometimes Toyota and NHTSA looked like two dogs pulling at opposite ends of a tug toy. When Toyota issued a statement in conjunction with a recall of floor mats saying it “confirms that no defect exists in vehicles in which the driver's floor mat is compatible with the vehicle and properly secured," NHTSA begged to differ. Its own statement said, “This matter is not closed until Toyota has effectively addressed the defect by providing a suitable vehicle-based solution." A safety consultant told the Los Angeles Times, "Toyota was trying to say it has a clean bill of health from NHTSA, when it does not."

As for Tiger, this might be a good place to acknowledge that he’s just a golfer. What he does and what happens to him really isn’t important to the rest of us other than for its entertainment value. But, if we assume he wants to continue profiting from being one of the best-known and (formerly) most well-respected people in the world, it should matter to him.

So when he refused to talk with the Florida Highway Patrol for days – and then not before he hired a big-time criminal lawyer – it just looked awful. Every one of us who has ever given a statement to the police after an accident shook our heads and thought, “What’s up with that?” He came across as arrogant and guilty of something, even if we couldn’t figure out what.

Refusal to take ownership of the problem.

Who will forget the leaders of the various oil well entities pointing fingers at one another on Capitol Hill about who was responsible for the spill. Among the many Tony Hayward quotes destined to become part of the American vernacular is: “This was Transocean's rig. Their systems, their people, their equipment."

Toyota first implied its customers were at fault for lousing up their floor mats. Then it seemed to point the finger at the American company that manufactured the gas pedal assembly. That didn’t go over well and was a short-lived strategy. By the time the company CEO told Congress in late February, “In the past few months, our customers have started to feel uncertain about the safety of Toyota's vehicles, and I take full responsibility for that,” the acknowledgement had lost its punch.

Tiger’s initial written statement about his wreck was a joke with perhaps the funniest line being, “…the many false, unfounded and malicious rumors that are currently circulating about my family and me are irresponsible.” We might ask: Who is irresponsible here?

For months Woods showed how out of touch he was with reality by trying to control the media. Accustomed to being fawned over by the golf press, he apparently was unaware of the importance of the blogosphere or even that the mainstream media would want real answers to hard questions.

As with most crisis communications principles, avoiding these kinds of mistakes isn’t rocket science but rather common sense. Why people continue to make the same mistakes is a mystery to us. In cases like Tiger’s, hubris must be the answer. In the others, perhaps it’s corporate ego and the unwillingness to ever acknowledge doing anything wrong.

Whatever the reasons, it should be clear by now that people hate to feel deceived and quickly lose respect for those who insult their intelligence.