Sometimes you can tell the culture of a company just from the way the media reports on your press release. Sometimes there's a word or phrase, or maybe it's the brevity with
which reporters report the story, but you can tell that the lawyers are in charge. Other times, announcements ooze transparency. They've put so much information out there that the
details overwhelm. This was certainly the case with the two stories we'll tackle this month- Freddie Mac and The New York Times.
Katherine Delahaye Paine is CEO of KDPaine & Partners. She can be reached at 603.431-6967 or [email protected]
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FREDDIE MAC
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Criteria
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Grade
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Comments
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Advice
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| Extent of coverage | F | Even though this was essentially a domestic story, it was amazing how much coverage the announcement received in the overseas press. | The world is a global village, even if your market is only the US. If you're one of the largest players in a particular market, foreign investors will take note of everything you do. |
| Effectiveness of spokespeople | D | From the coverage of the conference call, I can only conclude that the spokesperson was not particularly forthcoming with information. Reporters referred to the announcement as "abrupt"-which means that the company didn't give them enough time. |
It's always better to drown them in information than leave them waiting for more. I don't care what the lawyers are telling you to say, at least appear to be forthcoming. |
| Communication of key messages | C | The key message for Freddie Mac has been all along that the investigation won't affect the business, and this message was, in fact, communicated during the coverage. But at some point you have to wonder: How can a complete management shake-up and an ongoing investigation that has to be eating up hundreds and hundreds of hours, not affect the business. |
When a message becomes inherently unbelievable, change the "message" and opt for candor. |
| Management of negative messages | F | Without full and complete candor, and handed a "mystery" by the CEO, the media is bound to go looking for dirt-which it certainly found in the analyst community. |
The best way to control the negative messages is to be completely open with the media. Drown them in information and they'll be so busy reading your information, they won't have time to track down the naysayers before deadline. |
| Impact on customers | B | The good news for Freddie Mac is that their customers are the least likely of their publics to care about the crisis. They need money to buy homes, and Freddie Mac has lots of it-at least for now. However, if investors' confidence dries up, so will some of Freddie Mac's access to capital. |
While customer impact and investor impact are frequently very different, there is almost always some interaction. Never ignore one at the peril of the other. |
| Impact on employees | F | Given the general economic environment, if I were a Freddie Mac employee, I'd be very nervous, particularly if I was at all close to any of the three fired employees. |
One of the downsides of violating public trust is the impact on employees. When your organization is disgraced, so are its employees. Recent stories about the difficulties that Enron employees are having finding jobs are bound to make employees of other embattled companies nervous. Make sure your internal crisis communications plans are in place. |
| Overall score | D | They got their messages across loud and clear. There's only one problem: No one is buying them. | Just because you're clear on your key messages, doesn't mean that those messages are the right messages. Nor is communication of key messages an indication that anyone is actually hearing or believing those messages. |
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The New York Times
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Criteria
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Grade
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Comments
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Advice
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| Extent of coverage | C | Although the media tends to stay away from media coverage, this was a story they couldn't resist. It appealed to the most fundamental fears of any editor, and the soul searching went on ad nauseam. Nonetheless, one can speculate that if rival papers could have turned up half of what the Times revealed in its own self- investigation, the story would have had even more legs than it already did. |
Coming clean up front generally helps diffuse a story early on, and providing full and complete details of every aspect of the story reduces reporters' needs to go digging elsewhere for information. |
| Effectiveness of spokespeople | B | In essence, the paper lets its words speak for themselves. CEO Arthur Sulzberger and his senior editors were all forthcoming and good spokespeople, but it was the huge spread in the Sunday Times May 11, that carried the most weight. Of course, they lost some credibility when the senior editors who were initially quoted were later let go. |
Never let the people you're going to fire be the spokespeople. It causes incredible confusion in the media when the "go to" person becomes persona non grata. |
| Communication of key messages | B | The Times clearly conveyed the mea culpa message by devoting as many pages to the story that they did. While there is no doubt that they took too long to fire Blair, they took decisive actions when responsibility for the scandal was identified. |
Whenever possible, connect your mea culpas with direct and specific action that backs up your messages with deeds. |
| Containment of negative messages | D | This was the one area where the Times stumbled. Almost all the coverage pointed to the failures in management, and with the subsequent firing of Raines and Gerald Boyd, the disastrous message that even Sulzberger himself was vulnerable began to surface. Additionally, it was clear that internal squabbles at the Times had been rampant for a while, and no organization likes to air its dirty laundry. While some of those family feuds are inherent in newspaper life, it was unfortunate that the situation was serious enough for them to surface in the coverage. |
Corporate culture has a direct impact on the chances of your negative messages being communicated. Once the spotlight is on your organization, any cultural issues that exist will fall under the spotlight. The best way to prevent the communication of negative messages is to have an open, honest, trusting and transparent corporate culture. |
| Impact on customers | D | This was one story where customers (both readers and advertisers) couldn't help but be affected. The question is, is the impact long-term or short- term? Were the self-investigation and subsequent management shake-up enough to restore trust and squelch defections by readers and advertisers? I think so, but it is too soon to tell. |
When in doubt, do research. If you're not sure what impact your crisis is having on your constituency, the safest route is to ask them. Conducting overnight polling is necessary to test your communications assumptions against reality. |
| Impact on employees | B | The thoroughness and candor with which the Times approached this crisis should have given employees a good strong sense that the organization was committed to the ideals on which the paper was founded. However, such crises always have lingering effects. |
Employees always learn more from actions than words, and they should see by the firings and management changes the importance to the organization of trust and credibility. |
| Impact on share holders | C | Times' investors have reason to be a little nervous that the crisis could tarnish relationships with advertisers and readers. And any long-term instability in top management will also make investors skittish. |
Now more than ever, investors become deeply concerned when corporate trust is at risk. You must allay their fears by showing them definitive proof that advertisers and readers maintained their loyalty to the organization. As soon as possible after a crisis, conduct a trust measurement survey to determine whether the messages and actions you have taken are, in fact, being heard and believed. |
| Overall Score | B | It's hard to imagine a more damaging crisis than one that harms one's trust and credibility, and there is no getting around the fact that this was a disaster for the Times' reputation on a global scale. But under the circumstances, the manner in which they handled it cannot be faulted. |
The Times' self-investigation was one of the best examples of how to manage a crisis. If every organization could be as forthcoming and transparent in times of crisis, most crises would go away long before they became fodder for media frenzies. |