Our grandchildren's history books will record the globalization of our economy and growing influence of the Internet as the biggest factors in social change at the end of the 20th century. Perhaps that sounds too much like the perspective of a history major ( which I was (but in any case, that will certainly be how the history books will describe the communications industry.
That's why this month we've chosen two crises that would have been unthinkable in the nationalistic, isolationist world of the early 20th century.
Gap, the retail clothier founded by the Fisher family more than two decades ago, now faces a boycott instigated by local environmentalists and propagated via the Internet. The dispute centers on a recently purchased a tract of forest in northern California that the family purchased and wants to develop. Ironically, the family wanted to undertake the development using sustainable forest management techniques. Their opponents, who fault even conservative development techniques, have launched a publicity campaign encouraging consumers to boycott The Gap.
In the interest of full disclosure, I must admit to being a rabid environmentalist, so my analysis is perhaps biased, yet you may find the conclusions surprising. In this case, it may be the environmentalists who need a communications lesson.
In the second instance, we have Chase Manhattan Bank, which though facing an international crisis of potentially historic proportion, still needs a few lessons in communication 101. It is alleged that the bank assisted the Nazis, even after the Japanese bombed Pearl Harbor.
Its first mistake was to send their lawyers out to do community relations or to use quotes taken from historical bank correspondence during the time in question. Mistake #2: although lawyers pledged that the bank would work to repay with interest survivors and their heirs, the bank neglected to ensure that journalists were aware of this effort until the BBC and Newsweek picked up on it.
The Gap
CRITERIA: Extent of coverage
GRADE: A-
COMMENTS: Media coverage has been mostly local, and the company's use of all available channels helps disseminate accurate information about its environmental policies. The only reason for this story's high profile is that Gap has a reputation for being environmentally concerned.
You have the tools - use them. Web sites play an increasingly important role in crisis management and The Gap Inc. has made smart use of its site to get its pro-environment stance communicated without focusing on this specific story. Its site works to invalidate many of the arguments the environmentalists have made about The Gap: http://www.gap.com/onlinestore/gap/company/community.asp?
CRITERIA: Effectiveness of spokespeople
GRADE: B+
COMMENTS: Gap spokespeople did a fine job of getting its messages out. Government environmental regulators even took the side of the Fishers, calling them "a breath of fresh air" when compared to other companies. One criticism: statements from the Fishers were needed since they weren't available for comment and let their agents speak for them.
The closer to the source, the better the coverage. Get the person who's closest to the crisis to speak and the issue will go away even faster.
CRITERIA: Communication of key messages
GRADE: A-
COMMENTS: It was clear from the coverage that the Fishers are committed to responsible harvesting of the forest and any connection with Gap itself was tenuous at best.
Clear messages, effectively communicated by third parties, will come across every time. Remember, however, that when a "media relations person" represents the company (rather than the CEO or the people directly involved), some dilution of credibility occurs.
CRITERIA: Management of negative messages
GRADE: B-
COMMENTS: The environmentalists did as well as Gap did in getting messages out, but, in the end, it was probably a draw as to who had the greater impact.
In this case, the environmentalists may have overplayed their hand a bit, but they did get the attention of the local media. They should have used the Tai Kwon Do PR approach to build on existing perceptions, however. Never try to contradict established beliefs, but rather acknowledge those beliefs and then try to change opinion.
CRITERIA: Impact on customers
GRADE: A
COMMENTS: November sales are up 16% versus only a 7% increase in November of last year. At most, the boycott is only reducing what would otherwise be spectacular sales growth.
Notice to environmentalists: don't plan your boycotts so that they run up against the insurmountable holiday shopping rush.
CRITERIA: Impact on investors
GRADE: A-
COMMENTS: Analysts conclude that this is a local story which will not have an impact on the business. A Quicken poll of 20 investment analysts indicated that each recommended either holding or buying the company's stock. http://www.quicken.com/investments/charts/ibes/?symbol=GPS
See above. Sales success is still of utmost importance to financial analysts.
CRITERIA: Impact on employees and prospective employees
GRADE: A
COMMENTS: I would guess that most employees were unfazed or even unaware of this issue, however keeping the people who create your public face informed is crucial to sales and customer service success. This is especially true in retail.
Research shows that employee attitude has the biggest impact on customer loyalty. Make sure your employees are thoroughly informed and educate them about what's going on.
CRITERIA: Overall score
GRADE: A-
COMMENTS: Good communications has kept the fallout to a minimum. Looks like Gap followed some good advice!
Chase Manhattan Bank
CRITERIA: Extent of coverage
GRADE: D-
COMMENTS: This story received coverage from the Tower of London to Timbuktu. Everyone covered it because it had both international implications and emotional impact.
The rules of global communication are very different. Different customs and different times zones will wreak havoc with your crisis plan. Most of the coverage was based on BBC and Newsweek stories. Had the Newsweek story contained an effective Chase response, it might have been included in coverage by other publications which followed suit and gave the story play.
CRITERIA: Effectiveness of spokespeople
GRADE: C
COMMENTS: The first people quoted were lawyers - considered by some, the world's worst spokespeople. They are chronically evasive for fear of committing to anything that may prove damaging in the long run. On the positive side, CEO Walter Shipley was quoted conveying the bank's values in a high-impact New York Times story.
Get your CEO quoted early and often. Make everyone understand that the high cost of a lawsuit is often insignificant to the cost of a decline in brand value.
CRITERIA: Communication of key messages
GRADE: C
COMMENTS: Chase should have started investigating this issue the moment Holocaust reparations became an issue, not merely after the BBC first aired a report. Although the company might already have had a make-good plan in place, you would never know it from the media coverage.
Lessons one, two and three: Express concern; own the problem; and make it right - right away. Don't delay and don't let your lawyers be the first to speak publicly on the matter.
CRITERIA: Management of negative messages
GRADE: D-
COMMENTS: The company was accused of all the worst possible implications, but seemed to have little idea of how to resolve these negative impressions.
Get ahead of the negatives by looking under every rock and exposing questionable practices before someone else does.
CRITERIA: Impact on customers
GRADE: N/A
COMMENTS: It is a bit early to assess the impact, but far too many consumers heard about the controversy, and if they vote with their pocketbooks, it may have quite an impact.
If Chase doesn't make good on its restitution pledge, there won't be much "trust" in this trust.
CRITERIA: Impact on investors
GRADE: B
COMMENTS: Similar to the Gap image crisis, this debacle may have come at the right time, from an investor's vantage point. Any time the Fed cuts rates, analysts tend to view Bank stocks favorably. Indeed, Chase's stock surged in November on the rate cut news. Source: http://www.quicken.com/investments/news/?symbol=CMB
Ahh... if one could only plan the timing of a crisis to coincide with opposing, more powerful and beneficial market forces.
CRITERIA: Impact on employees and prospective employees
GRADE: B
COMMENTS: Millions of families, your customers and employees included, were personally affected by the Holocaust
If the bank is indeed a service business, then good customer service begins with a well-informed and trusting employee base. Make sure employees are fully informed so that inquiring customers are given the best information available.
CRITERIA: Overall
GRADE: C-
COMMENTS: I have to believe that someone in a position of power should have seen this one coming. Chase's apparent lack of action until after the story broke may result in damage that takes years to repair; to say nothing of possible higher legal costs.
If your company has been around for a long time, or if it acquires a company whose history is not fully known, take complete steps to investigate and, if necessary, rectify past sins. Your proactive approach would be unique and, therefore, looked upon favorably by all stakeholders.
The GAP
Headquarters: San Francisco Bay Area
1997 Sales: $6.5 billion
No. of Employees Worldwide: About 82,000
No. of Employees in Corp. Comm: Company Wouldn't Disclose
Chase Manhattan Bank
Headquarters: New York
1997 Assets: $365 billion
No. of Employees Worldwide: About 70,000
No. of People in Marcom: 60-plus