One Company Listens and Its Customers Respond...
If I were King of the World (assuming, of course, that James Cameron would give up the title), I'd decree that any corporate spokesperson would have to pass a test to show that he or she had actually "listened" and understood the needs, beliefs and attitudes of the company's key audiences before any press release or statement could be issued. This month's column details two perfect examples, one who would pass and one who would flunk.
The first, Home Depot, was the target of environmentalists who protested the company's sale of old-growth timber. Rain Forest Action Network, and Greenpeace both took action against the Atlanta-based company to coincide with the Home Depot's annual meeting. However embarrassing the incidents might have been for company management, spokesperson Suzanne Apple should have received a hero's welcome for clearly and directly communicating Home Depot's position in interview after interview. Apple made it clear that the company not only was concerned, but they actually were doing something about the claims by working with a third-party certifier to verify the source of the wood.
Another Compounds Its Problems, And Customers Withdraw
Bank of Scotland could learn a thing or two. This spring, Scotland's oldest and largest bank announced a joint venture with Pat Robertson it expected would receive high praise in financial circles thanks to the profits the alliance would bring in from the lucrative American market. They couldn't have been further off base. Long standing customers pulled their money out, the Edinburgh City Council adopted a resolution condemning the deal, charitable groups protested, and ultimately even the Scottish parliament weighed in with an opinion. The Scottish media speculated that depositors might welcome an outside hostile takeover of the bank, so disappointed were they with the board's actions.
The bank eventually nixed the deal, citing the fact that Robertson was a "loose cannon" - but it is the bank itself that should bear the bulk of responsibility for the PR crisis. Simply put, they should have known better and communicated better. Where was the due diligence? It's not as if Robertson woke up one day in May and changed his tune. He's been spouting bigotry and intolerance for as long as he's been in the corporate spotlight. Which is fine as long as your key constituencies don't mind. But Scotland has been fervently embracing tolerance for most of the latter half of the 20th century. What made the company think that Robertson's intolerance stopped at Virginia's shores? Any company taking on a high-profile controversial association owes it to their customers and their shareholders to at least test the concept first among key stakeholders. The bank then compounded its mistakes by avoiding media questions and taking a "no-comment" wait-and-see approach for the first few days. It always strikes me as the height of irony when institutions hire PR consultancies AFTER the crisis has begun. Will they ever learn that communications consultancies are most effective when they are brought in before the talking begins, not after the words are out in the world doing damage?
Katherine Paine is president of Delahaye Medialink. She can be reached at 603/431-0111.
Home Depot
1998 Net Revenues: $30.2 billion
Number of Employees: 183,000
Number of Corp. PR Staffers: 13
Founded/Headquarters: 1978; Atlanta
Bank of Scotland
1998 Rev.: Pounds 953.8 million (gross)
Number of Employees: 21,000
Number of Corp. PR Staffers: 12
Founded/Headquarters: 1695; Edinburgh
Home Depot
Criteria: Extent of coverage
Grade: A
Comments: Most of the worst coverage was in the local paper. And while the environmentalists did a great job at generating highly visible, television oriented photo ops, most reports gave equal time to HD's position.
Advice: Don't let the opposition fill up your air time. Apple was available, vocal and clear on HDs position.
Criteria: Effectiveness of spokespeople
Grade: A++
Comments: Apple made sure that every story at least carried HD's viewpoint and successfully positioned the company as caring and concerned.
Advice: Normally I would call for a CEO or similarly high-level person to do the talking, but in this case, Apple was the perfect person for the job. If you've got a great spokesperson, use them.
Criteria: Communication of key messages
Grade: A
Comments: Virtually every story carried the key messages and positioning.
Advice: Keep them simple, provide proof, and say it over and over again.
Criteria: Management of negative messages
Grade: C
Comments: HD's challenge was that they were up against some very good communicators who were just as good at getting their messages out there.
Advice: Luckily, no matter how good the opposition might be, most journalists will give you equal time. I'll say it again: keep it simple, provide proof and say it over and over again.
Criteria: Impact on customers
Grade: A
Comments: Chances are, few consumers even saw most of the coverage, and the balanced nature of the coverage made it hard for even a die hard cause-motivated consumer like myself to know what to do. Additionally Home Depots long- standing support of local community charitable organizations will probably linger in customers mind far longer than this particular protest.
Advice: "When faced with a boycott, the best you can hope for is ""permission to buy."" Home Depot displayed to its customers that permission by having a third party verifier. By acting as a concerned corporate citizen all along, the words of concern rang true. "
Criteria: Impact on investors
Grade: A
Comments: Given that the protests took place around the annual meeting, it could have been much worse.
Advice: Increasingly, protest groups are targeting annual meeting for demonstrations. Be prepared, and do what you can to preempt their positions.
Criteria: Impact on employees and prospective employees
Grade: A
Comments: Probably not much. Again, Home Depot's culture is one of community involvement and concern, so employees probably still feel good about working there.
Advice: Involving employees in community and social activities early and often will frequently enable companies to withstand a brief flurry of bad press.
Criteria: Overall score
Grade: A+
Comments: It was a short-lived crisis, kept under control by good communications and action.
Advice: "By following the standard crisis rules of ""showing concern,"" ""actions speak louder than words"" and ""being available,"" they handled this one beautifully."
Bank of Scotland
Criteria: Extent of coverage
Grade: F
Comments: Bad news travels fast, and the media love to bash Pat Robertson anyway. This one got coverage on both sides of the Atlantic and in all the most visible venues including the Scottish Parliament.
Advice: When you're dealing with a controversial celebrity, (especially a religious figure) you can expected the media to pay far more attention. That's why people use celebrities, isn't it? Just know you market and your celebrity.
Criteria: Effectiveness of spokespeople
Grade: F
Comments: There weren't any, except Robertson, and the bank essentially allowed Robertson and the media to do the talking for them.
Advice: Pick your spokespeople early, train them, and if the worst that happens is that they are never used, you've won. Clearly Robertson was the more media savvy and for him it was a total win/win. Even if the deal didn't go through, his messages were heard loud and clear around the world.
Criteria: Communication of key messages
Grade: D-
Comments: Most of the messages were Robertson's. Other than communicating the desire for profits, the bank never once expressed any aversion to the intolerant messages that were coming at them from the U.S.
Advice: In any partnership announcement, the best you can hope for is that your messages and positioning get out there half of the time. Nonetheless, you must do everything you can to maintain control of the messages and not let other sides drive the media.
Criteria: Management of negative messages
Grade: F
Comments: "Assuming that intolerance was a negative message for the bank, they did little to minimize it. The media quoted Robertson's repugnant comments in every piece of coverage. Worse, the negative financial implications of the deal ultimately became the news, with the bank positioned as incredibly stupid for not locking up rights to Robertson's mailing list before announcing the deal. For the bank to say, weeks into the controversy, that they were ""reviewing their relationship"" was more amusing than effective. "
Advice: By avoiding direct comment, the bank allowed Robertson and the media to take control of the conversation. Actions speak louder than words, and the bank needed to act much sooner than it did. Sounds like the lawyers were in control of this one.
Criteria: Impact on customers
Grade: F
Comments: The bank lost 400-500 customers in the first month after announcing the deals. Hundreds of larger customers, depositors and regulators threatened to pull their accounts as well.
Advice: "Robertson's customers came out well ahead of the bank's. The Financial Times put it best: ""In the goldfish bowl of world business, anonymity is impossible. And Mr. Robertson. knows his market. It would scarcely pay him to tailor his views for a small country in Northern Europe."
Criteria: Impact investors
Grade: D-
Comments: Stock plummeted as investors wondered what possessed the bank to take the actions it had.
Advice: Remember, business deals gone bad cost money, lots of it. Never mind the damage to brand reputation. The bank would have been far better off to spend a few pounds on research to test the concept than to lose millions in profits and share price after the fact.
Criteria: Impact on employees
Grade: F
Comments: There were no reports of how employees felt, but one can only imagine the impact on any talented minorities, gays and others working for the bank.
Advice: Be true to your mission. The Bank of Scotland is a respected, traditional institution. Wacky schemes with American right wingers don't ring true to the image, and such things invariably back fire.
Criteria: Overall
Grade: F
Comments: This goes up there in the top 10 most mismanaged business deals, never mind communication crises, of all time.
Advice: "I'll let The Financial Times have the last word: "The business lesson is more straightforward. Any company which deals with the general public must guard its brand in every market."