Every PR person's worst nightmare just happened to IKEA. Imagine doing a Nexis/Lexis search on your company's name within 10 words of "death" and having 39 articles pop up. That's what I just did. There were 39 stories that mentioned IKEA and death in the
first paragraph.
Perhaps the next worst nightmare is to do a Nexis/Lexis search on your company's name along with the word "scandal." We did that for newspaper conglomerate Hollinger International and it yielded more than 100 stories. So now you're wondering what's the
difference between the two? And the answer lies in how each company handled the stories with the media.
The Hollinger International scandal, in which its flamboyant chairman Conrad Black allegedly stole some $400 million from the company, has been simmering for months, fueled by lawsuits and investigations. Most of the stories tied to the scandal include the
phrase "spokesperson couldn't be reached for comment" or "spokesperson did not return phone calls."
On the other hand, after two people died in a stampede for discount coupons at an IKEA store opening in Jeddah, Saudi Arabia, the furniture company immediately issued a statement and made its spokespeople available for interviews. As a result, the story blew
over in just a few days.
Don't get us wrong. We're not blaming Hollinger's spokesperson Jim Badenhousen. The fault clearly lies with the culture of a company that allegedly encourages secrecy and deception. An internal investigation of the company's problems laid a good portion of the
blame on the company's lax board of directors. Interestingly, its board included Henry A. Kissinger and Richard N. Perle - two notoriously secretive government operatives.
| IKEA | |||
|---|---|---|---|
| Criteria | Grade | Comments | Advice |
| Extent of coverage | A | The good news is that there were ONLY 39 stories mentioning IKEA and death in the same sentence. While the incident was covered by all the major international dailies, stories tended to be no more than a couple of paragraphs. |
The way to make something NOT news is to give the media total access, hide nothing and be totally forthcoming with your information. Hold anything back and they'll dig into it and not let go. |
| Effectiveness of spokespeople | A | Spokespeople gave good explanations of what happened and, far more important, what they've done differently to prevent further problems. | Spokespeople should give out as much information as they possibly can and make sure reporters understand what they have communicated. |
| Communication of key messages | A | The statement that IKEA released expressed "deep sorrow " and was widely picked up | They would have gotten more pick-up if a spokesperson had been quoted rather than issue a statement. That said, a clearly worded statement that contains your key messages is a necessity in any crisis. |
| Management of negative messages | C | The basic negative news that people died at an IKEA opening was widely picked up. But all things considered the potential negatives were minimal. The fact that IKEA might have done a different promotion to diffuse the situation was an opinion offered by a "Saudi marketing executive." |
You have to expect that the bad news is going to be widely reported; what you want to make sure of is that no one else jumps in with a negative spin. |
| Impact on consumers | A | From all reports, the stampede was a pretty good indicator of local Saudi interest in what IKEA has to sell, and since the store was packed the day after the stampede, it clearly had little affect on consumer opinion. | When the bad news has to do with activities at a particular location, it is key to make sure that consumers feel safe going back to that location. IKEA did that by detailing the changes they'd made to improve store traffic. |
| Impact on shareholders | A | Chances are that IKEA shareholders were equally delighted by the apparent high demand for IKEA goods in Saudi Arabia as they were horrified by the stampede. Net net, the stock didn't budge. | Most shareholders only care about reputation if they are continuously bombarded with negative media. One bad store opening -- even one with fatalities -- is not enough to get them rattled. |
| Impact on employees | C | Local employees clearly must have felt threatened by a stampede at their doorstep, but IKEA's efforts to change the traffic patterns and clear explanations of how things were different on day two helped to allay their fears. |
Employees are key to customer loyalty, so do everything you can to keep employee morale up. |
| Overall score | A- | This was an horrendous situation that was handled about as well as anyone could. | Facing horrible crises straight on and dealing with them in an open and forthright manner is the key to keeping the damage to a minimum. |
| Hollinger International | |||
|---|---|---|---|
| Criteria | Grade | Comments | Advice |
| Extent of coverage | F | By not talking, Hollinger ensured that the media would keep the story alive for months | The faster you come out with the truth, and drown the media in information, the faster the crisis will go away. |
| Effectiveness of spokespeople | F | The official corporate spokesperson could never be reached for comment, so the only person heard was the ex-chairman Conrad Black, who succeeded in getting his side of the story out very well. | Crisis loves a vacuum, and the vacuum created by the "no comment" stance leaves it for the media to fill. |
| Communication of key messages | C | The internal investigation clearly showed that someone was interested in corporate governance, but generally the media found that it was too little too late. | Any organization lacking standards and process for transparency and good governance leaves itself very vulnerable to investigations. |
| Management of negative messages | F | In the absence of any corporate spokespeople the former CEO, Conrad Black, was able to position himself as an innocent victim who did nothing wrong. The report clearly showed that this was not the case, but the fact that such mixed messages were out there is indicative of the mess Hollinger has found itself in. |
When you have an ex-CEO who is being investigated, he/she will, of course, assert his/her innocence. But the organization needs to balance the ex's statement with clear-cut messages that communicate its desire to change. |
| Impact on consumers | B | Chances are most readers of Hollinger's publications won't be swayed by what's going on. | If you're very lucky, consumers will remain unaware of a financial scandal. But the longer it drags on, the more likely that consumers will get wind - and be impacted. |
| Impact on shareholders | D | One major problem with Hollinger is that there were half a dozen companies with overlapping ownership and management -- many of which were named Hollinger -- so even though the lawsuits were aimed specifically at Hollinger International, the others were tarnished at the same time. |
Bear in mind when you are strategizing your approach to a crisis that the impact of a tarnished brand spills over to every entity bearing that same brand name. |
| Impact on employees | C | Employees hate scandal because it makes them uncertain about their future. In this case, the fact that all the profits were allegedly plundered by the CEO must have made them very nervous. However, the fact that the CEO was sacked may have allayed fears somewhat. |
Employees should be a primary concern in any financial crisis. Their concerns for job security (and the future) should be addressed up front. |
| Overall score | D- | This was a classic example of how not communicating exacerbated a crisis, helped keep the bad news in the headlines and guaranteed that the company's reputation would be damaged. | Saying "no comment" just about guarantees that a crisis will be prolonged and that your company's reputation will be damaged. |
Contact: Katie Delahaye Paine is CEO of KDPaine & Partners, Durham, New Hampshire. She can be reached at 603.868.1550, [email protected]. Paine will be one of the keynote presenters at PR News'
media measurement webinar on Oct. 20 (more info at http://www.prnewsonline.com).