It's the rare company that hasn't been slammed with a
public-relations crisis. Depending on how severe the damage - and
how quickly the wound is cauterized - companies can either fess up
and regroup or face the wrath of the media and other stakeholders.
Results of how companies handle crises vary, of course, ranging
from corporations that implode (Enron) or that take the
bullet, fire the CEO, pay a hefty fine to regulators without
admitting any wrongdoing and hope that the Gods of Short Memory are
smiling down on them (Marsh & McLennan Companies).
But, sometimes, the crises are rife, which has been the case
with Chicago-based Boeing Co. The aircraft maker and defense
contractor is going through one of the most turbulent periods in
its 95-year history following a string of scandals, the latest
being the March resignation of Boeing CEO Harry Stonecipher after
he admitted to an improper relationship with a female employee (see
PR News, March 16). (CFO James Bell is serving as interim
president-CEO of Boeing.) In 2003, Stonecipher replaced Phil
Condit, who resigned in the wake of a scandal involving Michael
Sears, then the company's CFO, illegally hiring an Air Force
procurement officer. (Condit didn't get charged in that case, but
Sears was sentenced to four months in prison.)
The ethical lapses already had started to impact Boeing's
ability to do business, alienating allies on Capitol Hill (no small
thing when your biggest client is the U.S. government). Stonecipher
sought to rebuild the company's reputation by instituting a strict
code of ethics in-house, which he then violated when he started the
affair. A Boeing employee who saw e-mail correspondence between
Stonecipher and the female employee, say reports, uncovered the
affair. (Yet Boeing's stock has not suffered because of the crises.
It hovered around $39 when Stonecipher took over in December 2003,
it continued to climb through his tenure, it took a slight dip
after he resigned in early March but it finished the month at
$58.)
Although the defense industry is unlike most others, Boeing's
fiascos hold many lessons for how -- when crises seem to be endemic
-- senior PR execs can help to start to turn things around. Boeing
has to "step back far enough for [senior management] to say, 'We're
in trouble, but this is not fatal,'" says Alan Hilburg,
president-CEO of PNConsulting, a division of Porter
Novelli. "If they have an opportunity to fix it and don't, that
will be Boeing's legacy for the next five, 10 or 15 years."
Repeated telephone calls to Boeing's communications department were
not returned.
Hilburg says that, other than legal counsel, PR is the "only
function" that can present managers with a 360-degree view of the
real world. And when dealing with a series of setbacks, PR managers
have to address three objectives in order to get back on track:
- Rebuild confidence and trust among employees from a high
level. - Communicate to regulators and to Washington, D.C.,
decision-makers that the company can be trusted and still needs
support from the regulatory and legislative environments. - Create a six- to nine-month timeline to convince the company's
various stakeholders that the company is not another Enron and that
the various crises have been an aberration.
Indeed, unlike an isolated crisis, multiple crises require PR
managers to finesse some fundamental questions to the boss before
the company can start to rehabilitate, to wit, what role do
communications play in the company? What is our corporate culture?
What are the barriers that will keep shareholders from regaining
the highest level of trust? (For other tips on regaining trust
following a series of crises, see sidebar.)
Part of the problem is that the vast majority of companies
create elaborate plans on how to handle crises - and subsequently
stick them on the shelf to collect dust.
"Crisis management for most companies has been synonymous with
crisis response and not with crisis preparedness," says Jonathan
Bernstein, founder of Los Angeles-based Bernstein Crisis
Management LLC. "There's a difference between fire fighting and
fire prevention. It's one thing when the stuff hits the fan, but
you don't see the headlines about how a fire inspection saved the
city billions of dollars."
He adds, "A lot of companies have brick/mortar plans:
earthquakes, fires or even succession. But they don't think of the
impact of lawsuits or improper behavior, and the crises that
usually make the news are those that are based on reputations.
"
But with nary a day going by without one corporate scandal or
another splashing on the pages of the Wall Street Journal
and other top-tier publications, corporate managers may be,
finally, starting to get it. The number of requests Bernstein says
he now gets for crisis preparedness -- as opposed to crisis
management -- has jumped to 40% this year from just around 5% three
years ago. "The cumulative affect of the corporate scandals -- and
SARBOX -- is making companies finally say, 'We've got to do
something.'"
However, the question remains whether C-level managers who have
suddenly found religion will give their PR managers a pew right up
front. The Boeing scandal "is a situation where you want your top
PR managers in the room with the top people, playing devil's
advocate and asking questions without any fear of losing their
jobs," says David Margulies, president of PR firm Margulies
Communications Group (Dallas).
There's a caveat, though, that PR execs should not try and
re-engineer a badly damaged company. "The role should be to provide
the bad news with the bark off," Margulies says. "You don't want to
tell the CEO how to run the business but [you should] say, 'If you
implement this action, these are some of the likely public
outcomes.' You have to communicate the expectations and make sure
the solutions are realistic." Contacts: Jonathan Bernstein,
626.305.9277, [email protected];
Alan Hilburg, 212.601.8000, [email protected];
David Margulies, 214.368.0909, [email protected]