Come Clean, Stay Clean to Weather a Crisis

When I discussed possible subjects for this edition of Image Patrol with PR NEWS editors a few weeks ago, we decided that--much like the weather in New England--if we didn't like the current crop of crises, all we had to do was wait a few minutes. There would certainly be more. In the weeks following that conversation, I searched for an example of a well-handled crisis. (Needless to say, finding poorly-handled crises was not a problem.) I finally found one in YSI, a measurement products company in Yellow Springs, Ohio, that actually investigated itself and turned itself in for toxic waste spills at its plant. The problem was that the crisis was so well-handled, it received virtually no coverage outside its own backyard. That may be my definition of success, but it's hardly enough to write a whole column about. So, I turned to the very different communication tacks taken by two female CEOs: Martha Stewart and Anne Mulcahy (chairwoman and chief executive of Xerox). One is hiding behind her lawyers, the other is out in front of customers, media, employees and anyone else who wants to talk to her. As a result, Xerox's spate of bad press seems to be almost over, while Stewart's has only just begun. I trust that readers share my amusement at the fact that the basic tenets of good PR are now being recommended by Congress. In a recent hearing, congressional committee members investigating the ImClone insider trading scandal recommended that Stewart turn over her emails, letters and correspondence to the committee. That's exactly what I would have told her to do about three months ago. If she had, her empire would probably not be rocking on its foundation. Martha, Martha, Martha ... The continuous stream of "no comment" and refusals to come clean have only prolonged the crisis. I would have also told her to get out and talk to her customers. Let the readers and buyers of her products decide whether her actions impact their loyalty. Chances are if she'd followed that advice, the crisis would not have dominated the headlines for three months running, and her image and reputation would not be permanently tarnished. The amazing thing is that someone who is so media and publicity savvy as Stewart has been so clueless when it comes to this particular media crisis. A note about Image Patrol methodology: Since I began writing this column, I've based my analysis on print media clippings. Due to the growing import of the Internet in shaping reputation, I am now including online publications in my evaluation. CyberAlert has graciously provided the clips for this analysis from its database of 6,200+ Web publications and message boards (forums), and 63,000+ user groups. (Katie Paine is president of KDPaine & Partners, Xerox Criteria Grade Comments Advice Extent of coverage C The bad news is that Xerox is now being mentioned in conjunction with Enron, WorldCom and every other company under investigation. However, it is also the first company to report good financial news, so in time should be dropped from that most damning of lists. The good news is that most of the news on Xerox appeared in the business press, while the trade press is where purchase decisions are made. Where your bad news appears is a critical part of crisis management. If, by full disclosure, you can keep your problems local, you've won. It is extremely important to make sure that when you have good news, the good news appears in the same publication that the prior day's bad news appeared. Once the eyeballs have been reached, they need to be reached by ALL the news. Effectiveness of spokespeople A Mulcahy's forthright style and manner is perfect for these times. She comes across as honest, open, and willing to listen. You can't ask for more than that. These days, if your CEO is of the arrogant, "I don't want to hear it" variety, you're doomed. CEOs, more than anyone else, need to appear compassionate, caring, and willing to listen. They need to get out of their corner offices the way Ms. Mulcahy did, proactively seek out feedback, look for flaws and then fix them. Communication of key messages A Mulcahy clearly understands that she who communicates best does it with actions, not words. By meeting with dealers, franchisees and customers, she's actively listening in all the people who count. The consistency of Xerox's messages is also noteworthy. It is very clear that they are alive and well and working hard to cooperate with investigators and fix the problems. When in crisis, communicate with deeds, not words. The more you are seen doing to correct a situation, the more credibility your words will have. Management of negative messages C As with any crisis, the negatives aren't going to go away any time soon. My guess is that it will take six profitable quarters to make that happen. Timing is everything: Had their crisis happened a year from now, it would have been a very different scenario, but its proximity to other similar scandals ensures that it will continue. If you can manage the timing of a crisis, and, admittedly, few can, try to buy yourself some distance from other similar crises or you will be forever linked in media reports, even if you handle it well. Some years back, Intuit had a minor product recall about a month after the infamous Intel crisis, and even though the media praised Intuit up and down for its handling of the crisis, it was invariably discussed every time the Intel crisis was mentioned. Impact on investors B Stock price has begun to climb back up, and it appears that shareholders are welcoming the communications blitz by Mulcahy. Whenever possible, if you have good financial news, couple your communications around a crisis with the announcement of good news. If you are a major company, reporters will be forced to pay attention to you at least once a quarter. Impact on customers B Judging by the financials that Xerox recently released, it seems that customers are buying once again. Generally speaking, accounting scandals rarely have significant long- term impact on customer purchasing, unless there is real fear that an organization won't be around to support the product. Once those fears have been overcome, as long as price and delivery are consistent, and the products deliver as promised, customers are happy to relegate the accounting announcements to their trash bins. Impact on employees A Employees always welcome a CEO who is a good communicator and especially one who is willing to put herself in front of the customers. When the CEO talks, workers listen. Among employees, good communications skills are probably the single most important characteristic of a CEO. Overall score B+ Xerox has the one thing that every organization in crisis needs most: a strong, articulate communicator at its helm. My prediction is that this crisis will soon be forgotten. One good communicator at the top is worth a dozen attorneys. Let the CEO talk and your crisis is over. Let the attorneys do the talking and chances are you'll be in crisis mode for many months. Martha Stewart Criteria Grade Comments Advice Extent of coverage F Had Stewart opened her records on day one, come clean and forthrightly answered questions from the media and investigators, chances are we wouldn't have enough coverage to analyze. The more information you provide on day one of a crisis, the shorter the duration of that crisis. If reporters believe that they have all the facts and all the information and there is no point in snooping around, they'll move on to their next victim. Effectiveness of spokespeople F Martha Stewart is the ultimate corporate spokesperson--an individual virtually inseparable from her organization. So when she refused to comment, her effectiveness as a spokesperson was nonexistent. When your spokesperson refuses to comment and won't answer questions from Congress, he or she has essentially been rendered irrelevant. And the press will go find someone who will talk. Communication of key messages F Martha's only message to the media and her customers thus far has been "No comment." Not exactly an effective way of communicating brand image or benefits. When the person responsible for communicating your key message is rendered irrelevant by the media, it's going to be impossible to get your messages across. Containment of negative messages F All Martha Stewart Omnimedia is receiving these days are negative messages. Stock price down, CEO distracted, investors filing lawsuits. That's all anyone will hear as long as the "no comment" response continues. When your stance is "No comment," all you'll get is negative messages, because everyone on the other side of the issue is always ready and willing to offer their comments. Impact on customers D In the early days of the crisis, I was the first one to argue that it was a tiny blip on the overall radar screen for the Martha Stewart Empire. Her customers are much more interested in how to improve their dinner parties or their gardens than they are with insider trading. But the blip turned into a blimp, and her customers are being bombarded with more damning refusals to provide information every day. Sooner or later the advertisers, if not the actual buyers, are going to lose confidence. The best thing you can do is to follow Mulcahy's lead and actively go out and find out what's on your customers' minds, no matter what the crisis. Don't let too much time go by, during which they will form their own opinions without any input from you. Impact on investors F From an investor perspective, it's one thing to make a personal mistake and trade some stock when you shouldn't have. It's a totally different matter when Congress decides to make an example of you, and your ethics begin to be questioned. If you don't talk to anyone else, stay in touch with your investors and your employees. Investors believed enough in you to buy your stock; they'll give you the benefit of the doubt. But when you openly defy Congress and shun the media, you are leaving them no choice but to desert you. Impact on employees D It's bad enough to have any crisis at all, but when a crisis grows and grows, sooner or later it is bound to have a major impact on your staff. Your employees are your evangelists and thus should be briefed on all the details as early and often as necessary. That way, they feel that something is being done, and they're less likely to feed the rumor mill. Overall F The queen of domesticity and publicity has done just about everything wrong since day one, so it is no wonder her reputation is in trouble What more can we say? The rules are tell all, be honest and open, and get your crisis over with. Ms. Stewart has ignored all of them.

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