Eddie Bauer's Race Relations: The Fabric of Bad PR
This week we analyze some timely and some not-so-timely responses to crises.
The first example involves Eddie Bauer and the lesson we learn is that due to the company's delayed response, what should have been a minor incident and settled with an apology became a court case that resulted in a $1 million fine to the retail clothing company and a major bruise to its image.
On the other hand, we have Microsoft, which responded to the recently announced a Department of Justice investigation with a prompt, proactive response at a key industry forum. It was timely, to the point, and even if you do think of Microsoft as "The Evil Empire," you can't fault them in the communications department.
The Situations:
Eddie Bauer
Two years ago, three young black men were shopping at an Eddie Bauer warehouse store. One had been shopping the night before and was wearing his new Eddie Bauer shirt. Because they were black, a local off-duty cop kept tabs on them as they walked around the store. A store manager pointed out that one was wearing an Eddie Bauer shirt. The cop stopped the boy, and when he couldn't produce a receipt, had him strip to his undershirt, go home and find the receipt.
The incident caused a howl of protest from Washington-area residents, white and black alike, and calls for a boycott. The president of Eddie Bauer flew to Washington to meet with local black leaders, and thousands of pieces of Eddie Bauer clothing were distributed to shelters that Christmas. All apparently had little effect on public opinion.
On Oct. 10, a federal jury ordered Eddie Bauer to pay $1 million to the young men and the story once again made headlines. While Eddie Bauer has certainly made progress on the civil rights front, the recent coverage did nothing to help its reputation.
The story intrigued us because in fact the company did what most good crisis communicators would advise. They took action, sending the CEO to Washington, sending product to shelters, etc. The problem was they just didn't do it soon enough. The incident happened on Oct. 20, 1995. Official statements weren't released by Eddie Bauer until a month later - leaving the victims and their families four weeks to stew and fume and talk to neighbors and, ultimately, a reporter at The Washington Post.
In reviewing the case, I decided to revise my cardinal rules of last month.
1. Actions speak louder than words - when taken immediately.
2. Be as forthcoming and candid as you can, and whatever you do, don't blame someone else.
3. Honesty is always the best policy. When a Washington Post reporter calls you about a racial incident, you're lying if you think "it's a minor incident." Any time a major newspaper calls with that much influence, you drop everything, talk to them and get to the bottom of the issue.
Microsoft
First, in the interest of full disclosure, I have to tell you that I was director of corporate communications at Lotus when it was the largest independent software company in the world and Microsoft was a two-bit start-up trying to go public. Loyalties die hard.and I'll admit to my share of fuming and fussing over "The Evil Empire" over the years.
Some of the turnaround in positioning has to be a result of the company's incredibly quick response, not just in person and in print, but on the Web as well. They used the medium for what it's best at - quick, wide-spread dissemination of messages.
Katharine Paine is founder and CEO of The Delahaye Group, an international image consulting firm based in Portsmouth, N.H. She can be reached at 603/431-0111.
| Eddie Bauer | |||
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Grade | Comments | Advice |
| Extent of coverage | F | With a small slice of its profits for a month and an apology, it could have made the whole issue go away two years ago. A classic case of lawyers not understanding the dollar cost of bad PR to brand image and reputation. | Next time, apologize first and ask questions later. Own the problem, don't blame anyone else. Regardless of who's at fault, it's your brand that will make headlines. |
| Effectiveness of spokespeople | C | President Rick Fersch was believable and credible in his statements; the problem was he made them to the wrong people. It was clear that he was trying to impress the public - not the boys or their parents. | Don't forget that this is still about people. As public communicators, we tend to obsess about the "publics" and forget that communications still happens with one mouth and two ears. Start with the people who have the greatest influence over the press (readers, the individuals who tipped them off) - and then worry about community leaders and the world at large. |
| Communication of key messages | C | It did eventually get the message across that it is a concerned company and Fersch was genuinely contrite. Unfortunately it happened too late to fix the initial image that it considered a case of racial discrimination to be "a minor incident." That might be the case in the Northwest but certainly not in Washington, D.C. | Sell globally, speak locally. Don't ever forget that retail happens in cities and towns and neighborhoods. (At least it was two years ago, but arguably the Web has changed this.) Don't impose a Seattle solution on a D.C. problem. |
| Management of negative messages | F | No matter how hard it tried to mitigate it, virtually all coverage between the initial incident and the court ruling two years later mentioned Eddie Bauer in the context of poor race relations. | In the words of one Post reporter, hiring a high profile PR firm in a crisis is "prima facie--evidence of guilt." Nothing attracts suspicious newshounds like the abbreviation H&K. Make your apologies, your actions and your solutions high profile, not your PR agency. |
| Impact on customers | F | The company hasn't released any figures, but accounts in the press indicated that even though an official boycott was NOT called, a number of consumers (black and white) have stopped buying from the company. | In these politically correct times, you don't need to call an official boycott to impact customer loyalty: 60 percent of consumers say they'll switch brands based on corporate ethics. |
| Impact on investors | B | Parent company Spiegel seems to have managed to stay above the fray. | When possible, disassociate a brand from the parent during a crisis. |
| Impact on employees and prospective employees | C | I'd imagine that prospective employees of color might think twice, but aggressive reform of internal policies may help mitigate damage. | Own the problem. By blaming the off duty cops, E-B sent a message that it wouldn't stand behind its employees or contractors. |
| Overall score | D+ | I believe Fersch when he said the delay in informing him "made him crazy" and I genuinely empathize. But it's a good lesson for all of us: to be more sensitive to the small cries for understanding that cross our desks. | Act fast: take every racial incident seriously and apologize to the individuals as well as to society. |
Eddie Bauer:
Corporate Headquarters: Redmond, Wash.
Contact: Jane Loeb, 425/882-6159
No. of Employees Worldwide: 17,000
Main PR Firm: Edelman Worldwide PR
1996 Total Retail Sales for Parent Co.: $1.2 billion
| Microsoft | |||
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Grade | Comments | Advice |
| Extent of coverage | A | Every time Microsoft sneezes these days, it gets picked up by every major media outlet in the country. | Paying close attention to online zines and using its own Web site, it helped disseminate its messages. |
| Effectiveness of spokespeople | A | Not only was Gates good, so were all the other dozen or so spokespeople that the media got a hold of. | Media training of corporate spokespeople should go deep into an organization. Above all, make sure corporate counsel knows the key messages. |
| Communication of key messages | B | Its message was clear, the DOJ was being un-American, and Microsoft is just a bunch of typical American, go-getting entrepreneurs. | In a confusing anti-trust environment, find one convincing position and stick to it. |
| Management of negative messages | B | Not much it could do: the second, third and fourth most quotable CEOs were all ready and willing to join in the Microsoft bashing. | Make your argument convincing enough and at least coverage will present both sides. |
| Impact on customers | C | While the company made clear its position on the fine and charges, it wasn't as convincing that a victory for Microsoft would be a victory for the consumer. | Make sure that positioning has some benefit to consumers. |
| Impact on investors | A | Clearly Microsoft did a great job, its stock barely dipped and ended up for the week. | Act fast enough and Wall Street will never notice. |
| Impact on employees and prospective employees | A | One enterprising reporter actually surveyed employees. It was business as usual, with no impact at all. | Ensure widespread employee education - and keep everybody so busy they don't have time to notice. |
| Overall score | A- | Few companies or individuals can withstand a full frontal blast by Janet Reno and come out unscathed. Leave it to Microsoft. | Act fast, have clear messages and use every medium available. |
MICROSOFT:
U.S. Corporate Headquarters: Redmond, Wash.
Contact: Mary Meagher, 425/637-9097
No. of Employees Worldwide: 22,276
Main PR Firms: Shandwick & Waggener Edstrom Inc.
1996 Net Revenue: $8.6 billion