This month we're going to take a look at trust and the impact a crisis has on the level of trust that an organization inspires from its constituencies. First there's the AARP,
which makes for an interesting case study. Some 15,000 members have ripped up their AARP cards -- in response to the Medicare reform bill recently passed by Congress -- and
withdrawn from the organization. Granted, in an organization of some 35 million, that may not be a huge number, but it's enough to keep the crisis in the headlines for a good
while. The AARP's support for Medicare reform took members by surprise, and provided a perfect opportunity for opponents of the bill to capitalize on the membership's ire. Any
good PR manager will tell you that the fastest way to reduce trust and damage a relationship is to take your publics by surprise. Isn't that what PR is supposed to do - explain,
teach, persuade? Or is it all just about grabbing headlines?
Putnam Funds, meanwhile, found itself in a similar position when it was revealed that New York State Attorney General Eliot Spitzer would be investigating the company for
trading irregularities. In this case, even though "technically" the traders may not have violated the law, the public responded in a much more dramatic fashion by pulling $35
billion worth of investments from the fund in the first month after the crisis broke.
In both cases, relationships were damaged, trust levels were reduced and the organizations suffered severe damage to their reputations. The difference is that AARP is trying to
fix its image with an advertising campaign, while Putnam is taking decisive action internally to fix the systemic problems that caused the crisis.
Katherine Delahaye Paine is CEO of KDPaine & Partners. She can be reached at 603.868.1550; [email protected] .
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AARP
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Criteria
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Grade
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Comments
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Advice
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| Extent of coverage | C | If they wanted to make headlines, they succeeded. The organization's attitude in part contributed to the extent of coverage. The unexpected nature of the endorsement was picked up as far away as London, and the visual of seniors tearing up AARP cards was a surefire winner in all forms of media. |
If you want your crisis to make headlines, make sure it's a surprise, provide great visuals, and gloat that this is really all about a new strategic direction for your organization. The media loves a controversy. On the other hand, if you want it all to go away, don't gloat, be open and accessible, and make sure there's not much of a story there. |
| Effectiveness of spokespeople | C | Bill Novelli clearly knows what he's doing when it comes to communicating in sound bites, but his statement that the future of AARP is all about the baby boom generation left his current membership disgruntled and hostile. There's no easier way to damage a relationship than by appearing to not care about the opposite party. |
Sticking to your messages is clearly a good crisis communication strategy if the messages are the right ones. Unfortunately in most crises you don't have a chance to pre-test your messages, so you risk alienating all or part of your constituency. That's the nature of a crisis. Regular, on-going, statistically valid research (not just focus groups) can provide valuable insight into what messages will help your cause. |
| Communication of key messages | B | Thanks to the surprising nature of the announcement, it wasn't hard to get lots of exposure for the message. However, the message that came across was that AARP supported the bill because "it was better than nothing." Hardly an inspiring call to action, and not one to convince the membership that AARP had their best interests at heart. |
When you're grabbing headlines, it's easy to get your message across. The question is - is it the right message? |
| Management of negative messages | F | Disgruntled AARP members garnered at least as much exposure for their views as did AARP itself. As a result, rather than positioning AARP as innovative for wanting to appeal to baby boomers, AARP was positioned as uncaring and ignoring the wishes of its existing members. |
If you make a strategic decision, as AARP did, to take on more controversial issues, you must expect a backlash. Always assume that your opposition is at least as good, if not better at manipulating the media to its own advantage. |
| Impact on members | D | The net effect of the endorsement has yet to be felt. The immediate impact on membership was a loss of nearly 20,000 members. However, it remains to be seen if they ultimately gain more than they lose. AARP hopes that by taking a more visible stand on political issues it will appeal to more of the baby boom generation. However, if the fundamental reputation of the organization is damaged by the crisis and AARP is no longer perceived as a trustworthy or caring organization, the appeal may fail. |
While membership gains and losses provide an excellent measure of immediate short and medium term impact of the crisis, the longer-term effect on reputation must also be measured. (For more information on how to measure and restore trust go to http://www.measuresofsuccess.com/researchreports.asp ) |
| Impact on employees | D | Change is never universally welcomed, and clearly massive change is underway at AARP. Some employees will feel the same disgruntlement as disaffected members. Unhappy staff and former staff speaking on background against the move didn't help. |
Employees are critical to the communication process because no matter how much you try to control leaks; there will always be disgruntled employees to voice an opinion to the media. Keeping employees on the same page should be your highest priority in a crisis. |
| Overall score | D+ | Regardless of the appropriateness of the messages, clearly they were communicated and some (if not all) of AARP's goals were accomplished. The crisis was far from an unmitigated disaster. However, the damage to the organization's reputation and trust levels will take time to repair. |
Public relations is essentially the process of attempting to control the uncontrollable, and as much as you may believe that you are controlling their messages under fire, you always need to keep an eye on the long-term consequences. |
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Putnam
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Criteria
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Grade
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Comments
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Advice
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| Extent of coverage | F | In this environment, any crisis that even hints of financial wrongdoings is going to get major headlines. The problem with this one is that it was a "perfect storm" of a crisis involving large numbers of investors (i.e. readers and subscribers), the media darling New York Attorney General Eliot Spitzer, and a high profile company. There was no way to minimize the visibility of this one. |
We've long maintained that a well-managed crisis is one in which the amount of coverage decreases after the first wave of announcements; and to a certain extent, Putnam is following that pattern. The initial wave of attention dissipated quickly after Putnam agreed to cooperate with the investigation and the SEC. However, there are times when outside forces beyond your control may wreck havoc with your plans. Use historical data to set expectations correctly. |
| Effectiveness of spokespeople | C | In their statements, Putnam's management communicated their concern and regret effectively. However, their most recent release was issued by their General Counsel and may add fuel to the controversy. |
Using lawyers to communicate messages is never a good idea. No matter what they say, people will suspect whatever lawyers are saying and assume that they are simply covering up for their clients. |
| Communication of key messages | B | The fact that Putnam took prompt action to terminate employees involved in the scandal and that executives physically traveled to Alaska and other locales to express their apologies was a particularly effective move. |
Actions will always speak louder than any spokesperson, so if you can convey your messages with an action all the better. |
| Containment of negative messages | C | Putnam has done as good a job as can be hoped containing its key messages. However, when two states attorneys general and the SEC are investigating you, there's only so much you can do. |
There are times when you simply can't control the negatives. Whenever possible, research past results to set realistic expectations. And keep close tabs on your constituencies to determine the impact your messages are having on them. |
| Impact on investors | F | Despite the firm's best efforts, the investors have responded with their pocketbooks pulling some $7 billion a week out of the fund. However, many columnists essentially urged people to keep their money where it was, citing fees and additional costs of moving. The withdrawals may only be a short-term response. Ultimately, the long-term trust issues will determine the health of the company. |
Building trust and relationships takes time and rebuilding trust takes even longer. We know it's hard, but when you're in the middle of a crisis, try to keep a big picture perspective. The immediate impact may be tough, but what really matters is long-term survival. |
| Impact on employees | B | The actions to clean up the mess and instill a new culture were taken quickly and effectively and should send a strong message that it's a new era. |
External communications frequently impacts employees just as much, if not more than, external audiences. In this case, it was just as important that employees "get" the messages, as it would be to make sure that customers heard them. |
| Overall | B- | From a corporate communications perspective, Putnam did almost everything right: taking swift action to terminate offending employees, apologizing, and being up front about their actions. Unfortunately, great communications can't make up for all those years of bad management decisions that created the crisis in the first place. |
When faced with malfeasance, frequently the best you can hope for is that the media give you a fair shot and allow you to get as many of your messages out there as you can. You may not be able to control the negatives, but if you get a modicum of balanced coverage, you're doing great. |