Secrecy seldom pays off as a communication strategy and never has that been more evident than in the recent cases of insurance giant Marsh & McLennan Cos. and
pharmaceutical company Merck. When a company or a CEO is routinely described as "notoriously secretive" my first thought is "I'm so glad I'm not in charge of that company's
communications," because sooner or later, scandal will strike. And that's exactly what happened to Marsh & McLennan.
The company's former CEO Jeff Greenberg shunned the media and made sure everyone in the company did as well. So when Elliot Spitzer, New York's pit bull of an attorney general,
turned his sights on the insurance industry it was no surprise that MMC was his first target.
The fact that Spitzer had gone after MMC's investment arm Putnam a year earlier should have prepared MMC executives for the crisis, or at the very least enabled them
to learn from prior mistakes. But if recent press coverage is any indication, that wasn't the case. Not in the least.
Merck, on the other hand, was so good at PR that it got them in trouble. The kafuffle surrounding its popular arthritis medicine Vioxx was in many ways caused by the
excellent PR the drug company did around the results of earlier studies.
When an early comparison study of Vioxx vs. Naproxen showed that people on Vioxx had a higher rate of cardiac arrest, Merck attributed it to naproxen's beneficial effects
rather than assuming there was anything wrong with Vioxx. It was only after subsequent studies also revealed increased heart problems among Vioxx patients that they recalled the
drug. The FDA is now investigating whether Merck did anything wrong in "spinning" the results of prior tests.
CONTACT: Katie Paine is founder-president of KDPaine & Partners, Durham, N.H. She can be reached at 603.868.1550, [email protected]
| Marsh & McLennan Cos. | |||
|---|---|---|---|
| Criteria | Grade | Comments | Advice |
| Extent of coverage | F | When millions of people are taking your drug, the FDA is investigating and words like "death" and "heart attack" are involved, you know that coverage is going to be enormous. Unfortunately, by pulling Vioxx off the market, the company left millions of arthritis patients in pain--which caused a second round of coverage about the fate of those patients. |
As part of any recall effort, make sure that you address the consequences of pulling a popular product off the market. With cars and electronics, it's easy enough to announce a replacement policy, but you need a different strategy when health and pain are involved. |
| Effectiveness of spokespeople | C | It's a toss-up as to whether the lawyers suing Merck on behalf of patients or Merck's own lawyers are winning the PR battle. Merck used both the CEO of its research division and its lawyers to get its messages across, but the media wasn't buying what they were being fed. |
Lawyers seldom make good spokespeople so keep them as far away from the media as you can. Your opponent's lawyers are always going to get quoted, so make sure you have someone as credible to counter. |
| Communication of key messages | A | Merck's explanation of why it drew the conclusions it did and did not take the drug off the market sooner were widely disseminated. Unfortunately, so were the positions of the FDA and opposition lawyers. |
The media tends to be more sympathetic towards patients and victims than lawyers and corporate spokespeople. Make sure your messages are understood by the people the media are going to interview for a "second opinion." |
| Management of negative messages | F | Trial lawyers have already filled the internet with Web sites soliciting lawsuits (
http://www.viox-heart-attack.com) and the FDA investigation is ongoing so the negative messages aren't going to go away any time |
When the opposition uses every form of media to get its word out, if you want your messages to get out there, you need to counteract with an equally broad communications effort. |
| Impact on consumers | C | Millions of patients are without their medicine and lawyers are soliciting participants in class-action lawsuits against the company so consumers would have to be living in a cave to not be aware of the problem. But patients don't tend to be aware of the parent brand behind their medications, they just want to feel better, so the long-term impact on the Merck brand in the mind of the consumer is probably minimal |
The best way to minimize the impact on your consumers is to know exactly how they perceive your organization and your brand. Ongoing research into consumer perceptions can help minimize a crisis and improve strategic decisions-making. |
| Impact on shareholders | F | The stock has been dropping since the scandal broke, going lower with every new revelation. When the story started to break in mid-October MMC's stock started to plunge, going to $27 from $46. However, the stock price did start to recover somewhat after MMC fired CEO Jeffrey Greenberg. At press time, it was hovering in the $27 range. |
Shareholders do not take well to scandals, so anytime bad news is in the headlines, chances are your stock will take a hit. The critical question is: "Is it a temporary decline or does the share price reflect a deeper dissatisfaction with the organization?" Track media coverage and stock price closely to determine if there's a correlation. |
| Impact on employees | C | No employee likes to see the company that he or she works for plastered across the front page on a regular basis, but chances are the average Merck employee is probably not affected except, of course, those who were directly working on Vioxx. |
Employees are key influencers for the media, so keep them informed of your key messages, particularly if the opposition's messages are all over the media and the internet. |
| Overall score | C+ | Given the circumstances, Merck is doing as good a job as possible in getting its messages out. However, with the number of lawyers involved, whether the media backs off and the crisis dissipates will depend heavily on what the FDA and lawyers discover. |
Be wary of doing too good a job promoting results of research unless you are very secure in your facts. |
| Merck | |||
|---|---|---|---|
| Criteria | Grade | Comments | Advice |
| Extent of coverage | F | Because of the size of the corporation and its extensive global presence, the investigation was picked up by media throughout the world. When nearly a tenth of the U.S. population was taking the drug in question, it's going to be a huge story most everywhere. |
The bigger your presence in foreign countries, the wider the coverage of any crisis. Be sure you don't forget overseas media in your crisis communications planning. |
| Effectiveness of spokespeople | F | By refusing to meet with the media or say anything at all, MMC has essentially turned its communications over to the Attorney General's office. Spitzer, not known for his reticence with the media, is filling newspapers, the nets/web, etc. daily with his messages. |
When you say "No comment" or refuse to have a dialog with the media, you essentially guarantee that the media will go to your opposition for their information. |
| Communication of key messages | F | With only limited communications coming from MMC, it is hard to get its messages out. The best thing MMC did was to fire the CEO, which at least communicated a degree of remorse. |
In any crisis it is critical to communicate concern, remorse and honesty and no matter what you say, actions will always speak louder than words. |
| Management of negative messages | F | Anytime you stay quiet while an ambitious and eloquent attorney general is going after you, you can pretty much guarantee that he will be filling the media with negative messages. |
The media-abhor a vacuum, and if you're silent, the media will always fill up their columns or airtime with whatever news they can find from whatever sources are most readily available |
| Impact on consumers | F | As the details of the investigation become public, MMC's shenanigans are being broadcast to all of its customers and agents--and it is not a pretty picture. Chances are that if customers were disgruntled and unhappy before, they are even madder now. |
If there's an ongoing investigation that is going to make ugly aspects of your corporate behavior public, you're better off notifing your customers in advance rather than have them hear it on the evening news. |
| Impact on shareholders | F | The stock took a beating when the Putnam investigation began last fall and this latest scandal has only exacerbated the problem. Now investors are seriously questioning the company's ability to make money without resorting to the corrupt practices for which they are being investigated. |
If you're making money, shareholders can forgive just about anything. But when your ability to make your numbers comes into doubt-- beware. |
| Impact on employees | F | With any luck the new CEO can allay some of the employees concerns, but with a second scandal hitting so soon after the first, the corruption appears systemic. And the way the media is positioning future financials, employees should be nervous. |
Employees will devour every bit of news they can, so your internal communications needs to stay well ahead of what they're going to read in the press/online and see on television. |
| Overall score | F | Clearly the crisis was born of the internal culture created by the MCC's CEO. With his departure, things should begin to calm down, but the lingering question is, does the company have a viable future when so many of its practices are based on illegal behavior? |
Crisis begins and ends at the top. The culture of a company is driven by the culture of its senior management, so chances are scandals and crisis have their roots in the culture, so the only way to fix them is to change the people at the top. |