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Over the last 45 plus years I have encountered
numerous situations in which my client was accused of things that, if
true, would damage the reputation to the point of capital value
impairment of the company. In these instances, the repute injury and
impairment promised to be more enduring than what was then the normal
24 hour news cycle – that doesn’t exist anymore anyway. Currently we
are witnessing in the BP – Gulf of Mexico situation a perfect storm
example of this phenomenon that is being mismanaged to text book
proportions. Since it is so immediately current and pervasive, I will
refer to it from time to time as this article progresses.
In the BP situation we are dealing with the inevitable consequences of
cutting financial corners to such extremes that safety failures abound
over a period of some years in various of the company’s installations,
with resulting explosions, fires, deaths, multi victim injuries,
environmental damage, all followed by public statements that do not
tend to repair its repute in any community. The name BP is now
synonymous with Scofflaw.
There are really only two probable reasons for such unfortunate
mismanagement of public information. Either the company is advised by
people who have no clue about what is happening and how to deal with
it – following cut and paste manual like procedures intended to fit
everything from a hangnail to thermonuclear holocaust – or the
arrogance of management is such that any statement that might help
achieve mutual understanding between the company and its adversaries
would not be permitted for the sole reason that it fails to praise and
support the managers whose names and positions are associated with the
circumstances.
Aristocratic management attitudes are understandable where anything
but cheer leading support of policy is career ending in its impact. In
privately held companies the attitude is present, but how one manages
adjusting that attitude is somewhat different. In publicly held
companies there seems to be a palpable paranoia about the potential
impact on one’s prospects from anything but absolute praise.
Overcoming either circumstance is a process of accounting for what the
company is willing to do; when it is willing to do it; in what steps
it is willing to proceed; whether flexibility in adjusting to exigent
circumstances as they may arise is available; and control over
statements to be made, including by whom they are to be made.
Being told that suggested changes in position will produce your being
fired is something one must work around. Changes will be inevitable.
Suggestions have to be made. You have to be able to move on if your
suggestions don’t fit the pistol when they are made. You can’t allow
yourself to be scared off what you are there to accomplish by threats
that you can be discharged. That just comes with the territory.
Illustrative of the impact of changing circumstances, an important
event in the BP saga has just occurred. BP was sparing no effort
trying to consolidate all Gulf of Mexico litigation in Federal Court
in Houston, its home town in the USA, where it would be expected to
get an industry friendly judge and many industry employees in any
jury, and where there would not be any local oil spill impact to color
any result. However, the Judicial Panel on Multi District Litigation
just consolidated all Gulf of Mexico BP litigation in the Federal
Court in New Orleans, where none of the supposed advantages would be
available. They would be in the court and before a jury located at the
epicenter of the disaster.
There is a profound impact upon BP’s plans about how it would handle
anything from this point on, having to be more considerate in its
settlement of claims policies and procedures as well as potentially
more generous that originally planned with regard to disbursements.
How that program is handled can be expected to impact judicial and
juror thinking as well as how relief will be fashioned by the court if
there is also to be mandatory injunctive relief. What you do in the
beginning, if insufficiently flexible and sensitive, will turn on you
down the road.
In the same week as the story about the BP litigation being venued in
New Orleans, CNN broke a story about BP stiffing the suppliers from
whom BP ordered emergency supplies, such as surface booms to prevent
oil from coming ashore. BP came out with an obvious false excuse for
nonpayment, saying that they only refused non conforming products even
though in many instances BP’s on site inspectors approved the product
for shipment. Similar stories about BP promising to pay and then not
paying abound all over Louisiana. These will be some of the lawsuits
that will be brought in New Orleans. Perhaps it is an intentional ploy
to delay payments for the purpose of trying to negotiate smaller
payments to settle the disputes. Insurance companies are known to use
this claims management technique forever. That is not a great
comparison for BP, as there is a huge amount of insurance bad faith
coverage and claims management litigation pending all over the gulf
coast region right now, and the potential jury pools have already been
poisoned by the failure to pay claims arising from hurricanes Katrina
and Rita.
As somewhat more than an interesting aside, there has been an epidemic
of applications in Louisiana for fishing licenses, coupled with locals
offering bribes to commercial fishermen to attest falsely that they
had been on the payroll so that they could apply for payments from BP
for lost work. It appears that this has been rather substantial and
that millions in lost pay benefits were probably paid out to people
who were not and who never had been in the fishing industry. This
story will represent material usable to try to exonerate improper
withholding of payments in other situations. Le plus ca change, le
plus c’est la meme chose.
What if anything is different in the BP situation from what is faced
by people and companies generally in crisis mode? Think of BP – and
any other giant petro company for that matter – as in a group with
insurance companies and General Motors as far as attitude is
concerned. They live only by laws of large numbers in which everything
is – or should be – hedged. Community reputation issues are not real
to them. They pay lip service to community reputation, but the world
is the community, not some small region or city. In that scale what
may happen anywhere is not thought to endanger the whole enterprise.
That failed ultimately to work for General Motors where being out of
touch everywhere became the driving company modus operandi. And even
then, along came a government to bail them out. Is it any wonder that
such firms really don’t give a tinker’s damn about reputation? They
pretend to, but they don’t.
Normal enterprises cannot make it on that program. Normal companies
are vulnerable. Normal companies must, therefore, find a more humane
and rational way to manage crises. Normal companies must have well
conditioned antennae out there telling them to what and when they must
react, and then finding the reactions that, even if challenged, reveal
a conscious goal to deal with “it” in a competent mode.
This is so obvious an effective event response management plan that it
is a wonder that it is not universally adopted. There are no hard and
fast rules in these situations. This plan always works unless it
becomes corrupted by lost reliability. When the pronouncements do not
match the realities, any plan falls apart. Each step of its
implementation is multidimensional, as there are often several
interests impacted by the event that should receive consideration.
Their interests are usually divergent because those having the
interests are not a homogeneous population. There are also layers of
concerns within each interested group. When these are competently
accounted for and responded to, the restoration of company reputation
is achieved with the least amount of expense in the shortest time
period. Where there is culpability on the part of the company,
deliberate, negligent or in any event attached responsibility, there
is no magic pixie dust exoneration possibility.
Your PR people are not ready for prime time in this kind of situation.
This is the stuff of specialists who can think and work outside any
box and with any kind of management except the delusional dictator to
whom reason is immaterial. Additionally, the law protects the accusing
bloggers and their hosting website owners against lawsuits brought by
accused companies for besmirching the company reputation. In the back
and forth between preventing people from using your name (as in
references in adverse postings about you) through trademark
infringement litigation, on the one hand, and freedom of speech on the
other, freedom of speech is trumping the trademark protection
interests. Statutory constructs aimed at protecting the Internet favor
the website owners in most instances, limiting your real options to
posting responses to the accusations made against you. Scaring
disgruntled complainers with your big budget lawsuits is becoming more
difficult. Judicial willingness to award attorney fees and expenses to
your enemies because you should have known you had no right against
your target defendant is making the little accuser’s task of finding
representation less difficult. You can expect to be discovered and
successfully sued if you or others acting for you hack into your
adversary’s website to sabotage the site or remove adverse commentary.
I have dealt with three such situations in the last six months, so I
consider myself to be fairly up to date in this appraisal of it.
In the beginning…… just like it says in the Bible…..there are initial
circumstances. Most of the time they are not completely known or
comprehended in their potential. Therefore, what is said at that first
moment is being said for reasons of panic and evasion. That shouldn’t
be so, but it almost always is. What should be said is simple, direct
and obviously truthful – free of denial – free of agenda – free of
signs of panic and paranoia. What should be said is that you are
trying to learn all the facts and that when you believe you know
enough to be able to make responsible statements, you will have
something to say. Now how difficult is that, and why is it almost
never done? Think of what BP said that was of course shown to be
incorrect and that set the tone for so many of its subsequent
compounding falsehoods and half truths - to the point that nothing
said by BP would be credited by anyone.
That initial statement must be followed by a real investigation,
honestly marshalling information calculated to show the truth of the
matter. In a real crisis event that information will probably come out
anyway. If it comes out after you have misrepresented what it is and
what it will be, what have you accomplished?
Bring in resources that are known to have some credibility. Before
doing that, confer with the candidate resource so that there is a
clear understanding what will be done and how it will be done, as well
as how information resulting from the investigation will be handled
and by whom.
Illustratively, there is one person with enormous credibility and
respect in Louisiana based upon his work during the Hurricane Katrina
disaster. He has his ways, and that requires that before his retention
it must be sorted out what will and won’t be done and who is the boss
and just how he can live with the arrangements. The trouble with
honest effective people is that they often have a hard time when it
comes to being the spokesperson for apparent misrepresentation. I am
of course referring to retired General Honore. He knows the area and
its people and they trust him. Having an arrangement that accommodates
access to that kind of resource absolutely has to be explored as soon
as possible. This was not done by BP, and in retrospect it is doubtful
General Honore would have been willing to participate in what BP had
in mind. To do so would have been reputation destructive for him, and
his future value ruined.
General Honore type people are not always available. Unfortunately,
what is sought out is usually someone good at theatrical appearances –
Marlboro Men who can get you to start smoking their brand of weed.
They say anything if you pay them. They are at most only momentarily
convincing about anything. While you don’t always have access to the
instantly believable resource, you absolutely have to do better than
Tony Hayward. Most importantly, however, is the person behind the
spokesperson. That resource has to be focused upon managing the
potential for situational changes, and has also to be focused upon
achieving something more than simply momentary sound bite impact.
The resource you are going to use must be available throughout the
crisis. He cannot be handling so many other things that availability
on immediate notice is unworkable. As it nears its end, immediacy of
need may wane, but up to that point, he has to have his Blackberry in
his pocket when he sleeps and when he makes love. He must also be able
to show up quickly if today’s virtual meeting technology simply won’t
suffice.
It is rather easy to sit back and point out things that someone else
did that turned out to be less than appropriate. You can take just
about any adverse situation today and see the cut and paste standard
PR ploys being used – denials – misrepresentations about things not
even investigated yet – assigning blame to others – trying to use some
government or industry standard as exoneration for obviously
blameworthy conduct – false promises of remediation so general as to
allow later denial when you don’t do whatever it was that you promised
but never intended to do – and so on and so forth.
In the end, between authorities conducting investigations;
investigative reporting; adverse statements made by disgruntled
employees and former employees; other involved parties defensively
trying to lay responsibility on you through their own denials; most of
the correct information is going to come out. The ability to control
the news and the publicity of information is no longer an option.
Moreover, in the process of ineffective exculpation other matters in
which you are involved are investigated, and, just like BP today,
issues are found in which you engaged in similar conduct there.
If in reality you perceive yourself to be immune to reputational
damage, and you really don’t give a tinker’s damn about it – although
you won’t say that in public – falsehoods and false promises may in
the end save you some money. But if you are not possessed of royal
status in the world, you need to consider the approaches suggested
above. You should pay less in remediation costs and attorney expenses
in the long run, and your reputation will recover more quickly than if
you follow what passes today for crisis information management.
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