Archive for October, 2012

I was listening to NPR just now while working and heard a cool story that made me think about how New Yorkers are definitely reputation-mindful and good solid citizens. A resident of Dumbo, an area in Brooklyn near the water (and near me), was describing how he was walking down the street this morning to take in the devastation of super-storm Hurricane Sandy. The Brooklyn waterfront was pretty devastated with water lines still visible on store windows. He saw a few products from the nearby Brookstone floating by. He picked them up and threw them back in the smashed window of Brookstone — reverse looting! Made me feel good knowing my fellow Brooklynites do the right thing and keep NYC’s reputation uppermost in their minds.

The picture is of the Carousel in Dumbo!

I was recently interviewed in the Tennessean about how a hospital in Nashville, Saint Thomas Hospital, was handling the crisis related to the fungal meningitis outbreak. The question posed to me by the reporter was how this public health disaster caused by a New England compounding company would ultimately impact the hospital’s reputation. Like many people, I have been following the crisis but did not know much about how Saint Thomas Hospital specifically was dealing with the contamination and its aftermath. Of the nearly 17, 500 vials, 2,000 were sent to the St. Thomas Outpatient Neurosurgery Center. The Clinic is on the St. Thomas campus but not wholely affiliated with the hospital. Apparently the high number of people coming to the hospital’s emergency room is where the problems with the compounded steriod drug injected into people for back pain first came to light.   

After the reporter contacted me, I immediately went to Google to learn more about how the hopsital was dealing with the crisis and found this interview with the CEO of St. Thomas Hospital, Dawn Rudolph. I was very impressed with the steps she took to lead the hospital through the crisis and it was apparent to me that she had taken her crisis preparation seriously and had good judgement. It is worth reading how she and her communications department prepared talking points for medical staff, worked with the Centers for Disease Control and Prevention and Tennessee Emergency Management Association, coordinated with the clinic to determine who would do what and let people do their jobs while she fiercely observed what was happening. Some of her actions that are worth noting when you want to recover your reputation post-crisis:

1. Stay out of the way of those who have a job to do such as the clinical care teams

2. Surround yourself with good people

3. Anticipate challenges

4. Make yourself available. Clear your calendar.

5. Plan for the short-term. Ask Rudolph’s question, “What am I missing?” and take answers from everyone.

6. Be prepared for misinformation that circulates in the media or online. (The crisis was incorrectly tied to a viral meningitis scare in the area)

7. Give your team talking points for them to explain what is happening to their families.

8. Watch your team carefully. The psychological effects can be tough to swallow.

9. Pointing fingers and trying to explain who is at fault is not going to be well understood when people’s lives are in danger. (The hospital and clinic are different entities but Rudolph did not spend her time making the distinctions for people who were worried about the health of their family members. Very civil and very impressive.)

The best part of the interview was what she said about what she wishes she had done, “I would have immediately grabbed an administrative person and had them pull a chronological list of what had occurred that day relating to the crisis. We did that in spots, but things evolve fast. I would have said, ‘you’re designated to be the record keeper and check in several times a day with team leads,’ because it was so multidimensional.’”

These few sentences were chilling. They refer to the sentencing of Rajat Gupta  who was sentenced to two years in prison on Wednesday for leaking boardroom secrets to the former hedge fund manager Raj Rajaratam.

Legal counsel…” tried to keep his client out of prison by arguing, unsuccessfully, that Mr. Gupta was a proud man for whom the loss of his reputation was a punishment far worse than incarceration. This is a fall from grace of Greek tragedy proportions.”

When I was speaking at the YPO/WPO luncheon in Minneapolis two weeks ago, I mentioned that I was talking about how to prepare for a public relations crisis that can cause reputational damage and what can be done. I always like to find examples that might resonate with an audience and I found this one which I still can not get out of my head. In the checklist I provided attendees regarding preparing for a crisis, I mentioned the importance of establishing a chain of command. It is important that everyone knows exactly what to say and who should be saying it when crisis strikes. This control over a chain of command starts with the person who answers the phone!

Two weeks before I arrived in Minneapolis, I had come across an article that described exactly how it should NOT be done. The article was about how some workers at JFK airport filed a complaint with the TSA about how they were being rushed to do their jobs to avoid schedule delays.  And the jobs they get paid to do are important. One quarter of these workers — security agents — employed by this small business complained that they were unable to search flights in enough time to discover if there were any weapons, drugs or explosives left behind after the passengers left. These agents are supposed to pull down every tray, check every overhead bin, probe seat pockets and use metal detectors to make sure the planes are safe and secure as mandated by the federal government after 9/11.  Since airlines are very concerned about flight delays and on-time arrivals, these employees felt that they were being given little time to do their jobs. As one employee said, they were being asked to do their jobs in three minutes when the minimum amount of time needed was 25 minutes.

Here’s what stunned me. When the company that employs these agents was asked about the complaints, the pr director responded by saying that the employees were lying. “It is impossible for these allegations to really take place.” Here is an example of a company caught unaware and responding poorly. Within a few words, the director put the company’s reputation at severe risk. When The New York Times calls to find out information about an alleged complaint, the company spokesperson should have said that they would get right back to the reporter with a response and more information. Saying that one’s own employees were lying just does not cut it. From what I can gather, the PR director said that the employees were trying to unionize and therefore intent on aggravating the situation. Whatever the reason or excuse, this was quite the example of self-inflicting repuational harm. One for the books!

Faking reputation. Hard to believe! YELP knows so. The review site says that 20% of reviews never see the light of day. They are considered either suspect or fraudalent.  Some businesses even try to commission people to write reviews or bribe product users to write something positive.  You can solicit these reivewers-for-hire people on craigslist. What gets me, however, is that there is an entire cottage industry of reviewers-for-hire who will write bad reviews that knock a business’s competition. An article in Ad Age last week presented a slew of facts that makes me wonder where this will all end – a Gartner study reported that fake reviews would grow to to nearly 15% in the next two years.  They even forecast that the FTC will be taking a few Fortune 500 companies to court for faking reviews within the next few years. These reputation fake outs will weaken credibility of review sites when they’ve never been so important.

Starting this past week, YELP is going to shame businesses that pay for fake reviews to shine up their reputations. Read this article to learn more. By setting up a sting operation (the stuff of spy novels), YELP is said to be exposing eight companies by placing the following consumer alert on their profiles:  “We caught someone red-handed trying to buy reviews for this business.” (See above picture for the real deal) Potential customers will see the incriminating e-mails trying to hire a reviewer. And don’t expect these alerts to go away soon. Definitely a red-faced moment if caught.

This all makes me think again about how important reputation is in this information age where everything is accessible and disclosable. Reviews that lead to positive and negative reputation are their own form of currency and wealth. The lengths to which businesses will go to protect or heighten their reputations are endless (and sometimes deviant). 

I can’t say I am surprised. Recent research we did on corporate reputation found that online reviews were nearly as important as word of mouth and recommendations from friends and family.  I think that weeding out the fake outs is going to be a big business itself to maintain the credibility of reviewers.

I had a particularly interesting and rewarding week. It started in Minneapolis where my colleague and I spoke at a YPO/WPO event on managing a reputational/pr crisis and how to use social media to keep one’s reputation from getting tarnished. The audience of over 100 CEOs and presidents wanted advice on managing a crisis in this hyper-connected, turbulent and “gotcha” world. The person who was to introduce us was abit late because he was handling a crisis…which I thought was perfect timing! I hope I made the point that reputation management is a contact sport today. 

While preparing for my talk, I was searching for something to say about how socio-political-local issues are more important than ever in managing reputation. I was barely in the state when I quickly learned about the upcoming vote on the Marriage Amendment. Companies are being asked to vote yeah or nay on gay marriage and from what I can tell, it is having a resounding impact on perceptions of business reputations in the state. This event is an extraordinary example of how business reputations are being shaped by their political citizenship. In case you are curious as to how some CEOs are taking a stand, read this entry on the General Mills blog, Taste. Here is an excerpt written by the head of global diversity and inclusion as to his company’s CEO, Ken Powell, who addressed employees:

“As readers of this may or may not know, Minnesota voters will be asked to decide on a proposed constitutional amendment in November. If passed, this amendment would define marriage in our home state’s constitution as being between one man and one woman, effectively banning same-sex marriage in Minnesota. If defeated, Minnesota voters would send a strong message about our state’s view of the importance of inclusiveness and diversity.

Ken spoke only a few minutes – but his words spoke volumes.

He voiced our company’s opposition to the proposed marriage amendment, an initiative that makes our state less inclusive and reduces our company’s ability to attract and retain talent.

While, General Mills doesn’t normally take positions on ballot measures, this is a business issue that impacts our employees.

I am proud to see our company join the ranks of local and national employers speaking out for inclusion. We do not believe the proposed constitutional amendment is in the best interests of our employees or our state economy – and as a Minnesota-based company we oppose it.”

Also pretty impressive is that the company left all the comments from those in favor and those opposed to the marriage amendment on the blog on their corporate site.  They are all heart-wrenching and some unbearably uncivil.

I was talking to a few colleagues and came to the conclusion that companies are now mirroring civil society. Many of the issues facing the nation or even the world at large are now the business of business — education, bullying, civil rights, etc.  The public square and corporate corridor are becoming increasingly similar.

I wanted to mention an example of a new movie about fracking with Matt Damon that is soon to be released, Promised Land. The reason I want to post about it is that I predicted a few years back that this would become a trend in the reputation landscape and it has. I also like to use my blog as an archive on all things reputation. Lately I have found that when I have a presentation or speech coming up, I can find good examples to use to make my case.  So this blog comes in handy in many ways. 

Promised Land is about a natural gas company salesman, Matt Damon, in rural Pennsylvania and his plan to lease natural gas drilling rights there. The movie, to be released at the end of December, is already raising concerns in the energy industry (according to this article) and they are reportedly distributing research, information about fracking on social media and preparing brochures about fracking to educate the public. It is not clear if the movie takes a stand on fracking but sides seem to be lining up.

The article I read about Promised Land also mentioned an HBO documentary called Gasland on fracking’s impact on the environment and a subsequent energy association documentary in response, Truthland.

All of this is on my mind because of the article I wrote on Reputation Warfare for HBR and how companies can imitate adversaries’ reputational assaults and need not remain defenseless.

I wanted to keep this blog as a bookmark for how reputation strategies are changing over time as companies increasingly take on their opponents. My, how the world of business is changing.

I was pleased to be alerted to a copy of Reputation Review 2012 by Rory Knight, chairman of Oxford Metrica. Years ago I used some of their research in my book on CEOs and particularly on how CEOs can build their reputation or kill it when crisis strikes.  Knight just completed his annual reputation review for AON, the global risk management, insurance and reinsurance company, and as I expected, the report has insightful and timely information for those seeking to better understand the impact of crisis on a company and its bottom line.

Knight reviews the top crises of 2011 such as TEPCO, Dexia, Olympus, Research in Motion, Sony, UBS and News Corp, among others.  His company looks at the recovery of shareholder value following crisis. Among 10 crisis-ridden companies in 2011, only News Corp found itself in positive terrain afterwards. In fact, what they found was that 7 of the top 10 lost more than one third of their value. Two companies lost nearly 90% of their value. These companies clearly had to put big restoration processes in place afterwards and I would suspect paid good dollars to firms to restore their good names and overlooked other everyday business to move forward.  Oxford Metrica says: “Managing the restoration and rebuilding of reputation equity is an essential part of the value recovery process following a crisis. Reputation equity is a significant source of value for many companies and a coherent reputation strategy can be the difference between recovery and failure.”

The big takeaway from the report, or at least what seems to resonant with me, is that there is an “80% chance of a company losing at least 20% of its value (over and above the market) in any single month, in a given five-year period.” Those odds are not good and as Knight says, screams for having a careful and well thought out reputation strategy in place before a minor event turns into a raging crisis and monopolizes headlines, offline and online.  A solid reputation strategy will also help guide the reputation recovery process which is often too hurried.  This is the kind of advice that I write about in my book on reputation recovery and underscores having a strategy so you do not find yourself in this situation in the first place. Additionally, Weber Shandwick’s stumble rate of 43% for the world’s most admired companies tracks with Knight’s high rate of expectant reputational downfalls. It is not good at either rate.

The report outlines a process for managing a company’s reputational equity. They are 1) Measure your reputation through benchmarking and vis a vis your peers; 2) Identify the drivers of your company’s reputation in order to allocate resources properly; 3) Prepare a strategy for recovering your company’s reputation; and 4) monitor your reputational equity often and respond accordingly when risk emerges.

The report analyzes the reputational losses of Olympus and Research in Motion after their reputation-damaging events. It is worth reviewing.  It also takes a look at the financial results from TEPCO after the tsunami hit Japan. Apparently, 90% of TEPCO’s value was lost, over $US37 billion.  Oxford Metrica estimates that events associated with mass fatalities have double the impact on shareholder value than do reputation crises in general.  I believe they are right. BP’s Gulf of Mexico tragedy which involved over two dozen deaths wiped off substantial shareholder value off their books.

Where I wholeheartedly agree with Knight is when he talks in the report about the impact of senior management on crisis and the need for that management to lead with transparency and openness.

“For mass fatality events particularly, the sensitivity and compassion with which the Chief Executive responds to victims’ families, and the logistical care and efficiency with which response teams carry out their work, become paramount. Irrespective of the cause of a mass fatality event, a sensitive managerial response is critical to the maintenance and creation of shareholder value.” One of the takeaways from the report is that winners and losers, reputationally, can be determined by how the CEO responds to the crisis.

The report contains an article by Spencer Livermore, Director of Strategy, at Blue Rubicon, a reputation consultancy. He quotes a stat that is dear to my heart, “Oxford Metrica’s analysis shows that companies which open up more following a crisis and tell a richer, deeper story are valued more highly, increasing share price by 10 per cent on average over a year.” He calls it the communications dividend which comes from investing in communications. Years ago I wrote an article for Ernst & Young’s Center for Business Innovation called Communications Capital and the idea was similar – the right communications can increase market value and strengthen reputation.  As Livermore says, “We can make communications worth hundreds of millions more simply by making them better understood.” Having the right compelling narrative built on a well thought out reputation strategy is worth its weight in gold today.

Love this third leadership lesson from the CEO of JetBlue, Dave Barger. Ain’t it the truth!

“Third: brand matters.  I thought I was supposed to build an airline when I joined JetBlue. Not at all; it was more important to build a brand.  Brand is your reputation, who you are and what you value.  If you don’t establish this, your customers won’t find you to be relevant.”

How important is civility to the reputation of President Obama and Governor Mitt Romney? Pretty important.

We at Weber Shandwick and Powell Tate with KRC Research take the topic of civility seriously (see Civility in America, our third annual survey) because it impacts the reputation of the United States and affects public discourse. The new survey we just released is among 1,053 adults, 18+, and was conducted between September 14-16th. Data were weighted to align with the U.S. population distribution.  

We found two-thirds (66 percent) of likely voters saying incivility was a major problem in society with 85 percent also saying political campaigns are uncivil. By a margin of almost 2 to1 (62 percent to 32 percent), likely voters said incivility has always been part of the political process but more than three-quarters (78 percent) said incivility in politics is worse now than it has ever been. 

Since the debates are upon us (first one is tomorrow night), we decided to ask Americans about they perceived the civility of the candidates. Here is what we learned – there is a civility gap between the candidates:

• A majority of likely voters, 55 percent – 42 percent, considers President Obama’s campaign tone to be civil, while a plurality, 49 percent – 45 percent, perceives Governor Romney’s tone as uncivil. The civility gap is potentially significant because nearly half of likely voters polled, 48 percent, say the candidate’s civility will be a “very important” factor in how they vote. 
• The gap was much less pronounced for the Vice Presidential candidates. Vice President Biden was seen as civil by a margin of 49 percent to 43 percent while likely voters were evenly split in their assessment of Wisconsin Representative Paul Ryan, with 46 percent saying he was civil and the same number saying he had been uncivil. 
• Fifty-seven percent of likely voters say that any incivility demonstrated on the debate stage will affect their votes. The sentiment was shared equally by self-described Democrats (54 percent), Republicans (55 percent) and Independents (58 percent). 
• If you saw today’s Wall Street Journal article on incivility online, we could have told them that 23 percent of likely voters said they defriended someone on Facebook or stopped following them on Twitter not because of their political views but because those views were expressed uncivilly.
• And when it comes to tuning OUT of political advertising, a sizeable 75 percent of likely voters are doing so and nearly as many – 72 percent — are tuning out when they receive emails asking for political campaign support. My in-box is full, how’s yours?

All of this comes down to the degradation of political reputations in the future. We learned that seventy-three percent of likely voters say that incivility in politics deters qualified people from going into public service. That’s a large number and if it is as true as it must be, we have a lot of work ahead of us.