Weathering The Storm of Corporate Scandal

The 3d words What's Your Plan asking you if you're prepared to implement an idea and strategize a solution for success in achieving a goal or overcoming an obst

It has been a busy last two weeks in the world of corporate/organization scandals and there are likely some very stressed and busy crisis PR teams, currently working overtime. Crisis Communications is an essential component of the public relations industry, and being able to successfully handle any crisis that arises, is a cornerstone of good PR.

The reality is no organization, no matter how successful, efficient, well-managed, etc., is completely immune to experiencing a crisis situation at some point. Much like how life can be very unpredictable and unforeseen events can change or alter the course of our lives, so too can organizations be hit with unexpected events that can lead to very bad publicity and public backlash. The following are four key steps organizations should practice, to weather any crisis as best as possible:

  1. Have a Plan – It is essential that every organization develop an effective, concise and detailed plan in anticipation for any crisis that may occur. It is simply unwise for any organization to try and develop a plan and think about what steps to take while in the midst of a crisis. This is likely to result in exasperating the crisis, based on poor decision-making, as leaders go into panic mode. Some individuals cannot think logically under pressure and without a road map for what to do as a crisis is occurring, the risk of everyone running around saying and doing the wrong thing is exponentially higher.
  1. Do Not Hide – The worse thing an organization can do in the midst of a crisis, is bury their heads in the sand and just hope it goes away. The latter is particularly unlikely in this digital/online age where news and gossip travels so fast and everyone can develop an opinion very quickly. The best approach is always the direct one. So be as open and honest and transparent as possible.
  1. Avoid Being Defensive – If the crisis involves something that is unquestionably the organization’s fault, then simply own it and apologize. Avoid being defensive, angry and belligerent in any way, either to a consumer(s) or the media. And if the crisis involves something that can be fixed, be as clear and concise as possible about how the organization intends to fix things and make it better. And be sure to deliver on those promises.
  1. Learn From Others – You can always learn from the past. It’s never a bad idea to study what your organization’s competitors or other firms in general have done in other similar situations or just how they handled any major crisis. You may learn what not to do from them or you may learn something you never thought of, about how best to handle a situation.

That said, it would be remiss of me to not directly address the current corporate/organization scandals. Without question, the three biggest stories of the past two weeks has been former Subway spokesman Jared Fogle being charged with child molestation and child pornography, the Ashley Madison hacking scandal and the New York Times’ scathing story on Amazon’s employee culture. I decided to analyze each scandal based on three factors – the organization’s response to the scandal, whether or not I think the organization can come back from the scandal and finally the lessons other organizations can learn from it.

Subway

Response – There has been some divisiveness about how Subway responded to this scandal. Almost immediately, in the wake of it being confirmed that Jared Fogle would plead guilty to child pornography and child molestation charges, the company tweeted out a statement that read “We no longer have a relationship with Jared and have no further comment.” Perhaps owing to the fact that some found the statement inefficient, the fast food chain added on twitter the following day, “Jared Fogle’s actions are inexcusable and do not represent our brand’s values. We had already ended our relationship with Jared.”

The positive in Subway’s response was that they were quick and decisive. As soon as the news of Jared’s guilt went public, they responded and made it absolutely clear that any ties they had with him was over. That said, I understand and somewhat agree with those who felt the response was a bit lacking. On one hand, I get it – I think Subway’s goal is to distance themselves as much as possible, understandably, from this scandal and so they have decided to employ a cold and detached approach.

That said, fair or not, they are unfortunately tied to this in the public’s consciousness. After all, Jared Fogle wasn’t a celebrity hired to be a spokesperson for Subway – he became a celebrity because Subway used his personal story and decided to make him a face of their brand. So unfortunately for the company, that connection in the public’s mind isn’t going to just go away. Therefore, I do think, based on the nature of the scandal that a more emotional and heartfelt statement should have been made.

Can They Come Back – I think so. The biggest factor working for Subway right now is that the company had started distancing itself from Jared Fogle long before the scandal. Fogle began appearing in a lot less of the company’s campaigns in the last few years, particularly when they made a shift towards their $5 dollar foot-long campaign and placed a greater emphasis on Subway representing an “eat fresh” choice. However, things will likely be messy for a little while longer. Also, a bigger concern for the company are the latest claims that two women have come forth and stated that years ago, they reported Fogle’s activities to Subway executives. If proven true in any way, that might be a death blow to the fast food chain. If not, I do believe with some time and distance, the organization will be fine.

Lessons Learned – Obviously the biggest lesson here for other companies is the risk of hiring celebrity/individual spokespersons and having them be so closely tied to their brand. The biggest risk for any organization in hiring a celebrity spokesperson is the issue of credibility. That individual has to be someone who can positively and credibly represent the brand because any negativity on their part, will unfortunately reflect badly on the company. As a result, it is imperative that every company think long and hard about using a celebrity spokesperson to represent their brand and that they do an extremely thorough job of vetting that individual.

 Ashley Madison

Response – In the midst of possibly the worse scandal the company could face, Ashley Madison executives acted swiftly in putting out a statement that harshly and vehemently condemned the actions of the people responsible for the hack on their website. The positive is that the company acted quickly and addressed the scandal head on. Another positive was that the public statement made sure to stress that the situation is a violation of individuals’ rights to do as they please, as long as it is legal.

This is important, as Ashley Madison’s entire existence raises a moral debate among the public. Also, an impetus for the hack, as stated by the group responsible, is that they were disgusted by the website’s goal, which is essentially to help individuals discreetly have affairs. Turning the tables, so to speak, on the hackers by reminding the public that this is really an issue of violation of privacy could be significant for Ashley Madison, in gaining public support, even from individuals who may not agree with the brand’s goals and values.

That said, I thought a significant weakness of the company’s statement was the lack of specificity and clarity on what they would do in the future to ensure this situation never happened again. At the least there should have been some promise and/or statement to their consumers about their commitment to protecting their privacy and making sure the situation becomes an isolated event. Yes, the statement acknowledged that a criminal investigation is ongoing to find out those responsible for the hack, but I believe a personal reassurance to their consumers was imperative.

Can They Come Back – Piggybacking off my last sentence, the reason I believed some form of reassurance was necessary is because I actually think this situation may be a tough one for Ashley Madison to come back from. To put it frankly, this is a company that functions under a veil of secrecy and a promise to its customers that their actions on the site are completely private and discreet. Having that secrecy and privacy completely blown hurts the very foundation of the company. It seems highly unlikely that anyone would be willing to take the risk of signing up for the site after seeing how easily so many others were exposed.

Lessons Learned – The obvious lesson here is the importance of cyber security which realistically, any organization, particularly one that requires and receives large amounts of personal information from its consumers should already recognize. Unfortunately, the reality is nothing is ever really and truly secure on the internet which again is why this may be so hard for Ashley Madison to come back from.

Amazon

Response – On August 15, 2015, The New York Times published a scathing article about corporate giant Amazon’s work culture. Response to the article was immediate and the comments on the newspaper’s official site has since totaled over 5,000. Most of the reaction was not positive and as the story, as well as the reaction spread over social media and online, some current and past Amazon employees took to social media, particularly LinkedIn, to defend the company.  Eventually, CEO Jeff Bezos sent out an internal memo to the company’s over 100,000 employees, which was obtained by the website, GeekWire.

I found Bezos’ response quite timid and rather passive, not to mention unconvincing. I am okay with the company not making a full public statement to the media, because likely in their mind, it would only draw more public attention to the story. However, I do find it odd how tepid Bezos’ memo was. He never actually outright denies any of the claims in the New York Times article, but rather just kept insisting it is not the Amazon he knows.

Someone can infer from this that maybe he is simply not in tune with the employee/corporate culture of his own company. Bezos then goes on to simply say that he didn’t believe anyone would work for a company the Times described and again stated that he didn’t recognize this Amazon talked about and hoped the employees didn’t recognize it either.

What was glaringly missing from Bezos’ memo is an assertion of the Amazon he does know, an assertion of the values and culture he believes in and tries to foster every day and believes that every employee in their company embodies. What was missing from the statement was a declaration of what exactly Amazon truly is and stands for and how that contradicts the picture the New York Times article painted. I didn’t read that and frankly Bezos’ memo did little in my opinion, to convince others that the Times’ article was off base. Many found some of the defenses by employees and former employees online, more impassioned.

Can They Come Back – Without question – yes. The fact is as much attention as the article has gotten, it really has not become that pervasive and public backlash is not really that significant. I believe Amazon has stored up enough goodwill, to weather this storm with minimum damage.

Lessons Learned – The most significant lesson here is the importance of employee engagement in organizations. Assuming the New York Times’ claims are all true and assuming that Bezos is being honest in his ignorance of these claims and sentiments among the company’s employees, then it’s clear there is a disconnect between executives and the employees.

Employee engagement is one of the elements of public relations that often gets ignored or at the least is not focused on nearly as much as other elements.  Which is unfortunate because it is very important. An organization lacking effective employee engagement risks many negative effects on the company at large, including, the possibility of low productivity, greater risk of disengaged and unmotivated employees, low employee retention, lack of company loyalty and more. Employees need to feel appreciated and acknowledged for their efforts and like they have a voice in the company they work for.

As evidenced by the above scandals, not all crises are the same but whatever the nature, an organization must have a comprehensive crisis plan to effectively weather the situation with as little collateral damage as possible.

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