Public Relations Expert Provides Crisis Management Tips

 

Dec. 16, 2011

Appearances count. But universities, presidential candidates and businesses have all demonstrated a lack of awareness about good public relations. Given their significant status, we would expect them to exhibit world-class PR expertise in their crises.

But that’s not the case. Best practices in crisis management have been practically non-existent.

Consider these examples:

• Penn State and Syracuse – their sexual abuse scandals
• Herman Cain was forced to quit his bid for the GOP nomination following his weark and untimely responses to the sexual harassment accusations
• Rick Perry – his meltdown after a fast start in which he seemed invincible
• Bank of America’s controversial debit-card pricing fee, which prompted countless Americans to switch to community banks and credit unions, and a downgrade in the bank’s credit rating
• Anthem Blue Cross of California is facing multiple lawsuits as a result of policyholder perceptions of predatory increases in healthcare premiums and deductibles

Undoubtedly, in each situation, they would benefit from expert PR counsel.

“Businesses, politicians, sports figures and celebrities should all have a crisis plan because, sooner or later, they’re apt to need to activate it,” says noted PR expert Devon Blaine. “If that need never arises, at least they were prepared in case it did. There’s no harm in being a good Scout!”

Ms. Blaine has been the president and CEO of The Blaine Group, Inc. in Los Angeles since 1975. She has countless successes. So when she talks, clients listen and profit.

First step – preparation

“We’ve all seen what happens when people are not prepared,” she asserts. “Herman Cain is the perfect example. And he had a 10-day heads up prior to the Politico article coming out!  Most people don’t have that advantage.”

She says even with a crisis plan, there are important financial considerations.

“…even if a crisis ends up being well managed despite the lack of advance preparation, managing the situation is needlessly more costly than it would have been had plans been made in advance,” Ms. Blaine explains. “The quality of the response may also suffer.”

She advises against complacency.

“Everyone believes that it will ‘not happen to me,’ but it can…and does…even to extremely small businesses such as our client that imported all of the wheat gluten from China that was used in every recalled pet food product a few years back,” she cites as an example.

“Had they had a crisis plan prepared which identified the vendors needed to mitigate risk, i.e., FDA attorney, crisis public relations firm, other legal counsel, etc., before they needed all of the above on an emergency basis, they would have paid a small consulting fee in advance and been ready rather than retaining all of the above on a last-moment, already-into-the-crisis emergency basis at top billing rates.”

Here are her excerpted answers to my crisis-management questions:

Q: What are the keys to crisis management?  

A: There are many, for example:

• Knowing what the potential crises could be
• Planning and preparing in case the unthinkable should occur
• Knowing who does what
• Ensuring that the “chain of command” is known and adhered to in their office
• Having a trained spokesperson who will address the media
• Knowing what media to outreach to so that you are proactive rather than reactive
• Ideally, having an ongoing positive media campaign in place, based on the theory that the best defense is a strong offense…if your business is viewed as a good corporate/community citizen, a crisis will harm the business less, and perhaps not at all

Q: How do you suggest preparing for crises in business?  

A: Ideally the management team will brainstorm what they believe could go wrong in the business and then bring in a professional risk manager and crisis public relations person to brainstorm with them. A walk through the facility will also identify other potential trigger points, i.e., doors that are left open and provide access to the company’s computer server, to other sensitive data, to products where quality control is essential, etc.

Q: How do you suggest preventing a crisis?  

A: Conducting business in a prudent fashion is always the best way to prevent a crisis, however, there are issues beyond your control that can go awry, i.e., buying product from a manufacturer that operates with less than optimum ethics, importing toys that are decorated in China with paint that is toxic to humans, etc… unless you have control over each part of the process, there’s room for error. Visiting your vendor before doing business with them can help to control this but does not 100 percent ensure that you’ll not encounter a problem later.

Q: In the event of a crisis, what are best business management practices?  

A: Openness with the press and honesty are the best practices. Sometimes issuing a “controlled statement” is the best way to proceed, especially when management needs to focus on resolving the problem rather than being available to the press 24/7. It also prevents the possibility of a “burnout moment” and guards against a response that is not empathetic… as we saw in the recent oil spill crisis. Absolutely never respond with “no comment.” It is better to say “we are aware of the situation and we are looking into it,” which gives no more information yet sounds caring, concerned, involved, active and responsive rather than evasive.

Q: What are your suggestions for testing your crisis plan?  

A: In an ideal world, your management team will work with a crisis planning team such as that which The Blaine Group offers with its Reputational Risk Management Solution Product and avail itself of the opportunity to have key management roll up its sleeves and “play” a board game where a crisis is enacted and everyone plays out their role. We recommend this be done on a quarterly basis to ensure that everyone stays fresh. It is also a good idea for your spokespeople to be trained and for there to be “refresher” sessions every few months.

Q: What should be done PR-wise immediately following a crisis?

A: See the response above regarding best business management practices. And, more important, think about what should be done before a crisis, i.e., being a good corporate citizen and making sure that you’re acknowledged as such in an ongoing positive corporate communications campaign.

Q: What should be done during the crisis aftermath?

A: See best business management practices above. Also, ensure that there is a steady stream of information released as you have answers to the situation that occurred.

Q: What should be done once a crisis has ended?

A: If there has been a problem with one of the company’s products or their product has caused their customers problems, there’s an opportunity to generate goodwill by setting up a program that not only ensures this won’t happen again but also instructs their customers in how to handle such a crisis.  Be certain to communicate that all underlying issues have been addressed.

Resource link: Ms. Blaine’s Web site.

(Note: I’ve been very familiar with the expertise of Ms. Blaine since 2004. She is a fellow member of Consultants West, www.consultantswest.com, a roundtable of veteran consultants in the Los Angeles area.)

From the Coach’s Corner, Ms. Blaine also explains the secrets to marketing success in recessions.

“If I was down to my last dollar, I’d spend it on public relations.”

-Bill Gates

_________

Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?

 

Management Lessons from Epsilon’s Email-Breach Scandal

 

April 6, 2011

 

Noteworthy management lessons have evolved from the alleged data-management program at Epsilon. Obviously, Epsilon’s data management is an oxymoron. It is not managed properly.

As you know by now, the email marketing firm has allowed hackers to access the names and email addresses of countless millions of businesses and consumers. All of us must brace for the inevitable threats of spam and scam.

But this isn’t just a crisis-management issue.

If the email breach isn’t problematic-enough, what’s also troubling is the apparent culture at Epsilon and its parent company, Alliance Data. Their Web sites say little about their privacy concerns. But more on that later.

The only evidence of an Epsilon apology came about a week later on April 6 in a press release:

“We are extremely regretful that this incident has impacted a portion of Epsilon’s clients and their customers.  We take consumer privacy very seriously and work diligently to protect customer information,” said Bryan J. Kennedy, president of Epsilon.  ”We apologize for the inconvenience that this matter has caused consumers and for the potential unsolicited emails that may occur as a result of this incident.  We are taking immediate action to develop corrective measures intended to restore client confidence in our business and in turn regain their customers’ confidence.”

The press release also stated Epsilon has launched a forensics investigation in cooperation with federal authorities.

Positive step

Granted, the press release is a positive step. But it’s troubling that Epsilon took so long to issue a statement, and it’s symptomatic of what’s contributing to the worsening image of big business.

After reading and commenting on the security scandal, a leadership blog with a video caught my eye — Harvard’s Michael Porter on How Business Can Recapture Its Reputation. (As an author of 18 books, Dr. Porter is known for his thought-leadership in management and competitiveness.)

An excerpt from his comments:

“…I think that business have tended to look at themselves as self-contained and I don’t think they have really understood the way in which they touch the community and that they touch so many social issues. The external standards, of course, have risen in terms of what is expected of a business and the standards, for things like environmental impact, is much higher now than before. So businesses get caught by surprise, they are slow to raise their own internal standards, and I think their reputation suffers.”

Ostensibly, Epsilon, Alliance Data and some corporations consider themselves self-contained and they need to raise their standards.

Here are other management lessons to consider:

In a previous column (Epsilon’s Security Flaw Threatens Millions of Businesses, Consumers) one of my concerns was one of appearances. It still is. Epsilon’s Web site touted its email marketing abilities. But nowhere was enough evidence to indicate it was concerned about privacy; nor was there adequate contrition. Appearances are important.

Further, culture starts at the top. Aside from a tardy apology and inadequate contrition, what about Epsilon’s empathy for its customers and their millions of customers? What steps are being taken to prevent future breaches? Not only is Epsilon lacking in appearances, so is its parent company, Alliance Data. Alliance has earned an infinitesimal amount of money profiting from consumers’ data.

However, its Web also site fails to create a positive impression about privacy. I’d definitely include a value proposition about privacy protection. Instead, it merely appeals to corporate desires for profits. Note its branding slogan, “Solutions That Drive Sales, Create Brand Loyalty …” The home page headline reads: “Getting results starts with knowing your customers.” Certainly, the cyber criminals have a better chance of knowing millions of businesspeople and consumers.

Business reputations

The lack of due diligence provides another management lesson. One would think that Epsilon’s 2,500 corporate customers would now hesitate to turn over the email addresses of their millions of customers. What about their business reputations?

A certified project manager in Baltimore provides another management lesson.

“Perhaps the solution is to de-couple data warehouses and the Internet,” says David G. Peterson.

“Having been in IT for over 30 years, I know that networks can be cracked,” he adds. “I was never keen on data warehousing outside an organization, and this incident only confirms my worst fears.”

In other examples of best management practices, some customers of Epsilon have done an outstanding job of warning their customers. Others haven’t bothered, according to at least one professional, Gail Wallace, who responded to my initial column with her management lesson.

“Before the breach was public knowledge my first warning came from, of all companies, Kroger,” says Ms. Wallace, president of Bellwind Consultants in Dallas. “Next came U.S. Bank a few hours later. After the news carried the story of the breach, I received a warning from Best Buy. A friend of mine received a warning from Robert Half International as he is job hunting.”

So, thanks and congratulations are in order for Kroger, U.S. Bank, Best Buy and Robert Half.

However, Ms. Wallace provides another management lesson. She says two major banks failed to keep her informed – Citigroup and Capitol One – which prompts her to ask pointed questions:

“Does this mean they don’t care about their customers? They don’t want to spend the money to warn their customers? They were too embarrassed to admit the breach? Did they simply rely on news reports to get the word out?”

Her prediction:

“Many other companies may have been proactive with whom I have no affiliation, but those that didn’t warn their customers may find that their customers are less than happy and might even lose customers over the neglect.”

Agreed. They’re hurting themselves by exacerbating the Epsilon faux pas.

My sense is that it’s worth noting that Citigroup and Capitol One received taxpayer bailouts. One has to wonder about their corporate sense of entitlement and lack of contrition. Certainly, they haven’t learned lessons in management. This doesn’t help the nation, the economy or their customers.

Let’s hope all such corporations watch Professor Moore’s interview and utilize another best-practice in management listening to people such as Mr. Peterson and Ms. Wallace. Further, I’d launch a quality human resources training program – from top to bottom – to change their cultures and business approaches.

But will they make the right investment?

From the Coach’s Corner, here are PC Magazine’s Seven Tips to Avoid Post-Epsilon Phishing.

__________

For a complementary chat about your situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?

BP Crisis Management, PR Misfires — a Case Study

 

About every 20 years, there’s a major oil-spill disaster. None has been handled well, PR-wise.

On Jan. 29, 1969, an oil spill involved Union Oil off the coast of Santa Barbara, CA. On March 24, 1989, it was the Exxon Valdez oil spill in Prince William Sound, Alaska. And following an explosion on April 20, 2010, it was the BP oil spill in the Gulf of Mexico.  

Dr. Peter Drucker’s quote, “Arrogance is being proud of ignorance,” obviously was not intended for the most-recent public relations debacle facing BP, but it sure is applicable. The results are a case study for worst-practices in crisis management.

BP inadvertently created a PR situation synonymous with herding cats. It’s had to fight to clear up two quagmires – its oil mess and its tarnished image.

It’s important to understand the need for a comprehensive risk analysis. First impressions demonstrating empathy and competence are vital. It didn’t appear BP was prepared to successfully deal with such a catastrophe. A good old-fashioned SWOT analysis of strengths, weaknesses, opportunities and threats with worst-cases scenarios would have sufficed.

For possible insights into BP’s corporate mindset, a former CEO of Royal Dutch/Shell’s U.S. subsidiary, Shell Oil, has some illuminating realities. In the strategy+business management magazine, CEO John Hofmeister’s article, “Why We Hate the Oil Companies,” explained how some corporate oil CEOs dysfunction. He indicates they earn their reputations for arrogance and blow opportunities to create the right image.

“Retailing fuels is basically a secondary exercise from the oil company’s point of view, a way to get rid of the product it has spent so much time and money producing,” he writes. “This makes the retail side the least valuable part of the business, more often a nuisance than a value creator.”

BP’s “Beyond Petroleum” branding has not helped.

Despite BP’s best efforts, the company was not been front and center of the media. And when it has been in the media, it wasn’t a pretty picture, such as offering $5,000 to potential plaintiffs not to litigate in anticipated lawsuits. Nor has BP been seen as compassionate and aware of their social responsibility. Nor did it appear eager to roll up the proverbial sleeves to work with government to minimize the ecological damage.

In responding to a question about BP’s safety record in an interview with ABC’s George Stephanopoulos, BP CEO Tony Hayward said:

“I think we’ve made enormous strides as a company in the last three or four years with a remorseless focus on safe, reliable operations.  Ah, this wasn’t our accident. This was a drilling rig operated by another company. It was their people, their systems, their processes. We are responsible not for the accident but we are responsible for the oil, dealing with it and cleaning the situation up.”  

However, here are my recommendations:

1. Mr. Hayward should have been mindful of all his operations. In the middle of the disaster recovery efforts soon after his interview on ABC, another negative headline was published: “Washington state fines BP $69K for violations.”
2. Mr. Hayward’s initial comment should have been a strong note of empathy regarding the need for due diligence in safety.

BP’s Web site mentioned a only minimal number of advisories per day with links to Twitter and Facebook are insufficient. Why?

This is a war – a war to save the environment, the livelihoods of families depending on fishing and tourism, and the company’s reputation. Where were the pictures of a hardworking CEO, in oil-stained work gear, directing crews like Gen. George Patton in World War II? Where were images of him conferring in teamwork-style with government representatives?

Furthermore, published revelations in this typical headline, “U.S. exempted BP rig from impact study,” looks terrible for BP and a federal agency. The article indicated BP lobbied for an exemption in order to avoid an environmental impact analysis. The waiver was reportedly rubber-stamped by the Minerals Management Service of the Interior Department.

The Obama Administration also deservedly received criticism for its initial tepid handling of the accident, including this commentary:  “Government scholar Paul Light calls on Secretary Napolitano to step down.”

To minimize the damage, BP should have immediately accomplished five tasks:

1. Issue regular, frequent progress reports
2. Control the pictures (even some on the Web site appeared to be canned or generic)
3. Transparency
4. Display empathy as a concerned corporate entity comprised of authentic people diligently making a good-faith effort to solve the problem
5. Stop lobbying for environmental waivers

To be sure, BP would benefit from proven crisis management tips. Further, the oil company would also benefit by using a best-practices checklist for green branding and marketing.

From the Coach’s Corner, here are 19 Tips to Protect Your Core Assets from a Disaster.

“We made too many wrong mistakes.”
-Yogi Berra 

__________

Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?

Step-by-Step Solutions for a Company Turnaround

 

If you’re struggling like many businesses, you know the myriad of challenges exacerbated by the economy. However, despite the challenges, it is possible for businesses to successfully complete a financial turnaround.

First, you might have to put on a different set of glasses – see this economy as a marvelous opportunity.

But it’s not just a matter of increasing sales. There’s more to it.  Sometimes, I get inspiration from non-businesspeople like the most revered president in American history, Abraham Lincoln: “If I only had an hour to chop down a tree, I would spend the first 45 minutes sharpening my axe.”

To sharpen your axe, there are salient areas that need your focus in order to turn your business around, which include financial, marketing, and internal operations. For space limitations in this column, let’s deal with finances. Businesspeople are embarrassed by having to face the trauma of continuous collection calls. They often don’t communicate effectively with creditors on managing cash flow issues. So tell creditors you’re working to correct the situation.

The first objective is to manage cash flow in three steps:

• Increase the cash balance. Collect the outstanding accounts receivable and generate cash from any saleable assets.
• Prioritize the cash disbursements. Focus the available cash toward the must-pay expenses first, including payroll and associated payroll taxes, and pay other vendors with your remaining balance.
• Develop a cash forecast. Project realistic cash receipts by customer (preferably include the products or product lines) and disbursements by creditor on a weekly basis for the three months – and monthly thereafter for a year. This means reducing the revenue and collections in your projection by 10 to 30 percent to make certain the actual results are achievable and you do not run out of cash. Develop and implement plans to operate and keep you in business at the lower projections.

Denial is usually the biggest consequence: Acknowledge your situation, develop a turnaround plan, and communicate with your bank, with vendors, and your employees.

Once you acknowledge the situation, consider your company’s mission statement, define the core business, including your target customers, and your company’s unique competencies in the marketplace. The bottom-line question – are your products or services responsive to the market demand?

Next, determine your company’s strengths, weaknesses, opportunities and threats with a SWOT analysis.

If you owe money to banks or vendors, most would rather be repaid over time than take over your business or force your company into bankruptcy, provided you can show them how they will benefit by working with you.

For your lenders, provide your operational and financial turnaround plan exhibiting the company’s viability and outlining a repayment plan and timetable for the bank and explain how you intend to protect the bank’s collateral. You may have to show your lender how they will receive less money if they force you to liquidate to repay your line of credit if they don’t extend the repayment terms of your loan.

In dealing material suppliers, offer to pay them cash on delivery on future shipments so that they can continue to earn their gross margin on your purchases and suggest that you will also pay a small percentage toward their prior outstanding balance. Your vendor will keep you as a profitable customer and their outstanding receivables will be reduced over time.

For creditors, keep your commitments on making payments to re-establish credibility.

Continue to monitor your company’s financial health. Identify your company’s key performance indicators, or critical success factors. These indicators must be SMART, an acronym for specific, measurable, achievable, relevant and track-able. They typically relate to sales to key customers, accounts receivable collections, cash balance, raw material deliveries, and sales backlog.

A flash report can be designed to monitor these indicators on a daily basis and to evaluate your actual performance against the turnaround plan. It should be shared with key players in your company so everyone understands and has a sense of ownership so that you have a team-approach in achieving your goals.

As for your receivables, here are resource links: Are Accounts Receivables a Problem? and How to Ease Debt-Collection Headaches.

The textbook I use in teaching finance to non-accountants is “Finance for Non-Financial Managers” by Gene Siciliano, http://www.cfoforrent.com/publications/Books/finance-for-non-financial-managers.htm.

Use these tips and you’ll increase your odds for a good return on your marketing investments.

From the Coach’s Corner, here’s a quick tip on sharpening your axe for repeat business:

Use the Golden Rule. How many times have you said you’re tired of spending money at companies who have employees who take your money and say “Have a nice day,” but fail to smile and say “Thank you”?

Or they seem indifferent toward you? My research shows that consumers stop buying from a business about 70 percent of the time because they feel they feel taken for granted. Customers will go elsewhere and not bother to complain about the lack of respect. Incidentally, employees are consistent. If they are indifferent to customers, they treat their fellow workers the same way.

So if you have customer-service employees and your profits are down, you can bet your company needs to improve team morale and customer empathy.

Additional resource links:

15 HR Strategies to Improve Your Business Performance

Think 1930s for Business Success. Consumer Attitudes are Changing.

 You can’t do today’s job with yesterday’s methods and be in business tomorrow.

__________

Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complementary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?