A question has been nagging at the back of my head for some time. Are crises really bad for companies? Seems a dumb question, doesn’t it. We have a whole industry (including me) which seems to exist to first scare the crud out of leaders about the devastating impacts of reputation crises, then offer solutions to minimize the damage.
But, is there a connection between bad PR, big-time reputation crises and company or organization success? The question was raised by PRNewser in their review of the biggest PR losers for 2014. Here are a few examples that raise legit questions:
-the NFL–certainly had a bad year for PR, yet ratings for NFL games were higher this year than last
-GM — Congressional hearings, more recalls, reactions to exec salaries–but the company the best November in sales since 2001
- Sony cyber security–Sony was hacked and demonstrated a pattern of lack of data security. Despite most theater chains refusing to show the Interview, the film has already brought in $15 million in digital only channels
- Uber had about as bad a year PR-wise as can be imagined. But it looks like it isn’t having too much of an impact on its fundraising efforts which are valuing the company at about double its value since June.
- Microsoft–New CEO Satya Nadella made a huge politically incorrect booboo when he suggested women should rely on good karma for raises. At the end of November, Seattle Times reported Microsoft stock was at a 14 year high, nearly double since start of 2013.
- Congress–11% approval ratings, 95% re-election rates (explain that one!)
Beyond these headline grabbing examples, there have to be hundreds if not thousands of smaller crises affecting businesses and organizations large and small that don’t get the attention or traction of these major stories. In many, if not most of them, while intensely scary at the time, most of the organizations that I am aware of recover quite nicely and quickly once the furor and attention have died down.
However, and there is a very big however, things do not end so happily in all cases.
- Here are a few clear cases and some questionable where bad PR is causing serious harm:
- Police–already two NYPD officers have died in retribution. The well publicized examples of questionable (at best) killings of African-American young men is causing a serious problem for law enforcement–problems of trust and confidence that may affect community relations, recruitment and police safety for years.
- Cosby–I agree with the assessment, sadly, that one of America’s favorite dads is and should be gone from the public scene, and perhaps from the public streets.
-CIA specifically, federal spying generally–from Snowden, to the NSA’s late recognition of likely illegal behavior, to the global discussion about prosecution of American officials for torture, American spies–once the guardians of freedom–are quickly becoming the focal point of moral outrage and distrust around the world. Hard to say what it will take to recover from this.
This review creates a bit of a dilemma. Can it be that crises, at least some crises, are really not so bad for the company and bottom line? Why is it that some crises can be absolutely devastating while others seem to flit by the radar screens at ever accelerating rates?
I need to think on this some more, but a few initial thoughts:
- Crises are not such big news anymore–many of them anyway, partly because there are so many they are almost routine, and that in part is because of hyper-sensitivity. It’s hard to say much of anything these days without offending some person or group. Outrage (like most emotion) is viral fodder. The desperate need of the media for the headline not of the day but the hour, drives them to jump on the least offense and magnify it so that other hyper-sensitive types can jump on board and the two of them can declare a reputation crisis.
- Only big violations of common values really hurt. The Satya Nadella story is a case in point. His comments were clearly communicated out of context. The reality of equal treatment of women was made clear and Microsoft looked good in that respect. If his offense had been a clear and documented case of bias against women, Microsoft in general and Nadella specifically would have paid a much higher price. Cosby on the other hand, assuming of course the accusations hold, has violated on numerous occasions commonly held values. We will not tolerate people in high power who use their power to abuse others. Nor will most of us tolerate the idea that torture is ever justified, or illegal spying by our own government against ordinary citizens. And clearly, unwarranted killing of anyone–regardless of color–can never be allowed. These are significant violations of not just law, but of deeply and commonly held values.
This conclusion needs much more testing and I offer very tentatively here. But, if it proves correct, it is important in responding to crises. The number one rule of crisis management is don’t make a bad situation worse. That often means don’t bring to attention what otherwise would not be an issue. But that has to be balanced with the need for transparency, honesty and being the first to tell bad news about yourself. An over-reaction to a perceived serious reputation crisis can fit into the category of making it worse. An under-reaction, or more commonly a too-late reaction–can also cause serious harm.
There is great judgment needed in deciding if a crisis is going to blow over quickly and leave little damage in its wake, or if it is going to fester, balloon and overwhelm an organization. How does one get that judgment? It seems it is more important than ever to understand at a very significant level the public perception and communication environment. I guess that means, there is still a need for those experts who can help provide that guidance.
Whew, I’ll breathe a little easier as we go into 2015 now.