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It's the rare company that hasn't been slammed with a public-relations crisis. Depending on how severe the damage - and how quickly the wound is cauterized - companies can either fess up and regroup or face the wrath of the media and other stakeholders. Results of how companies handle crises vary, of course, ranging from corporations that implode (Enron) or that take the bullet, fire the CEO, pay a hefty fine to regulators without admitting any wrongdoing and hope that the Gods of Short Memory are smiling down on them (Marsh & McLennan Companies).
But, sometimes, the crises are rife, which has been the case with Chicago-based Boeing Co. The aircraft maker and defense contractor is going through one of the most turbulent periods in its 95-year history following a string of scandals, the latest being the March resignation of Boeing CEO Harry Stonecipher after he admitted to an improper relationship with a female employee (see PR News, March 16). (CFO James Bell is serving as interim president-CEO of Boeing.) In 2003, Stonecipher replaced Phil Condit, who resigned in the wake of a scandal involving Michael Sears, then the company's CFO, illegally hiring an Air Force procurement officer. (Condit didn't get charged in that case, but Sears was sentenced to four months in prison.)
The ethical lapses already had started to impact Boeing's ability to do business, alienating allies on Capitol Hill (no small thing when your biggest client is the U.S. government). Stonecipher sought to rebuild the company's reputation by instituting a strict code of ethics in-house, which he then violated when he started the affair. A Boeing employee who saw e-mail correspondence between Stonecipher and the female employee, say reports, uncovered the affair. (Yet Boeing's stock has not suffered because of the crises. It hovered around $39 when Stonecipher took over in December 2003, it continued to climb through his tenure, it took a slight dip after he resigned in early March but it finished the month at $58.)
Although the defense industry is unlike most others, Boeing's fiascos hold many lessons for how -- when crises seem to be endemic -- senior PR execs can help to start to turn things around. Boeing has to "step back far enough for [senior management] to say, 'We're in trouble, but this is not fatal,'" says Alan Hilburg, president-CEO of PNConsulting, a division of Porter Novelli. "If they have an opportunity to fix it and don't, that will be Boeing's legacy for the next five, 10 or 15 years." Repeated telephone calls to Boeing's communications department were not returned.
Hilburg says that, other than legal counsel, PR is the "only function" that can present managers with a 360-degree view of the real world. And when dealing with a series of setbacks, PR managers have to address three objectives in order to get back on track:
- Rebuild confidence and trust among employees from a high level.
- Communicate to regulators and to Washington, D.C., decision-makers that the company can be trusted and still needs support from the regulatory and legislative environments.
- Create a six- to nine-month timeline to convince the company's various stakeholders that the company is not another Enron and that the various crises have been an aberration.
Indeed, unlike an isolated crisis, multiple crises require PR managers to finesse some fundamental questions to the boss before the company can start to rehabilitate, to wit, what role do communications play in the company? What is our corporate culture? What are the barriers that will keep shareholders from regaining the highest level of trust? (For other tips on regaining trust following a series of crises, see sidebar.)
Part of the problem is that the vast majority of companies create elaborate plans on how to handle crises - and subsequently stick them on the shelf to collect dust.
" Crisis management for most companies has been synonymous with crisis response and not with crisis preparedness," says Jonathan Bernstein, founder of Los Angeles-based Bernstein Crisis Management LLC. "There's a difference between fire fighting and fire prevention. It's one thing when the stuff hits the fan, but you don't see the headlines about how a fire inspection saved the city billions of dollars."
He adds, "A lot of companies have brick/mortar plans: earthquakes, fires or even succession. But they don't think of the impact of lawsuits or improper behavior, and the crises that usually make the news are those that are based on reputations. "
But with nary a day going by without one corporate scandal or another splashing on the pages of the Wall Street Journal and other top-tier publications, corporate managers may be, finally, starting to get it. The number of requests Bernstein says he now gets for crisis preparedness -- as opposed to crisis management -- has jumped to 40% this year from just around 5% three years ago. "The cumulative affect of the corporate scandals -- and SARBOX -- is making companies finally say, 'We've got to do something.'"
However, the question remains whether C-level managers who have suddenly found religion will give their PR managers a pew right up front. The Boeing scandal "is a situation where you want your top PR managers in the room with the top people, playing devil's advocate and asking questions without any fear of losing their jobs," says David Margulies, president of PR firm Margulies Communications Group (Dallas).
There's a caveat, though, that PR execs should not try and re-engineer a badly damaged company. "The role should be to provide the bad news with the bark off," Margulies says. "You don't want to tell the CEO how to run the business but [you should] say, 'If you implement this action, these are some of the likely public outcomes.' You have to communicate the expectations and make sure the solutions are realistic."
Contacts: Jonathan Bernstein, 626.305.9277, jonathan@bern-steincrisismanagement.com; Alan Hilburg, 212.601.8000, alan.hilburg@pnconsult.com; David Margulies, 214.368.0909, davidm@prexperts.com |
