Transparency in Tough Times:
The New Rules of Engagement
for Crisis Management
PRSA Health Academy
April 28, 2011
Lewton,Seekins&Trester
The hits just keep on coming
Some seem pre-destined
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Goldman Sachs & an ethics issue
BP & an oil disaster
Abercrombie & Fitch & something sleazy
GE – so many options
• But the tax repayment hoax was a nice twist
• Not to mention the Twitter fiasco
BUT some crisis fiascoes were truly
surprising . . .
Really??
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Toyota?
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Pampers???
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J&J??????
(and just lately – Amazon??? Sony???
Warren Buffett?????????)
Maybe not so surprising . . .
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Fleishman-CIRI survey:
• Half of IR officers at health industry companies
surveyed said their company doesn’t have a
crisis plan
• Of those who do, only 30% update it at least
annually
• Yet vast majority say a poorly managed crisis
definitely impacts a company’s valuation
“High”lights from recent crises
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BP had slashed PR budgets and staff, relied
on “rookies . . .who had Hayward walk the
beach in a starched white shirt.”
• BP now termed prime target for acquisition
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Toyota tone deaf to current U.S.
Congressional climate
• But able to rely on unusually loyal customers
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And then “burnedbabybuttgate”
If you can’t trust Pampers . . .
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Hard to watch P&G bungle
July 2008: P&G SVP
“Mommy bloggers are the new influencers”
May 2010: “We’re insulted that someone
would imply that our products are
dangerous,” after dozens of Mommy
blogger postings about burned baby butts
P&G:
Seemed off-key from the start
• All about US (“WE are insulted”)
• Steadfastly denied there was a problem
– Then after barrage of BBB photos online, blamed the
parents for bad “diapering”
– Then said it’s not a big issue --“small number” of
parents – “less than two complaints per 1 million
diapers? (do THAT math)
• (5400 concerned parents on Facebook alone)
– Then attacked the complainers – parents who are
“unhappy” with product redesign OR who “supported
competing products”
Meanwhile in the blogosphere
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Hundreds of parent postings with personal
stories in excruciating detail
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•
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“I have FOUR kids – I know a BURN.”
“My baby was in agony”
“Just spent two hours at the pediatrician’s”
“I will NEVER buy Pampers or a P&G product
ever again.”
An trusted consumer brand bungles it, but it’s
nothing in comparison to . . . . .
The fall of the ICON of crisis PR
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J&J: 50+ recalls in 15 months
Tainted Tylenol, CHILDREN’S Tylenol,
Rolaids, Acuvue contact lenses, DePuy
hips, cracked syringes of Rx drug, surgical
sutures, insulin pump cartridges, FDA
consent decree for expanded oversight,
kickback lawsuit, settlement of physician
bribery lawsuit . . . .
AND the phantom recall of Motrin!
And the CEO says (4/03/10). . .
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Incidents are aberrations
Just a “one company” problem
Monday morning quarterbacking
“Not a systemic problem”
And at Harvard Business School, the classic Tylenol
poisoning case study (crisis the company reacted
to, rather than caused) now has a companion:
“On Weldon’s Watch: Recalls at J&J 2009 to 2010”
When the crisis comes,
it is a CRISIS (new ones daily)
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Crisis communications may be only 2% of PR
work, but it can often be make or break for the
company and the PR team
• Reputation can be irrevocably damaged – not only by the
company mistake, but also by how the company reacts
and responds
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The public WILL forgive mistakes – but NOT
defensiveness, deceit, disingenuity or arrogance
“Sony accused of lying about PlayStation outage”
The stakes can be corporate
life, or death . . . .
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Loss of market share
Litigation
Damage to reputation
Impact on employee recruitment, retention
Share price and valuation decline
Productivity affected
And all your marketing efforts are undercut
“Amazon gets “F” for communication amidst Cloud outage”
If J&J bungles . . .
Is there hope for the rest of us?
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What’s more high profile than healthcare?
• Patients now call Channel 4 before they call the
attorney
• We’re not immune to whistle blowers, product
recalls/patient safety incidents – reputation
shredding crises resulting in something we DID
– 100% different than managing an external disaster
• And our goodwill banks have been tapped a lot
• It’s not IF a crisis happens, it’s when . . . .
“Community Health Systems discloses more whistle-blower suits”
And there’s a new timeframe:
1440/7/365
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Expectations for “prompt” responses mean
nearly instant replies
• The good old days: “60 Minutes is downstairs”
• Then it was CNN, then Bloomberg, then blogs
• Now your first warning is an irate Tweet that
goes viral
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It’s the Two T Test:
In a 10-minute response cycle transparency
isn’t a choice – it’s a survival strategy
• No time to hide, no time to lie
Transparency isn’t a choice,
it’s a survival strategy
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Stalling means you waste time and earn
audience distrust
“A Week Into Data-Storage Flap, Apple Finally Speaks Out”
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Hoping it will go away? Public life today is
just one Macaca moment away
• Silence = you don’t know what’s going on in your own
company OR you don’t care enough to talk to your
stakeholders OR it’s true and you’re working the shredder
• And a lie is always, always, always discovered and then
the reputation damage is WORSE
"Thank you for your patience while we work to resolve the
current outage of PlayStation Network services"
Some make it sound simple:
Just write a plan
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But it’s not that simple
• There’s no cookie cutter approach that works in
every case
• Even when there’s a crisis plan, often the plan
sits on a shelf or is forgotten when the crisis hits
– Situations can be anticipated, but real life can be
different
• And the key variable is people – unpredictable
people within and without the company
“BP marked the anniversary by suing each and every
contractor . . . Time for discredit where discredit is due?”
And the hits keep on coming . .
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TODAY’s NY Times
• “With Deal, J&J Tries to Pivot” – “appealing to
investors who have been troubled . . . tarnished
once-golden brands . . . We think J&J should
have fixed its consumer unit first . . . Product
recalls diminished company’s revenue project . .
we have made mistakes, working hard to regain
trust (CEO).
Finally he says it . . . but by now, every positive
story will dredge up all the negatives again, and
again, and again.
Same day, same paper . . ..
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Jobs Concedes Apple’s Mistakes, and
Promises a Fix Hoping to put to rest a
growing controversy . . . after a week of
silence and no info to consumers . . . Jobs:
“Rather than running to the PR
department, it set out to determine exactly
what happened.”
REALLY???
What would PR have advised?????
SAME day, same paper
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Sokol Is Accused of Misleading Buffett
on Trades Initially, Buffett defended, said
no problem . . .. Now he has to walk it back,
accusing his once #2 of misleading the
company. Buffett – the reputation guy! A
“stark turnaround for Berkshire”
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(btw) BP Profit Falls as Costs of Spill
Outweigh Higher Oil Prices
Same day, ARTS section . . .
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PlayStation Security Breach a Test of
Consumer’s Trust “Hackers steal
information and Sony will pay a price. . . .
Sony has never made the transition to a
software and services company . . . .”
“Who, exactly, is going to volunteer to trust
the company again?”
So how do we manage?
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The new world order: Everything that used
to be on the “good if you can do it” list is
now ESSENTIAL.
• The new RULES are the OLD suggestions
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We have to practice (learn, adopt, execute)
the four P’s
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Principals
Principles
Planning
Process
The Principals
The PR Team
The Crisis Team
The Spokespeople
The Principals:
Your PR Team
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The 4 C’s maxim:
Companies/CEOs in Crisis Want Calm
Counsel
• Our collective wisdom and accumulated
experience
• Our “third party” objective viewpoint -- we’re
unemotional, we provide clear guidance based
on expertise
• Arms, legs and warp speed communications
counsel and tactics that can turn things around
The Principals:
Your PR Team
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So we must be prepared to provide counsel
• Sometimes they act on the counsel, sometimes
they don’t
• Even when they don’t take our advice, we still
have to do our ultimate best to help the company
survive the crisis -- and ideally, move on to
prosper
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But above all else, what’s needed is calm . .
. . or the illusion of calm
The Principals:
Your PR Team
What’s expected:
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A team that is THERE 24/7, on site, with no
whimpers
– Energy, realism, optimism
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A team that sees the big picture
– All the audiences
– The real issues and impact
•
A team that’s one step ahead . . . .
The Principals:
Your PR Team
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A team that will help management:
• Moderate their emotional responses
– Not let anger, bitterness, or fear drive decisions
• Face facts with straight talk, even if it’s not
what senior management wants to hear
• Keep all the balls in the air – remember things
that they may forget
• Put out the fire AND keep the plane in the air
The Principals:
The Crisis Team
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Crisis team needs to be formed and
normed in advance, meet regularly
• Begin with PR’s own crisis team -- crossfunctional, cross-level
– Notified first and immediately when there are crises
AND situations that might become crises
• Then add all the key players who will be needed
(CEO/COO, legal/risk, HR, operations, finance,
others)
The Principals:
Spokespeople
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The right spokesperson can make or break
a crisis in the early hours
• This is VERY tricky but VERY important
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IN ADVANCE, settle the issue. You can’t
do it on a 10-minute timeclock.
• Assess potential spokespersons and ID and
anoint several for internal and external roles
– Role/position, mediagenic, coachable, calm, collected,
smart/quick study, good on feet
– Match spokesperson to potential crisis situation
– Determine, in advance, when the CEO is it, not it
The Principals:
Spokespeople
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Train, train, train in advance – no time in
a 10-minute response window
The new model is beyond “wear blue shirt”
• General prep in advance, two-day approach:
– Day one – learn the basics, spend as much time on
message development as on-camera tips
– Let the spokesperson go home and write/practice
messages so s/he owns it
– Day two: practice interviews (print, TV, radio)
• Real-time refresher when a crisis happens
The Principles
Pre-Requisites
Cardinal Rules
Messages That Matter
First Responses
Principles:
The Pre-Requisites (ABSOLUTES)
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Strategic communications plan already in
place
Full buy-in of senior management
CPRO part of senior management team
Commitment to internal communications as
a priority
Effective internal and stakeholder
communications channels already in place
and fully road tested
Principles:
The Pre-Requisites
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Strong credibility and good relationships
with media (know who you’ll get calls from)
• And know the social media hubs where your
audiences already are
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Master list of all key audiences
• Contact database
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Allies database
PLUS: a dark website, smartphone, Twitter
and Facebook accounts, corporate blog,
and backgrounders/fact sheets already
done!
Principles:
The Cardinal Rules
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You will always respond
• No comment – hardly transparent
• Telegraphs you have something to hide, company doesn’t
care or is totally inept
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You will never, ever, ever lie
• The truth will ALWAYS COME OUT
• The “You Tube” generation is everywhere
• Any employee can dial NY Times
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You will never be pushed into speculation
• Educated guesses that turn out to be wrong just look like
lies to the public
• “I don’t know” never has to be retracted or walked back
Principles:
Messages That Matter
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Must focus on the harmed party first -- not just
OUR concerns
Begin with an expression of compassion or
empathy if appropriate
Be utterly candid -- “I don’t know that now” is OK,
“no comment” is not
Accept blame IF an error has been made
• Lawsuits will happen someday, but the Court of Public
Opinion is in session now
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Prove you’re fixing it:
• What are you doing now? What’s planned?
Principles:
Transparency = OWN the story
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Instead of reacting & providing answers
(hiding like we used to do . . .)
Take charge of the news – you have to
be the dominant producer of news about
your crisis, via blogging, tweets and direct
communications to stakeholders that runs
side-by-side with media outreach
• Even if there’s nothing much new, keep the
updates coming
Principles:
First Responses
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WE USED TO SAY : Don’t “go public”
UNTIL you have all the facts
NOW: The crisis IS public, so you’re either
represented or you’re absent
• Define, defend yourself or others will do it for
you
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Acknowledging situation buys some time
• Better to say “This is what I have now,” than to
have audiences hear and read “The company
failed to respond/refused comment.”
Principles:
First Responses
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So go with what you’ve got, refuse to
speculate
AND promise (and deliver) updates via
web, email, tweets, Facebook, etc
The Plan
Create It
Drill It
OWN it!
The Plan:
Create It
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Must be in sync with HCO values, mission
Foundation: detailed P&P to insure that potential
crises are identified ASAP
• And make sure employees are oriented and trained to spot
and speak up
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Detailed info on who does what when
• For example, when senior manager hears about a crisis
situation – who gets called FIRST? CEO? PR? Lawyer?
Figure it out now!
• Implementation instructions
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Resource and multi-layered contact info – updated
weekly
The Plan:
Practice Drills
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Issues anticipation -- let’s make a list!
• The predictable and generic
• The “that could be US” opportunities
– Strike while the competitor’s crisis is in the headlines
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Think BEYOND company-specific potential crises,
to the generic
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Embezzling
Sexual or racial harassment
Shareholder lawsuits
Government investigations
CEO illness
It COULD happen here!
The Plan:
Practice Drills
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“Working” – actually role playing
situations that could happen – is the ideal
time to:
• Kill the “no comment” mentality
• Try out spokespersons and decision-makers –
role play
• Confront the “WE DON’T MAKE MISTAKES
LIKE THAT” mentality
• Thrash things out with legal in advance
The Plan:
Practice Drills
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Scenario drills allow for:
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Assessing probability
Identifying potential audiences by scenario
Assessing severity and risks
Determining – in advance – what the answer to
the FIRST question
MUST do quarterly
The Plan:
Practice Drills
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Draw on real life examples of good CPR,
and bad
• Start with Toyota, J&J (then and now), Pampers
• Then use current/recent real life examples of a
company like yours
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Road test your team, your plan, your
spokepersons, to spot any inbred issues
and deal with them during peacetime
The Process: CPR!
The Crisis is NOW
The Process:
What to do first
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Take your own pulse. (remember CCCC)
Bring in outside counsel if that’s part of your
plan
Start fact finding, info gathering & audience
ID (simultaneously – divide up the work)
• We have to ask the right questions and push for
answers -- BE the reporter.
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Remember -- be the dominant producer of
news about your crisis
The Process:
What to ALSO do first
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While some fact-track, others are ID at which
audiences are going to be most affected,
concerned
• Employees – they’ll hear first, the rumors start here, and
they can support OR undercut whatever you say publicly
• Stockholders and stakeholders
• Influencers and regulators
• Customers and “community”
• Natural advocates and adversaries
The Process:
Simultaneously . . . .
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Draft messages
• Get management to focus first on WHAT will be
said, not how the message will be delivered
• Create the corporate story -- the whole story, not
just reaction to Q’s.
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Buff and brief your spokesperson
• Do in-person, aggressive media training once
messages are complete
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Get the dark site or home page ready
The Process:
And then . . . . .
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Deliver the message on multiple levels
Get to your internal audiences BEFORE
they see the coverage and stay in touch
• Stay below radar – e/vmail, CEO phone calls,
employee meetings – but assume everything will
go public
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Media: omnipresence via web and social
media, uberresponsiveness to MSM
• Update blogs, website, Facebook constantly
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Monitor foes – pay attention to what they
say but don’t let them drive YOUR message
The Process:
And so it goes. . . . .
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Track the crisis impact via research
• Initially to benchmark and assess the damage
• Monitoring -- both traditional and social media
and key audiences -- to avoid OVERreaction
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Keep the plane flying – “normal life” does go
on
Know when to stand down
•
May not be a hard endpoint
There IS a hard endpoint to this
session . . . . .
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ppt will be posted at prsa.org/healthacademy
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And at www.lstllc.com
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Along WITH the LST Prep CHECKLIST – get your
very own free copy!
Qs and queries to:
• klewton@lstllc.com
• sseekins@lstllc.com
• ktrester@lstllc.com