Disgruntled is not just a pig that’s lost its voice

The disgruntled employee wreaking revenge on a company may seem like a movie plot or a clickbait cliché. But one Australian fast food outlet learned recently it can be a very real threat to brand and reputation.

A former worker at the Domino’s Pizza store in Lismore, New South Wales, posted photos on Facebook said to show filthy kitchen conditions at the outlet.

The images – including mouldy cheese, insipid prawns and dirty workbenches – were shared more than 900 times and prompted over 800 reactions, mainly predictable expressions of disgust and pledges never to visit the outlet again. However some former employees came to the store’s defence, saying that during their time cleanliness was A1 and food was always fresh.

For its part, the response by Domino’s was decisive and effective, and they immediately closed the store while an investigation took place.

“We take matters relating to food safety and hygiene extremely seriously and have strict standards in place to ensure these protocols are adhered to,” said the company spokeswoman.  “We are investigating the matter as a priority and we are also working with an independent auditor to do their own assessment so we can be fully confident this store can and is operating to only the highest of food safety standards.”

It was a textbook response and the story soon lost momentum. Yet it was a reminder of the potential crisis risk posed by disgruntled workers.  Just weeks earlier, in the midst of the nationwide ‘needles in strawberries’ food tampering scare, the Queensland Strawberry Growers Association was quick to claim that “initial reports point towards a disgruntled employee.”

The reality is that revenge by disgruntled employees is not uncommon and is a genuine risk.

•    Scott McCormick left the Red Rooster outlet in Indooroopilly, Queensland, after an argument with his boss and used the company inventory system to order more than $67,000 worth of chickens from five separate suppliers. Fortunately one of the suppliers raised the alarm and his boss called the police.

  •  Juan Rodriguez was fired from the Marriott Hotel in New York and remotely accessed the reservation system to reduce the hotel tariff on all 3,000 rooms to as little as $10 a night. His so-called ‘Robin Hood’ action cost the hotel more than $50,000 and he faced three felony charges.

    •    An employee at Twitter used their last day on the job to switch off Donald Trump’s account and the world was denied the President’s thoughts for all of 11 minutes. The company initially claimed the account was inadvertently deactivated “due to a human error by a Twitter employee” but eventually came clean.

 

  •  A Melbourne IT engineer hacked into his employer’s mainframe computer and changed data value settings because he felt he was under appreciated and wanted to cause stress to the management. It cost more than $10,000 to repair the damage.

While there is a whole library of HR advice on how to recognise and manage disgruntled employees in advance of a grave misdeed, the lessons for crisis managers are clear – act promptly; don’t try to cover up; recognise and address the concerns of affected stakeholders; and demonstrate the steps you are taking to prevent it happening  again. As Domino’s showed in Lismore, it isn’t that hard to do the right thing,

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When will CEOs make proper use of social media? 

The world gasped when unwise tweets from Elon Musk cost his company and shareholders billions of dollars. Yet CEO failure to engage online is also a risk to reputation and diminishes capacity to manage issues and crises.

It’s very easy to focus on occasions when social media goes feral – Like when Musk posted a tweet suggesting that one of the Thailand cave rescuers was a pedophile, and Tesla shares fell by over $2 billion. Or how he falsely tweeted that he had financing to take the company private. When the SEC filed a lawsuit, Tesla shares lost more than $7 billion in value, and Musk and the company each agreed to pay $20 million to resolve the case.

Although such high-profile social media fails typically grab the headlines, a Hootsuite survey shows nearly 86 percent of executives in Australia, New Zealand and Asia believe having a social CEO is positive for a company’s reputation, and 76 per cent believe it enhances credibility in the market. Moreover, the vast majority say a social leader has a positive impact on business results.

At the same time, the survey reported that three out of four consumers say a CEO’s presence on social makes a brand more trustworthy, and companies with CEOs active on social media are perceived 23 per cent more positively than companies with inactive CEOs.

However, despite everything that’s been written about the positive value of social media, research shows most top executives are still failing to engage online.

An American report last year showed that just half of CEOs in top US public companies have a presence on public social networks (beyond the company website) while only 38 per cent had posted on any of their platforms within the past 12 months.  A mere 22 per cent had engaged with other people online within the past year.

In the Asia-Pacific region the numbers are equally disturbing. The Hootsuite survey said 34 per cent of listed company CEOs in Australia and New Zealand have no public social media presence at all, and only 10 per cent are active on social media. And 47 per cent of ASEAN CEOs have no social media presence at all, while only 10 per cent are active. Most worrying is that low participation persists in the face of overwhelming evidence about the importance of social media and the terrible cost of getting it wrong.

Any CEO who still doubts the impact of social media should pause to reflect on the case of Lockheed Martin, whose share value fell by nearly $4 billion after a single tweet by President-elect Donald Trump scolded the plane-maker for “out of control” costs. In his book The 4 Billion Dollar Tweet author Ryan Holmes commented that the company leadership was “conspicuously silent on social media, unwilling or unable to reassure shareholders or respond.”

While most incidents are not so dramatic, too many organisations remain at risk from CEO incompetence on social media, or from lack of executive social media presence, especially in the face of a crisis or major issue. Not surprisingly, around 70 per cent of unsocial CEOs worry about the perceived risk of participation. Barriers typically cited include lack of time; competing priorities; lack of expertise; uncertainty caused by past failures; lack of evidence of return on investment; or legal discouragement.

All of these concerns can and should be addressed, because compared to the risk of social media participation, the risk of non-participation can be an even greater threat. As Weber Shandwick boss Andy Polansky says: “Being a social CEO has gone from reputational advantage to reputational must.”

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Smoke and mirrors on issue funding won’t deter critics

Transparency should be the basis for effective issue management, especially when it comes to who’s paying the bills. How a campaign is funded not only needs to be appropriate, but must also be seen to be appropriate.

This was the lesson for a group of doctors lobbying for nicotine e-cigarettes as a way to help people quit smoking when a news report revealed their set-up funding came from an e-liquid supplier and an e-cigarette company.

The Australian Tobacco Harm Reduction Association (ATHRA), which wants to overturn the ban on vaping nicotine without a doctor’s prescription, said it would “get funding from the vendors and whoever else – not tobacco companies obviously – but it will be at arm’s length, with a view to having a detailed website on the safety of e-cigarettes, where to buy them, how to use them.”

Asked why they had removed the founding sponsors’ logos from their website, ATHRA Chair Colin Mendelsohn reportedly said it had been done on legal advice and not to “’reduce transparency.” However the website of the e-cigarette maker, which offers an online medical prescription service, still says “Nicovape is proudly a sponsor of the Australian Tobacco Harm Reduction Association,” alongside the Association’s logo.

While Mr Mendelsohn told Fairfax the vaping industry is “quite separate from the tobacco industry”, the perception is very different. Although the Association’s two Australian sponsors are small local companies, the vaping industry worldwide is in fact well and truly dominated by Big Tobacco.

Recent analysis reported the vaping industry is today worth about $10 billion globally and is expected to reach $34 billion by 2021. And whereas it was once the province of small businesses, the vaping industry is increasingly the domain of the major tobacco companies, which own some of the world’s biggest e-cigarette brands.

Moreover the National Health and Medical Research Council says there is insufficient evidence to conclude whether e-cigarettes can help smokers quit. The Council also says the widely used claim that e-cigarettes are 95% less harmful than tobacco cigarettes comes from a study based on opinion rather than empirical evidence, with concerns raised about potential conflicts of interest.

Big Tobacco has a long history of using front organisations to fight restrictive regulations. Think no further than the Alliance of Australian Retailers which was established to oppose plain packaging of cigarettes and claimed to represent owners of corner stores, milk bars, news agents and service stations. It was soon revealed that their TV advertising was almost entirely funded by three of the world’s largest tobacco companies, and plain packaging became the law.

However the cigarette industry is by no means alone in the creation of fake community groups. For example, some years ago the makers of cardboard milk cartons set up “Mothers Opposed to Pollution” as a supposed environmental activist group to campaign against plastic milk containers in Australia and New Zealand. Then there was shopping mall giant Westfield which once admitted in court that it had used apparently independent local resident groups to resist rival retail developments.

The purpose in the present case is not to suggest that ATHRA is a front organisation, or to cast doubt on the sincerity of well-intentioned doctors who want to change the law.

But in terms of issue management, it raises the question whether the Association has seemingly allowed itself to be compromised by commercial interests. The issue here is not just how things are, but how things appear, and whether trusted medical practitioners should be seen to be lobbying on behalf of the makers of nicotine-based e-cigarettes.

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When should you stand firm on a controversial issue?

There ought to be a clear difference between “caving in to criticism” and “making a smart decision.” But that distinction sometimes gets blurred when organisations need to respond to potentially damaging issues.

Take the recent case when animal activists PETA complained about the packaging for Barnum’s Animal Crackers, which for more than 100 years has shown beasts behind bars on a circus train. Cookie-maker Nabisco has now redesigned the box to show the animals free in the wild.

It seemed like a win-win, but of course the Twittersphere had to have its say. Mashable headlined that the internet was divided on the issue, and highlighted tweets helpfully pointing out that the crackers are not actually animals, or suggesting that PETA won’t be satisfied until the crackers are made in the shape of tofu cubes. Or rather more rationally, arguing that PETA should maybe focus its efforts on mistreatment of real animals rather than wasting resources “stiff-arming Nabisco”.

Companies today are increasingly coming come under social media pressure. Think of Kellogg’s which agreed to redesign its Corn Pops cereal box artwork after a single customer complained that of all the corn pop cartoon characters illustrated in a shopping mall, the only one with a brown face was dressed as a janitor.

How about Australian clothing brand Peter Alexander who recently recalled a children’s pyjama top with the slogan “Boys will be boys” after social media claims of sexism. Or the Dr Seuss Museum in Springfield, Massachusetts, who withdrew a mural featuring illustrations from the author’s first children’s book, originally published in 1937, because of complaints it showed a “jarring racial stereotype” of a Chinese man.

Such responses to criticism bring us neatly to the controversial Nike advert which is currently burning up the internet and driving angry critics to set fire to their branded sneakers. The ad featured footballer Colin Kaepernick, blacklisted after kneeling during the national anthem to protest treatment of African Americans. The result was immediate and predictable and highly political, with calls for a boycott and Donald Trump tweeting out venom.

The issue at stake here is obviously much greater than a cereal box design, but the principal remains the same. When do you stand firm in the face of criticism – even from the President of the United States – and when do you concede. Within 24 hours Nike reportedly received more than $43 million worth of media exposure, the vast majority neutral to positive, yet its shares fell about $5 billion (compared with the company value of about $130 billion). However, sales then spiked and the share price soon began to recover, so the chances of Nike conceding seem slim. As Katherine Miller commented in Buzzfeed: “We intuitively know that Nike never, ever, ever backs down. They are so corporate and so vast that every decision they make seems final.”

Several decades ago I attended an issue management conference in San Francisco where a representative of McDonald’s came under fire from delegates over the company backing down on a controversial environmental issue. His response: “We are in the hamburger business, not the issue business.”

While McDonald’s has come a very long way since then, some companies still cling to this illusion. The reality is that every organisation is potentially in the issue business. You generally don’t get to choose what issues will cause you grief. But you do get to choose whether to stand firm.

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It’s time CEOs started to think more about crisis

 

A new study at Harvard has revealed a shocking statistic. CEOs spent just one per cent of their time working on crisis management. That’s pretty shocking considering nothing destroys reputation or market value faster than a crisis.

Moreover, the Institute for Crisis Management records that more than half of all business crises are triggered not by workers or other causes, but by management. So there is no doubt that the CEO and top executives have a critical role in crisis management. Yet the evidence is clear that companies have a long way to go to get this right.

While the newly published Harvard study identified that the subject CEOs – monitored over a three month period – spent just one per cent of their time working on crisis management, the reality is that this worrying number should not come as a surprise.

For example, a 2016 Deloitte survey of Board members around the globe found fewer than half said they had engaged with management to understand what had been done to support crisis preparedness or to discuss crisis prevention. And the same survey showed 73 percent of the non-executive directors named reputation as a crisis vulnerability, but only 39 percent said they had a plan to address it.

Reputation has been called a company’s greatest uninsured asset, and we know from research that up to half of a company’s reputation, and a similar share of its market value, can be attributed directly to the CEO. That may seem encouraging and an endorsement of strong leadership, which is great when the CEO and the company are performing well. But it also highlights just how potentially vulnerable organisations are when things go wrong. In the world of crisis management this is very much a two-edged sword.

Think no further than Tesla boss Elon Musk, once the darling of Wall Street. When he used Twitter in July to suggest one of the Thailand Cave rescuers was a paedophile, his company’s shares fell by $US2 billion. Then just weeks later he told the New York Times the stress of the job was getting to him, and Tesla lost over $US5 billion in market value.

Or consider Facebook, where cumulative reputation and performance issues recently led to a market loss of almost $US120 billion in a single day, the biggest ever one-day drop in a company’s value.

In their memorably titled book “We’re so big and powerful nothing bad can happen to us,” Ian Mitroff and Thierry Pauchant published a worrying catalogue of ‘reasons’ top executives gave for NOT being properly crisis prepared. These included:

  • Excellent, well managed companies don’t have crises
  • It is enough to react to a crisis once it has happened
  • Certain crises only happen to others
  • Crisis management is someone else’s responsibility
  • Each crisis is unique, so it is not possible to prepare for them
  • Most crises turn out to be not very important

It’s blindingly obvious that such statements are simply excuses for inaction. Responsibility for crisis management absolutely belongs in the executive suite and any CEO who thinks crisis warrants only one per cent of their time is seriously endangering the organisation.

Effective crisis prevention and crisis preparedness demands visible management commitment and leadership from the top. If the CEO doesn’t think it’s important, then why would anyone else?

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Is ‘back-flipping’ on an issue really such a bad thing?

When an organisation or individual changes their mind on a public issue it is often derided as a back-flip or flip-flopping or a u-turn or caving in. But sometimes it is just part of the process of reaching the right decision.

Take the case of Australian supermarket giant Coles. The company announced they would phase out lightweight plastic shopping bags in favour of paid heavier-grade bags, then decided to make the replacement bags free on a temporary basis to allow customers to adjust. Then they announced the new bags would be free indefinitely, but quickly changed their mind to make them free only until the end of the month.

Was it messy and unhelpful? Undoubtedly.  But it surely was not, as an article in The New Daily was headlined, “one of the greatest PR bungles in history.”

Compare it, for example, with genuine PR disasters such as United Airlines CEO Oscar Munoz claiming the passenger brutally ejected from one of his aircraft was “disruptive and belligerent.” The incident lost the airline $1 billion in market value. Or British High Street jeweller Gerald Ratner light-heartedly describing his own products as “total crap,” which led to the virtual destruction of the entire business. Or BP Boss Tony Hayward’s infamous plea in the wake of the Gulf of Mexico oil spill that he’d “Like my life back,” which the New York Times described as the “soundbite from hell.”

Regardless of the merits of the plastic bag issue, over-stated media analysis raises the obvious concern whether such hyperbole deserves any place in serious commentary on an important issue of the day. Moreover, it also leads to the more important question: Does such exaggerated characterisation of a reversal inhibit future willingness to pursue proper and appropriate important changes of policy?

As ABC commentator Julia Baird wrote recently: “We need to stop stigmatising public expressions of doubt or error – when they are genuine and not simply opportunistic – and instead welcome them as healthy and human. Have we abandoned the entire concept of evidence-bad persuasion?”

American political editor Jamelle Bouie went even further, arguing that rather than maligning flip-flopping, it should actually be seen as a skill. “The best Presidents can use it to further their goals and take advantage of new opportunities,” he says. “The worst, by contrast, are doctrinaire and rigid – unwilling to move from positions they adopted under different circumstances, and resolute to the point of disaster.”

For examples of ‘change for the better’ look no further than the Australian Government which initially opposed an inquiry into the finance industry, then embraced its capacity to expose wrongdoing. Or Lyndon Johnson, who abandoned his career-long opposition to strong civil rights measures to pass the strongest such measures in history after he became US President.

The key here is to understand the big picture, not just the short-term headline or the cheap media jibes. Because, as Todd Purdom described in Vanity Fair, there are good flip-flops and bad flip-flops, just as there is good and bad cholesterol. What makes all the difference, according to Purdom, is knowing the difference between the two.

But for all that, we continue to call for change and then jeer when it comes. So, should an organisation or individual be able to change their mind on a major public issue without being accused of an opportunistic back-flip? Absolutely … provided it comes after real research, new information, changed circumstances and genuine evaluation of the options. But not, repeat not, if it’s simply a knee-jerk response to some social media criticism – albeit not exactly “one of the greatest PR bungles in history.”

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Health data debacle and the need for trust in communication

It’s no secret that citizens don’t trust governments. Yet that lack of trust has seldom been so manifestly evident as when the Australian Government solemnly promised to safeguard the nation’s most intimate and personal health data.

The public rarely get the chance to exercise their distrust of government – except in the political framework of an election. But that opportunity arose recently with the start of a three-month period for people to opt out of My Health Report, a centralised registry of personal healthcare information designed to improve healthcare through better access to data by primary providers and researchers.

It was also an opportunity for issue and crisis managers to be reminded that effective communication demands a framework of trust, especially when dealing with real or perceived risk.

That was the challenge facing the Australian Digital Health Agency. The privacy and security threats were blindingly obvious from the start, not helped by a worrying catalogue of government data breaches, like when hackers offered Medicare Card details for sale on the dark web last year. As Ellen Broad of the Open Data Institute wrote at the time: “It just got a whole lot harder to trust government with our data.”

More recently, health data was hacked in Singapore, and the Australian Information Commissioner has just reported 59 data breaches in the healthcare sector in the last five months.

Little wonder that on the very first day of the opt-out window, more than 20,000 people got online to register their distrust in the system, despite the platform crashing under the unexpected demand. Moreover, distrust turned into shock when some people attempting to tell the government they did not want a My Health Record found they were among almost six million Australians who already have such a centralised file, most of them completely unaware.

Of course a high level of distrust is not new, is not just a problem for governments, and is not confined to Australia. The 2018 Edelman Trust Barometer – a global survey of 33,000 participants across 28 countries – showed that in Australia the four major institutions – government, business, the media and Not-For-Profits – are all now officially classified as distrusted for the first time since 2013, with some of the lowest numbers in the world.  The survey showed that trust in government at 37% is the lowest of the four categories. Edelman Australia CEO Steve Spurr concluded: “It is deeply worrying that a majority (56%) of Australians believe their government is broken.”

Criticism of the My Health Record project has been widespread – including from legal academics concerned about reliability and security, mental health bodies fearing potential discrimination if patient data leaks, and doctors worried data might be handed to police without a warrant. Soon the Government was forced to announce new protections.

This case is a good demonstration of how community and professional distrust can have a real impact on major public issues. And it also reinforces that trust is an essential prerequisite for effective issue management.

In 2016 the UK Government was forced to scrap a similar scheme to centralise records of all NHS patients because of inadequate safeguards. Dame Fiona Caldicott, Chair of the official inquiry into the failure, reported: “Building public trust for the use of health and care data means giving people confidence that their private information is kept secure and used in their interests. Citizens have a right to know how their data is safeguarded.”

The government then responded that it was vital full consultation and dialogue with the public and professionals takes place to establish that trust before implementation. As the Australian experience shows, the word ‘before‘ may represent the difference between success and failure

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