Was it OK to help Facebook smear its critics?

The world has just watched Facebook plunge into yet another reputational crisis – this time denying and then admitting it hired a PR company to smear its critics. But was the campaign itself fundamentally flawed?

According to a New York Times investigation, Facebook commissioned Republican-aligned PR company Definers to smear billionaire George Soros, who has been a very outspoken critic of Facebook and Google. They also reportedly generated scores of stories and posts critical of tech rivals Google and Apple.

Facebook founder Mark Zuckerberg denied any knowledge of the campaign and sacked the PR company the day after the New York Times report. COO Sheryl Sandberg also tried to walk away from the debacle, but later admitted she had forgotten that material about Definers had “crossed her desk.”

Then outgoing Facebook Head of Policy and Communication Eliott Schrager threw himself under the bus and took responsibility for the company’s action. “I knew of and approved the decision to hire Definers and similar firms. I’m sorry I let you all down. I regret my own failure here . . . Mark and Sheryl relied on me to manage this without controversy.”

Without controversy? Some hope, given the company’s previous scandals.  In the wake of incidents like the massive Cambridge Analytica data privacy breach and Facebook’s failure to manage Russian use of the platform to interfere in elections, the news media response was swift and savage.

  • “Delay, deny and deflect: How Facebook’s leaders fought through crisis” (New York Times)
  • “Facebook comms head admits hiring PR agencies to discredit critics as horror year continues” (Mumbrella)
  • “Heads ought to roll at Facebook over the Soros smear – starting with Zuck’s” (Business Insider)

Yet, while Facebook is an easy target for just about everything that’s wrong with social media, what about the PR company which so enthusiastically implemented the strategy?

For its part, Washington DC-based Definers Public Affairs said they were proud of their partnership with Facebook and that: “All of our work is based in public available documents and information.” Which may be true, but is pushing negative stories about other tech companies and about Facebook’s critics legitimate issue management? And does it help the reputation of the public relations?

Bear in mind that all of this comes just over a year after one of the biggest scandals to rock the PR industry. In September 2017 the major British outfit Bell Pottinger was expelled from the Public Relations and Communications Association (PRCA) after being found to have breached the industry’s ethical standards over a campaign to stoke racial tension in South Africa. Bell Pottinger suffered eight million pounds worth of client losses within 48 hours and soon collapsed into bankruptcy.

Although the usual consequence of an ethical breach is seldom so brutal, the reality is that the Facebook smear story is not just about a tech company under intense pressure. It’s also about what is acceptable behaviour by communicators. The PRSA Code of Ethics says: “A member shall preserve the integrity of the process of communication.” The IABC Code starts by saying: “I am honest – my actions bring respect for and trust in the communications profession” and the PRIA Code says: “Members shall avoid conduct or practices likely to bring discredit upon themselves, the Institute, their employers or clients.”

The lesson here is that while critics may say industry codes of practice can be toothless, they are a pretty good basis for how issue and crisis professionals should behave.

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Why Business Continuity is not the same as Crisis Management

Any organization which imagines that a business continuity plan makes them ‘crisis prepared’ is due for a big and costly surprise.

Because business continuity is just one element of strategic crisis management, and failure to recognise this reality can leave you dangerously vulnerable to operational and reputational risk.

Part of the problem is confusion over terms – business continuity planning, crisis management, business recovery, incident management, emergency response, risk management, crisis prevention, crisis preparedness. The list goes on. But the risk to organizations is not just definitional. The real danger is putting a business continuity plan in place and then starting to relax – imagining that your organization is ready to face a crisis.

While arguing about definitions can be unhelpful and unproductive, recent social media debate on this topic exposed just how mistaken some communications professionals can be. No. Crisis management is not “part of business continuity management.”  No. Crisis management is not “the mode that strategic managers must enter when protective processes fail for whatever reason.” And no, crisis management is most definitely not just “how to respond to the crisis after it has happened.”

Crisis Management is a strategic management process which begins long before the triggering event and continues after the triggering event has been brought under control.  It embraces

  • Identifying and proactively managing potential crisis issues before they happen
  • Getting ready for when a crisis does occur
  • Responding effectively to the event
  • Restoring business as usual
  • Responding to the highly damaging risks which often arise when the dust has settled (sometimes called the crisis after the crisis) and finally,
  • Learning from what happened and incorporating it into future planning.

    As Singapore-based crisis consultant Kim Yang Lim has commented: “The Business Continuity Management, Risk Management and Crisis Management functions require different approaches and have different objectives. To use BCM or RM or CM as an umbrella term is misleading to company managers, who may then perceive the three functions as interchangeable and, consequently, may cherry pick what capabilities to develop and so omit an important part of preparedness. All three functions are essential but they are all different and require different skill sets.”

It’s this focus on roles and responsibilities which is critical. Business continuity is often perceived as a largely tactical or operational role to help restore ‘business as usual’ as quickly as possible, and that it’s done by logistics and technical people deep down inside the organisation. Even worse, business continuity is sometimes positioned as synonymous with recovering from IT failure. Indeed, some experts have introduced the term Technology Continuity Management (TCM) to reinforce that it is a technical responsibility.

But effective business continuity planning should address much more than just IT and other technical disasters. More importantly, crisis management should be recognised as both a tactical and a strategic responsibility which extends far beyond just business continuity and must be fully integrated into the highest ranks at a strategic level.

Without top executive commitment to Crisis Proofing, organizations will continue to be unprepared, and crises will continue to destroy organizations and reputations.

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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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