The Holmes Report Blog

Did APCO Really Fire Mark Hurd?

Sun, 15 Aug 2010 10:37:00 -0400

I have no way of knowing whether The New York Times' story about the role played by public relations firm APCO Worldwide in the dismissal of Hewlett Packard chief executive Mark Hurd is accurate. But it does raise a number of interesting questions about high-stakes crisis and issues management that are worth exploring. First let me say that the Times' narrative---which makes it sound as though APCO's predictions of a media firestorm if Hurd remained led directly to his ouster---seems to be, at the very least, overly simplistic. It would be nice to live in a world in which the lawyers and the finance guys and the board of directors were all cowed into submission by the mock-up of a news report criticizing the company for sticking with its CEO in the wake of charges concerning sexual harassment and falsified expense reports. But the reality is that few PR people--even at APCO--wield that kind of influence. (For what it's worth, the Times later amended its story to say that APCO had not advised the company to fire Hurd, just to be open and transparent about the reasons for the firing.) In any event, the analysis that accompanied the narrative was certainly simplistic. The authors, Ashlee Vance and Matt Richtel, point out that "even after following the specialist's advice, the company has not escaped criticism" and that "But in ousting Mr. Hurd, the directors set off a media scrutiny they had hoped to avoid." It seems to me inconceivable that anyone at APCO--even the receptionist--would have counseled HP that if the company chose to dismiss Hurd it would "escape criticism" or avoid "media scrutiny." If you fire a CEO, particularly a high-profile CEO like Hurd, someone is going to notice and someone is going to question whether the decision was correct. In circumstances such as these, good public relations people have to balance the negative impact of firing a CEO (in this case, quite intense but likely short-term) with the negative impact of sticking with him (perhaps less intense, but enduring and distracting the company over a longer period of time). Great public relations people, on the other hand, will focus on the company's values, and recommend that the decision be based on fundamental principles that are important to HP. One of those principlesis "trust and respect for individuals" ("We work together to create a culture of inclusion built on trust, respect and dignity for all," says the company). Another is "uncompromising integrity." In an explanation of its decision, the company said it was enforcing the same code of ethics it would apply to any employee. At this point, it's important to remember that in an age of radical transparency, the charges against Hurd would have become public knowledge eventually. It's hard to imagine how HP could have done other than it did and maintained any credibility.

Another Reason to Forget Reach and Frequency, Focus on Engagement

Mon, 09 Aug 2010 07:13:00 -0400

Peppercom's Sam Ford has an excellent blog post at Fast Company about marketers who disrespect their audience by bombarding them with commercial messages, who "barrage the audience at every moment, not to make the brand available for them to come to but to get in their face." Ford says this kind of approach is driven by an over-emphasis on measurement, and asks: "Hounding one's audience might increase sales, but to what degree might it also increase deterrence among those who don't buy?" I'd make the case that this is one more piece of evidence to support the case that too many marketers are measuring the wrong thing. The emphasis on reach and frequency--metrics designed by the ad industry for the benefit of the ad industry--needs to end. The focus needs to shift to engagement, and in particular the ability to create brand advocates. I suspect a shift to this kind of measurement would find that the kind of activity Ford describes may buy companies a few extra consumers, but that it creates hardly any advocates and a whole slew of detractors--people so irritated by the barrage he describes that they become actively hostile.

Shoddy, Unsubstantiated Allegations of "Reputation Laundering"

Mon, 09 Aug 2010 07:12:00 -0400

London, according to The Guardian, has become the capital of "reputation laundering." That's a catchy new term, one I suspect we are going to hear more of, even though there's no attempt in this article to define precisely what it means. In fact, the piece is a pretty shoddy piece of work. The author claims that "the capital's public relations firms are earning millions of pounds a year promoting foreign regimes with some of the world's worst human rights records," including Saudi Arabia, Rwanda, Kazakhstan and Sri Lanka, but there's no evidence to support the claim that this makes London the world capital of such work--there's no attempt to compare the volume of such work in the U.K. to the amount in Washington, D.C., for example. More significantly, of course, there's no analysis of the kind of work these firms are doing for the regimes involved. Much is made of a PRCA code of conduct that says "political consultants must advise clients where their activities may be illegal, unethical or contrary to professional practice, and to refuse to act for a client in pursuance of any such activity." The author warns that "some of the lucrative deals may breach" the code, but presents no evidence that they do. At the risk of being tediously repetitive on this point: ethical public relations depends on the honesty and integrity of the work done, not the individual--or company, or regime--on whose behalf it is conducted. Neil Gibbons, editor of communicate magazine, makes the case in a response to the original article, in which he points out that "good reputation management can lead to change. On Monday, Rwanda is holding presidential elections for the first time in 16 years: a modernizing step that has been propelled by the return of foreign interests." Sounds like they got some good PR advice.

Quick Hits

Mon, 09 Aug 2010 07:11:00 -0400

The FDA continues its Quixotic campaign to ensure that consumers are denied access to information about pharmaceutical products. This time, it's Novartis in trouble for encouraging consumers to share information with each other.

The latest column by Wall Street Journal "Numbers Guy" Carl Bialik looks at some interesting efforts to track corporate reputations online.

Coast Guard Admiral Thad Allen gives BP high marks for its technical response to the Gulf oil spill, but is less impressed with the company's public relations efforts: ""It's something they don't naturally have as a capacity or a competency in their company, and it's been very, very hard for them to understand."

A survey reported in The Moscow Times finds that "Russians think that public relations jobs are prestigious and profitable, but immoral, and do not want their own children to take up the line of work."

Smart CEOs Should Be Begging for Stricter Regulations

Mon, 26 Jul 2010 11:03:00 -0400

John Gilfeather knows more about corporate reputation than most, having spent a lifetime in the reputation research business, so when he says "I have never seen this level of vitriol aimed at larger corporations" it's time for corporate communicators to pay attention. Gilfeather's latest survey of corporate reputation turns up the finding that most Americans now think most corporations are "idiots"--a catch-all term they use to describe a pattern of behavior that combines arrogance, greed and secrecy. Meanwhile, another recent survey by economists at the University of Chicago and Northwestern University found that just 26 percent of Americans say they trust the American financial system, and 45 percent think the stock market will drop by 30 percent or more in the next 12 months. When trust is so low, there are real consequences for financial companies, and the Chicago survey provides plenty of guidance about what needs to be done to restore confidence: 59 percent of respondents want stronger regulation of the financial sector. And yet most companies continue to lobby intensely against stronger regulation. Most on Wall Street seem to consider the toothless regulatory package approved by Congress two weeks ago too much. One CEO complained of "an increasingly hostile environment for investment and job creation" and lambasted an administration that is "reaching into every sector of American life" and "making it harder to raise capital and create new businesses." A New York Times op-ed by investment banker and Clinton administration veteran Roger Altman makes the case that President Obama has a pretty good record when it comes to business (while arguing that the administration could do more). But the reality is that most of the wounds that have caused American business to hemorrhage trust are entirely self-inflicted. And if smart CEOs want to heal those wounds, rather than pass the buck, they should be begging for even stricter government oversight.

Even in the Digital Age, Speed Is Not Everything

Mon, 26 Jul 2010 10:45:00 -0400

It is, of course, conventional wisdom that in the digital age, it's even more important to move quickly when crisis strikes. But I'd suggest that the opposite is true: because things move so fast, it's important for organizations to make sure they are not being stampeded into hasty but ill-conceived decisions based on transient events. A perfect example occurred last week, when a video surfaced at a conservative website purporting to show Department of Agriculture official Shirley Sherrod confessing that she gave preferential treatment to black farmers. Agriculture Secretary Tom Vilsack, apparently under pressure from a hypersensitive White House, responded quickly and forced Sherrod to resign. The next day, White House deputy chief of staff Jim Messina reportedly praised the decision, telling colleagues: "We could have waited all day, we could have had a media circus--but we took decisive action, and it's a good example of how to respond in this atmosphere." Or it would have been, had the video not been exposed as a total distortion of what Sherrod actually said. By the end of the week, the White House and the Department of Agriculture were furiously back-pedaling, but the damage had been done: by panicking as it did, the administration was made to look craven and weak. Sometimes it's worth weathering an initial storm of criticism--however uncomfortable it may be for a few hours or even a few days--rather than to blunder badly because you couldn't wait for all the facts.

Quick Hits

Mon, 26 Jul 2010 10:44:00 -0400

Attempting to explain the disappointing results at Goldman Sachs during the second quarter, chief financial officer David Viniar made the extraordinary assertion that the company's performance is "not driven by management", but by customers and blamed "very, very largely reduced client activity" for the 83 percent fall in the bank's profits. If he's right, and management doesn't drive the company's performance, can we look forward to an explanation of why members of the management team are earning seven or eight figures? Don't hold your breath.

A brilliant FT feature looks at the response for current and former BP employees to the company's shattered reputation and says its interviews "reveal a company where many are fearful about jobs and savings, dismayed at their employer's part in another terrible accident, and furious at management's handling of the crisis." Says one interviewee: "The question [employees] are asking is: am I working for the company I thought I was working for, with the right values?" That's pretty much what the rest of us are asking too, and it seems as though BP has not provided the answers internally any better than it has externally.

I'm not sure I agree with the British government's austerity policy--at a time when the economy still seems to need stimulating--but I understand it. What I don't understand is the urge to cut health education initiatives like this one encouraging kids to drink more milk. It might save a few thousand pounds now, but it's the kind of campaign that pays for itself in the long term, because it results in healthier kids. Shutting it down looks like an ostentatious "we're-cutting-back" gesture rather than a well thought-out policy.

A Washington Post article makes the case that "a veritable deluge of crises since 2008 has shown that crisis PR is no longer up to the job," and concludes: "The lesson now for companies that screw up is that you really have no chance: The currents are against you from the get-go. The courts of Twitter and online video sites, along with Facebook groups that deplore the transgressions, will overwhelm even the most elaborate crisis battle plan." It's nonsense, of course: the principles of good crisis PR haven't changed: it's just that bad crisis PR is discovered much more swiftly and punished much more severely.

Automotive World has an interesting interview with Mary Henige, who directs social and digital communications for General Motors. "The social web is hungry for content. If we are excellent content providers, then we are adding value for our consumers."

When Political Reporting Ignores Policy

Mon, 19 Jul 2010 12:02:00 -0400

Clive Crook, who blogs for The Atlantic and writes a column for The Financial Times is one of the most intelligent--and least partisan--observers of the American political scene. Which makes his latest FT column an even bigger disappointment. Under the headline "Obama Has Angered the Centre and the Left," Crooks demonstrates just what is wrong with so much of political journalism, viewing every policy decision through the prism of what it means in electoral terms. Politicians themselves can be forgiven for seeing politics primarily as a horse race; surely it is the job of responsible journalists to remind them that what really matters is whether the policies they enact are effective and how they impact the lives of real people. Crook argues that "If Mr Obama had followed the advice of the party's progressive wing, he would have killed his administration's electoral prospects--and his own hopes of a second term--stone dead." He doesn't actually spell out why he believes that statement to be true, but reading the rest of the column the logical conclusion is that Crook believes embracing the policies of the left would have further alienated "centrist" Americans. After all, the president has compromised with moderates in his own and the opposition party and still been branded a "socialist" by the far right. But as Crook himself acknowledges, the dismal prospects of the Democrats in this year's mid-term elections are largely the result of a lousy economy. And his column doesn't begin to address the economic implications of Obama's decision to reject the policies of the left. That's unfortunate, because it leads Crook to ignore the fact that the kind of stimulus package urged by left-leaning Democrats--economist and New York Times columnist Paul Krugman is the most visible proponent of such policies--would almost certainly have resulted in a much more robust economic recovery than the one we are seeing right now. It was an approach focused on creating jobs rather than appeasing big business or addressing exaggerated concern over future deficits. The weak stimulus package that the Obama administation enacted worked, but only weakly. The jobs it created barely made up for the jobs being shed by state governments and the private sector. A strong stimulus package would almost certainly have worked better, on policy terms at least, since it would have put more Americans back to work more quickly. Regardless of what it did to Mr. Obama's election chances, it would have been a better policy. But what about those election chances: does Clive Crook really believe that the Democrats' prospects would be worse if unemployment today stood at 7 or 8 percent today rather than 10 percent?

Steve Jobs Should NOT Have a Blog

Mon, 19 Jul 2010 04:33:00 -0400

At the Online Social Media blog, Debbie Turner makes an argument I have also heard from several public relations experts, that "Steve Jobs Should Blog." No, he shouldn't. In fact, if there's one American chief executive whose PR people should keep him far away from social media, it's Jobs. Turner herself acknowledges that "Jobs can appear somewhat aloof" and that "the problem with the way Jobs handled the situation is that it looked as though Apple didn't actually care about customers complaints." Slate's Farhood Manjoo makes the case in more detail in a column about the Apple press conference at which Jobs managed to neither acknowledge nor apologize for the reception problems experienced by some iPhone 4 users: "I just wish Jobs could have handled this mini-crisis in a classier way. He could have admitted a problem, offered a fix.... Instead, he sounded wounded and paranoid, as if we were all being ungrateful for not recognizing Apple's contributions to the world." Look, you only need to study Apple's advertising ("I'm a Mac...") to understand that the company's dominant personality trait is contempt for others. Contempt for PC users defines the company's branding; contempt for its own customers--as soon as they demonstrate any independent critical thinking about the products the company sells--came through in this week's press conference. Give Jobs his own blog, and that contempt would permeate every post. Sooner or later, even the company's most ardent fans would get the hint.

Number One Rule of CSR: "Do No Harm"

Tue, 13 Jul 2010 14:13:00 -0400

In an otherwise intelligent analysis of social responsibility--he points out that business leaders have almost unanimously rejected the Freidmanesque view and says the new emphasis on sustainability has the potential to "produce the happy marriage between profitability and a clearer conscience that champions of corporate responsibility have long sought"--FT columnist Michael Skapinker makes one bizarre observation. Toward the end of his column, he argues that "companies committed both to traditional corporate responsibility and sustainability can still fail." I don't deny that its possible for such companies to fail; anything is possible. The bizarre part is that Skapinker tries to justify his assertion by pointing to Enron and BP. Enron, he points out "was a benefactor to its home city of Houston," while BP "promised a sustainable future beyond carbon." It requires a pretty narrow definition of corporate responsibility to apply the term to a company that made a few charitable donations while committing fraud on a massive scale, and a pretty superficial definition of sustainability to a company that promised investment in renewables while lobbying against environmental regulation and systematically failing to adhere to any limited regulations that remained in place. Neither Enron nor BP provides any evidence that a genuine commitment to responsibility or sustainability carries any risk. Rather, they demonstrate that business observers and reporters are easily fooled by superficial commitments unmatched by any genuine change in behavior, and that such cosmetic approaches to CSR are almost always doomed to failure. (And further, that a company that overstates its record in this area will be more severely punished than a company that makes more modest claims.) The most significant guiding principle of CSR should be the same as the guiding principle of medicine: "First, do no harm." Neither Enron nor BP seemed to understand this.

A Question of Personal Principle, Not Industry Ethics

Mon, 12 Jul 2010 07:23:00 -0400

In this week's newsletter, Arun Sudhaman reports on the controversy over Washington, D.C.-based Fenton Communications--known for its representation of liberal causes--going to work for a Qatari group that is trying to turn public opinion against the Israeli blockade of Gaza. Fenton has come under fire from former Counselor's Academy chair Bruce Rubin, who believes its decision to work for a group that "portrays the U.S. or any of its close allies as an enemy." We'll get to the specifics of this case in a second, but first it's important to look at the general principle here, since it comes up fairly frequently in our business. Lawyers justify their work for unpopular causes, companies and individuals by pointing out that everyone is entitled to legal representation. As Rubin rightly points out, there is no similar entitlement to public relations counsel. PR people are under no professional obligation to represent causes they find abhorrent. But they are entitled to work for any cause, company or individual they choose. This seems to me to be a matter of personal conscience.) The sole exception, I believe, would be when the State Department or some equivalent, raised an official objection--and even then I would argue that if a PR person believes a cause is just, he or she should be prepared to challenge the State Department view. As I may have mentioned before, I am pretty much a First Amendment fundamentalist. There are few if any issues that do not benefit from a full and frank discussion and robust public debate. If PR people believe anything, they should believe that. It's the core principle of the profession. Furthermore, I believe the core ethical issues of our profession are defined by what we do, not who we do it for. It is quite possible to do ethical public relations for clients whose ethics are questionable. Rubin, for example, asks whether it would be right to do PR for a "Charles Manson-type mass murderer." It seems to me that if this Manson type wished to apologize sincerely to victims, make some kind of restitution, or educate others to seek mental help when they start hearing voices, then a PR person would be well within his or her rights to take the account. Similarly, it is quite possible to do unethical PR for a client with the noblest motives. Lying is wrong, whether it is done on behalf of a giant oil company or an environmental group. In the case of this Qatari group, there is no allegation that Fenton has done or said anything dishonest. Indeed, the issue in question seems to me to be an almost classical example of one on which reasonable people can disagree. The United Nations, for example, has called for an end to the Gaza blockade. Would working for the UN be "unethical"? It's important to differentiate between attacks on the U.S., or one of its allies; and attacks on a specific policy of the U.S. and its allies. Companies hire PR firms to attack government policies (environmental regulation, trade policy and more) all the time. If a group wanted to hire a PR firm to oppose the invasion of Iraq or the war in Afghanistan, it should be entitled to do so, and any PR person who agrees with that view should feel free to offer professional counsel to such a group. Bruce Rubin has a right to criticize anyone who advocates a position with which he disagrees. And Fenton Communications has just as much right to argue a cause it believes to be a just one, to try to stimulate and influence public debate around that cause. That's what public relations does, and should continue to do.

Public Affairs People Can Improve Transparency

Mon, 12 Jul 2010 06:56:00 -0400

The media's predictable objections notwithstanding, I don't see anything egregiously wrong with the new Department of Defense guidelines for interaction with the press, issued in the wake of the series of massive indiscretions on the part of General Stanley McChrystal and his staff that led to an extremely unflattering Rolling Stone article and the General's subsequent dismissal from his role at the U.S. commander in Afghanistan. Reporters expressed discomfort with Defense Secretary Robert Gates insistence that the Pentagon's public affairs unit be notified "prior to any interviews or any other means of media and public engagement with possible national or international implications." At a press conference after Gates' memo was made public, reporters made the case that almost every story they worked on had "national or international implications" and suggested that the new guidelines contradicted the Obama administration's pledge to be more transparent than its predecessors. There is no reason why the involvement of Defense Department public affairs professionals should mean less transparency. In fact, there is no reason it should not mean greater transparency. Talking to those who have experience working with the military, the general feeling seems to be that PR people are more often advocating for better communication. Of course, that advocacy stops short of the kind of colorful, entertaining indiscretion that McChrystal's staff engaged in, the kind of indiscretion that destroys careers and drives magazine sales. But Pentagon spokesman Geoff Morrell told reporters: "The bottom line is if we do this properly you will hardly notice the impact." And Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, makes it clear that the military brass understands the importance of good media relations: ""We need to tell our story. It needs to be done well. It needs to be told smartly. We need to learn the right lessons, not the wrong ones." The new policy--if it is implemented responsibly and with common sense--seems like an entirely reasonable response to a public relations faux pas.

Bias and "the Appearance of Bias"

Mon, 12 Jul 2010 06:26:00 -0400

Still wondering why the mainstream media are having difficulty adapting to the social media world? Check out a thoroughly confused column from the Washington Post ombudsman Andrew Alexander, in the wake of the Post's precipitous decision to fire a columnist because his political views became known. On the one hand, Alexander says, the solution to any confusion about reporters who also write opinion pieces, or write opinionated blogs is to be "completely transparent about what people do . . . and completely transparent about where people stand." On the other hand, those in traditional reporting positions should remain "nonpartisan, unbiased and free from slant in their presentation in the paper and in any other public forum. There should be no appearance of conflict." Am I the only one who thinks that those two statements are contradictory? In the first, Alexander is advocating complete transparency, a principle I support (though I'm not sure how practice complete transparency is. In the second, however, he is arguing for complete opacity: under no circumstances should readers know the political views of people in "traditional reporting positions." Unless those people have no political views--something that's virtually inconceivable--that surely requires hiding those views from readers? Surely any attempt to eliminate the "appearance of conflict" must necessarily involve either concealing the real views of reporters or pretending they don't have any? That's the very opposite of transparency. Perhaps it's time for the Post and other mainstream media outlets to start treating readers like adults--rather than patronizing them, as the headline to this column does--and to acknowledge that reporters have political views just like everyone else. Preventing a reporter from attending an environmental rally, for example, doesn't make that reporter any less committed to the cause of environmentalism; it merely obfuscates the truth. Let's be transparent about that--and then judge the quality of a reporter's work on its merits, rather than on how well he or she conceals his true beliefs.

PR Needs Its Own Cannes

Mon, 05 Jul 2010 02:03:00 -0400

I mentioned last week that I was surprised that so many public relations people were enthusiastic about participating in the annual ad industry awards event at Cannes. For one thing, the event is opening itself up to PR people (not coincidentally) at a time when advertising is losing its central role in the marketing mix; for another, it is unlikely, because of its focus on marketing, ever to represent the breadth of what public relations people can bring to the corporate realm. It would disingenuous, however, to ignore the one very obvious benefit of attending the event: the ability to mix and mingle with marketing thought leaders who represent--and help choose PR firms for--some of the most significant global brands. (Of course that benefit does not extend to the awards competition; Cannes does not allow clients to serve on the awards jury.) But if PR people want a global forum at which they can mingle with clients, perhaps it's time to consider whether it might not be better to create their own than to piggyback on an existing event, the focus of which is far from conducive to the particular strengths of this industry. The time--with social media creating a larger and more central role for the PR discipline--could hardly be more propitious. With its focus on advertising--and on creativity, as defined by advertising people, it is unlikely that Cannes will ever focus on the topics that are of most pressing concern to public relations people (and ought to be equally high on the agenda of marketing folks). Among them, off the top of my head:
" The growing convergence of brand marketing and corporate reputation;
" The need to harness employees as brand ambassadors;
" The need to protect brands from and during crisis;
" The use of social media to build consumer relationships rather than as another communication channel;
" The need to develop new metrics that emphasize engagement and advocacy over reach and frequency; In other words, it's not difficult to imagine an agenda that addresses the most significant issues facing the PR and marketing communities, and would attract the most important corporate communications professionals as well as brand marketers. The question is whether the PR industry has the confidence--at this time of unprecedented opportunity--to create such an event, or whether it will continue to ride the coat-tails of an ever-weaker ad industry. The large agencies--they are the ones with the money and the motivation to make something like this happen, partnering with groups like the Arthur W. Page Society and the European Association of Communications Directors--need to ask themselves two questions: "If not us, who? If not now, when?"

On the Importance of Empathy

Mon, 28 Jun 2010 10:42:00 -0400

Peter Sandman has another indispensable column at his website, this one focused on the importance of empathy, particularly in times of crisis--and the obstacles to achieving it. The article is particularly apropos as we watch the senior leadership at BP struggle to engage with the victims of the Gulf Oil spill, but anyone who has worked with senior management during a crisis will recognize the barriers to empathic communication: managers who believe their success is proof that they know how to empathize; the belief that being right is more important than being empathic; the reluctance to empathize with people who are critical of the organization, often is less than circumspect terms. But his most interesting point, I think, concerns the way in which executives' egos can get in the way of sensible strategy. "I think the main thing wrong with corporate capitalism is insufficient preoccupation with profit," he says, somewhat counter-intuitively. But his explanation certainly resonates with me: "Faced with a choice between a path forward that nurtures profit at the expense of self-esteem versus a path forward that nurtures self-esteem at the expense of profit, most corporate managers at every level choose self-esteem, and then make up stories to convince themselves they're focusing on the bottom line." I think there's a pretty compelling case to be made that one of the most important roles a public relations advisor can play is persuading the CEO to subjugate his ego to the good of the company, to impose empathy on the company's communications even when (especially when) no one else is feeling particularly empathic.