The Top 10 Crises Of 2014: Part 1
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Holmes Report

The Top 10 Crises Of 2014: Part 1

Our annual crisis PR review kicks off with Facebook, Uber, the NFL, Sony and General Motors.

Paul Holmes

The Top 10 Crises Of 2014: Part 1

Part two of our annual crisis PR review, featuring Malaysia Airlines, Fifa, KFC/McDonald's China, Tesco and Bill Cosby, is here.

1. Facebook

In a year when several companies triggered crises by treating their consumers’ data carelessly, Facebook stood out by conducting what was either a study (the most generous interpretation) or a psychological experiment (the way many observers saw it) on its members, manipulating their emotions without their knowledge or consent.
Russ Williams, senior vice president, crisis and issues management at Cohn & Wolfe, notes that the study went “well beyond the consumer behavioral analysis that is widely recognized as a function of marketing today, questions arose over what power a social network could hold and how that power could be used. If Facebook was able to shift behavior through emotional contagion, could social networks be used to influence elections or matters of public policy?”
Facebook COO Sheryl Sandburg attempted to quell concerns by noting that the research, “was poorly communicated. And for that communication we apologize. We never meant to upset you.” But as Dorothy Crenshaw, CEO of Crenshaw Communications, noted in her crisis blog: “For Facebook, which is now in the crosshairs of the FTC following a complaint filed by a privacy group, the lack of transparency and halfhearted apology probably raise more questions than they answer.”
Williams had a similar reaction: “For many these words rang hollow. There was no apology for the study itself, only for the lack of communication around it.
“Even if the research was conducted with the best of intentions, Facebook should have been more transparent about what it was doing, when it was doing it and how the findings would be used. Further, once the company realized the extent of the concern it created, it should have moved more swiftly to address that concern.”
In fact, it took until October, four months after release of the study, for the company’s chief technology officer to outline new research guidelines, review processes, training programs and reporting protocols. Better late than never. “These actions on the part of Facebook are all positive steps that other companies can learn from,” says Williams.
2. Uber

It is telling that when we mentioned to crisis experts that we would be including Uber in our crisis round-up, several of them asked, “Which crisis?” It was that kind of year for the ride-sharing service, as pointed out by Richard Levick, CEO of the Washington, DC, firm that bears his name: “Price gouging allegations in the wake of Hurricane Sandy. Criticism of an aggressive, misogynistic, take-no-prisoners corporate culture. Proposed legislation seeking to ban its services.”
But the most significant burst of bad publicity came when the company responded to allegations of sexism—a complaint increasingly levied against a host of Silicon Valley companies—and questions about the safety of female users by using a high-profile speech as an opportunity to threaten to dig up dirt on a critical reporter’s private life.
The executive in question may have thought his comments were off the record, but as CyberAlert president and CEO William Comcowich points out, “Nothing is off the record anymore, even if an executive says it is. In the 1960s, reporters covering President Kennedy knew of his womanizing but never wrote about it. Those days are long gone. Journalists play by new rules now. More pointedly, citizen journalists—basically anybody with computer, camera or iPhone—can now report what an executive says or does.”
While the company has had its defenders—brand ambassadors among its drivers and users—Levick believe its “resilience is wearing thin…. Efforts to reframe the debate have largely fallen flat. This may very well be the year when Uber finds that growing pains often evolve into something far more serious when they are not adequately addressed.”
3. National Football League
The NFL is another organization that has dealt with more than its fair share of crises over the past year, with the ongoing story about concussion victims gaining steam and charges of harassment and bullying in the Miami Dolphins locker-room, but by far the biggest story of 2014 involved the league’s spectacular mishandling of the domestic abuse incident involving Baltimore Ravens running back Ray Rice.
The League initially took no action against Rice, and then—when video of the incident surfaced, prompting widespread outrage—reversed itself with a suspension. Critics were appalled by the initial inaction, and also questioned the NFL’s insistence that it had not seen the video before it went public and its “uncharacteristically passive approach” to gathering evidence in the case.
“Today, approximately 45 percent of the National Football League’s fans are female,” says Larry Larsen, senior vice president at Chicago-based Greentarget. “This fact was apparently overlooked in the NFL’s initial responses to the domestic violence charges.” One fundamental lesson, Larsen says, “is to identify and understand your audiences,” an approach that “forces clients to think about the various points of view they must balance [and] compels them to assemble responses that are much more empathetic.
“The NFL’s failure to adequately address the concerns of its entire fan base in the days following the initial charges led to a tremendous public uproar.”
Others worry that the League has been trying to paper over the cracks in its reputation. “You can’t compensate for a culture of violence, often against women, by wearing pink cleats for breast cancer awareness or issuing a handler-written apology long after the fact,” says Carreen Winters, executive vice president and head of corporate reputation management at MWW.
“The issues that have come to light this year are pervasive and deeply rooted, stemming from a belief that the rules simply don’t apply to football players…. It’s time for the NFL to stop talking about reviews, commissions and other consultant-speak and start holding franchises and players accountable for their actions, beginning with a league-wide code of conduct.”
4. Sony Pictures Entertainment
In November of last year, Sony Pictures Entertainment became the victim of a cyberattack, resulting in leaked emails and the electronic release of several upcoming films. Ultimately, the hack was linked to the government of North Korea, angered by an upcoming movie, The Interview, which used the assassination of that country’s leader as a major plot point.
Criticisms of lax security notwithstanding, Sony could have been portrayed as the victim of this crisis—but the way the company handled things guaranteed a less sympathetic coverage.
First, it took more than a week for the company to issue what what Re/code called its first "substantive comments" on the situation, in which it simply described the attack as "unprecedented in nature." As the seriousness of the leak became apparent—largely through leaked emails in which senior executives were seen to be insulting some of Hollywood’s biggest stars—the company’s response remained subdued.
Sony then fired its senior communications executive, apparently in response to the suggestion of co-chairman Amy Pascal’s husband, and employed attorney David Boies, who attracted even more media scorn by threatening reporters who wrote about the leaks.
And finally, amid safety concerns, the studio drew the ire of President Obama for cancelling the release of The Interview, and then insisted that "we have not caved, we have not given in, we have persevered, we will not back down," before releasing the movie on various digital platforms.
While the general public looked on with bemusement, crisis expert Jonathan Bernstein insisted that the real damage was to the company’s relationships with its key stakeholders: “They need to listen to the people most impacted by their statements,” he told the International Business Times. “They don’t need to focus on public opinion but what the effect on their stakeholders was. Based on the answers they get, they then need to proceed with humility and discretion.”
Individualized, private letters to the people insulted would be a good place to start, Bernstein suggested.
Meanwhile, crisis communications specialist Commcore suggested several guidelines for crisis protection, most of which—it noted—were “common sense”:
- Consider using private web-mail addresses instead of addresses on server-based corporate networks to send and receive ultra-sensitive e-mails.
- If the content is that sensitive, make a phone call or walk down the hall and talk about it face-to-face instead.
- Don't make email off-color jokes or controversial comments that can come back to haunt you or your organization.
5. General Motors
New General Motors chief executive Mary Barra underwent the ultimate baptism by fire when—just a few weeks into her tenure—the company was forced to recall 1.6 million small cars to fix faulty ignition switches linked to multiple fatal crashes.
The company’s initial response to the crisis—including Barra’s somewhat shaky testimony before Congress and the decision to replace its chief communications officer—was unimpressive, but as the new communications team (consisting of automotive industry veterans Tony Cervone and Steve Harris) took the helm and Barra began to find her feet, the company began to regain lost ground.
“In today’s world, the public expects that a corporation will acknowledge a mistake, seek a solution, and apologize for it,” said David Johnson of Georgia public relations firm Strategic Vision. “Barra did that.  She called reporters to General Motors’ headquarters and addressed the issue.  She pledged to fix faulty ignition switches…. She also apologized. This was a marked departure from the way auto makers traditionally handle recall crises.”
The evidence suggested that Barra’s leadership—aided by the fact that the internal failings that led to the crisis occurred long before her tenure began—helped the company’s protect its reputation and avoid any significant decline in sales.
“When your company is built on the promise of keeping people safe, a purposeful decision to knowingly put costs savings ahead of customer safety should spell reputation disaster,” says MWW’s Winters. “But this case is also a great example of the power of leadership and the use of executive communications for reputation recovery.
“CEO Mary Barra stepped in with a strategy of transparency and accountability that has created a new standard of leadership, not to mention establishing her credibility as a new CEO.  By treating the victims fairly, holding her own people accountable—and letting a few go along the way—and making significant internal policy changes, she made it clear that the company founded on providing safe vehicles for everyday people still has its priorities straight.”

Part two of our annual crisis PR review, featuring Malaysia Airlines, Fifa, KFC/McDonald's China, Tesco and Bill Cosby, is here.

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