Paul Holmes 17 Apr 2001 // 11:00PM GMT
There’s considerable disagreement among public relations professionals about whether Morgan Stanley Dean Witter was smart to invite former President Bill Clinton to speak at an investment conference in Florida earlier this month, but there is near unanimity that the financial services company made a major mistake when its chief executive apologized for the invitation after the fact.
Critics said Morgan Stanley appeared “wishy-washy,” “unprincipled,” and “ill-mannered” after chairman Philip Purcell e-mailed clients to say the firm had “clearly made a mistake” by inviting Clinton to speak at the conference in Florida. According to Jan van Meter, president of the eastern operations of international public relations agency Fleishman-Hillard, “The whole thing smacks of corporate panic.”
Harris Diamond, a political veteran president of BSMG Worldwide, agreed. “I thought it was a huge error. It raised as many questions as it answered. Basically, Morgan Stanley invited him to the table, got what it wanted from him, and then dissed him after he had left. It was ill-mannered, at the very least.”
Says another Washington insider, who asked not to be identified, “This whole incident tells you more about Morgan Stanley’s lack of character than it does about President Clinton’s.”
It seems clear that the company’s decision had nothing to do with his performance as a speaker. According to Don Walker, a spokesman for the Harry Walker Agency, which arranged the appearance, company officials “were absolutely thrilled with the event. They said President Clinton was by far the best speaker they have ever had.”
The company’s critics suggest that with its abrupt and very public about face, it broke two of the cardinal rules of reputation management.
The first of those rules is that it is better to head confidently and resolutely in any direction than to appear to be without a compass. Some experts drew a parallel between Morgan Stanley’s actions in this case and the flip-flop executed by Dayton Hudson in the late 80s, when it found itself at the center of a maelstrom over donations to Planned Parenthood. First the retail giant withdrew its support for the group, raising the ire of the pro-choice faction; then it reinstated its grant, inspiring similar wrath among anti-abortion activists—while moderates came away with the impression the company didn’t know what it believed in.
“The impression they created was that they didn’t have any core values, that they could be intimidated by an angry minority of their customers,” says Bob Sommer, head of the public affairs practice at The MWW Group. “It’s a dangerous precedent. The next time they invite George W. Bush, what will they do if some of their customers who are Democrats call up to complain? Will they have the courage to stand up to them?”
The second rule is that companies cannot allow a small, vocal minority of extremists to dictate corporate policy. Again, there are parallels, with critics pointing to a decision more than a decade ago by McDonald’s to abandon its polystyrene “clam shells” in the face of protests by environment groups and school children—even though the best scientific evidence suggested the clam shells were actually better for the environment than any of the available alternatives.
“I understand what they did but I don’t think there was any need to do it from a public relations standpoint,” says one Washington public affairs expert. “The question is whether you are more responsive to 100 very vocal people or to 50,000 people who say nothing. If you respond to a vocal minority, it creates the impression you’re just blowing in the wind.”
A survey conducted by Gallup a few days after the Clinton speech found that 50 percent of Americans believed other presidents “have done similar or worse things when leaving office.” Almost the same number (47 percent) felt that the criticism of Clinton was mainly a product of “his enemies trying to get him one more time.”
Even Morgan Stanley’s public relations chief Ray O’Rourke indicated that the volume of protest calls had been miniscule, telling The New York Times that the firm had received “dozens of complaints from clients,” some of whom threatened to take their business elsewhere. (The Wall Street Journal later reported that complaints were in the hundreds, but did not cite a source.)
O’Rourke did not respond to calls and e-mails from this newsletter about the decision to repudiate the former president’s speech, and it is not known how many complaints the firm received as a result of its about face.
It became clear that President Clinton’s appearance would be controversial soon after he left the White House, as the furor over the presidential pardons began to build, and prior to the speech, Morgan Stanley’s brokers were provided with a set of “talking points” for use if customers complained. If a customer asked whether Clinton was attending the conference, the answer was yes. If customers complained, the broker was to thank them for their input and promise to tell management. If customers threatened to pull their assets, the broker was to advise them “not to make emotional decisions on your finances based on this event.”
Clinton gave his speech on February 5, and Purcell’s e-mail to clients came on February 9. In it, the chairman said the decision to invite the former president was “clearly a mistake” and that the firm understood the customer complaints in light of “Clinton’s personal behavior as president.” He claimed that the decision did not receive the proper review within the firm.
“We should have thought twice before the speaking invitation was extended,” Purcell said. “Our failure to do so was particularly unfortunate in light of Mr. Clinton’s actions in leaving the White House.”
The e-mail drew scorn from crisis management experts. “The problems should have been anticipated easily,” says van Meter. “If they were, then no apology should have been issued. If they weren’t, the CEO should take the hit since he cannot claim he was in the dark on the invitation.
“The rationale for inviting Clinton is easy to make and easily justified,” he added.
Burghardt Tenderich, vice president and principal at San Francisco technology PR specialist Applied Communications, states the rationale succinctly: “President Clinton oversaw the nation at a time when the Internet took off, and a time of unparalleled prosperity. A lot of people on Wall Street and a lot of people in Silicon Valley made a lot of money while Clinton was in office, and he clearly has something of interest to say about wider economic issues.” (Applied is the agency of record for Oracle Corporation, which invited President Clinton to speak at a developers’ conference last week.)
The Clinton administration was almost always sympathetic to business interests—sometimes to the ire of the Democratic Party’s traditional allies in the labor movement and among consumer activists. Clinton’s trade policies in particular were a huge boon to U.S. companies seeking access to North American and overseas markets.
“He was Alan Greenspan’s favorite president,” says MWW’s Sommer. “He was a great president for the economy. He was more of a Rockefeller Republican than an FDR Democrat.”
Shortly after the Morgan Stanley apology another securities firm, UBS Warburg, decided to cancel an appearance by the former president at an investment conference scheduled for April. But on Monday of last week, Clinton spoke to about 10,000 people at a conference sponsored by software giant Oracle Corporation, where his former spokesman Joe Lockhart is now a senior vice president and counselor to chief executive Larry Ellison. Clinton gave what Reuters described as a “statesmanlike” speech in which he addressed issues such as the influence of the Internet and U.S. economic policy. He received $100,000 for the presentation.
According to Reuters, “A majority of the attendees stood and applauded, but many sat silently in their seats…. Outside, a dozen protesters carried signs attacking the ex-president. They were mostly ignored by everyone but the television cameras.”
The controversy has almost certainly damaged the former president’s speaking career, however. Andy Stern, a veteran of the Ford administration who now heads Dallas-based agency Sunwest Communications and specializes in crisis management, draws a comparison between Clinton and former president Richard Nixon—who did not go on the lecture circuit after his resignation—because “both have fanatical opposition.”
He says the Morgan Stanley episode “will cause everyone else to think twice—is it worth it to invite Clinton?” He says he recently advised a client considering inviting Clinton to a golf tournament that he should invite former president George Bush instead.
Harris Diamond agrees. “There’s no question that he has done huge damage to himself and to his reputation,” he says. “I would think twice before inviting him. I think the decision would be made on a case by case basis, depending on the venue and the audience.”