Tag Archives: Crisis management

Scandals and Company Culture

Shhh; Scandal and culture

Years ago a court judge in New Zealand was convicted of expenses fraud, the judge’s defense was that he hadn’t understood what the forms required. The public reaction was disbelief; either he just thought he could get away with it or he was too stupid to be a judge.

Since that early example I’ve looked at company scandals and the explanations given with a suspicious eye. In every case there are signs of how the company culture has effectively colluded around the scandal – it’s never just one person, it’s people turning a blind eye, it’s fear of whistleblowing, it’s the company culture, it’s the CEO.

Following the Enron scandal I heard a story, possibly apocryphal, of a manager who joined the company. Shortly after joining he heard that the ambitious revenue targets had been sent out across the company, requiring a jump of 25% in sales from one quarter to the next. At the end of the next quarter, to his amazement, those sales targets had been met across the company. He smelt something rotten and decided to update his CV and move on, he was not surprised when the Enron scandal broke. At the time it was the biggest corporate bankruptcy the world had seen. The Sarbanes-Oxley Act was passed to prevent scandals of this scale ever happening again (it didn’t).

In the Bernie Madoff Ponzi scheme his family members were involved in the company, including his brother who was appointed as Chief Compliance Officer. There are rules in many companies about potential conflict of interest when partners or family members work together.

More recently Wells Fargo came under fire for the cross-selling scandal where staff opened credit card accounts for non-exisiting clients in order to meet targets. In companies employees focus on what gets rewarded; and when enough pressure is applied from their bosses and their colleagues some will break rules to meet those targets. The company directors’ failure to halt the scheme was called “gutless” by Elizabeth Warren – the company maintains that the employees – all 5,600 of them (so far) acted alone. Either the bosses knew or they should have know, but so far none have taken responsibility.

John Oliver’s piece on the US police system exposes the myth of the “one bad apple” and looks at some of the systemic issues behind the fatal police shootings in the US. The failures of process and policy erode the public trust in the police, reducing their ability to their job.

The points John Oliver makes could equally apply to businesses.

  1.  Leadership
    Your leader must lead, her actions must demonstrate her high ethical standards and she should speak clearly and frequently about the company’s ethics.
  2. Monitor/Collect data
    We can now analyse data and patterns of performance, look at patterns and changing patterns. At a financial institute I worked at we were required to take a break of at least two weeks. HR sold it as being good for employees but my security colleagues gave another explanation, the two week break was long enough to highlight any odd activities.
  3. Avoid conflict of interests
    Keep review processes independent, external if possible. Don’t hire siblings or partners into the same field. Declare any outside interests that might raise a red flag – I wrote some columns for a (former) supplier. I had to declare this and I donated the income to charity to remove any potential conflict. Independent reviews make a difference
  4. Transparent Processes
    The more open you are, the more public you can be about your processes, the less opportunity there is for fraud or scandal. A very simple example; some universities are using blockchain to certify their qualifications, as that becomes a public record there is no chance to create a fake degree.
  5. Rewards
    Be careful what you reward, that will direct the employee’s focus and in extreme cases leads to unethical behaviour to reach stretch targets.
  6. Whistleblower procedure
    Even with all the best practices in place something could go wrong. Create a robust, independent whistleblower procedure.  Whistleblowers are generally punished for coming forward, be the exception.

Building a scandal resistant company culture is not easy; not doing so is expensive, even fatal.

Image: Shhh  |  Grey World  |   CC BY 2.0

3 Other Uses of Social Media

2016June Social Media Day

Snapchat is four, Instagram is six this year, Twitter is ten, and Facebook is twelve. As the social media platforms grow up and head into their teen age years how do they actually get used?

For Social Media Day I’m profiling three uses of social media for companies that you might not have thought of.

Real Time Marketing

Since Oreo won the internet when the lights went out on the Superbowl, companies have tried to use social media in real time – most often around big events. A London Fashion Week Topshop, the only high street brand on the runway, analysed twitter chat on the event and translated it to recommendations on billboards outside their stores in six cities across the UK.  There was a measurable impact on sales and more than 3 million people interacted on the hashtag #LiveTrends.

Pulling off a successful Real Time Marketing Campaign is a combination of having the right tools in place to analyse social media, the right people in the room to create a great response, and the authority to publish quickly. (The last is critical, if every post needs a legal review and three person sign off, then RTM is not for you.)

Service

Screen Shot 2016-06-30 at 16.09.12Social Media can provide customer service platforms. In the Netherlands most customers use at least one social media platform, so many of the larger companies here provide customer service via, at minimum, Facebook at Twitter. The gold standard of service on social media has to be KLM, their teams are so good at it that they put their response time into their twitter header, they aim to keep it below 20 minutes.

It takes significant training, good tools, and a sizeable team to run this, 150 social media agents around the world provide global coverage and respond to around 70,000 queries each week (source; KLM).

Crisis Management

Oddly enough it’s often a crisis that propels companies into using social media, requiring a cultural change to a more open model of communication that’s challenging for communication teams.

Social media also turns out to be a good medium to communicate in a crisis.

  • Mass reach, even people not on a platform can read your notes
  • Possible for individual questions/comments
  • It’s increasingly expected as people get their news from social media
  • Easy to update

Crises are by nature unexpected, but companies that plan on how to manage a crisis, and keep their social media team involved, are more able to respond appropriately. Examples could include a product recall, a supply fault, death of an executive, a case of fraud coming to light, or an airline emergency.  There’s lots of advice out there for managing a crisis in social media, in all of them preparation and speed are key.

In rare cases the way a company responds can improve the company’s reputation, two examples from very different industries.

O2, a British telecom company. During a rather long outage the community manager responded on twitter to every question or comment, even the angry and abusive ones, with personality and humour.

DiGiorno, in a now famous mistake DiGiorno responded to the #WhyIStayed hashtag with the comment “Because you had pizza”. Seems innocuous, except that the hashtag was being used to raise awareness of domestic violence. So their tweet did not go down well. However they quickly deleted the tweet, issued a simple public apology. And then apologised to every individual tweet who called them out. For weeks.

For crisis communication on social media to work, you need the social media experts involved in creating your crisis plan, and a team to execute the plan. You may also need to temporarily increase the size of your social team – during one crisis that I worked through we had 30,000 messages each day.

For all three of these social media strategies you need social listening tools, analysts and experts, and the authority to run with the strategy. Dial up your social media efforts. Happy Social Media Day.

Image: The Social Media Marketing Mix  |  Alan O’Rourke  |  CC BY 2.0