Seven Rules of Crisis Communications

Goldman Sachs has become the financial institution people love to hate, excoriated by indignant politicians, mocked by the media and blamed by the public for helping trigger the Great Recession. The Securities and Exchange Commission indicts the firm for fraud, and the U.S. Attorney in Manhattan opens a criminal probe.

It’s not fair; Goldman deserves better.

More broadly, the financial services industry is watching its reputation evaporate, morphing from a respected part of the American business system into a caricature of greed gone wild. Congress and the President are determined to rein it in with the most sweeping set of regulations since the Depression, and even so most members of the public think Washington is going too easy.

It’s not fair. Financial services businesses have done much for America and the world.

Toyota’s immediate public relations troubles have eased in the sense that the company is no longer in the news every day with stories about malfunctioning accelerators. But the long-term problem remains: How does the company overcome lingering suspicions that its products are not as safe as they used to be?

British Petroleum is entering the same whirlwind of media scrutiny and public blame in the wake of its massive oil spill in the Gulf of Mexico, and it will be fascinating to watch how it handles this “crisis”.

In each case, the specifics vary. But in general terms, the problems are the same: An organization that seemed to be cruising in high gear is stunned to find itself under relentless assault, confused about how to respond and uncertain about how to regain public trust. It has happened countless times before and will happen countless times again. Each organization must find its own way through the maze of challenges and choices. But certain rules of crisis communications do apply.

Rule No. 1: Recognize that you have a problem, and it is not going away. That may seem obvious, and in many cases it is, at least to those in the C suite who have kept their heads. But all too often the instinct is to retreat into denial, to hunker down and feel injured and indignant. In some cases it may even be true – the company has done nothing wrong. The point, however, is that once you’re in the media’s crosshairs, and once the public has jumped to a conclusion about you, the perception becomes reality, and you must respond.

Rule No. 2: In crisis communications, everything sends a message, whether it’s intended or not. For example, stonewalling by refusing to respond to press inquires sends a message that says you have something to hide, which only prolongs the agony. Protests of innocence and flat denials of a problem in the face of significant evidence to the contrary only increase the levels of suspicion and distrust.

Your primary goal must be to control your message so that others don’t control it for you. That includes recognizing that there are different constituencies that must be reached – the media obviously, but also law enforcement, shareholders, supply chain members, communities and not least, your own employees who see the same news reports as everyone else.

Rule No. 3: Facts have a power of their own. Having a company spokesman carefully assemble the facts about a situation and then convey them to the media and public in a straightforward, conversational manner conveys openness, honesty and a sense that the organization is dealing with the situation in an above-board manner. It is wise to have one trusted professional designated as the spokesman and to have that person speak on a regularly scheduled basis to stabilize contacts with the press. The setting should be neutral or even positive; for example, if the crisis involves a fire, the spokesman should not appear in front of the burning building so that he’s televised with flames in the background. The staging can be as important as the words.

The spokesman or CEO or anyone else who speaks publicly should always use dignified, jargon-free and factual language. Attempts at humor, irony, sarcasm or any other kind of verbal gymnastics will only backfire. A serious tone sends a message that says, we get it and we’re dealing with the situation in a professional manner.

Rule No. 4: Look for the unanswered question. Sometimes a crisis is prolonged because an unresolved issue weighs on the media’s mind. For example, the stories about Bernard Madoff and his monstrous Ponzi scheme kept coming for weeks after the facts were known because the press was gnawing at a question no one had satisfactorily answered: Why did he do it? In many cases, reporters themselves don’t understand what they are looking for, so they keep poking without asking the right questions. Recognizing what it is that keeps them coming back day after day and addressing it head-on can be a crisis ender. Sometimes a candid mea culpa from the person in charge does that job.

Rule No. 5: When you get your message out, make sure it is one that will resonate with people. For example, many observers believe that when John McCain ran for President in 2008, some of his message about not voting for the other guy came across as negative. At a time when people were hungry for uplift and optimism, that negativity fell flat against Barack Obama’s talk of change. Even worse than not having a message is having one that’s a turn-off.

Rule No. 6: Be willing to put integrity ahead of profits. One of the best examples of this that I know of is Johnson & Johnson’s response to the Tylenol poisoning scare when the company pulled its product off store shelves until the crisis was resolved. J&J lost millions in sales, but it emerged with its reputation intact and public trust as great, or even greater, than before. Sacrificing the company’s long-term reputation for the sake of short-term gains is one of the worst trades you can make.

Rule No. 7: Don’t react in just a defensive way. Yes, be open and honest about acknowledging the problem, getting the facts out and taking responsibility. But don’t hesitate to go on the offensive too. Change the subject. Introduce new programs and initiatives or find other kinds of positive news. Start writing your own headlines instead of letting others write them for you.

How might these rules apply to the cases I gave at the beginning of this article: Goldman Sachs, the financial services industry, Toyota and at BP? All four are changing situations, so by the time you read this, much may have happened that outdates or supersedes my thinking. But as I write this, here are some ideas:

Goldman Sachs. The first step is to explain their business. What they do is arcane and abstruse, which makes mischaracterizations easy. CEO Lloyd Blankfein and his colleagues need to start talking positively about the organization, using layman’s language to describe its work and its essential role in national and world markets. Second, Goldman has done a lot of good while making a lot of money. It should use those assets constructively to inform the public about its contributions to the economy, like financing business development and creating jobs. Third, Goldman is very generous in supporting important causes, yet this is not known or appreciated. For example, Blankfein should spread the word about the Goldman Sachs scholarships that underwrite higher education for African-Americans, Hispanics and Native Americans. And the Company needs to put a spotlight on its $500 million program known as 10,000 Small Businesses, which is designed to unlock growth and job creation. Goldman is giving back, so tell the world about it.

Beyond these three steps, the organization needs to address the unanswered question that still hangs over it: Are you changing your ways, or is it business as usual? The response could be new rules to eliminate the practices that have so outraged the public, like a ban on shorting investments the company has sold to clients as safe.

The Financial Services Industry. Leaders need to create a code of industry standards and guidelines. It should include penalties for violators in order to give the code credibility (a toothless document will only intensify the cynicism). For example, errant companies might be barred from certain business transactions and held up to public exposure. The industry should also create a new relationship with the rating agencies to end the perception that they are in the pocket of the big financial firms.

Toyota. The company must keep updating the public on its progress in solving the accelerator problem. The new CEO, Akio Toyoda, should be in the public spotlight as much as possible to send the message that the company has returned to its original philosophy of quality first, as opposed to the growth-at-any-cost thinking that led to this crisis. And all Company advertising, marketing and public relations must hammer the twin messages of quality and safety, because the unanswered question that hangs over future sales is, if I buy a Toyota, will I be able to trust it?

British Petroleum. The Gulf oil spill appears to be a disaster that will affect the Company for many years, even decades. After some initial hesitation, CEO Tony Hayward started speaking openly and candidly about BP’s responsibilities and response. But the danger is that over time the company may retreat into a shell of isolation and denial. That’s an all-too common problem when people become exhausted and resentful. But the seven rules of crisis communications don’t just apply to the first days, they are for the long-term.

Having offered all this after-the-fact advice, I should add that the best strategy for crisis communications is to be ready before the crisis hits. Remember that in the three cases I’ve discussed as well as dozens upon dozens of others, the folks in charge never thought it could happen to them. No one is immune, and every organization should have a plan in place. The elements would include:

• Ongoing risk assessment. What could go wrong? How likely is it to happen? What can be done to minimize the risk? What should the organization do to address the worst-case scenarios?
• A trusted insider. If a crisis comes, you’ll need a spokesperson ready – someone who will be, at least initially, the face and voice of the organization. That will insulate the CEO, who should be kept out of the line of fire until there’s good news to report. The spokesperson should be a communications professional who has the trust of the organization’s head and who knows the business from the inside.
• A communications plan. This involves the nitty-gritty that so many organizations forget until it’s too late: Having the names and contact information for everyone inside the organization who must be reached in case of an emergency, and in what order. Same thing for people outside the organization. And making sure that all facts are released only through the designated spokesperson to prevent speculation, misinformation and the premature release of data.

The bottom line is that crisis communications means controlling your message. The organizations that manage this successfully can emerge whole, or even better off. Above all, remember that integrity is a priceless form of added value.