August 22, 2011 11:59 am : Comments 000
One of my biggest sources of pride in running Starkman is when critical functions are performed extraordinarily well – and I had absolutely nothing to do with the effort.
Starkman’s internship program is certainly one of them. Identifying, recruiting, and training exceptional young talent is a formidable challenge for any company. It’s something Starkman excels at; our previous two interns are now valued full-time employees. That said, I’m clueless as to how we do it.
At some point during the first week of June each year, I show up for work and am introduced to someone identified as our new intern. Jackie was long responsible for the program, but this year she gladly handed the baton to Lauren, who interned with us two years ago. In what I first suspected was some sort of practical joke given my penchant for confusing names, Lauren introduced me to this year’s recruits as “the Katha(e)rines.” Technically, that’s not quite true as the two share a first name but use different spellings. There was Katharine Rose – with an “a” – and Katherine Blackburn – with an “e.” Our deep appreciation to Ms. Blackburn’s parents, who raised her with the nickname “Kate!” It made things much less confusing.
Katharine is a student at the College of the Holy Cross, which has an impressive internship support program: The school’s alumni cover the costs of an internship stipend, provided participating companies ensure a meaningful work experience. Kate, who was referred to us by someone whose impeccably high professional standards we very much admire, is a student at Wake Forest University. Coincidentally, we have clients who are active alumni from both schools.
During a particularly busy time for Starkman, both Katharine and Kate proved to be fearless and relentless, and quickly demonstrated an impressive command of the client accounts they were assigned to work on. Within days, Katharine could explain why the housing crisis is far from over and Kate readily understood that a BRIC is not something used to build houses. For Lauren, the duo was an immediate godsend, as they relieved her of some critical time-intensive account support activities.
But it was not just their work ethic that won the Starkman team over: Katharine and Kate also revealed an appreciation for cupcakes and bagels and were sympatico with our firm’s food-obsessed culture — the icing on the cake, so to speak. Their will to pursue new lunchtime adventures (such as Cuban pork sandwiches) and their appetites for new culinary endeavors impressed us as much as their drive and determination.
Both Katharine and Kate successfully managed multiple projects with varying deadlines throughout their internships. We often asked them to quickly shift gears between tasks, and both did so without blinking twice. When they finished one task, they immediately asked for another, ultimately assuming more work and responsibility than typically should be expected of a college intern. As for their dedication, on multiple occasions they both asked if it would be possible to work beyond their designated hours so they could see various projects to completion.
As for being the proverbial team players, Katharine and Kate were more than gracious when the hiring of a new employee required them to sit at a somewhat isolated workstation internally dubbed “Siberia.” Indeed, as best we can tell, Katharine and Kate don’t have a capacity for complaining. They also upheld another record: Never once has a Starkman intern shown up late for work.
Actions speak louder than words, so here is the ultimate endorsement of Katharine’s and Kate’s talents and abilities. We’ve let them know they are welcome back as full-time employees after they graduate. It’s another tradition we are hoping they will help us continue.
Blogs by Kate and Katharine:
La Vita è bella – In America, that is by Katharine Rose
Did a Company Really Tweet That? Don’t Make Me Twiggle by Katherine Blackburn
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August 8, 2011 1:58 pm : Comments 002
Can you imagine wearing flip-flops and shorts around the office, or writing to colleagues, clients, or customers with “LOL” and “BRB?” A tad inappropriate and rather awkward…right? Maybe not, judging by much of the corporate writing seen on the Internet today. Many companies have turned to online mediums to engage their customers directly, bypassing traditional advertising for social media platforms. And when it comes to grammar, it’s like the old rules don’t apply. Abbreviations, slang terms, fragmented sentences and even made-up words are the bread and butter of today’s corporate online marketer.
Since first learning to string words together into a sentence, teachers and now college professors have steered me away from playing fast and loose with grammar. They’ve imprinted upon me the absolute necessity of suitable sentence structure and precise punctuation in achieving the correct (non-colloquial…) tone in writing. This, they would say dramatically, was to prepare me for the dreaded “real world.”
Coming to STARKMAN this summer reinforced what I learned about using formal language and maintaining the proper tone when communicating with clients. I’ve learned how to craft a memo and a press release into something unique and interesting while still using accepted business language.
However, a significant aspect of my internship here at STARKMAN has involved keeping up with the news on behalf of clients, which means spending quite a bit of time reading a broad range of publications. As a committed member of Generation Y, that means more than getting a little newspaper ink on my hands. I compliment traditional news mediums with online ones, such as blogs and Twitter. All of these sources play an integral role in my daily interactions with the outside world. Twitter has real time news updates that keep me current, and blogs are particularly poignant when searching for opposing opinions on a trending news story or seeing what major industry players are talking about on a given day.
Interestingly – and opposite my expectations – I found social media content from corporations to frequently disobey the golden rules of grammar, punctuation and style. And I’m not quite so sure that’s necessarily a good thing.
For example, consider a common blog and Twitter occurrence: the made-up word. Pronouncing a word wrong and creating a new one in error has happened to everyone – even Sarah Palin (see the completely fictional word ‘refudiate’), but the type of word to which I’m referring is when two words are forcibly smashed together and form a new, (supposedly) more accurate word (such as the word in this title – twiggle: a giggle caused by twitter). This used to be a common tactic of branding professionals to develop names for companies and products, but now it seems everyone is jumping on the bandwagon.
Let’s look at a few self-crafted words for reference:
While it is expected that conversations among friends and family will be peppered with informal words and incorrect usage, corporations used to adhere to some degree of formality in their communication with targeted audiences. But, not anymore. Why is that? An easy explanation may be that if it looks like a duck and quacks like a duck – it probably is a duck. Corporations are delegating the role of social media upkeep to Gen Y employees thus ensuring the authenticity of their communication to the target audience.
Without a doubt, however, it also reflects a desire, almost desperation to connect to the everyday reader or, as marketers like to say, “to engaaaaage” their audience. There is so much competition in a consumer-driven world that every entity trying to reach a consumer (or more specifically, their wallet) must differentiate themselves in order to be heard above the din. Corporate lingo and buzzwords don’t resonate well with the everyday consumer, as companies now increasingly recognize. And, as the list above illustrates, even professional journalists are throwing out their AP and MLA Stylebooks in favor of a more relaxed writing style.
So while the made-up word may be silly sounding or even a ridiculous substitute for a perfectly reasonable real word, it pays, literally, to be accessible to all the Gen Y-ers out there with massive consuming power. Because, while I might not know what a Spux is at first, with closer inspection, I realize that a tux made from spandex is equally as ludicrous as the word Spux. I’m able to appreciate the humor and relaxed tone the writer is trying to convey with this type of word. However, my appreciation for this type of humor doesn’t necessarily extend to corporate-to-public communication. While I understand that print publications are fighting to regain the credibility they once had and connect with a new generation of readers, this may not be the route to take.
When readers look to a source for reliable, trustworthy information, they don’t want to feel like the subject of a marketing campaign. A reader wants to know that they are being passed correct information and being taken seriously, not as mere lemmings seeking entertainment value. So while the medium for connecting with readers might be changing, the language should not. A real word can easily take the place of a fictitious one and can create an appropriate tone for a publication or company pursuing a credible image.
Sadly, this means that although its summer for a while longer, leave your flip-flips and “LOLs” at home with your personal life and pull out your loafers. After all, a well-crafted message using strong key words can still make a reader twiggle.
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May 23, 2011 8:03 am : Comments 000
I’m not a life-of-the-party kind of guy, which may explain why one of my simple pleasures on any given Friday night for many years was reading the latest issue of BusinessWeek while drinking a stiff martini. Under the 21-year tutelage of Steve Shepard, the magazine served up an impressive mix of news, features, and insightful analysis written by experienced and collegial reporters who were bent on producing great journalism and not promoting their individual brands. In Shepard’s day, quality journalism actually drove circulation, not social media, Google rankings and the like. Something was clearly working: BW’s readership increased some 40 percent while Shepard ran the show.
Shepard left in 2005 for academia and replaced by Stephen J. Adler, an aloof, Ivy League-educated former Wall Street Journal editor who, it is rumored, was once a front-runner candidate to lead that newspaper. Adler literally drove BW into the ground by diminishing the quality of its journalism and implementing a questionable redesign. When he exited the doors four years later, BW’s value had deteriorated so badly it was hardly worth the paper it was printed on. BW’s longtime owner McGraw-Hill nearly shut it down, but opted instead to essentially give it away to Bloomberg L.P.
Josh Tyrangiel
At the time of the acquisition, Bloomberg had already become the premier U.S.-based business news organization. In terms of collective talent and experience, it has unquestionably surpassed The Wall Street Journal, a feat accomplished in part by poaching a substantial number of that newspaper’s journalists and editorial alumni. Yet despite its experienced in-house stable of capable editors, Bloomberg tapped Josh Tyrangiel, a 37-year-old Wunderkind from Time to be BusinessWeek’s editor and renamed the publication Bloomberg Businessweek.
To fully appreciate the chrysalis-to-butterfly transformation of Bloomberg Businessweek under Tyrangiel’s nearly 18-month reign, you need to understand three things: he had no previous business journalism experience when he took the job; he is, according to his boss Norm Pearlstine, a “true dude;” and he likes to pal around with fellow unabashed “dude” magazine editors.
To his credit, Tyrangiel has restored some of BW’s former excellence. The publication once again is chock full of insightful and tightly written articles, and its overseas business coverage is considerably broader. BW’s graphics are impressive as are its business book reviews, and its iPad app does Steve Jobs proud. Suffice to say, BW is once again as compelling as…well, as compelling as Tyrangiel himself.
That said, readers still want substance over style, and on that front Tyrangiel’s lack of business experience is abundantly clear, particularly in the magazine’s cover stories.
BW last year ran an appallingly naïve profile of Charles Schwab, portraying the founder of his eponymous brokerage as someone who champions the interests of individual investors. While that is how “Chuck” – and his marketing team — like to portray the founder and his company, the facts are very much at odds with the story line, as this story by New York Times reporter Floyd Norris makes clear.
More recently, BW ran a gushing cover story about Facebook COO Sheryl Sandberg, painting her as a sensitive and caring boss who sometimes cries at work and provides “adult supervision” for the company’s young staff. The reporter was so smitten by Ms. Sandberg that he opted to gloss over the not insignificant detail that the FTC will soon decree that Facebook’s privacy policies constituted “unfair and deceptive” practices and the company will be subject to periodic privacy audits. As the story went to press, news was breaking that Facebook had hired Burson-Marsteller to conduct a clandestine campaign attacking Google’s privacy policies without disclosing that Facebook was behind it. Ms. Sandberg, a former Google executive whose responsibilities include communications, is likely tougher and politically more brass-knuckled than BW understands.
As well, some of BW’s articles of late appeal more to stereotypical “dude” sensibilities than individuals looking to gain some business insight. For example, the magazine ran a cover story in February about Ashley Madison, a niche website that provides a venue for men and women looking to cheat on their spouse. The article’s only particular insight was the owner of the site purports to be the consummate family man. The magazine has also recently run articles on the “business” of cougars and lingerie football, and profiled a small 15-store lingerie chain specializing in custom-fitting bras. It’s hard to take seriously a business magazine that refers to Victoria’s Secret as the “Goldman Sachs of ladies underwear.”
I’ve long maintained that mainstream journalism’s declining influence stems from the repeated promotion of failed editors and journalists writing stories to impress each other rather than the readers they serve. Underscoring my point, Stephen Adler, the former BW editor, in February was named editor-in-chief of Thomson Reuters, an even bigger news organization. Fortunately, Mr. Adler just hired former Dow Jones executive Paul Ingrassia, one of the few business journalists with a successful leadership and management track record, to serve as his deputy.
As for Tyrangiel, if he wants BW and the impressive editorial team he oversees to garner the respect they rightfully deserve, it might behoove him to spend more time focusing on the stories truly shaping the economy and the business of business. Leave the “dude”-esque stories to publications like Maxim.
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May 16, 2011 10:04 am : Comments 000
Mainstream media, the tech trades, and the blogosphere are agog covering the story of Burson-Marsteller’s (BM) clandestine anti-Google media pitches on behalf of undisclosed client Facebook, but I’m guessing BM’s John Mercurio still doesn’t get the fuss.
During his earlier career as a political reporter, he no doubt frequently found himself on the receiving end of “you-didn’t-hear-it-from-me-but” calls from politicians, candidates, aides, lobbyists, and the like looking to plant stories that would smear the opposition. So when he jumped to the other side and entered the PR world by joining Burson-Marsteller, that’s the playbook he brought with him.
Mercurio and his colleague Jim Goldman, another newly hooked BM employee fished from the journalism sea (Goldman is a former CNBC reporter), soon learned that what works in the political world doesn’t necessarily translate to the business sector, particularly when public – or soon to be public — companies are involved. There are simply too many constituencies with a real vested interest — investors, employees, customers, analysts, vendors, and regulators, to name a few — for the usual chicanery of politics to prevail. If Mercurio and Goldman didn’t know that when they set out on their secret mission to raise privacy concerns about Google’s Social Circle, my guess is they do now.
The media’s outrage to date has focused primarily on Facebook’s hypocrisy for secretly trying to point a damning finger at Google given its own track record with user privacy transgressions. Despite founder Mark Zuckerberg’s claims that he’s all about transparency, the company is reportedly close to signing a consent decree with the Federal Trade Commission for its repeated violations. With the Burson stunt, Facebook was clearly trying to end their ignoble reign as poster child for online privacy violators by dragging Google up to the podium with them.
Despite the industry’s professional code of ethics requiring PR practitioners to reveal sponsors for represented causes and interests, it shouldn’t come as too great a surprise that Burson-Marsteller chose to violate it. While the company insists that Mercurio and Goldman breached the firm’s ethical guidelines, BM got caught doing pretty much the same thing for Microsoft two years ago with respect to Google’s planned acquisition of DoubleClick. Having a code of ethics is the easy part; expecting employees to adhere to it is something entirely different. After all, even Enron likely had a well-written code of ethics in its new employee onboarding package.
The issue of bigger concern is the inevitable adverse consequences when people from the world of politics infiltrate senior corporate communications positions, or in the case of Facebook and Burson-Marsteller, are allowed to run entire companies. Facebook COO Sheryl Sandberg, whose responsibilities include overseeing communications, is a former Treasury Department Chief of Staff in the Clinton Administration. Elliot Schrage, vice president of communications, marketing, and public policy, also is a political veteran. Mark Penn, Burson’s CEO, was a close aide in the presidential campaigns of both Bill and Hillary Clinton.
“Reputation management” has a very different meaning in politics. It’s about swaying public opinion by any means necessary. Politicos and lobbyists spin and leak stories, and political reporters lap it up and keep score. The effectiveness of this constant spinning is measured in news cycles; if you are featured positively in more news cycles than not, you’re ahead. Is it any wonder that Congress and the media are routinely ranked as America’s least trusted institutions?
Accordingly, individuals steeped in politics instinctively see nothing untoward about anonymously casting doubt on a rival. I believe BM’s claim that it was Facebook that insisted it not be identified as the sponsor of the campaign against Google, but I’m highly doubtful that Sandberg and Schrage weren’t a party to the decision.
Moreover, the very cynical side of me suspects that, despite the negative press, Penn, and perhaps Sandberg and Schrage, view BM’s whisper campaign as a huge success. Yes, the disclosure that Facebook was behind the campaign is somewhat of an embarrassment but the fundamental message points have been well reported.
Sadly, the Facebook-BM-Google debacle isn’t an isolated incident of a dubious corporate PR campaign being run by a former politico. Leslie Dach, who held various positions in the Clinton Administration, was the architect of the “Wal-Marting Across America” blog. It was positioned as being penned by a couple of genuine pro-Walmart customer enthusiasts, but was really an initiative of Walmart’s PR firm. That ill-advised campaign ranks among the biggest PR blunders by a major consumer corporation. Dach launched the campaign while working at Edelman, but he’s now Walmart’s executive vice president for corporate affairs. (For more on Dach and his corporate communications activities, read this damning profile in The New Yorker.)
The financial services sector is now turning to politcos for its communications counsel. Citibank recently hired Ed Skylar, a former aide to Mayor Mike Bloomberg, as its head of public affairs, and Goldman Sachs last year retained Clinton aide Mark “Master of the Disaster” Fabiani to help clean up its image. John Thain, CEO of CIT and the former head of the NYSE, has relied on former state department spokeswoman Margaret Tutwiler for his communications counsel for several years.
All of these companies are in some sort of trouble, whether it be financial, competitive, or reputational. It will be interesting to see the tactics these companies use to turn themselves around.
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August 31, 2010 8:20 am : Comments 000
The maturation of the Internet should have been the golden era of the public relations industry. Prior to the widespread use of the Internet, PR firms had to inordinately rely on the mainstream media to communicate client messages to broad-based audiences. Relying on reporters was a dangerous and often difficult process; journalists controlled the bat and ball and they all too often were reckless and arrogant in how they wielded their power.
The Internet provided an opportunity to level the playing field. The rise of the blogosphere quickly cut the media down to size and exposed their rampant irresponsibility. Mainstream publications and broadcast outlets were held to an unprecedented accountability standard and many reporters crumbled under the scrutiny. An untold number of prominent media stories have been retracted because of eagle-eyed bloggers.
Harnessed correctly, the Internet can be a powerful marketing tool, but it’s also an effective vehicle for fraudsters, flim-flam artists, and for companies with no qualms about using deception and unscrupulous tactics to win over customers. It’s in the best interest of the PR industry to promote and adhere the highest standards of ethics in Internet marketing. The more credible the medium, the more potent its efficacy.
Sadly, the PR industry has contributed mightily to the corruption of the Internet. One of the biggest global agencies was caught years ago for running the “Wal-Marting Across America” blog, supposedly penned by a couple of customer enthusiasts who turned out to have been shills paid by the PR firm. The person responsible for overseeing the Wal-Mart account was recently deemed one of the most influential professionals in the industry, underscoring that there are no material career consequences for dishonest or questionable practices.
Some PR firms also were caught secretly paying off or bribing bloggers with products to post positive reviews, but fortunately a PR blog named “Strumpette” was quite aggressive about exposing the practice and some industry leaders became quite vocal about condeming the practice. While blogger payola has not yet been eradicated, fortunately most recent exposed incidents didn’t involve PR firms.
Nevertheless, some PR firms still can’t resist employing deception as part of their “strategic” arsenal. Last week, the Federal Trade Commission settled charges with a California PR firm for having its employees “pose as ordinary consumers posting game reviews at the online iTunes store, and not disclosing that the reviews came from paid employees working on behalf of the developers.”
Rather than taking the high road and saying the firm settled the matter in support of the FTC’s desire to ensure greater transparency on the Internet, the company’s owner haughtily dismissed the agency’s concerns as a “frivolous matter”, saying they only agreed to settle to save on the cost of litigation. Perhaps most disappointing of all was the disclosure in the New York Times that the deceptive reviews in question were written and posted by interns. Thus, a new generation of PR professionals was taught that deception is an acceptable communications tool. That’s a toxic message to teach impressionable college students interested in pursuing a PR career.
Sadly, there is no shortage of PR firms who will welcome the skill-set these interns acquired. It’s an open secret that other PR firms regularly engage in having employees post reviews on behalf of clients. Let’s hope that the head of the FTC’s advertising practices division successfully eradicates the practice. Now there would be someone I could get behind as deserving of the “most influential leaders in the PR industry” title.
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August 27, 2010 10:45 am : Comments 001
Taking on a professional internship is daunting enough for a college junior, but the pressure is no doubt magnified knowing that your intern predecessors left mighty large shoes to fill. Now imagine that one of those previous interns came back after graduation and was working at your sponsor company full time…and oversaw the internship program. Well, that was the scenario that Erin Carpenter (Holy Cross, class of 2011) took on this summer. Let’s just say, Erin isn’t easily intimidated.
Today is Erin’s last day as our summer intern. We are truly sorry to see her go.
For several years now, all our interns have come to us through an innovative program sponsored by the College of the Holy Cross. The school’s alumni association provides each intern with a stipend to enable students to pursue internship opportunities that intrigue them intellectually rather than just tempt them financially. Participating companies must have a Holy Cross alumnae on board and pledge to provide a truly meaningful learning experience that goes beyond the usual filing, photocopying and fetching. The program has introduced us to an amazingly talented group of Holy Cross students including Lauren Olney, who interned with us last year and joined us full-time after graduating in June. Others we’ve worked with have been equally talented and impressive (see here, and here.)
We knew that Erin was cast from the same mold when she showed up for work on her first day having already read the Wall Street Journal on her Kindle. Actually, no – it was earlier than that. To apply for the internship, candidates must submit a cover letter and three writing samples with their resume. My colleague Jackie — who has the keenest eye for even the teensiest of errors — deemed Erin’s written correspondence flawless.
As might be expected of a woman who voluntarily took a class at Oxford in Italian Renaissance Art despite having absolutely no background in that area of study, Erin relishes a good challenge. She didn’t flinch when assigned to research the fundamentals of an esoteric Wall Street trading strategy and soon after she was up to her elbows in research for a healthcare initiative. Erin also provided invaluable assistance putting together a timeline for a litigation support project. No filing, photocopying or fetching for her!
Underscoring Erin’s work ethic and commitment, she asked to attend some meetings with various charities she had identified as worthy of support by one of S&A’s clients, even though they started well beyond her scheduled hours and were held on one of those brutally hot days we had this season. Charitable and non-profit work are truly one of Erin’s passions; she spent three summers working as a counselor at a camp for children with Autism, Turrets, ADHD, and other anxiety orders. She also has considerable experience tending to exotic animals (a skill-set that will no doubt come in handy dealing with some members of the media). At Oxford, Erin participated in a program to assist international students with personal and emotional issues.
Erin is the consummate team player. She delights in working as part of a group and never once sought special acknowledgment for her formidable contributions. Erin also doesn’t have much of an ego; one day on her own initiative she opted to clean out the company fridge. Trust me, no alumni association in the world offers a stipend large enough to tackle that nasty task!
Erin continued to impress us even when we took her out for drinks to thank her for her hard work. We learned she has an appreciation for Oban single malt scotch, although a purist would question the appropriateness of her adding ice cubes. Nevertheless, Don Draper would be proud.
Some people see the proverbial glass as being half full, while others see it as half empty. Erin approaches life with an energy and zeal the likes of which we’ve rarely seen. She is a credit to Holy Cross and another example of the impressive discipline and humility the college instills in its students. Though she worked with us for only 10 weeks, she will be long remembered and greatly missed.
Erin, best of luck in your senior year! Care to turn off the lights on your way out for old times’ sake?
To learn about Erin’s S&A experiences and her astute observations about public relations, read here, here, and here.
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August 19, 2010 11:43 am : Comments 000
Having a clear code of ethics is important, but having a demonstrated propensity to actually enforce it is far more so. Corporate ethics cannot be mandated by words alone. The thought may seem obvious, but it seems nonetheless lost on many companies.
Enron, for example, had a strongly worded code of ethics that proclaimed it was “dedicated to conducting business… with the highest professional and ethical standards.” But, employees no doubt knew that the creed was a sham, nothing more than pretty words on a piece of paper to be tacked up on the local office bulletin boards by someone in HR or internal communications.
More recently, there is technology giant Hewlett-Packard and its broken moral compass. H-P’s business conduct standards reportedly require employees to consider how any business decision “would look in a news story.” Hmmm….so “how it might look” should take priority over the rightness or wrongness of the action itself? That certainly seems to be the message, intended or otherwise. And, if that’s the case, then the decision whether to do something unethical will simply come down to how likely it is that they’ll get caught. Who knows how much that played into former H-P CEO’s decision to allegedly fudge his expense account – something rarely scrutinized at his level on a day-to-day basis – but I’m guessing it played a part.
Given H-P’s concern for how actions might be viewed if reported in a news story, it’s a wonder that contractor Jodie Fisher was ever hired to interact with the company’s major clients at corporate events. Her background does not scream “seasoned Corporate America professional.” That Ms. Fisher reportedly commanded as much as $5,000 a day to appear at corporate events is a pretty sad commentary on how H-P peddles its IT products to its biggest customers.
Equally eyebrow-raising, given their “think of how it will look” standard, is H-P’s choice of outside PR counsel when the bad news started to snowball. Let’s just say that firm has garnered more than a fair amount of negative coverage for itself over the years (see here, here, here, and here).
As for Mr. Hurd, his response to his transgression has not exactly been inspiring. Rather than take responsibility and unequivocally admit he made a major mistake in judgment and by doing so betrayed H-P, its employees, and its shareholders (and likely garner a considerable measure of sympathy), he hired a PR firm known for its aggressive “scorched earth” tactics. According to the Wall Street Journal, one of the firm’s message points is that Mr. Hurd’s expense account transgressions were quite small and that he offered to repay the amount, seemingly hinting that the punishment didn’t fit the crime.
When it comes to corporate ethics and reputation risk, potential bad press should have no bearing. None. Zero. Zilch. Adherence to a company’s guiding principles of integrity, trust, and responsibility should not depend upon what the press may report. A code of conduct is a company’s line in the sand about what is right and what is wrong, about what it stands for, and about how it defines itself as a member in some greater community. Sometimes that means companies and their leaders must do the proverbial right thing even when it invites media fallout. Just ask Royal Caribbean.
Early this year, Royal Caribbean faced a very difficult decision in the wake of the catastrophic earthquake in Haiti, the cruise company’s tourism partner for nearly the 30 years. The cruise company’s private resort called Labadee, located 85 miles or so from Port-au-Prince, suffered very little damage, with all facilities in prime condition to continue hosting ship passengers scheduled for a day of fun there. But as Chairman and CEO Richard D. Fain wrote at the time:
Should we bring guests to our private destination in Haiti or should we simply bypass the island and bring them to another destination further away from all the suffering? Bringing our guests to Haiti could be characterized by some as insensitive to the suffering of the Haiti people in the rest of the country, and we wrestled with this sentiment ourselves. After the government of Haiti asked us to continue to call on Labadee, there really was no choice; bypassing Haiti would do more harm to an already ravaged people by taking away essential income from our employees and their families. The Haitians told us they were desperate for our return and we couldn’t refuse… I remain convinced that we took the only honorable path and I remain convinced that we and Haiti will be better off in the long run because of it.”
As soon as the first ship dropped anchor and started tendering passengers ashore, the “how dare they?!” newspaper articles started, as Royal Caribbean’s management and savvy PR team undoubtedly knew that they would. The initial press was unfavorable, but Royal Caribbean stayed the course, working to explain their rationale for returning to Labadee and their broader contributions to Haiti’s recovery, both financial and in terms of getting much-needed food, materials, humanitarian aid, and other much-needed items to the country. In other words, they did what they thought was the right thing, backlash be damned.
Given the competitive nature of business today, adhering to ethical and moral business practices is more difficult than ever. Staying on the honorable path requires a strict moral code and a team with shared values. Given H-P’s code of conduct and the company its board and Mr. Hurd chose to keep, it’s little wonder they find themselves in such a messy and distasteful situation.
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April 26, 2010 3:11 pm : Comments 000
One of the biggest challenges facing a company under fire is to resist the temptation to downplay the severity of the crisis. And while there is no shortage of crisis communications advisors who may advocate telling white lies or less inflammatory half truths — a practice euphemistically known as “spin” – that approach almost invariably makes the situation worse. Goldman Sachs’ misguided PR effort to combat its mounting reputational crisis is a textbook example.
When the SEC first unveiled charges alleging that Goldman misled investors when it sold a package of risky subprime mortgage-related securities known as Abacus, the mighty investment bank wasted no time to thunder that the civil allegations were “completely unfounded” and vowing it would “vigorously” challenge them. A few hours later, Goldman issued a second statement, saying that it had lost more than $90 million on the transaction and proffered that it couldn’t have honestly believed the investments would fail given the firm’s own exposure.
Admittedly, quite a few reporters initially bought Goldman’s argument, repeating it without any objective analysis. However, all Goldman’s strategy bought them was time – not a free pass – as the media wasn’t duped for long. Within days, The New York Times reported that Goldman had insurance in place on the Abacus transaction to offset the $100 million loss and, separately, internal Goldman Sachs emails made public by a Congressional committee also suggest that Goldman handsomely profited as the housing crisis escalated. The Columbia Journalism Review has gone so far as to warn reporters to be wary of Goldman’s “forked tongue.” In addition to combating charges of fraud, Goldman must now deal with the fallout from being publicly accused of lying.
Regretfully, there are now other known incidents of spin that suggest that Goldman views the intellect of Congress and the public as cynically as the investors who were long on the Abacus deal. Goldman took out prominent ads in Politico, a newspaper closely read by Washington’s political elite, trumpeting that it was the biggest issuers of Build America Bonds; the ads neglected to mention that Goldman earns considerably higher commissions on the bonds. Goldman also seems to have leaked a story that it is mulling a requirement to compel its top executives to donate a certain portion of their earnings to charity. Giving to charity is an admirable initiative but it won’t alleviate the public’s anger about the firm’s perceived ill-gotten gains.
Goldman’s lament that the SEC’s charges are politically motivated is pretty tenuous. Decrying politics is a tad hypocritical given that many people believe that Goldman’s political connections were responsible for Washington making the firm whole on its AIG contracts. In any case, the interests of the SEC and The New York Times are closely aligned in making the fraud charges stick so the argument just won’t fly with the newspaper at the forefront of the media hunt for the rest of the story. Tongues are wagging that the SEC gave the Times a sneak preview of the fraud charges before they were even filed, perhaps as a reward for its dogged reporting. Even if the fraud charges are dismissed on summary judgment, the Times has pretty much secured itself a Pulitzer Prize.
Finally, there’s the issue of Robert Khuzami, the SEC’s enforcement chief and a prosecutor whose credentials include taking on organized crime. Although it’s been reported that Robert Khuzami previously oversaw a team of lawyers at Deutsche Bank who also were closely involved in structuring subprime mortgage-related investments similar to Abacus, Goldman would be wise to resist even veiled attacks on the enforcement chief. Given Khuzami’s impressive track record standing up to hardened criminals without the proverbial white collars, the public will likely relish the prospect of a proven legal tough roughing up Goldman’s top brass, regardless of the merits of his case.
For Goldman Sachs to survive this reputational crisis, the firm will have to devise a credible strategy that addresses both the legal and moral issues relating to its profiteering from the housing collapse. Its practice of deception and playing with the facts could potentially doom the firm. Because here is a secret that a spinmeister will never tell you: When you utilize spin as a strategy to minimize a crisis, the crisis will almost invariably spin right out of control.
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January 11, 2010 7:33 pm : Comments 000
There is no retailer I admire or trust more than Nordstrom. My fervent loyalty stems from a favorable experience years ago when a menswear department manager voluntarily refunded the cost of a suit after I complained about premature wear. I had bought the suit a year earlier, didn’t have a receipt, and there was no record of my purchase in the computer. I was so impressed with the store’s sense of accountability, I felt compelled to buy two suits. I have pretty much shopped at Nordstrom exclusively ever since, and now carry the retailer’s loyalty program Visa card. Without question, the goodwill and repeat business generated by that refund far outweigh the latter’s actual dollar cost.
On the service and value front, Charles Schwab is quietly becoming the financial services industry’s closest equivalent to Nordstrom. But they’re not entirely there yet, and founder Charles Schwab would be wise to take a closer look at the customer service playbook of Blake Nordstrom, the CEO who runs the retailer that bears his surname. (While Schwab is no longer CEO, he remains chairman and apparently is active enough in the business to command more than $3 million in annual compensation).
Although I maintain some of my assets with Schwab, I readily admit that I am highly distrustful of the company. Allow me to explain the paradox.
My relationship with Schwab is currently limited to plain vanilla bank products where I’m certain I have virtually no risk (or at least the faith and backing of the U.S. government). I would never buy an investment product from the firm because, unlike what I’ve learned to expect from Nordstrom, I do not trust Charles Schwab to stand with integrity behind the products they push.
In the past few years, Schwab has unloaded some highly dubious products on its customers, including quasi money market funds called Schwab YieldPlus and long-term bonds known as auction rate securities. Schwab faces class actions suits relating to the sale of its money market funds and has been charged with Martin Act Fraud by New York Attorney General Andrew Cuomo for peddling the auction rate securities. (Important Disclosure: S&A represents an attorney who has a case against Schwab relating to Schwab YieldPlus. That said, the comments in this blog post represent my thoughts and observations and are mine alone).
My outrage and lack of confidence in Schwab is not simply that it sold the money market funds and auction rate securities, but rather its failure to do right by clients who allegedly were misled. While most of Schwab’s competitors have settled with regulators and reimbursed their clients for losses relating to auction rate securities, pass-the-buck Chuck is following the old-school Wall Street strategy of saying the clients were entirely to blame: “Roughly 90% of the clients who invested in (auction rate) securities came to Schwab asking us to locate and make available these investments for them,” Chares Schwab wrote in a Wall Street Journal op-ed last August, emphasizing his firm “never guaranteed individual success.”
While that may be true, customer service is not simply about written guarantees, Chuck. It’s also about ensuring your customers view you as trustworthy and reliable.
People shop at Nordstrom because they can do so with confidence. If something goes wrong with a purchased product, there’s little if any doubt that the store will do the right thing when you bring the defect to their attention.
In truth, when it comes down to the fundamental principles of effective brand management and customer service, it really doesn’t matter what you are selling. As Donald Porter of British Airways once aptly put it, “Customers don’t expect you to be perfect. They do expect you to fix things when they go wrong.”
So why didn’t Charles Schwab do the right thing with respect to making customers who essentially were sold defective products whole again? Perhaps the lawyers deemed doing so too great a legal risk.
While that stance may have a significant upside in the courtroom, it will not be without a significant downside cost elsewhere. By not stepping up as other firms have done (voluntarily or otherwise) to make allegedly misinformed product purchasers whole again, Charles Schwab will squander immeasurable current and potential client goodwill and badly undermine the impressive work of those responsible for creating Schwab’s Nordstrom-like experience.
In truly world-class organizations, the legal and marketing functions do not operate as separate silos, in good times or crisis, and a measured balance is routinely struck between their sometimes conflicting interests – and for good reason. After all, the only ones to ultimately benefit from letting Legal call all the shots are, well, the attorneys themselves.
Customers have talked, Chuck. Perhaps it is time you started listening.
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October 10, 2009 9:30 pm : Comments 002
I avoid one-actor plays as I typically require a developing plotline and the interaction of multiple characters to hold my rather limited attention span. But I saw a one-actress play this week that has been weighing on my mind and not just because of its incredible intensity. The show reminded me once again as to why you should never judge a book by its cover.
The play is called “Guido Girl,” a coming-of-age musical memoir about Marianne Ferrari’s struggle to escape her oppressive adolescent life in the Bronx and realize her dream of becoming a Broadway star. Ferrari is an amazingly talented actress with a host of impressive theater and television credits, which came as a big shock to me when I read the program guide. Ferrari also happens to be a Pilates instructor at the midtown Manhattan studio where I train, and based on just a few good morning pleasantries, I always perceived her as being a rather shy and soft-spoken woman, albeit one with a very beautiful smile.
Turns out, Ferrari is anything but soft-spoken and her inimitable smile masks a rather troubled past. Ferrari is one of four children of Italian immigrants who arrived on the shores of New York harbor on the Andrea Doria a year to the day before it sank on July 25, 1955. Her parents would hardly be model candidates for a profile in Parenting magazine – her mother made her endure such indignities as pointing out which child was responsible for each Cesarean scar. Her father pointedly told “Marriana” she was washed up at 15 and blamed Ferrari and her siblings for his failure to become an opera star. So much for the stereotype that Jewish parents are the true Olympians when it comes to laying on the guilt.
Ferrari has a deft ear for foreign accents, and her imitation of her Scottish music teacher alone is worth the price of admission, though I found the simulation of how he ultimately sexually exploited her unsettling. Ferrari boldly shares some of her most humiliating childhood moments, like how Michael Meade dumped her because she was such an awful kisser. Fortunately, a more experienced girlfriend named Desiree taught her the ropes. And then there was Fifo, the career aimless boyfriend who took her virginity but had nothing more to offer than good sex.
Ferrari eventually found her way to California and embraced est and various other self-help programs for lost souls. Despite her painful childhood memories, she returned home 12 years later to help take care of her father, who was ailing with cancer but eventually beat the disease. Although its quite possible I just missed it (I often miss critical parts of plays), my only disappointment with the show is that Ferrari doesn’t share whether her parents are still living. While I’m certain they would be quite proud of their daughter’s acting and singing talents, I can’t imagine they would love her portrayals of them.
What is most remarkable about “Guido Girl” is the sheer physicality of Ferrari’s performance. She is in constant motion the entire 80 minutes she is on stage, climbing on blocks, contorting her body, and impersonating men and woman of all ages and nationalities. If not for her advanced Pilates training, I strongly doubt Ferrari could muster the stamina to do the show multiple evenings.
“Guido Girl” is alternatively hysterically funny and painfully sad, and I strongly recommend seeing the limited engagement show. And if by chance you are in the market for some top-notch Pilates instruction, I urge you to sign up for some lessons with Ferrari at the Equinox Fitness Club on Park Avenue, where, incidentally, the Pilates teaching standards are decidedly among the highest in the country.
You’ll have no problem finding Ferrari. Just look for the seemingly soft-spoken woman with the deceptively beautiful smile.
Emerging Artists Theatre presents
Guido Girl
written and performed by Marianne Ferrari
Directed by: Troy Miller
Musical Direction by: Peter Saxe
Produced by Agustine Welles
October 06, 2009 through November 01, 2009
Mondays @ 9pm
Tuesdays @ 7pm
Saturdays @ 9:30pm
Sundays @ 6pm
Location
TADA Theatre
15 W. 28th St., 2nd Floor
New York, NY 10001
Tickets
www.brownpapertickets.com
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