There are times when a PR person confronts an issue that tests their ability to come up with a rational strategy. That often happens about all the “rabbits in the hat” have been used. At that point, there are a very few tactics that can be used. To understand my point, read on.
I vividly recall a pre-earnings announcement meeting with the CFO of an investor relations client. The pressure was on for the company to meet or at least get close to analyst and investor expectations, and that was very iffy. The CFO explained that there were certain accounting treatments he could take that would produce an acceptable announcement. None of what he proposed was illegal, but they were one-time solutions such as reversing reserves or reclassifying some expenses. The actions would get us past the current difficult situation but would still impact us in a future (probably the next) earnings release. After he explained his tactics, he looked at me very seriously and informed me, “After this, there are no more rabbits in the hat.” He was letting me know that the client ran out of accounting treatments that could be used if the next quarter was also going to fall shy of expectations. What’s the PR strategy then?
- Simple explanations are best. When all is said and done, your credibility is the most critical asset you need to keep after dealing with the problem. It’s absolutely critical that your explanation be brief, to the point, candid and understandable on an intuitive basis. Often, that requires being more candid than many insiders would like. Unfortunately, that’s part of the cost of the appropriate communications strategy – and a much better pill to swallow than leaving your audience asking more questions, wondering whether the organization is on top of the situation and can work through it, and losing credibility in what the company says in the future. KISS (“keep it simple stupid”) is often the best approach in many situations, but it’s more than the “best approach” when dealing with a critical PR issue – then, it’s absolutely essential.
- “Let the chips fall where they may.” A problem has consequences by definition. Usually, when an attempt is made to avoid fessing up to a problem it’s driven by the desire to dodge the consequences. That will usually not only defer the ultimate revelation but will make the situation much worse. When drafting the announcement, the PR person is going to get a lot of advice/lobbying from those who may be facing fallout from the bad news. Salespeople will argue that you can’t put their big deal at risk. R&D people will argue that they may have to face budget cuts and defer or kill the company’s new product. Someone in position for a promotion will argue that the announcement could put his or her career at risk. What they are basically asking is that the announcement try to skirt the issue in a way that keeps them out of trouble. That will violate the KISS principle. At that point, the best policy is to accept the harsh reality: there is a problem … there will be fallout. That’s too bad, but the enterprise’s credibility cannot be put at risk.
- Pre-empt the situation by giving visibility to problems before they ever become problems.This is counter-intuitive because executives prefer to defer announcing problems for as long as possible, with the hope that the problem is resolved before giving it visibility becomes necessary. But emerging problems don’t have to be described as existing Here’s an example: Your company sells products all over the world. You’re beginning to see weakness in one of those markets – for this example, let’s say that the weakness is in Japan. As soon as that weakness starts showing up, reveal it. At that point it can be a modest parenthetical phrase, such as: “The Company said that its markets are all performing at or near sales expectations, although it also said that there are some indications that a new competitor in Japan is cutting their prices in an effort to gain market share.” As a casual statement, there will be no fallout. If the situation in Japan gets better, it never has to be mentioned again and the casual “by-the-way” statement about Japan would have done no harm. But if the situation does get worse, there is now the ability for a credibility-saving statement such as: “The Company said that as it previously announced, a competitor seeking to build its market share by cutting prices has taken a toll on sales in Japan.” That way, the shock of bad news is avoided – and often it is the unexpected nature of bad news that exerts more impact than the bad news itself. So, by giving bad news visibility sooner (and smaller) than later, the bad news that is ultimately disclosed does not incur the wrath of surprised investors, although a drop in share price may still be appropriate. And, using this tactic the company still has its credibility and thus its recovery will be much quicker than if the news came as a surprise.
- Don’t delegate away the spokesperson role.Simple: don’t ask a PR spokesperson or someone else to take a bullet for the CEO when the problem merits the attention of the CEO. That would stretch credibility and the net impact would be more negative than positive
- Follow-up. The tough situation will fade into the past in direct relation to how candidly the situation is handled and to what degree the enterprise has maintained its credibility. Nevertheless, wounds will have to be healed and stakeholders’ belief that there will be a recovery at some point will have to be restored. That won’t happen quickly or strongly just by the passing of time. The Company needs to follow-up in a deliberate way by conducting meetings (from one-on-one meetings to conferences), evidencing how it is staying on top of the situation (maybe by announcements made formally or through social media), and by evidencing its own confidence in the future (which can be achieved through the attitudes and statements of employees, requiring a focus on internal PR efforts). So … once you confront a difficult situation begin the follow-up effort as soon and do it as vigorously as is possible and to the degree appropriate.