When Bad News Is on the Horizon, and You Can’t Stop It

July 8, 2011

It’s a PR executive’s nightmare: Bad news is coming, and you can’t stop its arrival.

Perhaps The Wall Street Journal will report that your CEO is grossly overpaid. Or The New York Times is about to break a story on how your company made huge profits while receiving government subsidies or evading taxes. Maybe “60 Minutes” is preparing an exposé about your organization’s negligence and how it causes injury or death.

To make matters worse, the CEO doesn’t understand your angst. “Just make it go away,” he or she says.

What do you do?

Managing bad news

CEOs don’t often recognize a train wreck, whether it’s approaching or they are about to cause one by imprudent actions or mishandling a situation.

For this reason, a company’s top PR executive holds one of the most important jobs in any company. This professional acts as both a key adviser and a sounding board — the person who reliably tells the CEO the thoughts of his or her various constituencies and their probable reactions to upcoming developments.

The role of an executive-level PR professional carries particular significance when negative news is about to hit. The news may prove to be inescapable, but you can almost always mitigate the damage. The key is to anticipate, shape and influence: Don’t just react.

Let’s look at some of the basic principles of managing bad news.

• Lead the story when you can. Bad news should come from your organization. Instead of playing catch-up, you’ll have a better chance of receiving fair coverage and shortening the story’s life span.
   
• Be transparent. Don’t make matters worse by providing lame excuses or implausible reasoning.
   
• Correct all misunderstandings. Don’t assume knowledge or perspective on the part of the media or your company’s constituencies. If you don’t challenge a misperception, then it can become accepted as fact.
   
• Be honest. Never lie, mislead or deceive. You’ll pay a price for it in the future.
   
• Ban “no comment” from the corporate vocabulary. “No comment” says “We’re guilty of everything you think we are, and probably a lot more.”

Some recent examples illustrate some of these principles.

“GE Pays No Taxes on Huge U.S. Profits” became a popular headline this past spring. General Electric protested the conclusion of the initial New York Times investigative story on March 25 and the hundreds that followed in mainstream media and on the Internet.

However, the company’s responses were feeble and flawed. Its website carried weak rebuttals written in legalese, and the public and the press criticized GE for being evasive and uncooperative. The public’s general conclusion?  The story must be right.

Congressman Anthony Weiner (D-NY) provided a lesson to business leaders when he tried to tough out a personal embarrassment surrounding pictures he sent to women on Twitter.

His initial denial, followed by a series of evasive and hostile media encounters, escalated the crisis and probably doomed a once-promising political career.

If Weiner had recognized that the facts would eventually come out and had been honest about the situation in the beginning, then he may have experienced a better outcome. He resigned from office on June 16.

Congress recently quizzed five oil company CEOs, demanding to know how their record profits could be justified while they were receiving substantial government subsidies at the same time consumers were paying $4 per gallon at the pump.

Since Congressional hearings tend to play more like theater than fact-finding, it’s hard to come out of this one with a win. But you can still prepare your CEOs so they don’t make Tony Hayward-like verbal stumbles.

Many companies receive a black eye from ad or marketing campaigns that appear racist, sexist or otherwise offensive. But you can avoid this situation. For example, one major company reviews every ad with a veteran PR staff member before launching a campaign. Top management says the process has helped the company prevent potential embarrassment more than once.

CEO salaries present a difficult challenge for many companies today. Defending the CEO’s compensation is especially challenging when the company underperforms. Usually, the best response contains little more than an outline for the basis of compensation (contrast to comparable corporate leaders, past track record or incentive bonuses) and a note that the board of directors decides on the CEO’s salary. Although not particularly persuasive,that statement fares far better than “no comment.”

Preparing for the crisis

So what do we learn from these examples?

• Take every step possible to get ahead of the story.
• Advise your top management about potential damage and what needs to be done to mitigate it.
• Insist that your company handles the issues openly and honestly.
• Prepare key people to speak effectively to the situation.

Virgil Scudder is the author of “World Class Communication: How Great CEOs Win With the Public, Shareholders, Employees, and the Media,” which received an Award of Distinction as one of the best business books of 2012. Email: virgil@virgilscudder.com.

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