Vice Chairman, Managing Director,
Board & Chief Executive Officer Services
Multiple front-page articles about company practices in the Wall Street Journal. Hourly updates about the firm’s finances on business news channels. A trove of internal documents highlighted in front of millions of television viewers. All of it compounded by millions of social media messages. As multiple organizations worldwide have found out over the past few days, becoming the target of a media exposé can push every other priority to the side.
The media has been running impactful pieces for decades, of course. But experts say exposure of an organization’s practices, legal and otherwise, have harsher, faster repercussions today than just a few years ago. In the last week, for example, one organization shut down after a story revealed just days earlier that it tried to mislead potential investors, while several key C-suite executives at another firm were fired after an article revealed how they had overlooked managers bullying or sexually abusing employees.
The burgeoning environmental, social, and governance (ESG) movement has meant that many more corporate practices, if they receive media attention, may no longer be tolerated even if those practices help corporate profits. “The whole issue of shareholder return has broadened to stakeholder return, and stakeholders are suppliers, customers, employers,” says Joe Griesedieck, vice chair and managing director of Korn Ferry’s Board and CEO Services practice. Those stakeholders want their companies to behave.
Despite the increased attention, there are still many executives who mishandle media articles, whether by attacking the messenger, not engaging with stakeholders, or just flat-out lying. “The antiquated view among public relations was about ‘killing the story.’ That’s no longer acceptable,” says Peter McDermott, a senior client partner in Korn Ferry’s Corporate Affairs Center of Expertise. These days, a wrong step could quickly alienate customers, investors, employees, and every other stakeholder.
But while it might seem overwhelming, experts say there’s a pretty solid playbook, developed on the fly four decades ago, that an organization’s leadership can use to help guide them through a modern-day crisis. The question is, will executives follow it? “You have to be fast, clear, and resolute,” says Richard Marshall, global managing director of Korn Ferry’s Corporate Affairs Center of Expertise. That decades-old playbook was developed by Johnson & Johnson when, in August 1982, a medical examiner held a press conference indicating that someone had died after taking a poisoned capsule of the firm’s over-the-counter painkiller drug Tylenol. Within days, several other people were dead; tens of thousands of news stories with headlines such as “Poison Madness in the Midwest” and hundreds of hours of television news coverage linked their popular drug to the deaths.
Even though the company didn’t know exactly what was happening, it immediately urged all of its stakeholders—using advertising, press conferences, and other popular forms of communication at the time—to stop using Tylenol. It halted production and ordered a nationwide product withdrawal. Though the action certainly hurt the bottom line (the drug’s impact on the company’s sales was far bigger then than it is now), top company executives regularly and repeatedly met with media members, each time being contrite and candid while outlining the steps they were taking. “The Tylenol case was the gold standard of communications,” Marshall says.
That’s a model that is useful today, even with social media amplifying what other media organizations have said. Experts say a company has to be transparent in every interview, and it’s OK to admit that leaders don’t have all the answers yet. The company’s most senior executives, not its board directors, should be speaking for the company. “If I’m an investor and the board is speaking, that’s a sign of no confidence in management,” Marshall says.
While the board may not take the lead on communications, it absolutely has to be engaged, says Griesedieck. However, the board’s role these days has to go well beyond the fiduciary duty they have to investors. With the ESG movement taking hold among stakeholders worldwide, directors need to be having open, honest conversations with management, finding out what has happened and what management will do to solve any problems. “The board should be weighing in heavily, ensuring that CEOs are acting ethically,” Griesedieck says.