PR 101

In every company’s life comes a time when things don’t go so well. A product doesn’t perform well, there is an accident in the plant, or an executive is caught with his hand in the cookie jar. When bad news happens, many executives first instinct is to duck and cover. They deny, lie and obfuscate. Wrong thing to do.

No likes bad news. But bad news can be turned into either a demonstration of competency or a public relations disaster. Handling bad news incorrectly can lead to a depressed stock price, lower sales, and in some cases, government regulation. No smart CEO wants any of that.

If you remember my lessons on interviews and crisis communications, you know why. A quick review: liars get caught and destroy all credibility; not releasing all information, or giving incorrect information, can make a crisis worse.

In Milwaukee in the last few days, the right way to handle bad news was demonstrated. One of the area’s largest employers – meat packer Patrick Cudahy – saw a devastating fire destroy one of its primary buildings. However, local government officials and company executives handled the public relations correctly. Emergency officials gave updates as soon as they information to release. Local government did its part to tell people living around the plant what was going on.

Most importantly, both local Patrick Cudahy executives and executives from parent company Smithfield Foods, Inc. did everything they could to assure workers that jobs would not be going away. In addition, Smithfield worked hard to assure its customers that there would no product shortfall.

Writers note: I once was a member of the public relations team that represented Smithfield. However, I have not had any contact with the company in five years.

This was an example where everything was done right. Communication channels were kept open, information was disseminated as soon as it was confirmed as being accurate and no one tried to duck or cover. As a result, officials controlled the story and it’s positioning from the beginning.

Contrast that with the way some banks and mortgage companies are handling the rash of foreclosures. As reported in the July 12 Milwaukee Journal Sentinel, some lenders are simply walking away from foreclosed properties. The effect is causing blight in otherwise stable neighborhoods.

The lenders’ defense is that it doesn’t make financial sense to take some properties because the profit would not offset the cost of the effort to rehab and resell the property. So they walk away from it. Often there is no longer any clear owner leaving the municipality and neighbors to deal with a property that can become a haven for vandals, squatters, prostitutes and drug dealers. The cash-strapped local government has to deal with both losing property tax revenue and eventually paying to have the building torn down.

Remember, these lenders are the ones who either originated the loan or sold it to a group of investors. As has been demonstrated time and time again, the people receiving the loans should have never been given the money. They usually did not have the ability to make the payments.

The “not our problem” attitude is probably why only 36 percent of Americans in 2008 told the Gallup Organization they had a positive view of the banking industry.

I will never understand why financial people in particular always talk in “money speak” when it comes to dealing with bad news. It just kills their image.

What the financial industry in this case has to realize is that what is simply a balance sheet issue to them is an emotional issue to someone living next to an abandoned house. Residents take it very personally when something affects their neighborhood.

What the financial industry is doing is a good example of thinking short-term. Something bad happens, so the first instinct is to put one’s head down, make an inane comment and hope it all goes away. What they are not seeing is the big picture. People remember these kinds of actions. That leads them to do things like demanding more government regulation. The financial industry will find it has no friends when it opposes such actions.

That’s key takeaway from this. When bad news hits, think long term. Deal with the news in a way that doesn’t cause damage. It might be hard to do in the heat of the moment, but it is best course of action.

Next week, I am going to write the other side of social media – how in today’s environment, privacy is becoming a thing of the past.