It’s been a big year for corporate comms disasters.
There’s a lot to learn from how a company manages a crisis. Whilst crisis management isn’t something that we do here at TLP, it’s very closely aligned great CEO and corporate communication. It’s a pressure cooker, where the consequences are huge and everything simply must go right.
This list collects some of the big examples where everything hasn’t gone right and there’s been compounding communications failures. It’s the instances where a bad situation has been made much worse by the failure of communication.
Here’s five disasters from 2016 (included with a range of links to read more):
1. Bellamy’s – Revenue, margin and management credibility all downgraded in one day
Releasing a really bad result to market is bad enough. But being deliberately vague about the implications, and even whether it represents a downgrade made the issue much, much worse. Compounding the issue, both the CEO and Chairman have recently been selling shares on market, pocketing $2.4m and 2.9m respectively.
See also Bellamy’s great China moderation
Update 14-December-2016: Bellamy’s shares have been suspended from trade. A big and ugly reset of investor expectations is about to happen.
Update 19-December-2016: The AFR is reporting that “Maurice Blackburn is meanwhile investigating a potential class action claim against Bellamy’s following its share price plunge and suspension.” http://www.afr.com/business/retail/fmcg/bellamys-shares-suspended-amid-fears-on-china-trade-20161214-gtat4x
Update 22-December-2016: Bellamy’s has extended the voluntary suspension of its shares until January 13 to “continue negotiations with key suppliers and manufacturers“. It’s unclear what the underlying issue is – but it’s unlikely to be good news. The only positive at this stage is the company has resisted making more promises without understanding the full picture – which is a good start in rebuilding credibility.
2. Slack validating the competition
Microsoft announced their competitor to Slack in Microsoft teams. Slack responded with a full page New York Times advert, which validated and turned the launch into a real news item. This would otherwise have gone largely unnoticed by those outside the tech community.
3. Ignoring the crisis management team at Ardent Leisure / Dreamworld
In ignoring the advice of crisis managers, Ardent Chairman Neil Balnaves turned a tragic accident into a communications disaster. The company initially responded legally, and was on the back foot chasing to media coverage from a very early stage.
The issue was made worse by a vote on the CEO’s bonus, that went ahead just days after the incident.
See also Dreamworld accident: How to avoid a PR disaster
4. 7-Eleven “still don’t get it”
The 7-Eleven wage scandal didn’t turn into a crisis of confidence until the company transitioned (‘sacked’) the Alan Fels led independent board – charged with investigating and righting widespread wage abuse. Fels subsequently spoke out publicly, stating “7-Eleven still don’t get it”.
See also 7-Eleven creates new public relations disaster
5. Seven West Media following the Tiger Woods ‘arc’
After it was widely reported that Seven West CEO Tim Worner had an affair with an assistant at the company two years ago, the company went into lockdown, saying the issue is a personal matter for the CEO and refusing to comment.
The share market clearly disagreed, with shares down nearly 10% in the first few hours of trading post announcement. Many sources say that the company has played legal hardball and tried to shut-down the story, making the issue an even bigger rabbit chase for journalists.
Update 19-December: This is likely to get a lot worse for Seven West before it gets better – only great crisis management from this point forward is likely to save Worner’s job.
Update 20-December: New revelations today of up to four more affairs, drug use, and payment of an indirect bonus by Worner to Harrison. The CEO is mentioned in the press as a “serial sexual exploiter” of staff. The Board is likely to have their hand forced at this stage. Worner appears very unlikely to make it to Christmas.
Reports: Seven CEO Tim Worner Outed By Former Lover
Update 22-December: There’s some big challenges now for the Seven Board. Worner must go, but the Board have known in full for 2 yrs. It’s very hard to take the moral high ground now without Board change (which in itself is difficult in a family company). Today the Board has announced an “Independent Enquiry”, whilst announcing ongoing support for Worner (see also Seven West Media board missed the change in corporate culture).
It’s going to get much worse before it gets better, with journalists digging into credit card spending, the irregularities of the initial dismissal and Worner’s denials of widespread drug use. Given the typical Tiger Woods arc of denial, minimisation, resignation and repent – it’s likely that there’s still more to play out.
It will be interesting to see how long the Board continues to attempt to minimise the damage, before recognising that their only job right now is to rebuild trust and credibility with shareholders, employees and the general public.