PR Failure #24: Learning from companies’ mistakes during COVID-19

Aaron Blank / May 4, 2020




 


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PR Failure #24: Learning from companies’ mistakes during COVID-19

For the past two years we’ve been focusing on PR blunders companies around the globe—and celebrating them. But nothing comes close to what we’re all dealing with at this time. While we decided to pause our celebration of these failures in the past few months, we’re ready to pick the learnings back up… because… well, there are a lot more blunders to be paying attention to given how vast the impact of the pandemic has become.

The COVID-19 outbreak has tested organizations large and small on many fronts, including their public reputations and values. Nobody plans to create a PR crisis of course, and yet many brands have done just that.

Let’s take a look at a few of the higher profile #PRFails to dissect what went wrong and offer tips for avoiding a COVID-19 crisis of your own.

1. Failure Starts at the Top: Soul Cycle

High-profile, influential CEOs can be a huge plus – or a huge problem. Equinox and SoulCycle’s owner, Stephen Ross, who’s back in the (bad) news for his relationship with President Trump. Gyms have been shuttered in most locations to keep employees and patrons safe and to slow the spread of the novel coronavirus. Yet the day after being on a call with business leaders including Ross, the President included gyms in his plan to re-open the economy. Ross’ close relationship with Trump has caused the company problems before, so even if nothing improper occurred here, it reinforces a connection that rankled members in the first place.

Lessons Learned:

Charismatic CEOs probably won’t learn. While some successful leaders are lifelong learners, some find it harder to adapt to new qualities or behaviors – in some cases because they actually enjoy being firebrands. These repeat offenders are unlikely to consider optics or impacts outside their narrow perspective. Action Item: Create a rapid response team solely for CEO-generated crises, including internal counsel, investor relations and HR leaders; and external PR support.

Nothing stays internal. If you’re lobbying the President on a conference call, prepare for it to be reported. If you’re sending an email to your employees, prepare for it to be leaked. If you’re discussing personnel changes, prepare for it to be uncovered. Action Item: Continue to educate top brass on the impacts of optics and timing and the reputational damage that can be done when “backroom” or “behind the scenes” decisions are revealed – because they will be.

2. Greed Is not Good: Ruth’s Chris and Shake Shack

Small business owners around the nation emitted a sigh of relief when the (first) COVID-19 relief bill passed. A flawed roll-out caused tempers to flare and then the situation became a full-on dumpster fire. It was discovered that some cash-rich businesses – most notably Shake Shack ($10 million) and Ruth’s Chris Steakhouse ($20 million) – received funding while legitimately cash-strapped enterprises received nothing. Each brand responded with more of a defense than an apology, pointing out that they didn’t do anything illegal.

Shake Shack (published via an open letter on LinkedIn): “While the program was touted as relief for small businesses, we also learned it stipulated that any restaurant business – including restaurant chains – with no more than 500 employees per location would be eligible. We cheered that news, as it signaled that Congress had gotten the message that as both as an employer, and for the indispensable role we play in communities, restaurants needed to survive. There was no fine print, anywhere, that suggested: ‘Apply now, or we will run out of money by the time you finally get in line.’”

Ruth’s Hospitality (delivered in an emailed statement to CNN Business): “We intended to repay this loan in adherence with government guidelines, but as we learned more about the funding limitations of the program and the unintended impact, we have decided to accelerate that repayment,” Cheryl Henry, Ruth’s Hospitality president and CEO said in an email. “We remain dedicated to protecting our hardworking team. It is our hope that these funds are loaned to another company to protect their employees, just as we intended.”

While applying for the funding was completely legal, their actions were not viewed kindly in the court of public opinion.

Lessons Learned:

Just because we can doesn’t mean we should. We have no doubt that the corporate counsels and CFOs of Ruth’s Chris and Shake Shack fulfilled their responsibilities to legally protect the bottom lines. But what about the PR leads? They either weren’t “in the room where it happens” or weren’t listened to when these brands decided to go for the green. Action Items: Cultivate closer relationships with the C-Suite so you’re at the table and can provide expert counsel on how decisions will impact various stakeholders and audiences. Reinforce that your insights aren’t just about “image” with data showing how reputation and ESC (environmental, social and corporate) governance impact sales and revenues.

Respond with empathy. Both companies’ apologies were technically correct and totally tone deaf. It wasn’t the legality that got the public’s dander up, it was the greediness. Rather than defending the action as “legal”, the companies should have immediately returned the money and explained the situation with empathy and genuine atonement. Action Items: Invest time and resources to craft statements that strike the right tone and show accountability. Work with legal to balance their concerns against the public’s. Test-drive responses with a few trusted outsiders who can identify tone and content issues.

3. You Can’t Win the Blame Game: Smithfield Foods

When one of the largest site-based COVID-19 outbreaks was verified at Smithfield Foods’ Sioux Falls, SD, facility, the company deflected all responsibility. The meat processor claimed to be following the lead of South Dakota Governor Kristi Noem, who had yet to issue a stay-at-home order and said on local television (without any evidence, btw) that “99%” of the spread of infections “wasn’t happening inside the facility…because a lot of these folks who work at this plant live in the same community, the same buildings, sometimes in the same apartments.” An unnamed Smithfield spokesperson told Buzzfeed that, “Living circumstances in certain cultures are different than they are with your traditional American family.” The company eventually closed the plant but left others open. That move prompted a federal lawsuit over working conditions at one of its Missouri plants. More are expected.

Lessons Learned:

Take responsibility. You’d think we would have learned this by now, but apparently not. Deflecting responsibility is rarely an effective strategy for dealing with public outcry, though legal counsel frequently favors insulating the business from admitting anything. There has to be a middle ground. Action Items: Work with internal and external counsel before a crisis to discuss priorities for crisis response and establish a team approach. Work together as often as possible on non-crisis projects so you develop trust and reinforce a spirit of collaboration that will be invaluable when a true crisis emerges.

Be aware of public sentiment about current events, your company and industry. The meat-processing industry has been under scrutiny for all kinds of transgressions for centuries and faced several worker and food safety issues just last year. Inhumane treatment of immigrants and their families has dominated headlines for months, as well. Being blind to the larger environment makes it easy to deliver tone-deaf responses that often reinforce a poor image that already exists.

Action Items: Engage in trend analysis and social media monitoring as part of normal operations so you can tap into the current conversation quickly when framing a crisis response. Consider hiring an outside firm to provide reputation management services.

Play the long game. Responding to a crisis requires a mix of short- and long-term thinking. Smithfield’s problems started with its response to the public health crisis itself. The lack of a statewide stay-at-home order and social distancing requirement in South Dakota gave Smithfield legal cover for not safeguarding workers. But it was a remarkably short-sighted decision to eschew an opportunity to do it anyway. Operating at a lower volume has to be better than having to shutter the plant entirely. And the cost of paid time off or lower revenues would definitely be less than the settlements and legal costs associated with union and other lawsuits. Action Items: Make sure some members of your crisis response team are responsible for taking a longer-term view of the situation and how evaluating how responses will impact the operation after the immediate issue is addressed.

Though the brands here are all large players, crisis planning, response and management are a must-have for organizations of all sizes. That’s why we’ve been providing #PRfailure post-mortems on our website and in these monthly columns on a regular basis.

We all try our best to avoid crisis situations, but even the most vigilant organizations experience them. That’s why the best way to successfully navigate a crisis is to plan for it. Creating and testing a response plan and protocol empowers your organization to minimize impact and maintain your reputation.

Until next month. Best wishes for good health and safety to you, your family and to your staff.

We’re thinking about you.

Best,
Aaron Blank
President and CEO
The Fearey Group

Fearey Blog + News

 

 

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Aaron Blank

CEO & President, Partner

Aaron has been engaged in the conversation since the late 1990s, where he discovered his love of media while working at local radio stations. After five years as a radio reporter, anchor, producer and promoter in New York and Connecticut, he and his wife, Lacey, ventured west to begin his career in PR. Soon he caught the attention of industry legend Pat Fearey and the rest is history. Two decades later, as CEO and owner of The Fearey Group, Aaron leads with tireless enthusiasm and contagious drive. In 2014, he became the next generation owner of the firm. He takes his breakfast at 4:30 AM and never eats lunch alone. You can find him working to connect the next business with tomorrow’s leader.

Personal philosophy: do something amazing every day and be fearless!