Posts filed under ‘Public Affairs’

UC Execs Get an F

Dean Christopher Edley, graduate of the Lloyd Blankfein School of Public Relations

The San Francisco Chronicle reports that 36 top executives in the University of California system are demanding increases in their pensions. The group has written a letter to the UC Board of Regents calling the increase a “legal, moral obligation” and threatening to sue if the demand is denied. The executives cite a 1999 agreement to boost pensions if the IRS lifted a cap; it did so in 2007.

The UC system is currently in a budget crisis, as are all public schools in California and the state itself. Per the SF Chronicle, UC has over $20 billion in unfunded pension obligations. The increase demanded by the 36 executives would cost more than $5 million a year and $51 million in retroactive reimbursements from the 2007 trigger date.

Among possible self-inflicted PR wounds, money grabs are some of the most infuriating. The UC execs have infamous company:

2003, American Airlines. While exacting more than $1 billion in concessions from workers, executives at American Airlines concealed hefty retention bonuses and pension protection for themselves. After outcry, the execs surrendered the perks and CEO Don Carty left the following year.

2009, AIG. After receiving $170 billion in bailouts, insurance giant AIG announced $165 million in bonuses to members of the financial products unit, the company group at the center of the 2008 economic collapse. Public, political and media outrage came swiftly. Most of the top execs returned their bonuses.

2009, 2010, Goldman Sachs. The Wall Street giant has paid billions in quarterly bonuses during the Great Recession. Each bonus announcement burnished Goldman’s image as the epitome of Wall Street greed. The abrasiveness of their PR chief, Lucas van Praag, only worsened the firm’s rep. In an attempt to counter negative reactions, Goldman contributed $500 million to a small business development fund and switched compensation for its advisory committee from cash to stock.

All the above groups, including the UC execs, have made similar arguments: the financial rewards are necessary to attract and retain top talent. AIG’s rationale deserved a special honor for circular logic: the people receiving the bonuses were needed to undo the mess they had created.

As we have become a nation of expendable workers, no one can sustain an aura of indispensability. Scan the comments section accompanying any online news coverage of the UC execs’ pension demands and you will read dozens of calls for the execs’ termination.

Many have already turned the execs’ “a deal is a deal” argument back on them, citing the University of California’s deal to provide quality, affordable education, a deal undone by curtailed classes, slashed staff and hiked tuition. The UC homepage promises the system’s 10 schools will “open their doors to all who work hard and dream big.” The same homepage links to an overview of pension revisions for standard university employees. Here’s a hint: future retirees will take their lumps.

Amazingly, parties with self-inflicted PR wounds have the strength to twist the blade anew. As criticism and scrutiny mounted, Goldman CEO Lloyd Blankfein stated that his firm was “doing God’s work.” Amid the UC pension flap, Dean of the UC Berekley Law School, Christopher Edley, is the only one of the 36 UC execs to speak to the media to date. He defends the demands for higher pensions as important to his family. He sarcastically refers to himself and his 35 colleagues as “craven scum,” acknowledging yet dismissing the PR fallout of their actions.

Predictions for the new year:

  • Outrage and protests will grow as students, students’ families, and ordinary Californians return from the holidays. Social media will increase awareness of the story. I learned about it on Facebook from my state assemblyman, Jeff Gorell.
  • Every politician and pundit with a pulse will be able to score easy points off greedy execs and any milquetoast regents.
  • There will be defections among the 36 executives demanding higher pensions; people were ready to march on the homes of the AIG bonus recipients. By signing the letter to the regents, all these execs now bear a scarlet letter.
  • As self-appointed spokesman for the execs, Dean Christopher Edley stands with Goldman Sachs’ Lloyd Blankfein in issuing cringe-worthy quotes. If he keeps opening his mouth, he may join the league of BP’s Tony Hayward. Like Hayward, Dean Edley may be looking at an early retirement, with or without a fatter pension.

POSTSCRIPT 1: UC faculty launch an online petition condemning the pension demands of the high-paid execs, a group they dub “the gilded 36.” The executives’ disregard for public relations begins with disconnection from UC’s vast internal audience.

POSTSCRIPT 2: California State Assemblyman Jerry Hill introduces a bill to cap all state employee pensions. It would categorically enforce the upper limit of calculable annual income: $245,000. The IRS’ lifting of this rule for UC due to its nonprofit status precipitated the pension demand letter by the 36 UC execs, all of whom have salaries near the standard limit or well above it. The bill is a predictable response to the furor, resembling to moves in the U.S. Congress to staunch the AIG bonuses.

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January 1, 2011 at 2:07 pm 5 comments

The Atomic Press Release

Today, August 6, marks the 65th anniversary of the dropping of the atomic bomb on Hiroshima. Official announcement came through a press release issued by President Harry Truman:

Sixteen hours ago an American airplane dropped one bomb on Hiroshima, an important Japanese Army base. That bomb had more power than 20,000 tons of T.N.T. It had more than two thousand times the blast power of the British “Grand Slam” which is the largest bomb ever yet used in the history of warfare.

The Japanese began the war from the air at Pearl Harbor. They have been repaid many fold. And the end is not yet. With this bomb we have now added a new and revolutionary increase in destruction to supplement the growing power of our armed forces. In their present form these bombs are now in production and even more powerful forms are in development.

It is an atomic bomb. It is a harnessing of the basic power of the universe. The force from which the sun draws its power has been loosed against those who brought war to the Far East…

Arthur W. Page, a legendary figure in public relations history, wrote the release. Son of the co-founder of the Doubleday, Page & Co. publishing house, Mr. Page served as AT&T’s VP of Public Relations. During World War II, he oversaw the Joint Army and Navy Committee on Welfare and Recreation and was responsible for numerous communications and morale programs.

Noel L. Griese is the author of a definitive biography on Mr. Page. According to his account, Secretary of War Henry Stimson summoned Mr. Page to full-time duty in April 1945 and briefed him soon after on the Manhattan Project. The Trinity test blast would take place in the desert of Alamogordo, NM, on July 16. Mr. Page was asked to write the release that ultimately would be read to reporters at the White House on the day of the Hiroshima bombing while President Truman was at sea returning from the Potsdam Conference.

Arthur W. Page is credited with writing the most momentous press release in history. Whereas the 1969 moon landing–the 20th century’s other signature event–was beamed live to television audiences, Page’s release alone was the public’s introduction to the atomic age. It is likely the last time a sheaf of paper would change the world.

August 6, 2010 at 9:21 am Leave a comment

McChrystal and The Year of Bad Public Relations

General Stanley McChrystalIn my last post, I deemed 2010 “the year of bad public relations.” Not profound or poetic, but sadly accurate. The latest proof: General Stanley McChrystal, recently ousted from his Afghanistan command due to comments by him and his staff in a Rolling Stone article entitled “The Runaway General.”

Last September, I blogged about Gen. McChrystal and his “Commander’s Initial Assessment,” praising the plan’s communications component. At that point, Gen. McChrystal was demonstrating a grasp of media and message since dissolved with his military career.

The Washington Post reports the conclusion among Pentagon officials that Rolling Stone “betrayed” Gen. McChrystal by printing off-the-record remarks. The low drone you’re now hearing is not the vuvuzela section at the World Cup; it’s the groaning chorus of PR professionals. NOTHING is off-the-record (my old boss Susan Tellem is particularly good at making this point with clients–woe if you don’t heed her). That does not mean there aren’t journalists who abide by the “off-the-record” request. It means you can’t count on the protection. It means never say anything you don’t want converted into global content.

This is not a call for “no comment,” tight scripting, puff pieces or similar banes of good public relations. It’s a reminder that common sense is the foundation of any PR action. Common sense would question a Rolling Stone exclusive with the General, given its historic anti-establishment bent (this is the publication that gave Goldman Sachs its now iconic “vampire squid” description). Again, I’m not advocating puff pieces with staunchly sympathetic media, but the pitfalls of this choice should have been obvious.

Duncan Boothby, Gen. McChrystal’s civilian press aide, was the first to fall on his sword when the story–and the story about the story–broke. His counsel to the General before greenlighting the interview should have been:

  • Which key audiences are we reaching with this media? Are there other/superior media options to reach these audiences?
  • What messages will we convey with this media?
  • How will the eventual piece support our communication objectives and overall strategic goals?

And of course the $64 question:

  • What’s the worst that can happen?

Perhaps Mr. Boothby went through the above protocol. Perhaps the conclusions were solid for proceeding with Rolling Stone. Perhaps the problem was solely in execution, a lack of common sense from the General and his staff. The reports are damning of the officers’ prolonged, alcohol-fueled sessions with journalist Michael Hastings. There is nothing a public relations professional can do in such cases. Even if he/she could eject the media and lock the liquor cabinet, the damage would be irreversible.

In the end, this is a severe personal failure by Gen. Stanley McChrystal, particularly disappointing considering his past communications competency. When untested and largely unknown leaders stagger in the spotlight–BP’s Tony Hayward and Goldman Sachs’ Lloyd Blankfein chief among them–we can cite their ignorance and indifference regarding public relations. Gen. McChrystal had no such excuse, which is why he had no choice but to resign. Leadership does not give you the right to say whatever you want. It only increases the weight of your words.

June 26, 2010 at 2:12 pm Leave a comment

When Corporations Act Too Human

Corporations are often advised to put on a human face. Per legal definitions, a corporation can be construed as a “person” or “entity.” All said, three corporations are acting too human in displaying the mortal traits of defensiveness, insensitivity and petulance.

Toyota LogoToyota: The carmaker’s PR missteps are well-documented; however, a recent behind-the-scenes move has caused more reputational damage. Toyota enlisted Joel Benenson, President Obama’s chief pollster, to test messages that questioned the credibility of two key witnesses who testified against the company on Capitol Hill: safety consultant Sean Kane and auto technology professor David Gilbert. When congressmen upbraided Toyota for this communications initiative, the carmaker said no official campaign had been launched based on the preliminary work.

Per the Washington Post’s description of Benenson’s survey, entitled the Kane/Gilbert Debunking Message Test, it appears to be a “push poll,” often seen in politics when a questioner rattles off negative comments about a candidate and then asks respondents their opinions about the person based on what they just heard. In the political arena, such tactics are less about research and more about disparaging the opposition. This was a bad move by Toyota that smacks of vindictiveness.

Procter & Gamble LogoProcter & Gamble: The company is facing a PR crisis and a federal product safety investigation over claims that its Pampers Dry Max diapers can cause severe rashes and chemical burns. A Facebook page urging the recall of the Dry Max line and the return of Cruisers/Swaddlers has over 10,000 members.

Understandably, and appropriately in theory, P&G is fighting back. They have commissioned independent experts to verify the safety of Dry Max diapers. They have paid for doctor examinations of children said to be affected by the product. They have enlisted influential mommy bloggers to spread the word about the product’s integrity (with all necessary disclaimers about any compensation–mainly product samples and  travel to the Cincinnati headquarters). In its most important factoid, P&G has said that while Dry Max are 20% thinner, their components are not new and have never been associated with burns. All these actions are good.

Where P&G goes wrong is in its tone, first seen in the news release refuting charges against Dry Max. The title “Pampers Calls Rumors Completely False” contains two emotionally charged words, “rumors” and “false,” and the qualifier “completely” just in case we didn’t get the message. “Pampers Confirms Safety of Dry Max” would have been a more positive and dignified start.

Within the release, Jodi Allen, Pampers VP, says:

These rumors are being perpetuated by a small number of parents, some of whom are unhappy that we replaced our older Cruisers and Swaddlers products while others support competitive products and the use of cloth diapers. Some have specifically sought to promote the myth that our product causes ‘chemical burns.’

The mood is accusative and defensive, echoed by P&G spokesperson Bryan McCleary in Bloomberg Businessweek: “We’re insulted that someone would imply that our products are dangerous.”

P&G may be furious about the accusations and the social media tactics of their accusers. They may be absolutely convinced that Dry Max diapers are safe and have reams of scientific data to prove it. That still does not bestow license to “take it personally.” Be passionate, be responsive, protect your brand. But don’t get shrill.

BP LogoBP: In what is shaping up to be the year of bad public relations, British Petroleum is leaving Tiger Woods, Toyota and even Goldman Sachs in the dust. The company has obviously read all the PR articles about making your CEO visible and accessible. Unfortunately for BP, that CEO is Tony Hayward. Goldman Sachs’ vilified communications chief Lucas van Praag (see my previous post, “Goldman Sachs: PR and the Bottom Line”) must be relieved that Hayward is now the media’s top source for gaffes and outrageous remarks.

BP incarnate is a solitary executive who has riled the public, elected officials and the media, whose signature line “I would like my life back” has eclipsed “doing God’s work” from Goldman Sachs CEO Lloyd Blankfein. It is mandatory for any corporation whose products/services impact public wellbeing to undertake preemptive crisis communications planning and training. Of course, many have cited BP as unprepared for the oil rig explosion itself, let alone its subsequent communication duties.

June 6, 2010 at 9:35 pm Leave a comment

Goldman Gets It (?)

Goldman Sachs CEO Lloyd Blankfein. Profits are up. Stock price and public perception are down.

Goldman Sachs has reached a new destination in its world vilification tour: a civil suit by the U.S. Securities and Exchange Commission that charges the firm with defrauding investors in the sale of mortgage bonds. The crux of the case: Abacus 2007-AC1, the investment vehicle, contained components handpicked by hedge fund manager John Paulson as likely to lose value. Paulson bet against the portfolio and earned $1 billion. According to the suit, Goldman Sachs did not tell other investors that Abacus was a deliberate compilation of risky bonds. Goldman claims that it made all legally required disclosures. Indeed, I’m sure there’s no boilerplate saying “a guy behind the scenes will clean up if you take the bullish side of this bet.”

The SEC’s suit and resultant media avalanche are demystifying what Goldman Sachs “does” and how the mortgage meltdown brought the global economy to its knees. Note that the government has not won its case, nor is Abacus the “smoking gun” of the Great Recession. But clear explanations and analogies are emerging in the news, the blogosphere and politicians’ speeches, all of which further decimate Goldman Sachs’ image, filling the howling communications vacuum the company itself created.

Short selling is a bet against a sucker. A credit-default swap is insurance an arsonist takes out before torching his own business. A collateralized debt obligation is part of a pyramid scheme where the last one to buy in loses. Are these statements simplistic? Absolutely. Are they accurate? Depends on your financial and political point of view. Are they prevalent? Yes. To explain the SEC suit, major media are relying on familiar images and plain language.

The Wall Street Journal on the government’s case: “Regulators say Goldman allowed Mr. Paulson’s firm, Paulson & Co., to help design a financial investment known as a CDO, or collateralized debt obligation, built out of a specific set of risky mortgage assets—essentially setting up the CDO for failure. Paulson then bet against it, while investors in the CDO weren’t told of Paulson’s role or intentions.”

The New York Times on credit-default swaps: “Goldman placed insurance on those bonds — called credit-default swaps — inside Abacus, allowing Mr. Paulson to bet against the bonds while clients on the other side of the trade wagered that they would make money.”

Goldman’s attempts to tell its story have been limited and often self-wounding. I have blogged about CEO Lloyd Blankfein’s infamous quip that the company was “doing God’s work” and communications chief Lucas Van Praag’s inflammatory retorts to the media, both well-documented PR fails. The company attempted image rehabilitation by giving BusinessWeek inside access. The resulting cover story, “Goldman Sachs: Don’t Blame Us,” did little to help the cause. Substantiating the snarky title, the article reveals indignation and exasperation among the quoted executives. If I had coached the Goldman team, I would have used a cattle prod to deter any eye-rolling, sighing or voice raising. (Note to my current and future clients–I will use a cattle prod only if receiving a Goldman-sized fee. Otherwise you’ll have to make do with more conventional media coaching techniques.)

Subsequently, BusinessWeek gave Goldman a left-handed compliment in a commentary that says the firm is still loved by its most important audiences: big corporations and job-seeking business school grads. John Q. Public’s feelings are unimportant. The piece forgets one major player that will act on popular perception: the United States government. The SEC suit and the Obama administration’s financial reform movement have a major effect on Goldman Sachs, both driven by parties determined to show “the people” how they will bring Wall Street to heel.

As the government flexes its muscle, GOP lawmakers are complaining that the SEC’s announcement was calculated to boost the financial reform bill. My advice to my fellow Republicans: “be quiet.” Any sniping about the SEC suit turns you into a Goldman Sachs sympathizer while Dems sit back and smile. If nothing else, take a cue from rising GOP star US Senator Scott Brown of Massachusetts who said on Face the Nation: “We want banks to be banks, we don’t want them to be casinos. And I’m glad the SEC is doing their job.”

The “T” in a SWOT analysis stands for “Threats.” Unfavorable legal and regulatory action have been known threats to Goldman Sachs since January 20, 2009. The company’s horrid PR has emboldened its adversaries and hammered its recent stock price. The SEC suit will encourage actions by other governments and investor suits. Goldman Sachs’ most notable announcement in the past few days: a 91% increase in profits. We’ll see if Goldman gets it.

April 20, 2010 at 10:05 am 3 comments

“Smart Power” Is Smart Marketing

The Wall Street Journal recently covered defense contractors moving into the realm of “smart power,” nation-building programs used in concert with military presence to promote America’s strategic interests in “hot spot” regions.

Some of these smart power programs include:

  • Lockheed Martin: training prosecutors in Liberia.
  • Northrop Grumman: training Senegalese peacekeeping troops in basic human-rights law
  • BAE Systems: providing anthropologists to accompany US troops to improve their cultural understanding in Iraq and Afghanistan

The Wall Street Journal article points out that such programs are not the typical purview of defense contractors. That’s correct; in fact, the smart power services seem to clash with the very brands of multi-billion dollar corporations known for military hardware. But a closer examination of these companies’ fundamental positioning shows that smart power is a smart marketing move.

Defense contractors’ embrace of smart power represents the upholding of existing brands with new products that accommodate shifting trends. Business history is replete with companies that failed to change with the times; Good to Great and Creative Destruction are catalogs of such failures. As the WSJ piece states, the Obama administration may be axing the F-22 fighter and new helicopters for the president, but they are pushing for more smart power programs. Lockheed CEO Robert Stevens asserts “(t)he definition of global security is changing.”

Smart power also has a positive PR effect for defense contractors as it demonstrates their facility and willingness in being part of humanitarian solutions. This can help their standing with the public and government leaders.

“Defense contractor” describes an organization that provides services and systems to help protect America and its interests. The Obama Administration has decided that a move to smart power, in essence preemptive “Marshall Plans,” is America’s best defense. With their new smart power programs, companies like Lockheed Martin, Northrop Grumman and BAE Systems are showing they will not surrender their “defense” positioning.

March 24, 2010 at 12:27 pm 1 comment

Update from the Afghan Communications Front

President Hamid Karzai

Major media have reported recent developments in the Afghanistan public relations war between the Taliban and the United States and its allies. This communications battle entwines the armed conflict, and Gen. Stanley McChrystal identifies it as essential to success in his “Commander’s Initial Assessment.”

My previous posts on public relations’ importance  in the Afghan theatre:

“More from the Afghan Communications Front,” focusing on the McChrystal report to Defense Secretary Gates.

“Admiral Mullen Communicates,” examining concerns by the Chairman of the Joint Chief’s of Staff regarding strategic communications.

“Heart and Minds 2009,” supporting the announcement of a stepped-up “information war” in Afghanistan.

The New York Times reports Taliban leader Mullah Omar’s edicts to improve the insurgent group’s reputation, including a moratorium on “suicide bombings against civilians, burning down schools, or cutting off ears, lips and tongues.” NYT says that the Taliban are using a broad communications mix to counter American/NATO/Afghan central government campaigns. According to the article, the UN has found anti-government forces cause more than twice as many civilian casualties as pro-government forces, undermining the Taliban’s support among the general population.

According to NYT, The Taliban disseminate information faster than NATO officials as they are less concerned with veracity. Contradicting previous fundamentalist condemnations of the medium, they are using the Web, including a well-designed, multilingual site called “Voice of the Jihad.” Per The Wall Street Journal, content on this site trumpets Taliban “victories” and describes confusion and ineffectiveness among NATO and Afghan government forces.

The BBC reports that the Taliban contacted local media while carrying out their recent coordinated attacks in Kabul. In further examples of their media relations, Taliban spokesmen regularly issue statements, with the media contacting them for clarifications and quotes. Understanding the communication imperative and the PR advantages the enemy routinely seeks, Afghan President Hamid Karzai held a news conference two hours after the Taliban attacks and gave medals to Afghan commandos who performed well in the counterattack.

As many experts have insisted, and I have concurred in this blog, a consistent, pervasive communications strategy is mandatory to victory in Afghanistan. The Taliban understand that. Why else would they be pitching the media at the very moment they were attacking Pashtunistan Square? The Taliban are using proven communication channels and techniques. They are smart enough to modulate their brutality (or at least promise as much) in the name of public image. We were right to announce an escalation of the information war in 2009. That’s where the enemy continues to fight for the high ground.

January 25, 2010 at 2:37 pm Leave a comment

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