Holmes Report Blog

The Holmes Report blog focuses on news and issues of interest to public relations professionals. Our main site can be found at www.holmesreport.com.

Saturday, August 26, 2006

Specious Survey Watch: Having devoted several pages of the newsletter recently to the subject of specious surveys, I wouldn’t let last week’s excellent column by Wall Street Journal “Numbers Guy” Carl Bialik pass without comment, since it includes what appears to be a prime example of the phenomenon.

Simply put, the Wine & Spirits Wholesales of America took the results of a deeply-flawed survey into online alcohol purchasing among teens (the sample being deliberately biased to over-estimate the problem) and exaggerated them (miraculously turning the fact that 2.1 said they had bought alcohol online into the conclusion that half a million kids bought alcohol online).

Once again, the survey was swallowed hook, line and sinker by gullible reporters, despite the fact that the sponsoring organization clearly had a stake in the scary outcome. Some will argue that if the media are dumb enough to buy this kind of nonsense, PR people are going to continue churning it out. I say it just makes everyone more cynical about the manipulation of data and the credibility of corporate America.
A Sorry Tale: Peter Sandman’s approach to risk communication—which includes maximum transparency coupled with extreme humility—is not appropriate for every company. It was not appropriate, obviously, for the Australian Wheat Board, which was recently forced to acknowledge that it paid $290 million in kickbacks to the corrupt Saddam Hussein regime.

As The Age reports (in great depth), Sandman was brought in at considerable expense to help the company craft an apology, which he did—apparently too well. Sandman took what had been a fairly bland apology and made it sound real. His apology explained that AWB employees who suspected wrongdoing should have stepped forward sooner, and that AWB, all the way up to the former chairman, Trevor Flugge, apparently lacked a culture that encouraged such actions.

He wanted chief executive Andrew Lindberg to concede that AWB’s responses had been “legalistic and ethically obtuse,” and to admit that “it was my job to create a corporate culture where my employees would identify suspicious circumstances and bring them to my attention. My ignorance of these details until far too late demonstrates how thoroughly I mishandled this part of my job.

“Although we ourselves violated no Australian laws or UN regulations, we were a party to transactions in which others undermined the fundamental purpose of the UN sanctions. We should have seen this and made an effort to stop it. We did not … This represents a serious failure of the AWB ethical culture, and of the company's systems and processes.”

That was apparently all too much for AWB’s management and public relations advisers, who felt it went too far. As The Age points out, AWB seemed genuinely convinced that Sandman’s advice did not reflect the reality of the company’s situation.

Sandman responded to the changes with a withering memo: “This whole list of facts reads to me like a one-sided effort to look as innocent as you can without actually lying. You are entitled to do that. It is a lawyerly thing to do. It might be the right thing to do if you think you are in legal trouble and need to argue your way out. Or it might be the right thing to do if you think you are being ethically criticised unfairly and are preparing to say you did nothing unethical and are the long-suffering, innocent victim of an unfair report from Volcker and unfair media coverage in Australia.

But “It’s a terrible way to begin if you are seeking forgiveness for ethical misconduct that everyone pretty much knows wasn't illegal … It makes the reader want to find something illegal to get you for.”

He went on to ask: “On what basis do you say your distress… is ‘shared by all at AWB’? You told me many at AWB thought and still think it was no big deal that Iraq’s money got back to Saddam. Have they changed their mind? Do you mean that they are distressed that these arrangements got AWB into trouble? Or is this the only statement that I have found that goes beyond half-truths and is actually a lie?”

Sandman seems to me to be right on every point, and the publication of his memo—which was entered into evidence as an exhibit in a government inquiry into AWB’s behavior—simply exposes a debate that goes on in every company accused of illegal or unethical behavior. Certainly, taking Sandman’s advice would have spared AWB much of the embarrassment it is now suffering for the mealy-mouthed pseudo apology it eventually issued.
Naked Podcast: Don Tapscott, author of The Naked Corporation—one of the best and most under-appreciated business books of recent years—and an advocate of greater corporate transparency, is the guest for the first BusinessWeek Playbook Podcast. Tapscott’s new book, Wikinomics: How Mass Collaboration Changes Everthing, is out soon.

Friday, August 25, 2006

Orange Alert II: British blogger Stuart Bruce, who was way ahead of me on the Orange blogger suspension story (amazing what you miss when you’re on board the QM2, where internet access costs $20 an hour), also caught an aspect that I missed, which is that Inigo Wilson, the blogger in question, also posted a definition of consultation—presumably part of his community affairs job with the mobile phone company—as part of his Lefty Lexicon.

“Consultation,” he says, is “a formal system for ignoring public views while patronising them at the same time.” As Bruce points out in a comment below, that kind of attitude is a little more than just a mitigating factor in Orange’s decision to suspend the guy.
Home Free: Slate’s Michelle Leder picks up on a new perk for CEOs—one that could be very costly indeed for shareholders if the housing bubble bursts. “Since the beginning of this summer, at least a half-dozen companies, including eBay and Nike, have disclosed in their routine Securities and Exchange Commission filings that they're now protecting their executives from real estate market forces….

“In other words, companies that depend on free markets are making sure their own executives are safeguarded from them.”

There’s likely to be a brief flurry of criticism over this issue, just as there was when it was learned that companies were backdating stock options to their lowest point of the year or quarter to ensure that senior executives benefited from any up-tick. But CEO compensation is one of those issues that seems to be immune to the ordinary laws of reputation management: no matter how great the outrage, CEO pay just keeps on rising.

What amazes me is that this is happening despite the fact that no one seems to know just how much value a good CEO adds to a company, how to isolate the impact of the CEO from all other factors impacting corporate performance, or how transferable CEO skills are (is a CEO who does a great job at X Company likely to do a similar job at Y?

In some respects, what we are seeing here is a corporate version of the “great man theory,” the belief that history is shaped by individuals. That theory is out of fashion in academia, where today’s historians look at a more complex web of social and economic forces to explain events. But it’s still very much in vogue in the business world, perhaps because compensation policies are set by those who either are or have been “great men” themselves.
Orange Alert: The suspension last week of a community affairs manager who works for British mobile phone company Orange raises a number of issues for bloggers and corporate blogging policies.

Inigo Wilson was suspended after the company received complaints about a “Lefty Lexicon” posted on a conservative website. The humorous posting defined “Islamophobic” as a term describing “anyone who objects to having their transport blown up on the way to work,” and described Palestinians as “archetypal ‘victims,’ no matter how many teenagers they murder in bars and fast-food outlets.”

The Muslim Public Affairs Committee objected, encouraging members to write to the company complaining.

Normally, I would consider this another example of corporate over-sensitivity. Wilson was not posting in any official capacity, and his words and actions outside of the corporate context are surely his own business. Moreover, this is one of those issues on which any action is going to offend someone. I suspect conservatives—and those on the left who value free speech over political correctness—will be appalled by Orange’s actions.

Indeed, the political commentator and former Conservative candidate Iain Dale said: "Inigo was acting in his private capacity. Orange have [sic] a choice: are they on the side of freedom of speech? The article is an attack on the left’s approach to language and the way language is used to shut down debate and promote a particular world view. It is intended to be satirical. Sadly, his opponents have proved his point to him by their reaction.”

But in this case, there are a couple of mitigating factors. The first is that Wilson identifies himself rather prominently in his lead-in as a community affairs manager for a large telecoms company—although he doesn’t identify Orange by name. I suppose it could be argued that by mentioning his corporate affiliation at all, he opened himself up to attack. And then there’s the fact that he’s a community affairs manager, perhaps not the ideal job for someone whose views of a segment of the population are so jaundiced.

One obvious message is that companies should have clear rules about these issues—online and off—rather than making up policy on the fly when an incident occurs.

Thursday, August 24, 2006

Chocolate-y Goodness: On the subject of authenticity, it’s nice to be able to point to an example of transparency in the blogosphere as a counterpoint to all the deceptive practices that still seem commonplace.

The Chocolate Blog, created by Hill & Knowlton on behalf of LG Electronics (for the company’s wildly popular chocolate cell phone, is a gold standard in this regard. Click on the link “The Programme” at the top of the page and there’s an explanation of the PR campaign, the reason for the company’s outreach to bloggers (LG “realises that consumer-to-consumer recommendations carry a higher trust factor than virtually all other forms of advertising, and that word of mouth is a frequent factor for purchase [and] that bloggers are the most important initiators of online conversation right now.”

There’s even information about H&K’s social media team (and yes, the transparency also serves the more selfish purpose of an ad for the firm’s work) as well as to the blog posts of the individuals involved.
Still Dancing: We are now six years into the Bush administration and the White House press corps is still dancing to whatever tune Karl Rove decides to call.

The latest example is the coverage of Katrina victim Rockey Vaccarella, who travelled from New Orleans to meet with the President and thank him for the great job the administration is doing with the clean-up in the battered Gulf region. Most of the media lapped up the story of a regular guy trekking north in his trailer in the hopes of being granted an audience with the most powerful man in the world.

Of course, the entire story turned out to be “fake news” in the true sense of the term. Rockey turned out to be a wealthy businessman and Republican politician, who stood for office as a GOP candidate whose journey was far from the speculative adventure the media portrayed: he had an invitation and an appointment before he left his home in St. Bernard Parish.

How do you preach the gospel of authenticity to clients when reporters fall so eagerly for the inauthentic?

Sunday, August 20, 2006

Young Folly: Sometimes, I almost feel sorry for Wal-Mart. Earlier this year the company’s attempt to show a softer side was thwarted by the publication of an internal memo suggesting ways of cutting employee benefits. Now, the company’s decision to hire normally reliable shill Andrew Young has backfired after he made some culturally insensitive remarks about Jews, Koreans and Middle Easterners in an interview with a black newspaper in Los Angeles.

The reason companies hire Young—he was serving as head of the Working Families for Wal-Mart front group—is because he can normally be depended on to say exactly what his corporate paymasters tell him to say and because (for reasons that escape me) he still has a few shreds of credibility in the black and Hispanic communities.

The company reacted quickly to denounce Young’s bigoted comments. It couldn’t actually fire him, I guess, because that would mean admitting that Working Families is a wholly-owned subsidiary of the retail giant rather than an independent citizens’ group, but he soon announced that he was stepping down.

The question is whether Wal-Mart has been unlucky in the reputation setbacks it has suffered this year, or whether despite it’s best efforts to repair its image, what’s happening is just the company’s true character showing through.
Mid-Atlantic Blogging: I’m blogging a little sporadically from the Queen Mary 2, somewhere in the middle of the Atlantic, as I complete my long on-going move from New York to London. Internet access is neither as easy nor as cheap as I’d like, so posts are somewhat infrequent.

As many of you know, I’m headed back to the U.K. for (at least) a couple of years. I’ve actually been ensconced in my London apartment for a few months, but now the wife and dogs are joining me, and we are doing the boat thing because we didn’t want to fly Jake (our English bulldog) whose already labored breathing could be upset by heat, excitement and air pressure, all factors in air travel.

The kennel facilities on the Queen Mary are quite nice, the crossing has been smooth, we get to visit with the dogs (the other one is Molly, a Shetland sheepdog) for up to six hours a day, and Robinson, the kennel attendant is both pleasant and extremely efficient. Both dogs seem to think this is a fine adventure. I’d recommend it to anyone who has to transport pets and who has six days to take out of their schedule to do so.