Big Tech Has A PR Problem. Can It Close The Trust Gap?

A new survey of 31,000 people in 27 countries has documented what most of us in PR know – Big Tech has a reputation problem.

For years, the enormous role technology plays in our lives and our reverence for brands like Apple and Amazon shielded the sector from greater taxation and regulation. But things are changing, and shifting public opinion is one reason why. According to reports on the latest Edelman Trust Barometer, public trust in tech companies has “cratered.” The sector has dropped from being seen as our most trusted industry in 2020 to only the ninth most trusted business category in 2021.

As a sector, technology has lost its luster

Favorable views of tech companies on a worldwide basis fell six points, from 76 to 70, based on a scale of 0-100. It’s the lowest point for technology in the 11-year life of the survey in 17 of 27 countries, including the U.S. Worse, social media companies averaged a score of just 46, below all other business categories. At a time of huge partisan polarization, one thing that brings people together, it seems, is resentment of Big Tech, especially the Big Four —  Facebook, Google, Apple, and Amazon. Throw in Twitter for good measure.

The news isn’t all bad. So far, Wall Street isn’t too bothered by the reputation hits. And even in the Trust Barometer, businesses in the tech sector performed better than some other industries, including financial services and automotive. And the industry’s reputation problems in matters from data security to diversity are well known. When called out, CEOs like Mark Zuckerberg apologize and pledge to do better. Sometimes they do make positive changes, like Facebook’s plan to combat misinformation about COVID-19 vaccines.  Yet it’s hard to escape the impression that the companies are led there kicking and screaming.

Can Better PR Solve Tech’s Reputation Problem?

Of course the PR folks at Edelman had some advice for the prominent tech companies whose reputations are now suffering. The firm advises them to “share prosperity” by offering new jobs and presumably skills training; to communicate more clearly about “fairness” and use “explainability”;  and to embrace diversity, equity, and inclusion. We’ve heard this before, of course.

But the trust dilemma, as in most cases, goes beyond what PR can fix. Big Tech’s problems are a reflection of its failure to grapple with problems and issues resulting from their power and influence. There’s more that technology companies can and should do.

Show transparency

One industry that’s a match for Big Tech may be the one that funds it — Big Advertising. P&G’s Marc Pritchard led the call for change, claiming deep-pocketed marketers are left in the dark on matters of data collection, privacy, and billing across the media supply chain. P&G spoke for Big Advertising when it called out “massive media waste, outright fraud and issues of brand safety,” among other things. Pritchard was targeting the ad tech ecosystem, not necessarily giants like Google and Amazon. Yet the big guys, too, are feeling the heat, and they’ve responded with greater transparency. That’s because big advertisers are taking control back, bringing in their own data scientists, and managing their own platforms. As Pritchard notes, “For too long, we’ve been wowed by shiny objects, overwhelmed by big data and intimidated by algorithms. We outsourced too much work, taking the head fake that media was so technical and advanced we couldn’t possibly handle it ourselves. No more.”

Take responsibility

There’s another kind of transparency that leaders of any tech company would do well to adopt – open and transparent communications. Anyone who watched a recent legislative session involving the heads of Facebook, Google, and Twitter knows that the goal is to obfuscate rather than inform. It doesn’t help that most of Congress is pretty clueless about the sector. But you don’t need to be a PR expert to spot the problem. It goes beyond PR to the core issue of accountability. The social platforms in particular are still trying to have their cake and eat it, too. They want the stickiness and clout of a top media company, yet with all the freedom of an “agnostic” platform. That implies no responsibility whatsoever for its content or the impact of that content, no matter how toxic. It doesn’t work that way.

Redefine data ownership and privacy

This is the issue that grabs the headlines. The sector’s reputation slide accelerated when Cambridge Analytica allowed the personal data of millions of Facebook users to be used for political advertising without their consent. Though the coverage at times exaggerated the depth of the scandal, it pointed to a very real problem. And things have changed since then. Google and other browser companies have pledged to stop supporting cookies, those pieces of data that websites store on your browser to track your activity. Yet what they haven’t fully reckoned with is the value of customer data and the customer’s right way to share it. Some experts believe that the large tech companies should simply share profits from monetized personal data with those who give them permission to use it. Those schemes don’t seem realistic (or very profitable for consumers). But the point is this: the companies who step up with reasonable positions on data ownership and regulation will win, even though critics will never be satisfied. It’s a question of good-faith action.

Crack down on misinformation

Misinformation is the pernicious problem in my book due to its toxic impact on our culture. It’s complex because even the definition of misinformation is divisive. Some conservatives accuse large social media platforms of de-emphasizing or shadow-banning their content. But lies are lies. There’s still such a thing as objective truth.  The bad-faith protests amount to “working the refs,” and it’s a tired tactic. As the Capitol attacks and the explosion of the QAnon following have shown, social media is like gasoline for lies and false propaganda. Social media has given birth to a monster, and everyone knows it. Balancing content moderation with censorship is a tough and complicated problem, but it’s well within these companies’ power to improve the situation. And it’s the biggest single thing they can do to restore Big Tech’s reputation.

Be a part of the solution

The large technology companies have, in fact, made progress in each of these areas. But there’s one commonality. Each step forward has come in response to the threat of real business consequences – more stringent regulation, or even a breakup of the giants. Nothing is proactive. Nothing seems done out of good faith.

When an industry is attacked, there’s a natural tendency to close ranks. Often critics don’t understand the ins and outs of the business nearly as well as insiders, and at times they’re flat-out wrong. I’ve seen it myself in occasional “exposés” of PR tactics that distort what we do. It’s easy to portray a nuanced situation with a big brush. So the defensive posture is understandable. But it’s the wrong attitude for an industry that’s being scrutinized from all sides.

Ex-Googler Jessica Powell said it well. “We discredit the outsiders rather than admit their overarching point is directionally accurate (even if their solution is silly—which, yes, almost all solutions involving only human moderation are.” She favors a cross-industry approach that has a precedent in collaborative efforts to tackle child sexual abuse content, for example.

I don’t have the answer, but this argument is the only realistic one. Some kind of regulation of Big Tech is inevitable, so it makes sense for the industry to come together, embrace it, and be part of the process. In good faith. It’s the only way out of the reputation hole. And it has the additional benefit of being the best and most feasible solution to the challenges that face all of us.

Big Business Must Help Us Unify

Pundits and politicians have bemoaned our country’s cultural and partisan divisions for years. Yet things have gotten worse. There’s just not much that brings us together these days. We’ve seen an erosion of confidence in our major institutions –  government, faith groups, and media, among others.

I’ve long thought that this perfect storm of disunity represents an obligation – and an opportunity – for corporate America. It’s time for the business community as a group and individual businesses as brands, to help us heal the divide. In the wake of the shocking violence last week, that may be starting to happen, and there’s a role for PR and corporate communications. After all, we are all about credibility. But it’s now America’s reputation that’s on the line, and the right messaging isn’t enough.

Why business can help

The roots of what happened Wednesday are deep. But big business is in a unique position to help restore confidence in our systems. Large companies are mostly bipartisan. Citizens and media respect and listen to them, and elected officials count on their support. Most have huge advertising and marketing clout. Sure, they have their own best interests and that of their shareholders in mind, but they rely primarily on facts and numbers, not ideology or opinions. After years of staying out of most political and cultural controversies, many corporations spoke out during the Trump administration, especially following the murder of George Floyd. Now, the stakes are higher.

As images of the flag-waving mob filled our newsfeeds, business groups mounted a strong response.  The National Association of Manufacturers, a business lobbying powerhouse that has welcomed many of the president’s policies, pointed a finger directly at Mr. Trump and urged his removal.

“The outgoing president incited violence in an attempt to retain power, and any elected leader defending him is violating their oath to the Constitution and rejecting democracy in favor of anarchy. Anyone indulging conspiracy theories to raise campaign dollars is complicit. Vice President Pence, who was evacuated from the Capitol, should seriously consider working with the Cabinet to invoke the 25th Amendment to preserve democracy.”

Many AAM member companies offered comment in support of the statement. Other groups, including labor unions, the National Retail Federation, and the Chamber of Commerce, followed with strong statements of condemnation. The AFL-CIO called the riot “one of the greatest assaults on our democracy since the Civil War.”

Companies pause pursestrings

What’s encouraging is that other businesses were even more pointed in their actions, putting their money on the line. By Monday, Marriott, Blue Cross Blue Shied, Commerce Bancshares and Citibank said they will stop donating to members of Congress who objected to the certification of the Electoral College vote. CVS Health Corp., Exxon Mobil, FedEx and Target are reported to be reviewing their political giving. Still others, including Bank of America, Ford Motor Co. and AT&T, say they will “take recent events into consideration before making future donations.” I’m not sure what that means, but it’s clear that every major corporation is looking at its public affairs, lobbying, and candidate donation commitments in a new context. This is big. And in what might be the unkindest cut for Trump, organizers of the 2022 PGA Championship canceled plans to host its event at his Bedminster, N.J. golf course.

To be sure, many commitments are vague or open-ended, and the repudiation comes after several corporations chose to look the other way for too long after the election results were confirmed. Many overlooked inhumane policies or controversial tweets because they loved the administration’s tax cuts. As Starbucks founder Howard Schultz put it, “The Trump tax cut was fool’s gold.” Last week, those businesses woke up – too late to tamp down the lies that led to the insurrection, but not too late to help repair the damage.

The president loses his MAGAphone

The most attention-getting corporate responses were by the tech companies who control social media platforms. Weeks after slapping labels on many of the president’s tweets, Twitter suspended his account, then banned it altogether. Facebook announced a suspension until after the inauguration, and Amazon Web Services took the extraordinary step of denying hosting services to right-wing platform Parler, a destination for #StoptheSteal organizing. The move forces Parler offline until it can find another host.

These actions raise questions about the motives of companies like Twitter and Facebook. The suspensions don’t violate free speech, as some have alleged. But the tech giants have been rightly accused of wanting to have their cake and eat it, too – the freedom of a neutral tech platform with the scale and sway of a media company, yet with none of the accountability. And their actions come just after the Georgia runoff elections that gave slim control of the Senate to Democrats – many of whom have pushed for tighter regulation. But their motives don’t have to be pure for the actions to make an impact. If nothing else, it sets a precedent for the future.

A “truth reckoning”

What does it all mean, and how should corporate communicators behave? First, I think we can’t underreact to what happened. What may have looked like a clown coup on Wednesday now emerges as a violent mob bent on insurrection and very real harm. The videos are ghastly, and more will surely come out. Everyone can unify around a position that rejects violence.

Corporate America can also stand up for objective truth. We’re witnessing this trainwreck because reckless lawmakers claimed the 2020 election was stolen, and their lies were amplified within the right-wing media ecosystem. As much as I hate to see lawsuits against a media outlet – any media outlet – it was impressive how fast NewsMax and OANN backed down after being threatened with defamation complaints. Our judiciary is probably the only U.S. institution that has held up during the president’s unceasing attacks on the integrity of our election, so let’s use it when other methods for accountability fail.

Business media can also step up, and it has. Forbes did something unprecedented. In what it terms “a truth reckoning,” it is calling on corporate America not to let the “chronic liars cash in on their dishonesty” by hiring Trump administration press secretaries as communications officers. Reeling off a list of former administration presssecs from Sean Spicer to Kayleigh McEnany, Chief Content Officer Randall Lane points out that in PR, “credibility is the coin of the realm.” They are words to warm any CCO’s heart.

“Hire any of Trump’s fellow fabulists above, and Forbes will assume that everything your company or firm talks about is a lie. We’re going to scrutinize, double-check, investigate with the same skepticism we’d approach a Trump tweet. Want to ensure the world’s biggest business media brand approaches you as a potential funnel of disinformation? Then hire away.”

Then there’s the advertising clout of big business. In my opinion, ad boycotts are tricky. They’re invoked too often for silly reasons and they often fail to produce the desired results. But now is the time for every top advertiser to scrutinize its traditional media and digital/social commitments to ensure they’re aligned with corporate values – and common sense. The election lie isn’t going to go away, but it cannot be allowed to fester and grow.

The opportunity for business communicators

Finally, businesses must support their communities with leadership, backed by solid communications about their intentions and actions. There are plenty of bipartisan issues and initiatives to champion. There are opportunities to speak out on tough issues without being divisive. There are ways to fight back against malignant propaganda about our institutions through public service campaigns, advocacy, and one-on-one diplomacy. Our glorious and imperfect country has suffered under a lack of leadership, but there’s nothing like a little sedition to bring us together. As influencers and advocates for business leaders, we in public relations all have a role.

Will Jones Day Weather The PR Storm?

Elite international law firm Jones Day faces a reputation crisis as a result of its work supporting legal challenges to the results of the election. Controversy isn’t new to Jones Day, but this situation is a bit more fraught. Here’s why.

As any professional services company knows, the stakes grow if your clients are involved in a negative-PR situation. And on Tuesday the Lincoln Project, that snarky band of never-Trump Republicans who spent $42 in scathing ads and mean tweets to defeat the president, announced a TV, digital and social media campaign accusing Jones Day of undermining democracy. Now, the Lincoln Project intends to draw the firm’s clients into the fray.

No stranger to controversy

Jones Day has weathered plenty of criticism in the past. It was hit with an employee gender-bias lawsuit in 2019, and just last month Warren Buffet’s Berkshire Hathaway sued the firm for fraud over a transaction that went bad.

But the stakes rose Monday when a prominent New York Times story hit that amplified the situation.  “Growing Discomfort at Law Firms Representing Trump in Election Lawsuits” describes concerns among lawyers at Jones Day and Porter Wright, a less well-known firm that has represented the Trump campaign for legal challenges in Pennsylvania.

Jones Day has worked with the president since 2016, when partner Don McGahn began to advise the Trump campaign. The work grew after McGahn became White House counsel and has continued after his return to the firm. It drew scrutiny then, but now it much more polarizing because the Trump team’s legal actions are widely seen as frivolous but dangerous. The objective, it seems, is not to overturn the results of the election, but to sow doubt and erode confidence in the system itself. That is a tougher position to defend.

Lincoln Project set to raise the game

The Lincoln Project campaign isn’t large – it’s described as half a million in spending – but the group is good at raising attention on social media platforms and generating earned media through cable TV interviews. (These are the guys who made hay with a Times Square billboard featuring ads about Ivanka Trump and Jared Kushner, who promptly threatened to sue them.) Invoking some of the law firm’s large clients, Lincoln Project partner Rick Wilson told The Washington Post, “I’d like to know how General Motors justifies working with a company that’s aggressively seeking to undermine the validity of a free and fair democratic election.”

Does GM consider this a problem? Probably not. Even if so, will public pressure change anything? We see concern about such situations more often at PR agencies, as when Edelman backed down after employees protested its work for ICE detention company GEO Group. A giant law firm like Jones Day is more insulated from reputation issues than a PR company who advises about reputation for a living. And it may not want to bend principles about sticking by clients by bowing to public criticism on Twitter.

The drip-drip can have an impact

Yet employees are clearly upset about the work; some complained (on background) about “heckling” and one lawyer at Porter Wright has resigned. Most importantly, Jones Day hasn’t made any kind of statement defending its work. It had no response to questions by New York Times reporters, which is baffling. The silence gives the impression that it’s ambivalent about the work, or maybe unconcerned about its reputation among its own partners and the community at large.

Then there are the clients. It seems to me that the controversy is more likely to deter new clients than to pressure existing ones to drop their legal counsel. Why invite scrutiny if there’s another law firm to handle your business? If I were Jones Day, I’d be looking for a quick and quiet resolution to the legal challenges that by all accounts have no chance of succeeding.

If things drag on for weeks, the drip-drip-drip may actually have an impact. Jones Day earned $4 million for its Trump work this year — an insignificant sum for a firm its size. Most prominent clients come with bragging rights, but the upside here isn’t clear. Are the fees and the high-level contacts worth what may be coming?

*Late Tuesday Jones Day posted a statement on its site in response to the controversy. The statement asserts that the firm represents neither President Trump nor any affiliated party and that its work does not seek to contest election results. It goes on to define the work very narrowly as “representing the Pennsylvania GOP in pending litigation brought by private parties in April 2020” around the Pennsylvania Supreme Court’s order to extend the deadline for return of mail-in ballots. It asks for media to correct “numerous false reports” about its work.

Goya And The Art Of The Brand Boycott

The consumer boycott is a time-honored tactic for those who seek to force political or social change. But do boycotts ever work?

Consider the recent backlash dished out to Goya Foods CEO Robert Unanue after Unanue participated in a White House roundtable on opportunities for Hispanic Americans. As he announced Goya’s involvement, Unanue praised president Trump’s leadership. He observed that the country is “truly blessed […] to have a leader like President Trump, who is a builder.” Unanue went on to compare the president to his immigrant grandfather who had founded the company he now runs.

The reaction to Unanue’s words among many Hispanics was predictable and swift. Boldfaced names from Alexandra Ocasio Cortez to Lin-Manual Miranda tweeted in support of a boycott. They used hashtags #goyaway and #boycottgoya, with accompanying media coverage.

The hits kept coming. The Hispanic Federation released a statement criticizing Unanue’s comments in light of the president’s track record and rhetoric about Hispanic immigrants. To many boycotters, the CEO’s words were simply at odds with the values and well being of its core customers.

When a boycott sparks a buycott

Yet, just as quickly, Goya’s proponents pushed back with a grassroots tactic of their own. Many tweeted urging a #buycott of its products, with one notable GoFundMe raising over $300,000 to buy Goya foods for donation to the needy. The president’s daughter famously got into the fray, and just like that, black beans become a political statement.

One irony of the situation was that Unanue was at the White House to announce Goya’s donation of a million cans of chickpeas and another million pounds of goods to food banks – a part of its admirable history of charitable contributions that was lost in the sauce of mutual recrimination.

Goya was clearly unprepared for the fuss, as its handling of a friendly phone interview with The Wall Street Journal showed.

Through all of this, I can sense the PR woman fret, and I hear a scolding administered to Mr. Unanue in the background. The communications team’s risk-aversion becomes even more evident after the interview is over, when Mr. Trump and his daughter Ivanka tweet photos of themselves posing with Goya products. I email Mr. Unanue on Thursday asking for comment on the endorsement, and he responds with an expression of gratitude to the first family.

An hour later I receive an email from a different PR woman: “We’d like to retract and edit that quote immediately. Please see below for the approved quote.” The approved quote makes no mention of Donald or Ivanka Trump. Two more hours go by and I get yet another email from PR, retracting the reworked quote altogether.

Never say those PR reps don’t earn their salaries.

Brand boycotts rarely succeed

So, who’s winning the PR war here? Between the pro-boycott noise and the #buycott clapback, the Goya situation may be a draw. The fact is that most boycotts fizzle. And experts say they don’t usually harm the bottom lines of the brands or companies targeted. Barely a quarter of them result in desired change.

Yet the goal of a boycott should be in the media coverage and brand reputation harm (or benefit) it generates. A study by Mary Hunter-Dowell and Brayden King shows that. A successful boycott isn’t about lost sales or financial pressure. It’s about negative media headlines that persist. “The no. 1 predictor of what makes a boycott effective is how much media attention it creates, not how many people sign onto a petition or how many consumers it mobilizes,” notes King.

A clash with brand values can stick

In my view, the bad PR is effective when it runs counter to a corporation’s character or values. After Stephen Ross, majority owner of Equinox and SoulCycle, hosted a Trump fundraiser last summer, both brands were targets of a celebrity-led boycott. A data analytics company that tracked SoulCycle signups concluded that its business slumped in the weeks following the controversy.

What made the difference? Brand image, for one. As “lifestyle” brands with large LGBT followings, Equinox and SoulCycle count on being status symbols — or at least they did in pre-COVID days. The brands also convey social responsibility commitment in their marketing, sponsoring progressive and LGBT events, so the fundraiser made them seem hypocritical at best.

By that logic, the Goya brand controversy will simmer on, because the food fight isn’t over. The Trump campaign has seized on the boycott as a proxy for the latest culture war, producing Spanish-language broadcast ads that highlight the “shameful smear campaign” against Goya in Florida.

It’s a canny move. If the president and his advocates can link the Goya controversy to cancel culture and intolerance among progressives, they can win. If, on the other hand, Goya’s critics align it with the administration’s anti-immigration policies and racist attitudes to paint the CEO as hypocritical or callous, they will have elevated the boycott above partisan politics.

As Americus Reed of University of Pennsylvania’s Wharton School writes, “If the boycott reflects a movement — rather than a moment — it can change the world around it.” Stay tuned.

Corporate Reputation And The Whistleblower Culture

As a PR person, I’ve always been fascinated by the complicated psychology of whistleblowing. Lately it seems particularly relevant. Tom Mueller, who interviewed over 200 corporate whistleblowers for his book Crisis of Conscience: Whistleblowing in an Age of Fraud, proclaims this “the age of the whistleblower.”

Look at Theranos – the health tech unicorn that crashed and burned just two years ago. Its implosion was in large part due to first-rate reporting by The Wall Street Journal‘s John Carreyrou, yet Carreyrou was originally tipped off to irregularities by a company insider. Just two months ago, luggage company Away grappled with reputation stumbles after employees shared internal messages that unpacked a punitive workplace culture.

But the most far-reaching recent example is that of Susan Fowler. Her new memoir, Whistleblower, recounts the events that drove her to document the harassment and toxicity she experienced in the now-legendary blog post about her “very, very strange year at Uber.”

So, what’s behind the whistleblowing trend, and what does it mean?

A mixed legacy

The best outcome from Fowler’s experience, and those who endured similar treatment, would be what Stephen Levy of Wired calls “the end of the high-performer defense.” In many companies, especially high-growth technology businesses, there have been different standards of behavior for certain employees. When Fowler originally complained to Uber’s HR department about inappropriate overtures from her manager, her experience was dismissed because the manager was, you guessed it, a “high performer.” Since the Fowler memo, Big Tech players like Uber and Google will think twice about excusing inexcusable behavior or implicitly rewarding it with rich exit packages even when the bad actors are let go.

Yet Fowler’s experience is a cautionary tale. Sure, she landed on the cover of Time and she’s now an opinion editor at The New York Times. Her memoir will be made into a movie. Things have worked out fine for her; in fact, a cynic might say she’s better off after what happened. But as she tells it, the consequences of her disclosure were scarier than anything most of us could imagine. She has been threatened, smeared, investigated, and shunned by people who know better. For an even uglier example, just look at the rancor toward the (officially) unnamed individual whose report ultimately triggered the impeachment of the president. There is no guarantee of protection for any whistleblower.

When culture is a barrier

Blowing the whistle sends a chill through an organization. What’s more, a strong corporate culture, rightly prized by high-growth organizations, can inhibit healthy disclosure of wrongdoing. Exposure of unethical activities can have bad repercussions for lots of employees, not just those directly involved. Rarely does a whistleblower story involve just one individual. There are those who actively participated as well as those who knew or should have known. Often there are employees who received complaints directly or who heard about them. Where does accountability begin and end? Then there are those responsible for risk-management processes that failed. Finally, there are negative consequences for employees who weren’t involved at all – from cocktail-party shame to staff layoffs.

The key, of course, is for senior managers to model ethical behavior, and to cultivate an environment of full transparency. That’s easier said than done.

A red flag about institutions

In an essay about the most famous whistleblower of all time, Edward Snowden, Jill Lepore reminds us that the prevalence of whistleblowing today isn’t a good sign. It’s a red flag. It means that systems are failing. It’s an “indictment of an entire system of accountability.” Lepore writes, “Businesses have regulations, compliance departments, and inspections. Whistle-blowing is necessary when these safeguards fail.”

So what can businesses do to protect themselves, and what can we do as a culture?

A striking commonality among whistleblowers is their persistence. According to the experts, most report problems or abuses to those in charge, and often repeatedly. They don’t usually turn to the press before exhausting other avenues.

Many companies launch investigations and, where warranted, negotiate compensation in exchange for an NDA signed by the injured party. But NDAs don’t solve the cultural problem, and lately, they don’t even ensure confidentiality. Stories about NDAs often leak, even when the details stay private. It’s not a good look – just ask WeWork or Bloomberg LP. Employers should be focused on proactive action to prevent unethical behavior in the workplace rather than taking a reactive approach that can backfire.

Like any other risk management tool, a whistleblower policy is only as good as its practice. It must send a message to stakeholders that the organization is committed to rooting out illegal or unethical behavior, and that retaliation will not be tolerated. In some cases, outsourcing is part of the answer. Anonymity helps, of course. If complainants can make reports anonymously to an outside firm, it allows for more objective reporting and the chance to correct wrongdoing without public exposure. The only cure for the epidemic of whistleblowing may be more of it.

Any crisis manager knows that it’s easier to prevent a reputation crisis than to clean it up after the fact. The same is true for a whistleblower policy. A business should encourage whistleblowing within its walls, because the consequences of not doing so will be far worse. The internal and external mantra needs to be: If you see something, say something.

Can PR Take Ownership Of Reputation?

In business as in life, reputation is everything.

Few corporate CEOs will deny that a company’s reputation colors every aspect of business, including marketing, talent recruitment, employee relations, shareholder relations, and even customer experience.

In fact, the 2017 U.S. Reputation Dividend Report calls reputation a “cornerstone of corporate value” and quantifies the dividend that corporations with a five-star rep enjoy. The report calculates that in 2017, $1 out every $5 in market capitalization came from “confidence underpinned by company’s reputation” among those in the S&P 500. And reputation’s value seems to grow as a company scales.

Reputation accounts for 20% of the average company’s value, yet the highest-ranked corporations derive far more value from reputation. Those in the top spots, like the Walt Disney Corporation and Johnson & Johnson, can claim that over 50% of their market cap comes from reputation. That’s real money.

How PR and reputation intersect

Reputation’s soaring value is good news for PR and corporate communications professionals. Yet, even though reputation management is prized, it’s not always well understood. It’s often confused with crisis management, but while the two overlap, they are distinct.

Crisis management involves responding to a simmering or sudden event that negatively impacts reputation. Case in point: the 2017 United Airlines fiasco in which a passenger was violently removed from his seat. According to research by B2B research platform, the PR storm actually made some fliers feel less safe. Even seven months later, some 30% of consumers said they would not fly on United. The airline’s slow response and initially poor crisis management compounded the damage, though its share price did rebound.

What’s in the CCO’s purview?

Reputation management, on the other hand, is more proactive than the firefighting that characterizes crisis management. It can help an organization weather a crisis situation because a well-earned reputation is like money in the bank. This should mean that the internal stewardship of reputation falls to the chief communications officer. Yet reputation management isn’t always in the CCO’s purview, at least not solely. Risk management, compliance, legal counsel, brand marketing – all may have some ownership when it comes to corporate reputation. But in most organizations PR and reputation management work together, or at least they should. For that collaboration to succeed, the role of PR and the skills involved may need to evolve.

Understanding of audiences is key

The connection between communications and reputation management means that PR officers need to adopt new skills and even functions. One is a greater grasp of research. Not all PR people have a sophisticated understanding of market research. Some think of it as a tool for measuring ROI, but it can uncover valuable insights about stakeholder and public perception. It’s impossible to monitor and measure reputation without that baseline intelligence.

Reputation management is risk management

We deal in perception, which is an intangible asset. PR people tend to be comfortable with intangible and hard-to-measure attributes. Yet those trained in communications may lack the grasp of organizational risk and compliance issues faced by many companies. More importantly, a CCO rarely has oversight responsibility in that area.

C-level access is critical

Access to senior management is all-important here. The good news for corporate communicators is that the function has been elevated in the past few years. According to a study by the Arthur Page Society, as the communications role has become more crucial and more complex, CEOs place greater value on the CCO role. The Page report, which is based on data from interviews with 31 CEOs at companies earning more than $2 billion in revenue, suggests that CEOs have expanded expectations the role of the chief communications executive. Yet only 39% of CCOs report in to the CEO.

Can the CCO speak truth to power – and make it stick?

For chief communications officers to grow into the reputation management role, they need the attention and respect of the CEO. Most importantly, an effective reputation management officer must have the authority and the courage to tell senior officers what they may not want to hear. They must be perceptive in flagging risks and persuasive in offering advice and urging change. Not every communications officer has that blend of skill, influence, and authority. But those who do will be an invaluable asset to any organization.

Why Most Boycotts Fail But Others Win

When is a boycott more than just PR? What makes it work?

Recent reports of a slowdown in SoulCycle’s business made me wonder about the staying power of customer boycotts. Why do most fade while others gain traction and even force change? If you missed it, famous SoulCycle fans were outraged when billionaire Stephen Ross, who owns both SoulCycle and Equinox, among other companies, hosted a high-dollar Hamptons fundraiser for Donald Trump on August 8th.

Led by Chrissy Teigen and other celebrities, Twitter erupted against the brands. Rival fitness companies lunged at the chance to pummel them. Crunch Gym launched a Summer Break-Up promotion, and some less luxe gyms ran snarky ads tweaking their tony, Instagram-ready image.

Like most brand-watchers, I expected the boycott to fizzle like a summer fling, but I was wrong, apparently. Data analytics company Earnest Research accessed SoulCycle’s August signups and compared them with those of a year ago. Even adjusted for a seasonal dip, SoulCycle showed a marked slump in class attendance. Average enrollment dropped a whopping 12.8 percent across all U.S. locations, compared with a “normal” five percent dip in August in a typical year. That’s unusual.

Why Most Consumer Boycotts Fail

Well-organized corporate activism, like the 2017 campaign to pull sports and business events from North Carolina after its “bathroom bill,” can be very powerful. Backed by the NCAA and high-spending corporations, the bathroom bill boycott hit the state in its wallet, and it worked. But consumer boycotts are a dime a dozen today. Experts say most don’t hurt the bottom lines of the brands or companies targeted, and barely a quarter of boycotts result in desired change.

So, what makes the difference? Why is SoulCycle feeling the burn? It may be because it and Equinox are lifestyle brands. SoulCycle adherents in particular enjoy strong social bonds and bragging rights that were dampened by the Ross fundraiser coverage. Who wants to Instagram their workout now? Most importantly, both SoulCycle and Equinox convey their social responsibility in their marketing, with sponsorships and positioning that embrace diversity and LGBTQ rights. So, the behavior of their corporate owner can seem flabby and hypocritical to members.

That’s the risk, and the irony, of corporate social responsibility. If a brand spends to build a reputation as a social advocate, it stands to lose more than if it had never invested. According to Mary Hunter-Dowell and Brayden King, who studied activist targeting of major companies, “Building a strong reputation as a socially responsible firm creates certain expectations, making incongruent behavior more noticeable and damaging to the firm’s image.” That’s logical, and it’s why some brands approach any kind of advocacy with caution.

The study also shows that the key to a successful boycott – if success is defined as desired change – isn’t financial pressure. It’s – wait for it – negative media headlines. “The no. 1 predictor of what makes a boycott effective is how much media attention it creates, not how many people sign onto a petition or how many consumers it mobilizes,” notes King. The bad PR is typically most effective when it targets a high-profile company, because reputation damage is perceived as notably harmful over the long term.

The SoulCycle and Equinox boycotts may run out of steam as time passes. Yet the short-term success offers a lesson about social activism and PR. It’s about making it a story, and refreshing that story when the initial news cycle is over.  To succeed, a social action must be orchestrated to create press coverage and social media noise above all. For major brands, a reputation injury may be more important and more effective than a blow to the bottom line.

"Stakeholder Value" Is Good PR — And Good Business

The recent move by the Business Roundtable to redefine corporate priorities by emphasizing value beyond shareholder profits is the latest indicator that corporate reputation’s importance is on the rise. The statement supporting “stakeholder value” is also a good sign for public relations professionals who preach corporate responsibility or even strategic activism in U.S. corporate boardrooms. We specialize in messaging to those very stakeholders, especially employees, partners, and customers.

Nearly 200 major CEOs signed on to invest in employees and serve customers as well as deliver for shareholders. The pledge has been embraced by big-brand Business Roundtable members from Apple to JPMorgan Chase.

Some observers take issue with the statement as wrongheaded, seeing it as de-prioritizing every for-profit company’s fiduciary obligation. The Council for Institutional Investors immediately issued a statement in response, expressing “respectful” disagreement, while reinforcing that shareholder value should remain paramount as a corporate goal.

Others have called the statement window-dressing — a gimmick to manage corporate reputation during a time of increasing concern about income inequality, hair-trigger boycotts and cultural polarization. And it’s true that the commitment itself has no teeth. Metrics, incentives, and benchmarks for progress are conspicuously absent from the pledge.

Yet, the Business Roundtable statement didn’t happen in isolation. It comes a year and a half after Black Rock CEO Larry Fink, the largest investor in the world, issued marching orders to top business leaders, urging them to deliver not just financial performance, but “a positive contribution to society.”  The New York Times calls CEO activism “the new normal, noting its rise over the past several years.

Could this mean a sea change in corporate governance? Shareholder value will always reign supreme, but increasingly, corporate leaders are linking it to stakeholder value. The 2018 tax cut and fat corporate profits are a factor, along with the spotlight it placed on rich CEO pay packages. And as we approach full employment, talent recruitment and employee retention have become business imperatives. Millennials in particular pay attention to corporate brand values, both as customers and as a part of the workforce.

The power of social media makes corporate reputation vulnerable to rumor and criticism (whether legitimate or not), and customers expect a level of engagement and participation from brands. And let’s face it, the chaos and controversy courted by this administration may also be a factor in the trend. The public is looking to the private sector for consistent leadership, positive social impact, and stability.

Is the Business Roundtable statement about PR? Sure. But the concerns that drove it aren’t likely to go away, and once corporations put their name to a pledge, they will be held accountable by stakeholders. The “PR move” isn’t just a shallow one; it’s an opportunity for corporate America to engage with audiences who, despite their skepticism, are looking for more from our institutions. For corporate leaders, the stakeholders will only grow more important and the stakes will only get higher.

How To Restore A Public Reputation

When the college admissions cheating and bribery scandal broke nearly a month ago, two names led the headlines. More than 50 people were implicated, but actors Lori Loughlin and Felicity Huffman were featured in every article. Both actors’ spouses were mentioned, and as a social influencer, Loughlin’s daughter Olivia Jade was also drawn into the coverage. But the two women were the faces of the scandal. It’s the price of fame; boldface names draw clicks.

Now, each woman is faced with a classic PR problem. Can they win back their reputation? If so, how?

Any expert will tell you that coming back from a public disgrace is a long haul. So far, only one – Huffman – has taken the first public steps toward recovery. Here’s the advice I’d give to her and her fellow defendants.

First, nail down the legal strategy

For a public person charged with a crime, the smartest legal strategy may be in conflict with the best public relations advice. PR people don’t like it when legal counsel wins at the expense of public image. But it happens, as when a public company CEO can’t admit wrongdoing due to liability concerns, despite knowing that a mealy-mouthed statement or “no comment” comment may prolong the damage. Happily for Huffman, in her case the legal and communications strategies are in sync. She swiftly chose to plead guilty and was free to move on to the next step – taking responsibility for her actions.

(In contrast, Lori Loughlin has thus far refused a plea deal, and at her court appearance she was all smiles, signing autographs for fans. Yesterday she and husband Mossimo Giannulli were slapped with more charges, so the stakes for them are higher, and the outlook for PR rehab is poor.)

Face the reality

This step is harder than it looks, and not just due to potential liability. Celebrities – even top business leaders among them – often live in a bubble. They’re surrounded by people whose livelihoods depend on pleasing them, and over time their judgment can become distorted. Many are tied to an infrastructure of agents, talent management, PRs, and support staff, and it’s difficult to upset the balance. While facing the music is often their only chance to preserve the career machine, it often feels counterintuitive, and it’s tempting to hide behind third parties.


Do it sincerely and do it well. That’s exactly what Felicity Huffman did in a statement released yesterday. A poor or inadequate apology can make the situation far worse, but as such statements go, Huffman’s is pretty good. In fact, it’s worth breaking down what works.

Take responsibility

Huffman gets several things right in her messaging. First, she admits and accepts responsibility for what she did, a key precursor to an effective mea culpa. Importantly, she makes no excuses. This is where many public apologies go wrong; we’re all familiar with celebrities who blame substance abuse, emotional issues, or a bad childhood. Instead, Huffman expresses deep remorse for her actions, admitting, “I am ashamed of the pain I have caused my daughter, my family, my friends, my colleagues and the educational community.”

Acknowledge the harm

Another helpful aspect of the statement is its acknowledgement of others. A good apology and effective PR message shouldn’t be about you, the public personality whose life has been fractured, even though it may be natural to feel that way.

Finally, Huffman apologizes to “the students who work hard every day to get into college, and to their parents who make tremendous sacrifices to support their children and do so honestly.”

That last part is key, because it hits on why the scandal infuriated so many people. The phony admissions schemes were shocking examples of how advantaged people cheat and game the system to gain even more advantage, and ordinary families were naturally outraged by it. Huffman did well to acknowledge that.

Make things right

It may sound paradoxical, but from a reputation point of view, Huffman should hope that she spends time in jail. She can’t fix what’s broken about the college admissions process, but she can pay for her crime. A reasonable penalty that includes a prison sentence will ultimately help restore her image because it will appeal to our sense of justice.  It worked for Martha Stuart, although in my view Stewart’s crime was less egregious. Of course it won’t hurt if either Huffman or Loughlin spend time doing legitimate volunteer work or donating to a worthy cause. But those steps come later.

Use media wisely

If I were advising Huffman I’d probably tell her to lie low until after her sentencing and (probably inevitable) incarceration. Repairing one’s reputation doesn’t have to involve media, and in many cases it’s better to avoid it, lest you appear to be capitalizing on the situation. For a professional actor, however, an eventual media sit-down is inevitable. When the time comes, Huffman should conduct an exclusive interview with a friendly media outlet as a way of sharing her story and completing the redemption journey. It should be honest, unvarnished, and heartfelt.

It’s a long road back, and in Huffman’s case, the admissions scandal will be in the first line of her obituary. But the cliché is true; while the media mob is a beast, especially amplified by social platforms, the American public is essentially forgiving. With the right reputation rehab and some time for people to forgive her, Felicity Huffman has a chance to return to a time when her biggest problem was which dress to wear on the red carpet.

Has Apple Lost Its Magic?

In its business and its PR, Apple has had a golden touch. For a decade sales have climbed along with profits, and its reputation for innovation has flourished. Until recently, that is.

iPhone sales started slowing several years ago, but no one seemed to mind or even notice much because prices kept going up. The profits were still rolling in.

But 2019 has been a rough year so far for the world’s most valuable brand. In January it slashed its earnings forecast, erasing $446 billion in shareholder value.

In consumer technology, it’s the norm for sales to slow and profits to erode over time. In fact, 10 years is an amazing run in a category where change is rapid and commoditization pretty much inevitable. The antidote to the latter, of course, is innovation. It’s the lifeblood of all tech companies, and Apple has mastered it as well as any. When it lacked a truly innovative product, it made up for it with a truly innovative user experience.

That’s why it was a shock last week when Apple pulled the plug (no pun intended) on its highly anticipated AirPower wireless charging pad. Air Power was meant to charge the iPhone, Air Pods and the Apple Watch all at once, without the ugly nest of wires and charging cables. The statement from Dan Riccio, Apple’s senior vice president of Hardware Engineering, was succinct.

“After much effort, we’ve concluded AirPower will not achieve our high standards and we have cancelled the project. We apologize to those customers who were looking forward to this launch. We continue to believe that the future is wireless and are committed to push the wireless experience forward.”

Apple-watchers noted that the decision was apparently sudden, because retail packaging for the second-generation AirPods feature an AirPower image. It’s almost unthinkable that the company would pull it. The charging pad was originally announced in September 2017 and scheduled for sale last year. And though it’s hardly as crucial as an iPhone or other flagship product, it’s a rare stumble and a disturbing sign that the luster is wearing off.

To compound matters, Apple started 2019 with another type of stumble – in data privacy. Privacy is an area where it has worked hard to build a reputation as a consumer champion while Facebook suffers one scandal after another over its handling of user data. At a privacy conference last year CEO Tim Cook called for an end to the technology industry’s collection and sale of user data, using a policy proposal to differentiate Apple at a time when Silicon Valley is under regulatory and public pressure. (Never mind that Apple was forced to shut down its FaceTime server due to an application bug that let callers to listen in on people with certain iOS devices. Luckily for Apple, everyone was distracted by the Facebook privacy scandal du jour, so it was a one-day story.)

Apple has never much cared about being first, only about being the best. Its genius is to command user loyalty by out-engineering and out-designing the competition, and by offering something we didn’t even know we needed. So, a delay isn’t a big deal, but a retreat is a different story. Apple may see its future as digital entertainment, but, let’s face it, it isn’t yet equipped to battle it out with Netflix and Amazon. Its brand and business identity for the foreseeable future is in elegant, innovative products and big ideas that anticipate or even shape how we use the internet.

Yet as embarrassing as it is, scrapping the AirPower was the right choice, presuming serious quality issues. If Tim Cook had given in to pressure to move ahead with the introduction, Apple would have risked introducing a less-than-stellar product, and that could damage its reputation far more than an aborted launch.

In the words of one tech blog, “it’s a rare case where their ambitions publicly exceed their otherwise impressive engineering capabilities.” But the stakes are now high, and the coming months will be a business and communications test for Apple. Will it be seen as an innovator, or simply a maker of pricey iPhones?