Written By: Andrew M. Apfelberg, Esq.
Los Angeles, California
Today’s ubiquitous social media and 24-hour news cycles create a constant court of public opinion for businesses and corporations. How a company manages the public’s verdict can lead to either derailment or opportunity.
Historically, executives braced themselves for the public outcry and high-risk litigation triggered by such large-scale crises as tampered Tylenol or oil spills.
What’s new is the influence public opinions increasingly have in day-to-day issues and business deals that previously would have flown under the radar. Recall the recent heat Facebook took when it chose its own COO, Sheryl Sandberg, for its board of directors.
How should a smart business act in a world that watches and comments at the speed of a keyboard stroke? It is possible to balance legal risks, company survival and the judgment of the public. The next time your company contemplates an acquisition, introduces a new product or service, or finds itself in the crosshair of a product recall, here are tips for positioning your company in front of a high-profile event:
1. Prepare for the Unexpected
It’s the element of surprise that frequently causes a company to fare poorly in public.
The public is unpredictable. Company deals and advances that you viewed as positive, such as a consolidation to increase shareholder value or a product rollout, can cause unexpected negative reactions. Preparation is the only cure for surprise.
Act before trouble arises. Assemble a team to devise and execute a comprehensive response plan. Team members should include internal communications and management personnel, along with outside legal counsel, and public relations and investor relations professionals.
It’s critical for key advisors to be accustomed to performing cool and calmly under pressure in the public eye.
2. Manage Stakeholders and Perceptions
Early in the event, pause and think deeply about the publicity’s affect on employees, shareholders, customers, suppliers and vendors and other stakeholders. Each group has differing financial, emotional and ethical reactions that you need to identify and address. Manage their perceptions – the facts are secondary. Focus first on your critical constituencies: clients, customers, shareholders and vendors. Don’t let competitors, opposing lawyers, regulators and others define your agenda.
3. Remember the Human Factor
Before you slot people into categories, such as customer, employee, vendor, shareholder, lawyer or reporter, view them as human beings first and foremost. Each group will have differing emotional responses. Commonly, people want to be made whole and feel heard more than they want to engage in the legal process and a windfall.
For example, when allegations of tainted pet food came to light, the manufacturer faced enraged customers. To turn around the potentially company-sinking maelstrom, the manufacturer did not hide. It stepped up and got ahead of the issue by “walking the land and shaking the hands.” Responses were framed to address the deep personal connection between pet and owner. The manufacturer assembled a war chest and offered reparations, including a subsidized pet adoption program. Not only did the company’s approach hit the appropriate emotional note, but it cost far less than defending litigation nationwide.
4. Use Social Media and the Press as a Tool
Use multiple online and traditional media outlets as a tool to understand how your company is perceived. These same media venues are available to disseminate your company’s message.
In communication, consistency is power. Outward-facing messages should be consistent and directly address each stakeholder group’s concern. Messages to employees and other internal audiences, who will in turn share those messages with the outside, should be identical to your outward messages, and include findings of your internal team.
5. Apologize without Admission and Other Business-Smart Legal Strategies
Issuing “no comment” statements is a common fallback position favored by some legal counsel. But it’s not necessarily a good business move and usually plays terribly in the court of public opinion.
Smart legal strategies go beyond the strict letter of the law. They take into account the business fallout, both short and long term. With skilled legal guidance, your company can bypass the “no comment” trap by offering a statement or apology without admitting wrongdoing.
6. Write Your Own Ending Even if the initial limelight caught your company off guard, aim to close the matter on your own terms. Clearly demonstrate and communicate the changes your company instituted and any future plans. Following the tainted pet food crisis, the manufacturer’s sales increased significantly, due in large part to its on-target communications and follow-through actions with customers, the press, distributors and suppliers.
Whether in your daily operations, during a major transaction, or defending bet-the- company litigation, the court of public opinion need not lead to a damning verdict. It all depends how you manage it.
Andrew Apfelberg is a corporate and finance attorney for middle-marketing companies. He acts as outside general counsel and advises in significant transactions such as mergers and acquisitions, private equity and other financings, joint ventures and licensing.