Jesse Jackson’s Damage Control May Pay Off
August 22, 2008
It is an unfortunate thing to get caught saying or doing something that is horrifically embarrassing. So is the case when Jesse Jackson made off-color comments about presidential hopeful Barack Obama during the taping of an interview. The comment was made between sets, when the good reverend was not aware that the microphone was on and was picking up every word he said. The comments that he made quickly traveled the media waves via video, blogs, chat rooms, discussion sites and even some folks’ living rooms! There were very few people not talking about what Jesse Jackson has said about Obama and even fewer that were not appalled by this man’s seemingly disregard and disrespect for another individual.
About a week or two after Rev. Jackson made those unfortunate comments about Senator Obama, staffers in his camp went right to work on damage control, attempting to shift the attention from Jackson by saying his “words were taken out of context”, or “he didn’t recall saying that.” However, anyone in a position of responsibility knows that you must be very careful when you’re in the public spotlight, by watching what you say, when you say it and to whom you say it. Leaders cannot afford to be loose cannons in their speech or deeds.
Quick-Thinking Media Relations Staff
One thing that Jesse Jackson’s media camp did somewhat effectively was in the way that they handled Mr. Jackson’s blurb. First off, they never allowed him to take responsibility for what he said as evidenced when he mentioned that his words were taken out of context. The next thing was offering a follow-up statement by saying that he fully supported Obama and that there were no ill feelings present with him. But what finally paid off for Jesse Jackson in attempting to prove that all is well in his political camp with he and Barack Obama was when through a recent interview where he offered glowing words of affirmation and support of the hopeful presidential candidate. He seemed to go above and beyond the expectations of amend-making by showing the two of them in alignment towards a common goal. He talked about how his support of Barack is unbiased and without reserve as this is an historical moment for the African-American race and for the nation as a whole.
What is interesting is how quickly things shifted from Jesse Jackson being the bad guy to Jesse Jackson being the comrade. Certainly, the whole idea of making nice wasn’t all Jackson’s idea, but his media relations strategist perhaps determined how much damage Jackson could do to his own political career if some type of communication or repair wasn’t done quickly to soothe stinging words. Jackson seemed to comply almost immediately. He has now shown a unified front with his political friend and instead of them being on opposite sides of the spectrum, they are now both on the same team.
Do Some Quick Clean-Up
Damage control is an issue that most every business has to perhaps deal with occasionally. It is quite frequently, if not often, that companies do or say something that is not ‘politically correct’ to say or can even be offensive. This is when it becomes necessary to step in and put out proverbial fires in order to offset any problems that the business or individual may encounter.
The media relations department of any major corporation or even that of an individual has the tricky job of fixing things that have gone awry or when trouble hits. A good media relations staff will show the organization an effective exit strategy on getting themselves out of an embarrassing or harmful situation and perhaps even offer methods or solutions that can avoid the issue coming up again. An ill-equipped media relations staff can make an already bad situation worse by not stepping in at the right time and offering solutions for an issue that could grow out of hand. If situations aren’t addressed immediately, problems that were perhaps miniscule can burgeon into uncontrollable issues. Imagine what would have happened if Jesse Jackson’s staff had not intervened when they did; his political career and any following that he had could have been further damaged or hampered by his unfortunate statement.
What would you have done if you were Jesse Jackson’s political media strategist? Was it wise to offer a follow-up so soon or should he have waited until the issue was addressed again? Perhaps Jesse Jackson realizes that if Barack Obama does in fact become the United States President, that he could help his own political career and that it would be in his best interest to be on his side politically. What do you think?
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Consumer Inclusivity Works Well For Large Corporations
August 21, 2008
What better way to get your company’s name in front of thousands if not millions of eyes than to do it through a medium with which everyone will remember? Playing board games, of course!
Hasbro will release later this month (tentatively August 26th) a new and extended version of the popular Monopoly board game called Monopoly Here & Now. The new version promises to feature such countries as Cape Town, Jerusalem, London, Paris, New York, Rome and Taipei and will be printed in 37 languages and sold in 50 countries. With this new deal, will Monopoly perhaps monopolize the board game industry?
Initially, Hasbro solicited the public’s opinion in deciding which cities would be represented in the new Monopoly Here & Now game in Januray 2008 by asking for their input in selection. Fans of the new board game had the opportunity to “vote” their selected city in and bragging rights for life. Hasbro’s idea of allowing the adoring public to be a part of the changes they’re making within their board game division was a savvy move on their part.
Often when companies want to increase the buzz about a product or service, they will make a release statement to the general public with offers of free products or a chance to partake in a new development, as the case with Hasbro. Adding to the idea of involving the public in a major business decision, Hasbro’s idea of including major countries and cities provided more of a network opportunity for Hasbro to establish themselves as industry leaders.
Why Public Inclusivity Is A Good Practice
Hasbro could very well have had their marketing and development team design and supply the new board with the countries and cities that would be included in the game. There are literal development teams that survey and research marketing techniques, consumer buying patterns and analyze which areas to concentrate on and where to focus the bulk of their development energies. When Hasbro decided to ask the public about which cities and countries should be included on their new board game, it certainly wasn’t because they were at a loss as to what to do; it was a strategy to garner public attention and create a buying sensation. Public inclusivity is a phenomenal business practice for large corporations like Hasbro because it does create a consumer buzz and because people are far more likely to buy a product where they have an emotional attachment. Companies like Hasbro create consumer’s emotional attachments by offering them chances to participate and be a part of a product’s development. Other types of this kind of consumer marketing is when there are contests to:
1.) Name the new logo for Google.
2.) Wendy’s design a new hamburger.
3.) Bloggers who maintain websites and need new Blog design’s.
Public inclusivity is ideal for companies of any size and works wonderfully for a company’s media relations campaign. Consumer marketing and spending ramps up when there are reasons for the public to get involved.
What are some things that your company can try to engage consumer inclusivity? What areas of your corporation would benefit from it?
Hyperlinks to Third-Party Information
August 21, 2008
In its recent Interpretive Release, the SEC addresses links to third-party information from a company web site. This new guidance applies only to the liability a company might face for purposes of the antifraud provisions of the federal securities laws. This guidance in no way alters their position as it relates to the Securities Act.
Rules in the Exchange Act may hold a company liable for third-party information that it links to from its web site if it could be attributable to the company. In the 2000 Electronics Release, the SEC stated that such information can be attributable to the company if either the company was involved in the preparation of the information, or if the company explicitly or implicitly endorsed or approved the information. Not surprisingly, it is the “implicitly” that makes company lawyers nervous.
The three factors delineated at the time by the SEC, context, confusion, and presentation, left plenty of room to be nervous. So, there is some new guidance to answer the principal question:
“Does the context of the hyperlink and the hyperlinked information together create a reasonable inference that the company has approved or endorsed the hyperlinked information?”
Here is where it gets scary. The SEC states that they “begin with the assumption that providing a hyperlink to a third-party web site indicates that they company believes the information on the third-party web site may be of interest to the users of its web site.” Further, the SEC states that “The degree to which a company is making a selective choice to hyperlink to a specific piece of third-party information will likely indicate the extent to which the company has a positive view or opinion about that information.”
Yikes!
I know what you are thinking. You’re thinking, “No problem, we’ll just put a notice that we don’t endorse the information and we’re done.” Unfortunately, that is not going to work. The SEC states that a disclaimer or “exit notice” alerting users that they are leaving the company web site and accessing an unendorsed web site is not sufficient. One example cited is a company that links to only one stock analyst web site and that site happens to have positive information while other analysts who might be more negative are not linked.
Best Practices
So, where does that leave our IR web pages? First, while notification is not a free pass, it is still useful in making sure that web site users are aware of when they leave the company web site and that where they are going is not endorsed by the company. To achieve this, an “exit notice” for every off site link on the Investor Relations pages is a must. No, it doesn’t let the company off the hook, but it does let the investor know what is going on and is the first step in making sure there is no endorsement.
The second task is a little more complicated. The fewer links that exist in any one area or page, the higher the probability that those links can be considered selective. On the other side, the lower the quality of the site or page being linked, the higher the probability of that link being considered misleading.
Your best bet then in providing links is to follow some basic ground rules. First, when it comes to analysts and research, never link to just one. Always have multiple links. A good way to get multiple links without having to worry about quality is to link to the big independents like Thompson or Morningstar if they have research about your company. Finally, determine if the links really belong on the Investor Relations page or if they would be better located elsewhere. Links from the IR page will take on a heavier weight than those on other areas. If the company wants to showcase recent charity work, link from the Community Involvement page or the Recent News page.
Again, none of this is earth shaking news, but a couple ounces of prevention is always worth a pound of cure.
Best Companies Corporate Governance
August 20, 2008
IR Global Rankings is one of the few firms that analyze companies for Corporate Governance practices. They published their ratings for the top 30 global companies.
Rating criteria include –
- Management Accountability (15 points)
- Board of Directors (25 points)
- Minority Shareholders Protection (22.5 points)
- Controlling Shareholders and Shareholders’ Meetings Procedures (20 points)
- Other Policies (12.5 points)
- Financial Statements and Disclosure (5 points)
While seemingly overall similar to the more popular rating agencies, notable are such evaluation statements as –
Those willing to go the extra mile, presenting additional information not required by law, such as the expensing of stock options and comprehensive information on estimates used in the accounting (for example to estimate future revenues and expenses related to pension benefits) should outperform others.
Despite the absence of a “right” approach to the use of cash generated, the company should establish and clearly state its policy and why it was adopted.
PROS
In the top 5 are two companies that I know have superior corporate governance practices, Nexen and Infosys. Visit Nexen’s Corporate Governance site and you will see a comprehensive display of policies and practices. Be sure to look at their Corporate Governance Roadshow.
Infosys also has a good display of Corporate Governance practices and policies and –
The primary purpose of corporate leadership is to create wealth legally and ethically. This translates to bringing a high level of satisfaction to five constituencies - customers, employees, investors, vendors and the society-at-large. The raison d’être of every corporate body is to ensure predictability, sustainability and profitability of revenues year after year.
- N. R. Narayana Murthy
Chairman of the Board and Chief Mentor
Also visit their Beyond Business section.
CONS
IR Global missed the Tata Group which clearly should be on their list. See my post on the Tata Group.
Despite this oversight, IR Global has a Corporate Governance rating process that stands out.
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Good Corporate Governance – Ethics Hotlines, But…
August 15, 2008
BusinessWeek published its Best Corporate Practices in January. I noted with some interest that the #6 best practice was an Ethics Hotline.
All employers talk about ethics, but the ones who provide a way to report misdeeds are the ones most likely to catch problems. Confidential ethics hotlines allow employees to anonymously report bad actors without taking their chances on the dreaded “chain of command.”
This has implications for Corporate Governance.
Most discoveries of fraud are by employees. Since Sarbanes-Oxley there has been much interest in Ethics Hotlines. You might think that there would be an increased employee use of these Hotlines. Well no, according to the Ethics Resource Centers’ 2007 NATIONAL BUSINESS ETHICS SURVEY, employees seem to be reluctant to use these Hotlines.
Reasons why employees avoid hotlines include cultural taboos on “snitching” and lack of awareness. However the main reason is fear of retaliation. Even when the hotline is outsourced, there might still be the fear that anonymity cannot be completely guaranteed.
The key learning is that Ethics Hotlines must be viewed as one alternative in a menu of practices to report ethics violations. Companies should not think that once a hotline is in place that nothing else needs to be done.
Additional resources –