Why AIG is Getting Such a Bitter Reaction

"Anyone who talks about you...or your business...is media!"

Emotions always, A-L-W-A-Y-S, trump statistics and, usually, legitimate facts. So, even if you can see a rational reason for the latest bonuses paid to AIG executives, people are upset, angry and, in some cases, demanding retribution. And the president is looking for legal ways to recover the payments.

Syndicated radio talk host Neal Boortz makes a rational case for what might be behind these bonuses. And he accuses democrats like Congressman Barney Frank of demagoguing the issue to create anger at big business for his (Frank's) and his party’s own benefit. Maybe he’s right.

But it doesn’t matter. It’s not important.

You’d assume that AIG's leaders (or, at least someone in their PR department) understand how people, including elected officials, react when they do something like using taxpayer money (no matter how small a percentage) for bonuses, especially during a deep recession. The fact that the money went to managers of a business unit that led to AIG’s need for a bailout only intensifies the anger.

Are they “tone deaf at AIG,” as some have suggested? Do they live in a cave? Probably not, but can you make a convincing argument that they are not arrogant? Again, probably not.

Indeed, it would appear that AIG looked about as far out into the future to see the reaction to these bonuses as it did in examining the quality of the derivatives they sold that helped put us in this economic abyss.

Time and again business executives fail to recognize and anticipate the emotional backlash to their actions. They don't even seem to care. We human beings emote. And we react to our emotions. Granted, sometimes those reactions are even irrational.

But, sometimes the actions they are reacting to are irrational, as well.

The question for AIG: Could the corporation have handled this differently? Perhaps putting off any bonuses for now, or renegotiating contracts. The argument that these payouts help hold onto intellectual property (experienced managers) does little to convince the people who have been laid off or furloughed or had their salaries cut. Pay raises and bonuses have been put off, or even canceled, at many smaller businesses, often in an effort to save jobs.

AIG may be too big to fail, but it’s not too big to consider how its actions will be perceived and what that does to its public image. Executives need to understand the value of good, honest public relations. That would go a long way toward achieving their business goals, especially the ones who's corporations now are being fueled with taxpayer dollars.

You can learn from this and earlier similar situations. Consider all the possible reactions of your most important audiences. If it's a move or decision that can't wait, something that has to be done now, why not you be the first to break the news. Pre-plan what you want to say. Finally, make sure you're being honest, credible and accessible.