Honest Communication Is Not Optional

By Eric Seidel, CEO
The Media Trainers®

Cyber space is bloated with articles, blogs, video and audio criticizing and condemning businesses and their leaders, helping to form negative impressions. Online examples are easy to find:

The people at the top in general are the subject of a recent blog post entitled The Demonization of Corporate Executives.

A major air carrier, often its own worst enemy as pointed out in this space earlier this year (United’s PR Goes Down in Flames), is the subject of even stronger criticism in the blog of Forbes contributor and marketing expert Shaun Rein, founder of China Market Research Group. He does not mince words in this post: United Airlines' 3 greatest flaws.

When a passenger-filled JetBlue sat on a frozen tarmac for hours on end, the blogosphere went ballistic. One site defaced the JetBlue logo and its promise.

And, in the current angry environment over bailouts, when AIG chose to dish out millions in “bonuses,” the backlash was long, loud and predictable, as noted in this post: Why AIG is Getting Such a Bitter Reaction.

Executives complain they don’t know how to deal with it all. They actually do. It really comes down to wanting to. As pointed out in United Airlines' 3 greatest flaws, the airline’s statements about customer care rang hollow. They were only words, unsupported by the actions of management and employees.

Communication, first and foremost, is critical. Today’s CEO has got to be able to communicate effectively and honestly to a bevy of constituencies. What you say—promise—and how you follow through will answer the question of How Is Your Company Being Perceived?

This era of new media is a double-edged sword. Use it honestly, openly and authentically to protect your name and reputation.

Ignore it at your peril.

Congress Fiddles; Does Business Enjoy Being Burned?

By Eric Seidel, CEO
The Media Trainers, LLC

“Retention bonuses are a form of extortion.”—Barney Frank on CBS’ Face the Nation, 3-22-09.

While public anger in reaction to the AIG bonus payments is understandable, knee-jerk legislation from Congress is not. Yet, on top of the punitive 90% surtax bill already passed by the House, Financial Services Committee chairman Barney Frank now has his sights on all companies receiving federal bailouts (a/k/a TARP). He will be rolling it out this week (click on video below). In essence, it puts more of Washington into corporate boardrooms. Is that what you want, or need?

In addition, there’s talk of using “reconciliation” by the Democratic majority in Congress to stifle debate and amendments when the budget, healthcare reform, energy and bank bailout legislation come to the floor.

How far does Congress want to take this? And what is business willing to do in response? Is there concern about the federal legislature having its hand so deep into the management of private business? How are your most important stakeholders supposed to feel? What are you doing to address and impress their feelings?

While Congress is busy tapping into public anger with poorly thought out bills, the businesses of America seem to be MIA. Unless they’re called onto the Congressional carpet for hearings where members can make points with constituents, business leaders seem to be lying low. Yet, now is the time to speak up, as is so effectively explained in a white paper from Acumen Strategies.

There is too much at stake to remain silent.

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.