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News of the World phone hacking: crisis management lessons for all businesses

July 6, 2011 Jonathan Hemus

As we observe News International’s phone hacking crisis lurch from bad to truly horrendous, it’s tempting to feel a little smug, safe in the knowledge that nothing quite this awful could ever affect our business.  But whilst the alleged behaviour of the newspaper and its private investigators sinks below the behaviour of the vast majority of corporations, there are nevertheless lessons in crisis management that businesses would do well to heed.

1) Your corporate culture has the power to create or prevent crisis

Reports from ex-News of the World journalists and other sources indicate that reporters were under enormous pressure to come up with the next scoop, whatever it took.  This would likely lead to an atmosphere where the end result is all that matters: this is exactly the culture in which crises can flourish.

In a corporate environment, similar issues can arise.  A blinkered focus on the bottom line – “I don’t care how you do it, just hit the number” – or an unwillingness to hear about problems which may hint at broader failings - “just sort it out” – are examples of this.

The best crisis management is crisis prevention: this requires leaders to set and exemplify the right culture.

2) Denial is your greatest enemy (part one)

The News of the World appears to be suffering from denial in both senses of the word.  Its initial response was to deny that widespread hacking had taken place. That early denial has been thoroughly undermined by subsequent developments. The effect is that the credibility of the newspaper’s subsequent statements are diminished.  Worse, the paper is seen as either incompetent or disingenuous in making the initial claim.

Businesses must heed this important crisis communication lesson: never make a public statement unless you are 100% certain of its truth. Ignore this, and serious reputational damage will inevitably follow.

3) Denial is your greatest enemy (part two)

Denial that there was a problem may be one of the key reasons why the News of the World has been unable to get to grips with its reputational challenge.  Businesses can suffer the same fate.  When a negative situation faces a corporation there’s a temptation to dis-believe or ignore it: leaders can find it almost impossible to comprehend that such a thing could afflict their business.  The problem is that until you recognise and acknowledge a problem, you cannot deal with it.  Beware corporate denial at all costs.

4) Pay special attention to the internally generated crisis

The News of the World is facing a crisis of its own making, created by the behaviours of its own employees.  This makes its crisis communication challenge so much harder.  The same applies to other businesses: accidents, natural disasters, even terrorist attacks all constitute crises and require professional management.  But the fact that the organisation in question is also a victim of the event gives them a degree of sympathy and understanding in responding to it. Don’t abuse this position: many businesses have suffered sgnificant reputational damage not because of the crisis itself, but because of the way in which they have mis-managed their response to it.

Far more challenging though is the self-inflcted crisis, where no one is at fault but the organisation itself.  Exacerbating this is the fact that many businesses fail to plan thoroughly for the internally generated crisis (it’s much more uncomfortable to contemplate management fraud or sexual harassment than it is to plan for a fire).

Businesses must avoid being blind-sided by internally generated crises by properly considering them as part of their reputational risk assessments, and testing their ability to respond via a well-conceived programme of crisis communication training.

Manage the crisis – don’t let it manage you

The News of the World has failed to apply effective crisis management to the phone hacking saga: the crisis seems to have managed it rather than the other way round.  And that really is the final learning for all businesses: effective crisis communication is about recognising a problem quickly; taking decisive action to address it; and communicating pro-actively to stakeholders to protect relationships and reputation.  News International appears to have failed on all counts.

Jonathan Hemus

  • Jonathan Hemus, Insignia Communications
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3 Comments

Jonathan

Excellent summary of what organisations should do in a crisis, as you correctly point out, culture plays a key role in all of this as it did with Toyota.

I would add one further point, namely don’t try and cover it all up! The lessons of history from Watergate down show us that this only exacerbates the crisis when it all eventually comes out.

My own view is that News International has not been in denial. Hubris led to attempts to cover up and will in turn lead to Nemesis!

Tom

Comment by Tom Leatherbarrow — July 7, 2011 @ 1:06 pm

Tom

Many thanks for your comment. I have to agree that in this incident, cover-up is at least as likely as denial. Neither approach is likely to be an effective crisis management strategy!

Readers of Insigniatalks wanting to hear more of Tom’s insightful views on the NOTW issue, should take a look at his own posting here:

http://willoughbypr.blogspot.com/2011/07/full-disclosure-is-only-route-now-for.html

Jonathan

Comment by Jonathan Hemus — July 7, 2011 @ 3:25 pm

I agree most corporations don’t actively intend to send the message “do whatever it takes to meet financial goals” to their employees, but executives ARE too often disconnected from “how” the challenging demands they make are achieved. In fact, in our culture work the most difficult conversation is when executives see what their employees are really thinking and saying – it’s eye-opening and almost always met with surprise.

But meeting numbers doesn’t have to be an either/or choice to doing the right thing – that’s a copout. If execs actually care about more than just making money – ie, their company’s reputation and how customers and employees are treated – then they must actively talk and walk their values across the company. In companies where employees see that happening, what’s OK and not OK is within clear guardrails.

Alternatively, when taught the only definition of success is making money, people who care about values leave; those who stay with the company take poetic license and convince themselves “the ends justifies the means.”

Any executive who thinks values are “just fluff” – or worse who says they’re important but violates them his or her own behavior – can expect their organization to slip off the precipice; it’s just a matter of time and the internet will spread the word quickly.

While extreme, News of the World is a good example of where that ends up.

Comment by Lisa Jackson — August 5, 2011 @ 9:33 pm

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