ARTICLE

By Bill Nielsen

Your Company’s Response in the Wake of Negative Events Can Have a Profound Impact on Its Reputation

Written by Bill Nielsen

So, let’s be clear up front: although the title of this article may sound promising, there is no easy formula for salvaging, repairing, or restoring a previously solid reputation in the aftermath of a negative event. To suggest otherwise is to trivialize a critically important dimension of the standing of any organization, and that is its integrity and trustworthiness.

These are character traits that emerge only over time. They are hallmarks of public expectations and acceptance of good behavior. Hard-won public trust, once shaken, is very difficult to restore—particularly in the short term. Someone observed that you can repair a broken China teacup, but it’s never quite the same afterwards. It is also true that some negative incidents are never forgotten. Their impact may fade over time, but they become part of the legacy of an organization. For example, Exxon will forever live with Valdez; Union Carbide with Bhopal; Dow with napalm and Agent Orange; and, Johnson & Johnson with Tylenol tampering.

But another truth is that cataclysmic events often strengthen the character and resolve of organizations over the long term as they try to assure that crisis events are never repeated. This is certainly true for the organizations mentioned above and many, many others that have experienced events that have shaken them to the core.

While we can learn from history, one can only wonder how some of the events mentioned would play out today in this age of…let’s call it “hyper-socialization.” Many who have studied moments of crisis and recovery in today’s world point to the imperative of strong, values-based, organizational cultures as holding the best hope for guiding the management of crisis events and restoring public trust. As understanding of this dynamic has advanced, the importance of internal or employee participation in a shared-values culture has emerged as an absolute requisite. A principle of the practice of public relations advanced by the Arthur W Page Society is to “realize a company’s true character is expressed by its people.”

Today, smart CEOs get this, and clear statements of organizational values and employee enrollment have become commonplace in well-managed organizations. This has the effect of conditioning them to handle times of stress and crisis.

Although it may be hard to believe, there were just two simple but fundamental precepts that formed the overarching response Johnson & Johnson made to the Tylenol product tampering incidents of 1982 and 1986. They came straight from the Corporation’s statement of values: put the consumer first and tell the truth. Such direct and practical guidance seems almost too simple. It begs the question of how this company really managed to salvage its reputation and restore confidence in its brand in the wake of such horrific events and set the standard for crisis response for decades to come. Further, how could this case have any relevance to the vastly different environment of today—32 years later—in which companies and institutions deal with moments of crisis in a highly socialized, litigious, and fast-paced world? The answers: it was that simple and it does have relevance, but perhaps not in the way the case has been taught, historically, where emphasis has been placed on the company’s rapid response.

Although it didn’t feel that simple in the moment of crisis, both Jim Burke, then CEO, and Larry Foster, VP of Public Relations, would later say that in the midst of great uncertainty initially about how such product contamination could have occurred, whether the company was at fault, and how extensive the contamination might be, possibly endangering the lives of many others (seven people died from cyanide-laced Tylenol capsules in Chicago)—despite the chaos of those early moments, both credited their initial commitments to the truth and putting the consumer first with giving them a firm foundation on which to make good decisions through rapidly unfolding events.

Importantly, while they were concerned about the corporation’s trusted reputation, neither Burke nor Foster managed this event so as to “minimize damage.” That’s an important and telling truth. Foster’s policy for media relations as the crisis broke was simply: “We’re going to tell them what we know, and we’re not going to tell them what we don’t know.”

Johnson & Johnson executives and their management team members were not saints, but they had all recently recommitted themselves to a values-based culture as articulated in the document “Our Credo,” which was written by General Robert Wood Johnson, Jr and first published in 1943.

Our Credo is a single-page statement of values and responsibilities and is the longest-standing expression of corporate values in the world. It has served as a model for many other organizations. Four tenets frame the company’s responsibilities: first to consumers, second to employees, third to communities, and fourth to stockholders.

In the late 1970s, prior to the events of 1982, Jim Burke had challenged management to either commit to these values or “take the thing off the wall.” It was a provocation of historic significance for the company.

The lessons in “crisis management” drawn from the episodic events of 1982 and 1986 are too numerous to recount here and are not the point of this article. However, some important reflections have emerged on the impact these events had on the reputation of Johnson & Johnson, and many other corporations that have learned to manage those aspects of their public standing that impact their reputations. We are finding that strong “corporate character” trumps “rapid response” when it comes to surviving the moment and restoring trust.

The term “reputation management” is, unfortunately, a widely used misnomer. Reputations cannot be “managed,” per se. Certainly, organizations can manage the images they project; however, a good reputation is a quality that is bestowed by those who observe an organization’s behavior—over time—to see if it is consistent with the values that organization has said are important and against which they commit to conduct their business affairs.

Abraham Lincoln’s oft-quoted remark bears repeating here: “Character is like a tree and reputation is like a shadow. The shadow is what we think of it; the tree is the real thing.” Let’s add here that it’s important to nurture the tree and not just its shadow.

A good reputation signals a high level of integrity, which is the result of consistently acting in accordance with expressed values. Herein lies the hope of the regeneration of trust, which is the ultimate underpinning of success and significance for an organization. It is also at the heart of restoring or salvaging reputations that have been tarnished.

The importance of an organization’s commitment to values and the acceptance of responsibilities consistent with those values cannot be overstated. This is fundamental and essential in today’s world, where demands for authenticity are paramount to success.

Unfortunately, some management groups and their boards of directors still tolerate high levels of reputational risk by not coming to grips with who they are and what they value. In today’s world, being thrust into the public spotlight as a result of crisis is the worst time to make a good first impression. There is much to be said for the value of investing over time in the bank of public trust.

More unfortunate is the possibility that crisis events are managed with the first priority on damage control and minimizing the impact of bad news. Instead, obviously, management’s focus in times of emergency should be on doing the right thing. Of course, this is easier said than done, especially in the stress of the moment.

As I was part of the Johnson & Johnson culture from 1990 through 2004, as VP, Corporate Communications, I came to appreciate the value of its strong Credo culture, especially given its far-flung and highly diverse operations and decentralized management structure.

Reflecting on that experience and others earlier in my career and since my time at Johnson & Johnson, a kind of mantra for crisis management has emerged. I would suggest there are three parts or frames through which management teams ought to initially size up the crisis situation with which they must deal. They are: “What do we know? What do we believe? and What are we going to do?”

Just as Jim Burke and Larry Foster found a firm footing for their initial work on the Tylenol tampering crisis, I believe this frame can be effective in giving crisis teams initial direction in even the most chaotic events, setting the stage for decision-making that is consistent with their organizational values and finding the right thing to do.

First, of course, is to consider what has happened and ask all the questions necessary to discover all aspects of the event. Importantly, what is not known is crucial. Discovery begins to suggest what actions are necessary. But before formulating a response, it is important to ask, “Based on our values, what do we believe about what we know about what has happened?”

Asking, “what do we believe” about what we have learned is the crucial step. This forces the discussion to take into account the values, which in turn carries the higher likelihood of understanding and agreeing on the “right thing” to do.

Doing the right thing isn’t the be-all and end-all of restoring good reputations in the aftermath of crisis. But whether determined ethically, morally, or socially, that genuinely “right” thing is more apt to emerge from a firm foundation of shared organizational values—values that are formed on the basis of what is important about the organization’s mission and the responsibilities it accepts for being what it is. Over time, these “right” decisions, actions, and behaviors become the rebuilding blocks of organizational integrity and generate levels of trust that are hard to shake.