The Trump administration’s January 27th executive order banning refugees and certain legal immigrants from entering the United States galvanized businesses into action. Companies immediately affected by the ban, like airlines, scrambled to manage the impact on their customers. U.S.-based companies with global operations and diverse workforces, like Coca-Cola, Ford, Goldman Sachs, Google and Nike made forceful public statements opposing the ban. Technology and media companies expressed concern for their employees and operations. Starbucks announced plans to hire 10,000 refugees. Companies like Amazon and Microsoft joined the State of Washington’s successful lawsuit challenging the legality of the immigration ban. Apple and more than 125 other companies signed a brief defending the nationwide restraining order. Even companies that have not addressed the impact of the ban publicly are managing its fallout. From assisting affected employees to fielding inquiries from concerned employees and others, few large enterprises could avoid addressing the federal government’s sudden attempt to close U.S. borders to certain groups of people, targeting refugees and Muslims.

The immigration ban is the first of many ethical dilemmas companies will confront under this administration.

Trump signing order January 27The Trump administration brings unprecedented levels of uncertainty for businesses. The immigration ban is the first of many ethical dilemmas companies will confront under this administration. Trump’s controversial proposals include detaining and deporting all undocumented residents of the United States, including children; and creating a Muslim registry. Corporate boards, CEOs and their advisors are asking themselves how the most extreme Trump proposals would affect their company’s people, customers and communities, and how their company should respond. Companies prefer not to address these questions on the fly.

Well-managed companies anticipate risks to their business and plan accordingly. It is no surpsrise that some of the global brands moving quickly to defend the rights of their employees, customers and communities against harmful executive action on immigration in the United States have been working for years to integrate human rights considerations into their global operations. Nike, Starbucks, Coca-Cola, Google, Ford and Microsoft have all faced human rights challenges in the past – from child labor to complicity with abusive security forces to government censorship – and have drawn management lessons from their mistakes. Companies reacting to the immigration ban are pursuing many strategies used by companies seeking to meet their human rights responsibilities, but without articulating any conceptual framework for their actions.

The business and human rights movement provides a roadmap for managing business risks under Trump. Executives and managers looking for a conceptual framework to organize their responses to Trump’s policies, and road-tested tools to manage them, can apply the corporate responsibility to respect human rights to their United States operations.

The Corporate Responsibility to Respect Human Rights

The business and human rights movement provides a roadmap for managing business risks under Trump. 

UNGPs CoverBusiness and human rights” is a management discipline that has emerged over the past three decades. An international benchmark, the United Nations Guiding Principles on Business and Human Rights (2011) (PDF), reflects the working consensus among business, governments and civil society on what companies can do to meet their corporate responsibility to respect human rights. Specifically, companies must:

  • Avoid causing or contributing to adverse human rights impacts through their own activities, and address such impacts when they occur; and
  • Seek to prevent or mitigate adverse human rights impacts that are directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts.

To meet this standard, companies have adopted human rights policies, are conducting due diligence to understand the human rights impacts of their operations and business relationships, and finding ways to prevent, mitigate and remedy adverse human rights impacts.

CablammetchMost attention has focused on the human rights impacts of multinationals outside their home countries, typically in places where corporate activity is connected to human rights violations – like child labor, human trafficking and torture – and where legal accountability for perpetrators and remedies for victims are lacking. The most familiar examples are sweatshops in global apparel supply chains and complicity with abusive security forces by oil and mining companies, but advocates have shined a spotlight on the human rights impacts of companies in sectors ranging from agriculture and consumer products to healthcare and technology.

Business and Human Rights under Trump

The business and human rights landscape in the United States shifted dramatically with the election of Donald Trump.

Dodd FrankThe business and human rights landscape in the United States shifted dramatically with the election of Donald Trump.

The prospect of stronger U.S. government action to protect individuals from corporate misconduct has vanished. One of the final initiatives of the Obama administration in December 2016 was the release of a U.S. National Action Plan on Responsible Business Conduct describing the federal policies and governmental expectations for the conduct of U.S corporations operating abroad, including their responsibility to respect human rights consistent with the UN Guiding Principles. Corporate accountability advocates are rightly concerned that the Trump administration will fail to consistently implement the laws and policies contained in the National Action Plan. The ideology and policy prescriptions of Trump’s advisors and cabinet, abetted by Republicans in Congress, means the likely weakening of protections for consumers, workers, and communities against corporate abuses under federal U.S. law, especially concerning the activities of U.S. companies abroad. Regulations of corporate conduct are more likely to be stripped than strengthened. (One exception may be the issue of tax avoidance, for which companies could face greater scrutiny if Trump’s rhetoric becomes policy.) The modest federal human rights reporting requirements enacted during the past decade, like the conflict mineral provisions of the Dodd-Frank Act, are already targeted for elimination. The Trump regime may even stop prosecuting companies for bribing foreign officials under the Foreign Corrupt Practice Act. Advocates will have to rely on other tools to promote corporate responsibility for human rights impacts.

TIMOTHY A. CLARY/AFP/Getty ImagesAbsent government enforcement, voluntary corporate action has become the backstop for meeting the corporate responsibility to respect human rights in the United States. The policy shift in Washington may be good news for business executives who subscribe to a “profits at all costs” business model. It is deeply troubling, however, for the business leaders, managers and employees who know that business success in the long run (beyond the next earnings cycle) is inextricably tied to meeting the expectations of customers, investors and employees that companies demonstrate corporate responsibility, their so-called “license to operate.” Leading companies, especially those companies that have integrated compliance and human rights standards into the way they do business, are unlikely to make bribery or human rights violations part of their business plans. Unethical executives will be less likely to get caught, but responsible companies will continue to comply with the spirit of the UN Guiding Principles. U.S. federal regulators may be instructed to look the other way when companies do harm, but the corporate responsibility spotlight now shines brighter than ever on business operations in the United States.

In a complete role reversal, business leaders may need to mobilize to hold the U.S. government accountable for protecting human rights and obeying the Constitution. U.S. companies face the real prospect of human rights violations connected to their operations much closer to home. Multinationals operating in the United States will be asked to demonstrate that they are respecting human rights whenever U.S. government policies fall short of international standards, and significantly, if government actions violate the United States Constitution. Businesses will also face pressure, as they are right now regarding the immigration ban, to deploy corporate resources as a check on the U.S. government.

Rights under Threat

The corporate responsibility spotlight now shines brighter than ever on business operations in the United States.

Internationally recognized human rights threatened by proposed actions of the Trump administration include the rights to non-discrimination; to recognition and equality before the law; to protection from arbitrary arrest and from interference with privacy; to personal security; to freedom of opinion and expression; to freedom of thought, conscience and religion; to political participation; and to freedom of association. These rights, defined under international law in the Universal Declaration of Human Rights and international human rights and labor treaties, are the focus of corporate efforts to manage their human rights impacts outside the United States. Other rights that have received less attention by most companies may now come into play, such as prohibitions of “propaganda for war” and “advocacy of national, racial or religious hatred that constitutes incitement to discrimination, hostility or violence” (ICCPR, Article 20), and the right of “ethnic, religious or linguistic minorities” to “enjoy their own culture, to profess and practice their own religions, or to use their own language.” (ICCPR, Article 27). The Trump campaign and administration have demonstrated a willingness to engage in such tactics in the United States, and to target minorities.

The Corporate Responsibility to Respect the U.S. Constitution

U.S. ConstitutionCompanies operating in the United States should consider the U.S. Constitution together with the international human rights instruments to define their potential human rights impacts. Most internationally recognized human rights are protected in some form under United States law at the federal, state and/or local level. The United States Constitution’s Bill of Rights, for example, enumerates rights including the free exercise of religion (First Amendment): the freedoms of speech, of the press, and of assembly (First Amendment); freedom from unreasonable searches and seizures (Fourth Amendment); the right to vote (Fifteenth, Nineteenth, Twenty-Fourth, Twenty-Sixth Amendments); and the rights to citizenship, due process and equal protection of the law (Fourteenth Amendment).

Companies can add “US Constitutional rights” to human rights principles as another lens through which they manage the impacts of their operations in the United States.

Companies can add “US Constitutional rights” to human rights principles as another lens through which they manage the impacts of their operations in the United States. If federal, state or local authorities in the United States engage in systematic discrimination; target individuals or groups for harassment based on national origin or religion; curtail press freedoms; seek to arrest undocumented individuals; separate children from their families; or arbitrarily restrict the right to vote; their actions or omissions are likely to be both unconstitutional and violate international human rights.

Human Rights Impact Management

In the Trump era, companies must exercise due diligence to identify, prevent and mitigate the domestic human rights impacts of their operations and business relationships in the United States.

Due DiligenceCompanies can manage the risks of contributing or being connected to government actions that violate human and Constitutional rights using the same concepts and tools that apply a human rights lens to their non-U.S. operations. In the Trump era, companies must exercise due diligence to identify, prevent and mitigate the domestic human rights impacts of their operations and business relationships in the United States.

If U.S. government action violates rights, companies must take steps not to cause or contribute to any of the human rights impacts, and must be prepared to respond appropriately when any of these scenarios touch their people, products, or partners.

Companies should be prepared to do five things to manage their human rights impacts and meet their responsibilities to respect rights under Trump:

1.  Protect employees.

EmployeesWhen government actions threaten or harm employees, companies must act to support and protect them. The priority for companies in the wake of the immigration ban has been to identify affected employees, ensure their safety, and provide assistance, such as travel, legal and financial support. Providing employees with clear, accurate information about the immigration ban and its impact, so that individuals can take action to protect themselves and their families, is a first step companies can take to meet their responsibility to employees. Employees are the stakeholder group companies can help most directly, but businesses must also consider how to support and protect others connected to their particular business, such as customers, business partners and the communities where they operate.

2.  Avoid complicity.

Rally Against the Immigration Ban (32487627352)Companies must ensure that they are not contributing to rights violations in any way. A practical first step for businesses is to apply international standards for effective human rights due diligence, such as human rights impact assessments, to their corporate operations and business relationships in the United States. Airlines that refuse to allow passage to refugees in the wake of the immigration ban, for example, are at risk of complicity with violations of the right to seek asylum under international law. Particularly important will be corporate relationships with the U.S. government, its agencies and the Trump administration. CEOs serving as advisors to the Trump administration are already attracting extra scrutiny from customers and rights advocates. If the Trump administration were to attempt to detain all undocumented residents of the United Sates or to create a national registry based on religious belief, companies should not provide information nor supply products or services that would foreseeably contribute to rights violations.

Once a company understands how its operations, products or relationships are connected to potential or actual rights violations in the United States, the business must act to cease or prevent its own violation or contribution, and use its leverage to prevent and mitigate violations by others. Exercising leverage may take the form of challenging rights violations or opposing harmful policies. Companies connected to human rights violations committed by government security forces outside the United States have intervened with government authorities seeking to prevent the violations, promoted standard-setting and training initiatives to prevent future violations, and have ended business relationships to ensure they are not connected to violations. U.S. companies are beginning to use their leverage, individually and collectively, to prevent and mitigate the impact of the immigration ban. One can imagine scenarios in which companies refuse to provide goods or services to U.S. government agencies violating rights, or in the case of non-U.S. companies, pull out of the U.S. market altogether if the violations are sufficiently severe.

3.  Mitigate harmful impacts.

NondiscriminationWhen companies are unable to stop harmful policies and actions by others, they can seek to mitigate the negative impact on their employees, customers, business partners and communities. Companies have sought to comply with the spirit of international human rights standards outside the United States by protecting rights “within the factory walls.” Brands sourcing from factories in China, for example, where independent trade unions are banned, have promoted the creation of factory worker councils to bring concerns over working conditions to management. Businesses must consider ways to ensure that their U.S. workplaces provide safe spaces where individual rights are protected. Adopting workplace policies reinforcing a commitment to non-discrimination and prohibiting the harassment of any individual based on national origin or immigration status is one concrete way to meet the corporate responsibility to respect rights.

4.  Challenge rights violations.

Companies must obey the laws wherever they operate, yet the corporate responsibility to respect human rights goes beyond legal compliance. What is lawful may still violate an individual’s rights. Challenges arise for companies when local law or its enforcement conflicts with international standards. Companies must be prepared to challenge government actions that are unconstitutional or violate human rights.

Tech CompaniesIn countries where laws explicitly contradict international human rights standards, companies have found ways to minimize their connection to human rights violations by others. In China, Brazil and elsewhere, for example, foreign technology firms have insisted upon valid judicial orders before acquiescing to demands from government officials to turn over personally identifiable user information for questionable purposes. Companies may face similar situations in the United States if asked by law enforcement authorities to turn over personal information related to their employees’ or customers’ national origin, immigration status or religious beliefs. Businesses can exhaust all available legal processes, as Apple successfully refused to collaborate with the FBI to unlock encrypted iPhones, and challenge the legality of government actions in court, as some companies are now doing in opposition to the immigration ban. Companies can also communicate publicly about government actions that violate rights, using transparency to highlight actual and potential rights violations. Since 2009, for example, Google has published a “Transparency Report” with data on government requests to hand over user data, and how the company responds. Companies will need to be more transparent about what the U.S. government under Trump asks them to do, and the likely consequences of compliance.

5.  Oppose harmful policies.

Google CEOCompanies in diverse sectors are speaking out against the immigration ban. In response to government actions targeting Muslims, immigrants and refugees, companies are directing corporate resources toward organizations defending these groups and their rights. Multinational companies have learned that the corporate responsibility to respect human rights often requires advocating for governments to fulfill their own human rights obligations. Companies have criticized rights violations by governments around the world and opposed harmful government policies privately, publicly and in partnership with others through business associations, coalitions and advocacy networks. More businesses will need to become public rights advocates in the United States. 

Starbucks-refugee-cupCorporate advocacy is most effective when it reinforces company values. U.S. companies in recent years have publicly opposed state laws in the United States that would permit discrimination based on sexual preference. Since the election, U.S. companies have spoken out to let their stakeholders know where they stand on the most extreme Trump proposals.

When engaging in public advocacy on rights issues in the United States, companies will need to overcome any cultural reluctance to speak out publicly. This will seem even riskier because Trump has embraced the “naming and shaming” of individual companies to advance his political agenda. Companies at the center of the business and human rights movement, however, understand that customers, employees and investors often view corporate silence in the face of rights violations as tacit complicity.

Human rights impact management accounts for all of these strategies.

The discipline that accounts for all of these strategies is human rights impact management, an approach that more and more business leaders may now embrace to effectively manage the Trump administration. What is your company doing to meet its corporate responsibility to respect rights in the United States?

Anthony P. Ewing (aewing@logosconsulting.net) is a Senior Advisor at Logos Consulting Group and a Lecturer at Columbia Law School, where he teaches business and human rights.

Logos Consulting Group president Helio Fred Garcia co-authored an analysis of one of South Korea’s biggest crises of 2016 in Korea’s leading business journal, Dong-A Business Review.

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The analysis was co-authored with Dr. Hoh Kim, founder, head coach, and facilitator at THE LAB h in Seoul, Korea.

Dr. Hoh Kim, founder, The Lab h, Seoul

Dr. Hoh Kim, founder, The Lab h, Seoul

Dr.  Kim, former head of Edelman’s Korea office, is a certified trainer in the Cialdini Method developed by Dr. Robert Cialdini, and a certified coach in the Marshall Goldsmith Certified Stakeholder Centered Coaching method.  Dr. Kim is the primary author of the Dong-A Business Review analysis.

Their article examines the crises surrounding The Lotte Group, one of Korea’s leading industrial conglomerates.  Lotte Group consists of more than 60 business units and employs 60,000 people in such industries as hotels, beverages, candy manufacturing, fast food, retail, financial services, chemicals, electronics, IT, construction, publishing, and entertainment.

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In October Lotte Group’s Chairman, Shin Dong-bin, was indicted on tax evasion, embezzlement, and other charges.  His sister, Shin Young Ja, was arrested several months before for embezzlement and bribery.

Lotte Group is one of Korea’s chaebols, family run business conglomerates, a common form of business organization in Korea.

You can download the complete original Korean language version of the analysis here.

An English translation follows below:


Untitled

The Crisis Management of Lotte

‘A red team’ that challenges a corporation from within is necessary
in the era of ‘reputation management’

Co-authored by

Hoh Kim, Founder, Head Coach & Lead Facilitator, THE LAB h and
Helio Fred Garcia, President of Logos Consulting Group

Published at Dong-A Business Review (DBR), December 2016 Issue 2 (No. 215), pp. 90-94, in Korea

AUTHORS

  • Dr. Hoh Kim graduated from Hankuk university of foreign studies, where he majored in French literature and philosophy. He earned his master’s degree in PR at Marquette university and his Ph.D at Graduate School of Culture Technology, KAIST. He is one of the 19 Cialdini Method Certified Trainers (CMCT) approved and endorsed by Robert Cialdini, the author of Influence: The Psychology of Persuasion.  He has previously led the Korea office of Edelman, a global PR firm and written several books including Cool Apology (co-authored), Cool Survival Kits, Reputation Society (co-authored) and Why I Can’t Say No (all in Korean).
  • Dr. Helio Fred Garcia is the founder of Logos Consulting Group and has more than 35 years of experience in crisis management, executive coaching and consulting. He is an adjunct professor of management in NYU’s Stern School of Business Executive MBA program, where he teaches crisis management. He is the author of  The Power of Communication: Skills to Build Trust, Inspire Loyalty, and Lead Effectively, and is the co-author with John Doorley of  Reputation Management: The Key to Successful Public Relations and Corporate Communication, which was translated into Korean and published as Reputation Management Strategy in Korea by Alma Press in 2016.

 

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ABSTRACT

According to the book Reputation Management Strategy, the formula for reputation is ‘Reputation = (financial) performance + (organizational) behavior + (corporate) communication’. The Lotte crisis has largely been triggered by problems with its organizational behavior. First, ‘an owner risk’ has occurred in leadership behavior and second, in corporate behavior dealing with its customers and business partners, the company led people to believe that it is not an ethical company. Finally, Lotte has failed in communication because there has been a huge gap between its short-term responses, actual leadership behaviors and its nominal long-term vision.

This article offers suggestions for Korean companies that are facing  challenges similar to Lotte’s.

For starters, companies need to get stakeholders to be involved so that they can constantly challenge the companies from the outside. Second, corporations need to have something like ‘a red team’ or ‘a devil’s advocate’ within the organization so that they can bring genuine change to corporate behavior.

ARTICLE

This year the Lotte Group experienced its worst crisis. Here are some questions we need to ask concerning the issue:

  • Q1. How did people first respond to the scandal? Did they say “No, Lotte would never do such a thing” Or did they say “I told you so”.
  • Q2. How would you respond if someone tells you that you are acting just like Lotte?  Would you feel flattered or offended or just regard the comment as neutral?
  • Q3. Lotte has made several promises to reform it. Which one impressed you the most? Do you really believe that the company will keep the promises?

We will explain later why these questions matter for Korean businesses in terms of crisis management. In the meantime we want readers to find the answers to the questions on their own.

For the most part, when we analyze a case, we take a careful look at it as if cameras zoom in. And then we figure out what the problem was and how the problem should have been solved. But in the case of Lotte, one of the authors (Dr. Hoh Kim) thought that when it came to solving the problems there was little Lotte could do in the short term. There were three reasons for this.

  • First, the core of the crisis lay in conflicts among three members of the founder’s family.
  • Second, the founder has failed to smoothly pass down the business to his children, which should have been done over the course of years or decades.
  • Third, it is only the founder and his family who could have prevented these problems.

In this article we’d like to talk about Lotte’s crisis management from a reputational perspective.

In the field of crisis management, there is something called issue index. The index refers to a list of potential issues that might occur to a company in the future. When we were reading news articles about the 2016 Lotte crisis, it almost felt like we were seeing the issue index of Korean conglomerates in general. Of course, how dangerous the problems are and how the issues affect the businesses can be different from company to company.

But it is worth looking into the Lotte case because so many Korean conglomerates share the same kinds problems as Lotte. Conflict over succession and slush funds are a good example.

The authors discussed how we could approach the Lotte case and decided to suggest a common tool that can be applied to other Korean chaebols. (Chaebols are large Korean business conglomerates, mostly family led.)

We believe that it would be helpful to develop ‘a mirror’ that other companies or business people could use to reflect themselves, not ‘a mere window’ through which other conglomerates may just watch and do nothing.  But a mirror to create self-awareness.

Also, with this analysis we’d like to present the last puzzle piece to Korean chaebols that can help them advance their management of crisis and reputation.

One Element in the Reputation Formula that
Most Korean Conglomerates are Missing:

The book Reputation Management Strategy that Dr. Garcia has co-written with John Doorley introduces a reputation formula as below:

Reputation =
(Financial) Performance + (Organizational) Behavior + (Corporate) Communication

The seriousness of the Lotte crisis lies not just in legal risks that it might face but also in a damage to its reputation.

The crisis facing Lotte at the moment is completely different from a crisis that a conglomerate might encounter when it fails to do well in its operations. The current Lotte crisis is highly likely to directly hurt its reputation. So in this case one of the most important crisis-management goals is to recover reputation.

What lessons can the reputation formula offer to Korean Chaebols as a whole as well as to Lotte?

The three elements in the formula are:

    1. Financial Performance
      • Long-Term Performance
      • Short-Term Performance
    2. Organizational Behavior
      • Leadership Behavior
      • Behavior Towards Others
      • Behavior Towards Society
    3. Corporate Communication
      • Tactical and Short-Term Communication v. Strategic & Long-Term Communication
      • External Communication v. Internal Communication

Financial performance, as an element that affects reputation, has two factors: long-term performance and short-term performance. Long-term performance can include profits of the last 10 years or long-term growth potential. Profit for the year is an example of short-term performance. In the case of Lotte, financial performance was not the major factor that affected its reputation.

When it comes to organizational behavior, there are three factors:

  • The first is leadership behavior.
    When the Lotte crisis took place, the behavior of the founder’s family was broadcast almost in real time and not just Lotte employees but also the public were able to learn about it. The conflict among the family members exposed various problems within the chaebol including opaque business practices and governance structure, and succession-related problems. And all these conflicts still remain unresolved. What is unique about founder’s family-related problems is the fact that both the crisis maker and the crisis manager are the founder and his family dynasty. This is a serious problem because it is almost impossible for the employees to take actions to solve the problem. All they can do is simply following orders from the founder’s family.
  • The second factor of organizational behavior is about consumers and business partners.
    This includes how satisfied consumers are with the products and services provided by Lotte and what its partners (vendors) think of working with Lotte.
  • The third factor is about corporate behavior towards society.
    So-called ‘Corporate Social Responsibility’ is a good example of this.  In October, Lotte’s Chairman, Shin Dong-bin, made a public apology and announced reform plans. In the plans, he adjusted the original growth target of increasing its sales to 200 trillion Won (Korean currency) by 2020 and of becoming Asia’s tenth largest company. He then shifted his focus to corporate social responsibility, particularly philanthropy, and said he would put more emphasis on meeting people’s expectation and promoting social values. He stopped short of detailing his plans for fulfilling corporate social responsibility.

In fact, what really matters when it comes to corporations’ social behavior is not philanthropic activities but how companies make profit.

As a matter of fact, in ISO 26000, an International Standard providing guidelines for social responsibility, the word ‘philanthropy’ is mentioned only once. According to the standard, how responsible a company is depends on how much the company contributes to things like human rights, labor practices, the environment, fair business practices, consumer issues and local communities. ISO asserts that corporate social responsibility is about how to make a profit, not about what to do with profit. In other words, to become socially responsible, a company needs to make profit in positive ways. Whether it engages in charitable activities or not is a minor issue. Korean chaebols need to do more in this regard.

Corporate communication, the last factor of the reputation formula, includes both tactical and short-term communication activities like press release and press conference, and strategic and long-term communication activities such as creating corporate missions, visions and values.

Another form of corporate communication includes communication with consumers and the public and communication with employees.  If you go to Lotte’s website(lotte.co.kr), you can find its management policies. The first policy is about transparency and it reads: “we shall promote transparency in our operation and financial performance by tightening self-monitoring systems and strengthening regulatory tools”.

The company also says that it shall put the idea into practice by establishing a system that helps its shareholders understand how the company is doing, by honestly sharing management-related information and decision making and by actively supporting the board of directors and creating a committee that promotes transparent business practices.

One of the core values of the company is responsibility and it reads: “we shall always honestly run the business and contribute to social development by fulfilling our social responsibility. And its action guidelines read: we shall not cover up our mistakes and immediately inform our mistakes and correct them; we shall execute our tasks according to legal, ethical and social standards.”

Lotte is being criticized because there are gaps between its corporate communication and organizational behavior, particularly its leadership behavior.  This Say-Do Gap is the key problem.

One could conclude that Lott’s statements of corporate vision, values and action guidelines are just meant to be framed and hung on the wall. One might also add that in reality no company takes these things seriously.

But stated values create expectations.  And trust rises when expectations are met; falls when expectations are not met.

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If corporate founders ignore the management policies and detailed action plans that they themselves have created, they will face a situation where it is almost impossible to exercise their leadership because they will lose the trust of those who matter to them.

This is the last piece in the reputation puzzle that Korean conglomerates need to improve. Korean chaebols have been able to show world-class business performance through innovation in their products and services. They also have heavily invested in advertising and promotion and have seen great improvement in their corporate communication.

However, they are rightly criticized for failing to make a meaningful change in their corporate behavior, particularly in their leadership and social behavior.  The founders and chief executives of chaebols create ‘great’ visions and values for their companies, but top management themselves often do not take these visions and values seriously. In today’s world, where it is easy to monitor corporate behavior and where stakeholders have easy access to information, organizational and leadership behaviors that haven’t been detected before now can greatly influence corporate reputation.

As we analyzed the Lotte case, we defined the gap among performance, behavior and communication as the fundamental cause for loss of Lotte’s reputation.

Korean chaebols as a whole often have gaps in their business, not just the gap between behavior and communication, but also between performance and communication and between performance and behavior.

So far, when Korean chaebols have faced a crisis as a result of their mistakes and wrongdoings made public, they have done all the same as if there is a formula for such situation: to issue an apology, hold a press conference, take a bow and make some promises.  But, few companies have kept their promises and now few consumers and citizens believe them.

One of the most important jobs of the public relations departments of large companies in Korea has been to stop scandals involving their founder’s family dynasty from spreading. This year Koreans saw massive protests against the government that have been symbolized as candles. In this circumstance one might wonder if Korean conglomerates will be able to continue to make profit (performance) and manage crises and their reputation in the way they have been doing for a long time. Will that be possible without changing their behavior?

The Last Piece of Puzzle:
Will They Change Their Behavior?

The important question that conglomerates, founder’s families, and executives need to ask themselves is whether they are going to change their behavior.

The challenge that Lotte chairman Shin Dong-bin faces now is not to overcome this crisis but whether he changes the corporation’s behavior. If he doesn’t, the company might face another similar or worse crisis in the future.

What can businesses do to change their behavior? We get some ideas from a behavior-change model in the leadership field, not from the crisis-management field.

Dr. Marshall Goldsmith, the world’s leading leadership coach, says that stakeholder engagement is the most important factor in changing corporate behavior. So, for example, if one is to quit smoking, he needs to let his colleagues know about his decision. When around him are engaged they can watch to determine whether he changes his behavior.  As a result, he is more likely to become determined to change. This is part of why many people sign up and go to the gym, or team up with others to exercise. They aim to change their behavior by engaging stakeholders.

In October, Lotte chairman Shin announced reform plans and said that he will establish a watchdog committee that will be directly monitored by him and hire experts from outside. Will this committee be able to lead the conglomerate to change?

To succeed, the committee must be able to act like a red team.

A red team refers to a structure similar to a devil’s advocate — someone who is actually a member of the organization but monitors and points out problems from the opposite point of view in the interest of that organization.

If Lotte has such a committee just for appearance’s sake, the effort is highly likely to fail.

In the beginning of this article, we asked three questions. Now we’d like to explain why such questions matter and what our answers are.
In order for companies to change their behavior, nothing is more important than to figure out exactly how their stakeholders  think of them. In fact, many Koreans have negative perspectives of Korean conglomerates.

If the founders of big corporations or chief executives are to properly manage crises and reputation, they need to understand how those who matter to them view them. When a disaster takes place or when the end of the year is near, chaebols often donate hundreds of millions or even billions of Won (Korean currency) to those in need. They even encourage their employees to perform community services. So big companies often complain that they are unfairly criticized because they actually do many things for communities.

Here’s a question: If chaebols raise their donations by two to three times or perform more community service, will their stakeholders have a better view of them?

We don’t think so, because people’s fundamental ideas of chaebols are negative.  Many take conglomerates’ donations and community service for granted because they believe that chaebols must give some money for the poor at the end of the year because they have done so many bad things all the year round.

What kinds of strategies should conglomerates adopt to effectively manage their reputation and crises? And how should they put the strategies into practice?

In most cases, there are two types of behaviors that chaebols engage in facing a crisis. First, they engage in behaviors that make their negative image worse. Such behaviors include cover-up, lie, evasion of responsibility, denial and even blaming victims — just as recently happened when a daughter of Korean Air Line’s chairman threw a fit, angrily insisting that a plane she was on return to the gate of an airport. These kinds of behaviors reinforce consumers’ negative views of chaebols.

The other type of behavior is the ones that contrast sharply with people’s negative perspectives. For instance, the public  found it surprising when a daughter, not a son, of the founder’s family of a big company had joined the navy as a naval officer. The public knew that the decision was not made to improve the image of the company but still found it pleasantly surprising.

Also, when Korea was hit by the Middle East Respiratory Syndrome pandemic (MERS),  Samsung’s Vice Chairman JY Lee conceded his company’s fault and sincerely apologized to the public. This gave the public an opportunity to fix their negative perceptions towards chaebols because most people thought that chaebol owners would deny their responsibility when a crisis takes place.

Of course, if Korean conglomerates are to overcome crises and transform their image, they need to do more than just create a temporary surprising event. Corporate founder’s family must be determined and engage in consistent “surprising behaviors.”

Protesters holding candles are calling for change not just within the government. They are sending a strong signal that there must be a paradigm shift in chaebols’ management of crisis and reputation.

The public is calling for change in corporate behavior. We each have public relations experience and have long worked in crisis management and strategy communication consulting. The conclusion that we want to share with readers is clear: If one approaches crisis and reputation management from the perspective merely of public relations, one is bound to fail.

Food for Thought

      1. What kinds of images do publics have about my company? Apart from the products and services that my company provides, how do publics think of my company? Do they think of it as the one that coexists with, is mutually beneficial with and contributes to society? Or as evil? If the latter, why is that? What are your solutions to fix the image?
      1. It is difficult to improve corporate reputation merely by engaging in some corporate social responsibility efforts and philanthropy or by handing out some corporate leaflets. To get positive reputation, the entire company needs to make an effort to create social value, and this approach should be the center of  profit-making process. The reason why this approach matters is the reason why the CSV (creating shared value) strategy matters. Does my company take CSV seriously? Does it have a team that puts the idea into practice?

 

#  #  #


Note:

Reputation Management: The Key to Successful Public Relations and Corporate Communication, by John Doorley and Helio Fred Garcia, was originally published in 2007.  It is now in its Third Edition in English.  A Korean translation was published as Reputation Management Strategy in 2016.  A Chinese edition is scheduled to be published in early 2017.  A French language edition is now underway, due to be published in late 2017.

John Doorley is a Visiting Associate Professor at Elon University in Elon, North Carolina, and a Director in Mindful Reputation.  He is a founding academic director of New York University’s MS in Public Relations and Corporate Communication.

Dr. Hoh Kim and Helio Fred Garcia began working together in September, 2015 when Dr. Kim was the moderator and Mr. Garcia was a keynote speaker in the Chosun Issue Forum, a conference on crisis management in Korea sponsored by Chosunilbo, Korea’s leading newspaper.

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Dr. Hoh Kim, left, moderating a panel discussion at Chosun Issue Forum, Seoul, September, 2015

By Helio Fred Garcia

Size of Penis Trump

This week the Donald Trump phenomenon seemed to reach a tipping point, with Republican leaders scrambling to prevent his continued wins in the primaries, and with debate discourse hitting new lows.  Not only did we see him feign ignorance of David Duke and the KKK, but we were even treated to debate commentary about the relative size of the candidate’s genitals.

Trump: Not a Cause But a Consequence

But the rise of Donald Trump as the presumptive nominee of the Republican Party, and all the bipartisan angst it is creating, is not a cause but rather a consequence.

It is the predictable result of decades of degradation of political discourse, facilitated by a media more interested in grabbing an audience’s attention than in covering issues.  And the worst part is that we should have seen it coming.

In fact, we could have seen it coming if we had known what to look for.  And we should have known.

Even now as the frightening reality is finally being recognized, we seem to be grappling only with the symptom of the problem — what Trump says and how to prevent him from ever being in a position of authority  — without recognizing that there’s a greater challenge that will continue regardless of how we address the immediate problem.

We can solve the Trump problem but still be as vulnerable to another authoritarian figure who energizes the disenfranchised, the angry, and the scared to similar effect.

Orwell Called It

 

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Almost exactly seventy years ago George Orwell published Politics and the English Language.   That brief essay served as the nonfiction treatment for what two years later would become Orwell’s Nineteen Eighty-Four

Most educated Americans are familiar with Nineteen Eighty-Four.  That popular novel is based in a dystopian future in a continuous state of war, where an intrusive and authoritarian government keeps people uninformed, and where political language is intentionally misleading. So the Ministry of Peace wages war. The Ministry of Truth controls all information, news, propaganda, and art. The Ministry of Plenty rations food. Our term “Orwellian” refers to the use of language to convey the opposite of reality.

1984first

But most educated Americans are not familiar with the essay that served as the novel’s basis.  Sadly, Politics and the English Language helps us understand the current state of the American body politic, and it isn’t pretty.

Says Orwell:

“In our time, political speech and writing are largely the defense of the indefensible.”

“Political language – and with variations this is true of all political parties… –  is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind.”

The problem arises when politicians use language in a disingenuous way, asserting things they don’t necessarily believe and making arguments that may sound compelling but that logically don’t make sense.

“The great enemy of clear language is insincerity. When there is a gap between one’s real and one’s declared aims, one turns, as it were instinctively, to long words and exhausted idioms, like a cuttlefish squirting out ink. In our age there is no such thing as ‘keeping out of politics.’ All issues are political issues, and politics itself is a mass of lies, evasions, folly, hatred and schizophrenia. When the general atmosphere is bad, language must suffer.”

But however damaging individual instances of political language, of insincere speech, or of intentionally misleading statements may be, it’s the effect of these that causes harm.

The central idea in Politics and the English Language is this:

  • Political speech has the effect of reducing citizens’ critical reasoning skills….
  • …This creates a self-perpetuating cycle…
  • …where as people become less discerning they become more susceptible to political speech…
  • …which further diminishes their critical reasoning skills…
  • …and so on…
  • …and so on…
  • …until a fully uninformed public creates conditions for authoritarian government to thrive.

 

A Cause Can Become an Effect, And So On:

It’s The Cycle That Matters

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The key idea, though, is the relationship between cause and effect.

Orwell notes that an effect can become a cause, and a cause can become an effect.  It’s the cycle that matters.  And in the end the result is a citizenry that remains intentionally ignorant of the issues that matter, unaware of what is happening to them, and easily manipulated by politicians.

“But if thought corrupts language, language can also corrupt thought. A bad usage can spread by tradition and imitation, even among people who should and do know better.”

“Now, it is clear that the decline of a language must ultimately have political and economic causes: it is not due simply to the bad influence of this or that individual writer. But an effect can become a cause, reinforcing the original cause and producing the same effect in an intensified form, and so on indefinitely. A man may take to drink because he feels himself to be a failure, and then fail all the more completely because he drinks. It is rather the same thing that is happening to the English language. It becomes ugly and inaccurate because our thoughts are foolish, but the slovenliness of our language makes it easier for us to have foolish thoughts.”

The predictable result of this cycle is a citizenry that is easily manipulated, that becomes immune to persuasion by evidence and reasoning, and that doesn’t notice the multiple contradictions all around.

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Choosing Ignorance:

Identity-Protective Cognition Thesis

Three years ago Orwell’s argument that political language causes a decline in critical thinking was supported by research by professors at Yale, Cornell, Ohio State, and the University of Oregon.  Their study,  Motivated Numeracy and Enlightened Self-Government, showed that math problems that seem to be about benign topics are easily solved by people with strongly held political views. But when the same math problems are framed in terms of polarized political issues — in this case, gun rights — both progressive-and-conservative-leaning participants have a very hard time getting the math right.

The authors conclude that

“Subjects [use] their quantitative-reasoning capacity selectively to conform their interpretation of the data to the result most consistent with their political outlooks.”

A 2011 essay in Mother Jones by Chris Mooney on the neuroscience of political reasoning helps us understand why this is so.  The piece begins with seminal research from the early fifties by famous Stanford psychologist Leon Festinger, who concluded:

“A man with conviction is a hard man to change. Tell him you disagree and he turns away. Show him facts or figures and he questions your sources. Appeal to logic and he fails to see your point.”

Mooney explains:

“Since Festinger’s day, an array of new discoveries in psychology and neuroscience has further demonstrated how our preexisting beliefs, far more than any new facts, can skew our thoughts and even color what we consider our most dispassionate and logical conclusions.”

“This tendency toward so-called “motivated reasoning” helps explain why we find groups so polarized over matters where the evidence is so unequivocal: climate change, vaccines, “death panels,” the birthplace and religion of the president, and much else. It would seem that expecting people to be convinced by the facts flies in the face of, you know, the facts.”

Cover What Orwell Didn't Know

Ten years ago, on the sixtieth anniversary of the publication of Politics and the English Language, the New York Public Library hosted a conference conceived by five journalism school deans and sponsored by the Open Society Institute. The conference proceedings later were published as a book of essays called What Orwell Didn’t Know: Propaganda and the Face of the New Politics.  Much of what was described ten years ago can be seen now.

For example, Susan Harding, a professor of anthropology at UC Santa Cruz, who has written extensively about the religious right, explained a process called “revoicing.”  She described revoicing as creating apparent structures of legitimacy and embedding within them positions, points of view, or ideologies that would not pass muster in actual legitimate institutions.  She says that this revoicing process leads to  controversial positions and institutions becoming mainstream by co-opting the symbols and vocabulary of the mainstream. She gives an example of the late Rev. Jerry Falwell:

“Falwell’s church ministries, media and political organizations, and educational institutions were, in effect, a hive of cultural workshops in which both fundamentalist and secular ideas, images, narratives, and practices were smelted, refashioned, melded, packaged, and distributed with spectacular success.

Falwell’s Lynchburg Baptist College morphed into a liberal arts college, Liberty Baptist College, and then into a university, Liberty University. The Museum of Earth and Life History on its campus occupied the cultural space of a museum of natural history, but recorded displays of man and beast with the assumptions of creation science rather than evolution. Liberty Godparent Homes converted a former home for unwed mothers into a staging ground for pro-life save-a-baby narratives that in turn revoiced feminist story lines in born-again Christian terms.

We can see this revoicing, this co-opting of mainstream symbols, vocabularies, and institutions, playing out over the last decade:

  • The Creation Museum, which has the look and feel of a science or natural history museum, but whose exhibits and educational material assert that the earth is only thousands of years old, that evolution is a fraud, and that humans and dinosaurs co-existed.
  • The Intelligent Design Institute, which seems to be a think tank and educational organization is really a media and production group whose work is used to refute the scientific theory of evolution.
  • Fox News, ostensibly an objective news organization, but whose editorial focus in the promotion of conservative causes and candidates.  It even has an appropriately Orwellian slogan, “We report, you decide.”

This process provides cover for those who would ignore mathematics, science, and observation and insist that reality is consistent with a particular political, social, or religious viewpoint.  Take, for example, a fourth grade science quiz administered by a religiously-affiliated school in South Carolina.  The student received a perfect grade for answers that would have been marked as incorrect in a school, religious or otherwise, with a mainstream science curriculum; in fact, some of the quiz’ questions would have been unintelligible in a more traditional science curriculum.  But this approach is influencing millions of citizens and future voters.

Creationquiz1

Truthiness

At about the same time the revoicing discussion was taking place, the new late night comedy host Stephen Colbert coined the phrase Truthiness to describe political discourse.  Parodying Fox News, he defined truthiness as preferring concepts or facts one wishes to be true, rather than concepts or facts known to be true. As  Colbert put it, “I don’t trust books. They’re all fact, no heart.”

 

In 2005 the American Dialect Society named Truthiness the Word of the Year.

Sadly, what Colbert intended as a comedic take on misdirection has proven to be a defining element of much modern political debate.  Candidates argue not the truth they know but the truth they wish, as if it were known.

Why All Heart Matters

Colbert differentiated between thinking with the brain and knowing with the heart.  He actually hit on something profound about how humans make judgments, and why it’s so easy for political language to have the Orwellian effect.

As described by Chris Mooney in Mother Jones:

“The theory of motivated reasoning builds on a key insight of modern neuroscience: Reasoning is actually suffused with emotion (or what researchers often call “affect”). Not only are the two inseparable, but our positive or negative feelings about people, things, and ideas arise much more rapidly than our conscious thoughts, in a matter of milliseconds—fast enough to detect with an EEG device, but long before we’re aware of it.”

“That shouldn’t be surprising: Evolution required us to react very quickly to stimuli in our environment. It’s a “basic human survival skill,” explains political scientist Arthur Lupia of the University of Michigan. We push threatening information away; we pull friendly information close. We apply fight-or-flight reflexes not only to predators, but to data itself.”

“We’re not driven only by emotions, of course—we also reason, deliberate. But reasoning comes later, works slower—and even then, it doesn’t take place in an emotional vacuum. Rather, our quick-fire emotions can set us on a course of thinking that’s highly biased, especially on topics we care a great deal about.”

“We have seen this trend for several decades, where for political expediency citizens have been conditioned to not trust any source of news that includes conclusions contrary to those consistent with a political point of view.”

We Apply Fight-or-Flight Reflexes

Not Only to Predators, But to Data Itself

 Such citizens, who reflexively flee from the facts, are unlikely to be aware of, or even care about, contradictions among any candidate’s positions.  Simultaneously holding two contrary positions, the very definition of absurdity, would ordinarily dismiss someone as not to be taken seriously.  But in the political world such contradictions seem not to matter.

In such an environment citizens literally are unable to notice absurdities. But the same part of the brain, the Amygdala, that causes the flight response also causes the fight response.  So any intruder is seen to be worthy of a fight.  And violence tends to ensue.

And as the French philosopher Voltaire once warned, “those who can make us believe absurdities can make us commit atrocities.”

Presentation3

So within a week of Trump calling for a ban of all Muslims entering the country, we saw a rash of attacks on mosques and on people perceived to be Muslim or Arab.  We have seen people removed from his rallies while being taunted by Trump from the podium, calling for his supporters to punch the person being removed in the face; to have the crowd strip people of their coats before sending them into the freezing weather.  This week, after his flirtation with the KKK and white supremacists, we saw peaceful non-protesting black students ejected from his rallies, and at least one white supremacist leader assault a black woman as she was being removed from the rally.

So what characterizes the Trump voters?

According to Derek Thompson in The Atlantic, the first common element is lack of higher education:

“The single best predictor of Trump support in the GOP primary is the absence of a college degree. ”

“Diplomas are what Ron Brownstein calls the “new Republican fault line.” In 2012, Mitt Romney struggled for months to consolidate support because, even as he had clear support among college-educated Republicans, he fared worse among non-college voters.”

So there’s more than a passing coincidence in Trump’s cheering “I love the poorly educated!” after the Las Vegas caucuses.

The second characteristic is feeling voiceless.  A survey from RAND Corporation, found:

“Voters who agreed with the statement “people like me don’t have any say about what the government does” were 86.5 percent more likely to prefer Trump. This feeling of powerlessness and voicelessness was a much better predictor of Trump support than age, race, college attainment, income, attitudes towards Muslims, illegal immigrants, or Hispanic identity.”

This helps explain voters’ reports that they support Trump because he speaks what they feel.

There is also a fear of the other:

“Trump has clearly played on fears of non-white outsiders, by likening Mexican immigrants to rapists, promising to deport illegal immigrants and to build a wall between the U.S. and its neighbors, pledging to keep Muslims out of the country during the Syrian diaspora, and playing coy with his relationship with the KKK.”

“But he has also told a simple three-part narrative to attract the despondent demographic: America is losing; Donald Trump is a winner; and if Trump becomes president, America will become a winner, too. This Great Man Theory of political change, however, strikes others as potentially dangerous…”

Fourth, Trump voters want to wage war against outsiders, both those within and those beyond our borders.  According to Matthew MacWilliams of University of Massachusetts, Amherst,

“The classic definition of authoritarianism implies a tradeoff — more security for less liberty — but MacWilliams says it’s also about identifying threatening outsiders and granting individuals special powers to pursue aggressive policies to destroy them. The best predictor of Trump support… [is] “authoritarianism … [and] a personal fear of terrorism” that best predicted Trump’s support across the state.”

“Trump’s foreign policy, like his policy for anything, is a muddle. He’s cautious toward the Israel-Palestine conflict, yet he told Fox News he would kill the families of ISIS members to stop their advance, something awfully close to a public pledge to commit war-crimes.”

“But it’s his domestic security policies that have been astonishingly hawkish. He’s promised to shut down mosques, keep a database of Muslims, and round up the children of illegal immigrants. Indeed, when you put it together, Trump’s hysterical promises to protect his white in-group from non-white outsiders looks like race-baiting…”
His support seems to be strongest in places with history of racial animosity:
“According to the New York Times’ Nate Cohn, who used data from Civis Analytics, Trump’s support is strongest from the Gulf Coast, through the Appalachian Mountains, to New York, among marginally attached Republicans (possibly former Democrats). It is a familiar map for some demographers, since it’s similar to a heat map of Google searches for racial slurs and jokes. “That Mr. Trump’s support is strong in similar areas does not prove that most or even many of his supporters are motivated by racial animus,” Cohn writes. “But it is consistent with the possibility that at least some are.”
And what to Trump voters care about?  According to a Public Policy Polling survey of Trump voters in South Carolina,
  • 70% think the Confederate flag should still be flying over the State Capital; only 20% who agree with it being taken down.
  • 38% of Trump voters say they wish the South had won the Civil War; only 24% are glad the North won and 38% aren’t sure.
  • 36% of Republican primary voters in the state are glad the North emerged victorious; 30% are for the South, but Trump’s the only one whose supporters actually wish the South had won.
  • By an 80/9 spread, Trump voters support his proposed ban on Muslims entering the United States.
  • 31% would support a ban on homosexuals entering the United States as well, something no more than 17% of anyone else’s voters think is a good idea.
  • There’s also 62/23 support among Trump voters for creating a national database of Muslims and 40/36 support for shutting down all the mosques in the United States, something no one else’s voters back.
  • Only 44% of Trump voters think the practice of Islam should even be legal at all in the United States;  33%  think it should be illegal.  To put all the views toward Muslims in context, though, 32% of Trump voters continue to believe the policy of Japanese internment during World War II was a good one, compared to only 33% who oppose it and 35% who have no opinion one way or another.

 

Fixing The Body Politic

So what can the nation do to halt the decline and to make things better?

The first thing to note is that things will surely get worse before they get better.

The second is to recognize that there is no easy fix.

Again, Trump is not the problem.  He’s the current symptom of the problem.  South Carolina voters do not hold their positions BECAUSE of Trump.  Trump is merely the person who happens to appeal to their views now.

Rather, the problem is that authoritarian government depends on uninformed, scared, and angry voters, who can channel their negative emotions toward others, and who see in their candidate some relief from their anxieties.

Orwell told us that.  And we have seen it play out over the last few decades.

The problem is a body politic that is comfortable being uninformed and suspicious of facts, data and people with whom they don’t agree or connect.

But the problem arose because of the convergence of social, technological, political, economic, and demographic trends over decades.  The solution is also decades-long.  Regardless of who happens be be the next president.

The central question of our republic is this: Do we continue down the path where authoritarian government becomes both inevitable and seemingly natural, or do we recommit to actual democracy?

There is much we would need to do.

But over the long term, the only sustainable solution will be a restoration of a core founding value of education.  Of elevating the ability of voters to think clearly and to discern carefully.

Indeed, founding father Thomas Jefferson called for education as the key to democracy.

Jefferson becomes the antidote to Orwell.

Jefferson: An Educated Citizenry

is Necessary for a Thriving Democracy

Jeffereson

Throughout his life, including before and after serving as president, Jefferson noted that education is the key to accepting others and to exercising effective citizenship.  (Indeed, on his tombstone, he lists only three accomplishments: author of the Virginia Statute on Religious Freedom; author of the Declaration of Independence; and founder of the University of Virginia.  His term as president didn’t make the cut.)

Among his views on the relation between education and democracy:

  • “I know no safe depositary of the ultimate powers of the society but the people themselves; and if we think them not enlightened enough to exercise their control with a wholesome discretion, the remedy is not to take it from them, but to inform their discretion by education. This is the true corrective of abuses of constitutional power.”
  • “The most effectual means of preventing [the perversion of power into tyranny are] to illuminate, as far as practicable, the minds of the people at large, and more especially to give them knowledge of those facts which history exhibits, that possessed thereby of the experience of other ages and countries, they may be enabled to know ambition under all its shapes, and prompt to exert their natural powers to defeat its purposes.”

And, as if in direct rebuke to Donald Trump:

  • “No nation is permitted to live in ignorance with impunity.”
  • “[I have] a conviction that science is important to the preservation of our republican government, and that it is also essential to its protection against foreign power.”

A Decent Respect for the Opinions of Mankind

But of all the Jeffersonian notions, the one that most directly speaks to remedying the challenges Orwell describes is a little-remembered but central idea from Jefferson’s Declaration of Independence.  In the opening paragraph, Jefferson describes why the Declaration was needed in the first place.  He declared:

“…a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.”

That decent respect for the opinions of mankind goes in many directions:

  • A decent respect by politicians for the opinions of citizens.
  • A decent respect by citizens of this nation for the opinions of those in other nations.
  • A decent respect by governments for the people.

 

But decent respect has been sorely missing in American politics for some time.  Orwell called it…

Fred

Please note: Helio Fred Garcia is executive director of Logos Institute for Crisis Management and Executive Leadership; board chair of the Interfaith Alliance Foundation; and an adjunct associate professor of management and communication at New York University School of Professional Studies, MS in Public Relations and Corporate Communication, where he teaches, among other things, communication ethics.  But the views expressed here are solely his own and not necessarily reflective of any other entity.

 

Helio Fred GarciaHelio Fred Garcia | Bio | Posts
29 Aug 2015

Ten years ago today Hurricane Katrina made landfall.  The rest, as they say, is history.

I won’t recount that history day-by-day here. There are plenty of special reports on TV and in the newspapers this weekend that help us see the horror as it unfolded.  For a day-by-day timeline of the federal response, see Chapter 3 of The Power of Communication, or see Failure of Initiative, the final report of the U.S. House of Representatives Select Bipartisan Committee to Investigate the Preparation for and Response to Hurricane Katrina.  That congressional report concluded:

“The Select Committee identified failures at all levels of government that significantly undermined and detracted from the heroic efforts of first responders, private individuals and organizations, faith-based groups, and others.”

But on the tenth anniversary of the flood, we have the opportunity to learn from the mistakes of that bungled response and to re-commit to the discipline of effective crisis response.  I will hit the high points (or low points) of Katrina response as teachable moments.

I monitored the hurricane and flood and then deployed to New Orleans in the second week as part of a corporate response to the disaster.  I saw first hand the consequence of the government’s ineffective handling of the crisis.

The author documenting Katrina damage.

The author documenting Katrina damage.

The federal government’s response to Katrina was bumbling, disorganized, and dishonest. It cost hundreds of lives. Many of the nearly 1,500 deaths in New Orleans happened in the days following the flood.  Many of those were preventable.

And the bungled response cost President George W. Bush his reputation. Until Katrina, President Bush had enjoyed a job approval rating above 50 percent. He had won re-election in a tough campaign just 10 months earlier. But after Katrina his job approval fell below 50 percent and never recovered. It fell first to 42 percent and a month later to 38 percent, and was below 30 percent the following year. President Bush finished his presidency with the lowest approval ratings of any president.

Bush approval

That loss of trust and reputation was preventable.  Because most of the bungled response was preventable.

Effective Crisis Management is a Leadership Discipline

Crisis management is the management of choices – the management of decisions that leaders make when things have the potential to go very wrong.

Effective crisis management helps leaders and organizations make critical business decisions that can prevent, mitigate, or recover from an event that threatens trust, reputation, assets, operations, and competitive position.

There is a rigor to effective crisis management that is equivalent to the rigor found in other business processes. But that rigor is often unknown, ignored, or misapplied by many leaders, to their own and their organizations’ misfortune.

That rigor includes a systematic way to think in a crisis.

Many leaders who otherwise are gifted managers – managing finance, or engineering, or marketing, or any other professional discipline, or even a whole company or government – throw rigor to the wind when a crisis emerges. Then they either make up a response on the fly or try to cobble together bits of knowledge from other parts of their experience. Or they ignore the crisis until it is too late. Or they think that their problem is one of public relations that can be rationalized away.

All of these things happened in Katrina. Indeed, from the President to the Secretary of Homeland Security to the Director of the Federal Emergency Management Agency, there was lack of situational awareness, ineffective and dishonest assurances of an imminent response, and then denial of their own mis-steps.  They focused more on saying what sounded good, but were singularly unable to deliver on the assurances they made.

Washington, DC, August 31, 2005 -- Michael Chertoff, Secretary of Homeland Security, at a press conference at Homeland Security Headquarters, The press conference was also attended by Stephen Johnson from the Environmental Protection Agency, Secretary Michael Leavitt of the Department of Health and Human Services, Secretary Samuel Bodman of the Department of Energy, Secretary Norman Mineta, Department of Transportation, Rear Admiral Joel Whitehead, US Coast Guard, Acting Deputy Director Patrick Rhode of FEMA and Assisstant Secretary for Homeland Defense Paul McHale from the Department of Defense. Photo by Ed Edahl/FEMA

August 31, 2005 — Michael Chertoff, Secretary of Homeland Security, addresses the media.  Photo by Ed Edahl/FEMA

 Every Crisis is a Business Problem Before it is a Communication Problem

Crisis management is far more than skillful public relations. Seeing PR as the solution to a crisis is a recipe for failure.

Every crisis is a business problem before it is a communication problem, and you cannot communicate your way out of a business problem.

The government set the bar very high early in the Katrina crisis.

The day before the hurricane made landfall President Bush went on television to reassure the citizens of New Orleans and the surrounding areas. He said,

“We will do everything in our power to help the people and the communities affected by the storm.”

FEMA Director Michael Brown also reassured the public:

“FEMA is not going to hesitate at all in this storm. We’re going to move fast, we’re going to move quick, we’re going to do whatever it takes to help disaster victims.”

FEMA chief Michael Brown alongside Governor Kathleen Blanco and Senator Mary Landrieu

FEMA chief Michael Brown alongside Louisiana Governor Kathleen Blanco, center, and U.S. Senator Mary Landrieu, left.

These were the right things to say.

But simply saying them was not enough.

Regrettably, both FEMA and the larger US government, having set those expectations, spent the next week dramatically under-delivering on them. As the horror that New Orleans experienced unfolded over the next few days, the government’s lack of effective action, and the disconnect between the rhetoric and the work, defined the president and his administration.

Crises play out in an environment of emotional resonance: fear, anxiety, anger, shame, embarrassment and other, often confused, emotions. Effective crisis communication, combined with effective management of other elements of a crisis, can address and even neutralize these emotional reactions.

New Orleans flooded on August 29, 2005

New Orleans flooded on August 29, 2005

Crisis Response =
Effective Action + Effective Communication

Effective crisis response consists of a carefully managed process that calibrates smart actions with smart communication.

The key to making smart choices is to use the right decision criteria – the proper basis for choice. And that means asking the right questions.

Indeed, in my experience working on and studying thousands of crises over more than 35 years, the most effectively handled crises were the ones where leaders asked the right question.  Ask the right question, and the solution can become clear within a matter of minutes. But asking the right question requires mental readiness; a readiness to shift perspective and to think differently.

The Leadership Discipline of Mental Readiness

Most counter-productive crisis responses begin with leaders asking some version of What should we do? Or What should we say? The challenge with this kind of question is that it focuses on the we – on the entity or leader in crisis. This results in the consideration of options that may make the people in midst of crisis feel good. But it is unlikely to lead to what is necessary to maintain trust, confidence, and support of those people whose trust, confidence, and support are critical to the organization.

What is needed is a different kind of thinking that begins not with the I/me/we/us but rather with the they/them – with the stakeholders who matter to the organization. The leadership discipline of mental readiness – the readiness to shift frames of reference from the first person — I/me/we/us — to the third person — they/them — makes all the difference.

And that’s because of the way trust works.

Maintaining Trust: Meet Expectations

A common goal for most organizations and leaders in crises is to maintain the trust and confidence of those who matter – shareholders, employees, customers, regulators, residents, citizens, voters, etc.

Trust arises when stakeholders’ legitimate expectations are met. Trust falls when expectations are unmet.

Asking What should we do? runs the serious risk of failing even to consider stakeholders’ expectations. Worse, it further risks the leader becoming stuck in his or her own perspective, in I/me/we/us. Hence, such crisis whoppers as BP CEO Tony Hayward’s “I’d like my life back,” or even President Richard Nixon’s “I am not a crook.”

Most crisis response failures can be traced back to the ultimate decision-makers focusing on their own frame of reference rather than on their stakeholders.  This was the case in Katrina.

The right question to ask when determining the appropriate course of action in a crisis is not What should we do. Rather, it is this: What would reasonable people appropriately expect a responsible organization or leader to do when facing this kind of situation?

Framing decisions in light of stakeholder expectations leads to smarter choices faster, and maintains stakeholders’ trust.

For any stakeholder group we can answer the question, What would reasonable members of this stakeholder group appropriately expect a responsible organization or leader to do? to a very granular level. And at the very least, one way to determine stakeholder expectations is to reflect on the expectations we ourselves have set.  So, in Katrina, President Bush set the expectation that the the federal government would do everything in its power to help the people affected by the storm.  FEMA chief Michael Brown said that FEMA would not hesitate at all, but would move fast and do whatever it takes to help disaster victims.

But when FEMA was seen to be slow and to create obstacles to rapid response, and when the U.S. government was not seen to be responding or even acknowledging the gravity of the situation, trust began to fall simply because the expectations the government itself had set were not being fulfilled.

 

Photo by the author.

We can inventory expectations to a very granular level for each stakeholder group, and we can then work to fulfill those particular expectations.

But regardless the particular expectations of any given stakeholder group, there is a common expectation that applies to all stakeholder groups all the time:  In a crisis, all stakeholders expect a responsible organization or leader to care.  To care that something has happened; to care that people need help; to care that something needs to be done.

One of the common patterns in crisis is this: The single biggest predictor of loss of trust and confidence, of loss of reputation, and of financial and operational harm, is the perception that the organization or leader do not care.

So effective crisis response, at a minimum, begins with a timely demonstration of caring. And it continues with a persistent demonstration that the organization and leader continue to care, for as long as the expectation of caring exists.

This is what was sorely lacking in the government’s response to Katrina.  Officials said they cared; but the tangible demonstration of caring didn’t match the rhetoric.

New Orleans flooded on a Monday.  Throughout that day and Tuesday, the government kept assuring the news media that FEMA and other agencies were on the ground and helping the victims.  But news coverage showed little federal presence except for U.S. Coast Guard helicopter rescues.  But no staging areas for victims; no shelters; but hundreds of people, mostly African-American, struggling against the rising waters and without help.  On Tuesday the news media persistently questioned why there was little evidence of federal help for the city, noting even that dead bodies continued to float by.

On that Wednesday the media not only covered the lack of a FEMA presence on the ground, but also how FEMA prevented or stalled potential aid from other sources.  For example, a fourteen-car caravan arranged by the sheriff of Loudoun County, Virginia, carrying supplies of water and food, was not allowed into the city. FEMA stopped tractor trailers carrying water to the supply staging area in Alexandria, Louisiana because they did not have the necessary paperwork. CNN also reported that during the weekend before the flood Mayor Nagin had made a call for firefighters to help with rescue operations. But as firefighters from across the country arrived to help victims, they were first sent by FEMA to Atlanta for a day long training program in community relations and sexual harassment. When they arrived in New Orleans, the volunteer firefighters were permitted only to give out flyers with FEMA number, but were forbidden from engaging in rescue operations. The media reported not only the resentment felt by the first responders, but also how FEMA’s policies hurt those people who were begging for aid in New Orleans.

That day Homeland Security Secretary Michael Chertoff held a press conference in which he said,

“We are extremely pleased with every element of the federal government, all of our federal partners, have made to this terrible tragedy.”

That day Mayor Ray Nagin went on the radio and blasted the federal government for its failure to respond quickly:

“I don’t want to see anyone do any more g*d-dammed press conferences. Put a moratorium on press conferences. Don’t tell me forty thousand people are coming here. They’re not here!”

On Thursday, the news media reported that hundreds of people who had been sheltering at the New Orleans Convention Center without food, water, blankets, or any other help.  FEMA Director Michael Brown went on four network news programs and admitted that FEMA had been unaware of the people at the convention center until the news media reported it.

That day commentators and late-night comedians began to question Mr. Brown’s fitness to serve.

On Friday President Bush visited the area, and famously praised Mr. Brown, addressing him by his nickname:

“Brownie, you’re doing a heck of a job.”

President George W. Bush addressing FEMA Director Michael Brown: “Brownie, you’re doing a heck of a job.”

That caught people’s attention (and became a defining quote of the President Bush’s tenure as president).  Media analysts wondered why the President would say that: Did he not know how incompetent Brown seemed to many people?  Did he know and not care?  Or did he actually want the ineffective response?  It showed a president out of touch, or worse.  This meme began to make its way across the television networks.

That night, Friday, on a live televised concert to raise funds for Katrina victims, entertainer Kanye West gave voice to the pent up frustrations of many:

“George Bush doesn’t care about black people.”

Kanye West gave voice to pent-up frustrations when he declared on live TV: “George Bush doesn’t care about black people.”

 

This changed the dynamic completely.  The next morning, six days after the flood, the President spoke to the media in front of the White House. Flanked by Defense Secretary Donald Rumsfeld, Joint Chiefs Chairman Richard Meyers, and Homeland Security Secretary Chertoff, the president acknowledged shortfalls in the federal response and committed to direct a more effective response. He said,

“Many of our citizens are simply not getting the help they need, especially in New Orleans. And that is unacceptable.”

After six days of seeming out of touch, the acknowledgement of the inadequate response seemed a heartening development. That day a larger federal presence was seen in New Orleans and President Bush ordered over 7,000 troops and an additional 10,000 National Guardsmen to the disaster area.

On the weekend talk shows, the focus shifted from why the response was inadequate to who was to blame for it.

Meet The Press host Tim Russert with Homeland Security Secretary Chertoff

Homeland Security Secretary Chertoff appeared on NBC’s Meet The Press and was questioned by host Tim Russert.  Russert asked whether Chertoff or anyone who reported to him would resign given the poor response.  He quoted the Republican senator from Louisiana, David Vitter, who gave Secretary Chertoff a grade of F.  He noted that Mitt Romney, Republican governor of Massachusetts, said that the U.S. is now an embarrassment to the world.  He then challenged Secretary Chertoff:

“Your website says that your department assumes primary responsibility for a natural disaster.  If you knew that a Hurricane Three storm was coming, why weren’t buses, trains, planes, cruise ships, trucks provided on Friday, Saturday, Sunday to evacuate people before the storm?”

Secretary Chertoff gave a response that was, at best, disingenuous. He said,

“Tim, the way that emergency operations act under the law is – the responsibility, the power, the authority to order an evacuation rests with state and local officials.”

Even if the statement were true, it was a sharp contrast from President Bush’s and FEMA Director Brown’s assurances that the federal government would do everything it could to help those affected by the storm. But as a PBS Frontline special pointed out, evacuation is a shared responsibility. The law establishing FEMA spells out:

“The functions of the Federal Emergency Management Agency include…conducting emergency operations to save lives and property through positioning emergency equipment and supplies, through evacuating potential victims, through providing food, water, shelter, and medical care to those in need, and through restoring critical public services.”

By the following Friday, 13 days after the flood, Secretary Chertoff announced that operational responsibility for the Katrina response was shifting from FEMA to the Coast Guard, and that Coast Guard Vice Admiral Thad Allen would take charge.  FEMA Director Brown resigned the following Monday.

9 Lessons for Leaders and Communicators

The Katrina anniversary is an opportunity to reflect on foundational principles of effective crisis management.  These include:

  1. Leaders are judged based on how they deal with their most difficult challenges.  Crises can literally make or break reputations.
  2. Crisis management is the management of choices – the management of decisions that leaders make when things have the potential to go very wrong.
  3. There is a rigor to effective crisis management that is equivalent to the rigor found in other business processes. But that rigor is often unknown, ignored, or misapplied by many leaders, to their own and their organizations’ misfortune.  That rigor includes a systematic way to think in a crisis.
  4. Every crisis is a business problem before it is a communication problem, and you cannot communicate your way out of a business problem. Crisis management is far more than skillful public relations. Effective crisis response consists of a carefully managed process that calibrates smart actions with smart communication: Crisis Response = Effective Action + Effective Communication.
  5. The key to making smart choices is to use the right decision criteria – the proper basis for choice. And that means asking the right question: What would reasonable people appropriately expect a responsible organization to do in this situation?
  6. Trust arises when stakeholders’ legitimate expectations are met. Trust falls when expectations are unmet.
  7. Framing decisions in light of stakeholder expectations leads to smarter choices faster, and maintains stakeholders’ trust.
  8. In a crisis, all stakeholders expect a responsible organization or leader to care.  To care that something has happened; to care that people need help; to care that something needs to be done.
  9. The single biggest predictor of loss of trust and confidence, of loss of reputation, and of financial and operational harm, is the perception that the organization or leader do not care. Effective crisis response, at a minimum, begins with a timely demonstration of caring. And it continues with a persistent demonstration that the organization and leader continue to care, for as long as the expectation of caring exists.
by Anthony Ewing | Bio | Posts
8 Apr 2015

Mandatory human rights reporting is coming soon to a jurisdiction near you. Is your company ready?

Large European companies need to review their human rights policies and the risks of human rights impacts linked to their operations over the next two years. The catalyst is a European Parliament Directive adopted in October that requires companies to report annually on non-financial issues, beginning in 2017. Under the Directive, large, publicly listed European companies must report annually on how they are meeting the corporate responsibility to respect human rights, as well as environmental, social and employee-related, and anti-corruption and bribery matters. The Directive mandates corporate disclosure of human rights due diligence and consideration of human rights risks, consistent with the UN Guiding Principles on Business and Human Rights. Non-financial reports must include a “description of the policies pursued” relating to respect for human rights, including “due diligence processes implemented;” “the outcome of those policies;” principal human rights risks linked to the company’s operations, including its “business relationships, products or services” likely to cause adverse impacts; and relevant non-financial performance indicators. While the regulation is of the “comply or explain” variety – companies must disclose existing policies or explain why they have no policies on these matters – and carries no penalty for noncompliance, the twenty-eight member states of the European Union will implement the Directive through national legislation, in which each country is free to set more stringent disclosure requirements and possible penalties.

The European Non-Financial Reporting Directive is part of a broader trend of mandatory reporting that seeks to promote corporate respect for human rights through greater corporate transparency. Like financial reporting that provides material information for investors, human rights reporting informs consumers, investors and policymakers about the human rights impacts of business operations. Advocacy organizations, like those in the European Coalition of Corporate Justice, and investors, like those in the sustainable and responsible investment network Eurosif, pushed for adoption of the Directive. In the United States, mandatory corporate human rights reporting is emerging around specific issues, such as conflict minerals, forced labor and human trafficking, and specific geographies, such as Central Africa and Burma. No non-financial reporting regulation to date in the United States applies as broadly as the European Directive, however, which is estimated to cover some 6,000 European companies.

The Directive and similar regulations will force many companies to address their human rights impacts for the first time. How should executives prepare? Companies can take a number of steps to meet escalating expectations of greater transparency about corporate human rights impacts:

  • Conduct human rights due diligence.

Companies that understand the human rights impacts of their operations and business relationships are in a better position to prevent or mitigate those risks. Conducting a human rights impact assessment can reveal actual and potential human rights risks and allow a company to prioritize actions to address the most severe risks. Nestlé, for example, based on information from human rights impact assessments (PDF), has taken steps to reduce excessive working hours, improve road safety training for its drivers, add human rights principles to its contracts with security providers, and develop an external grievance mechanism.

  • Integrate human rights considerations into existing policies and procedures.

A growing number of companies have made explicit commitments to respect human rights in corporate codes of conduct, supplier standards and corporate responsibility reports. Adopting a human rights policy is an important step. Companies are also finding ways to integrate human rights considerations into existing management systems, which can be easier than creating stand-alone policies. Even without “human rights” language, corporate policies and procedures can relate to a company’s human rights impacts. Executives should review their employment, security and compliance policies, for example, to identify ways that they can address the human rights impacts of the company’s operations and business relationships.

  • Become familiar with human rights reporting frameworks.

Meaningful human rights reporting accounts for how a company addresses its human rights impacts, especially risks of severe human rights impacts, and serves as a basis to measure future performance. Companies are developing key performance indicators relevant for their businesses and the particular human rights risks they face. Almost all of the world’s 250 largest companies are publishing non-financial reports. More than 7,000 companies have reported non-financial issues consistent with the Global Reporting Initiative Sustainability Reporting Guidelines, which include human rights indicators. The recently launched Reporting and Assurance Frameworks Initiative (RAFI), piloted by the European multinationals Unilever, Ericsson, Nestlé and H&M, can help companies report on their human rights performance in line with the UN Guiding Principles. The European Commission is expected to issue non-binding guidelines for reporting non-financial information under the European Directive.

While European companies now have a regulatory deadline to start reporting, all companies would do well to better understand their non-financial impacts and how to manage them. Whether mandatory or not, non-financial and human rights reporting is an emerging business practice and stakeholder expectation of leading companies with the potential to influence your company’s reputation and bottom line for years to come.

Now in Circulation

 

Friends,

I am pleased to announce that The Power of Communication: Skills to Build Trust, Inspire Loyalty, and Lead Effectively is now in circulation!

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Recent public apologies from Goldman Sachs’ CEO Lloyd Blankfein and Tiger Woods made me wonder why we accept some apologies and denounce others.
Which components of a public apology show us that it is authentic and sincere and, therefore, that we can accept it? Is there a perfect public apology?

Goldman Takes The Lead

When Goldman Sachs’ CEO Lloyd Blankfein issued a public mea culpa, his goal was to convince the public that he accepted responsibility for and deeply regretted his firm’s role in the financial crisis. As a form of restitution, he offered to have Goldman invest $500 million over five years to help small businesses. Mr. Blankfein’s was the first official apology by an investment bank of that caliber, which is by itself a unique occurrence. And yet, Goldman’s apology caused a mixed reaction.
Some stakeholders gave the company credit for taking the initiative to apologize and for its willingness to help small businesses. Most others, including the general public, questioned the sincerity of the apology and its real value. The media called it a “faux apology”, a “non-apology”, a “hollow apology”, and an “unspecified apology.” The author of Mean Street blog (WSJ) Evan Newmark called it a “big PR exercise” that is “so sequenced and packaged that it’s bound to come across as disingenuous, even deeply cynical.
The negative public reaction was caused mainly by the apparent disconnect between Goldman’s carefully calibrated message and real issues that the company still needs to fix if it is to restore public trust and earn forgiveness.

Tiger One Over Par
Tiger Woods’ attempts to apologize also caused a mixed public reaction.
On November 27, 2009 Woods crashed his car into a fire hydrant near his house. After the incident brought to light many affairs, Woods posted two separate apologies on his website, several days apart.
After the first apology mainstream media, bloggers, vendors, corporate sponsors, and the golf community expressed major disappointment and dismay at Woods’ behavior and did not accept his apology as sufficient. Woods’ story caused a lot of debate even among the apology experts. The only stakeholders who showed support were his fans. Most of them accepted his apology, demonstrating higher tolerance for his personal failings.

Woods’ second apology was more successful and resulted in mostly positive reviews among his fans, critics, media, the golf community etc. It could have been even more effective if the athlete had come clean earlier and had delivered the apology in person rather than on his website.

Why Didn’t the Apologies Work?

Why didn’t people believe Goldman Sachs CEO’s apology? Why did Woods’ first apology reach his fans but did not convince others? Why did his second apology result in more positive reaction among his stakeholders?
What type of public apology do people need to hear to be able to believe it and accept it?
The authors of “The Five Languages of Apology,” Gary Chapman and Jennifer Thomas, might have an answer. Read more

Taking Strategic Communication Seriously

The United States government is finally taking strategic communication seriously.

This week President Obama used all the instruments of diplomacy to advance the US foreign policy agenda, including getting Russia, France, and Britain to stand with the US against continued nuclear development by Iran.

President Obama’s wins at the UN and in the G-20 summit in Pittsburgh this week are just the latest indication of a more mature and intentional foreign policy that aims at influencing world leaders and the world community in ways that increase the security of the United States.

An important element of this new approach is a renewed emphasis on effective public diplomacy.

Effective Public Diplomacy =

Influencing, not Bullying

Last year I wrote a post about US public diplomacy, and how much of it missed the mark.

I noted that effective communication isn’t about pushing messages to audiences, but rather about provoking a desired reaction from those audiences.

I also quoted Dr. Amy Zalman, who wrote an East-West Institute concept paper, Countering Violent Extremism, that included this observation:

“Good communicators reveal, in speech and action, that they understand the motivations and aspirations of their audiences—and it is via this understanding that they gain their sympathies.”

Dr. Zalman then reviewed US public diplomacy directed toward the Muslim world, and concluded:

“A review of U.S. official rhetoric shows an all too persistent absence of this understanding, an oversight which in turn can fan rather than dampen extremist sentiment.”

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Worth Reading: Harvard Business Review, June, 2009, special section: Rebuilding Trust

I’ve been teaching ethics in graduate business and communication programs at New York University for more than 20 years, and every semester we lament the decline of trust.

But this year seems to be worse than most.  Trust in US corporations is at an all-time low, 38 percent, according to the 2009 Edelman Trust Barometer.  And most other measures of trust in institutions also point to continuing declines.

The June issue of Harvard Business Review takes on the issue of trust with a 25-page special report, Rebuilding Trust.  It’s worth reading.  The package includes a forceful critique of business school curricula, a 100-year timeline of highlights and lowlights in the public’s trust of business, and a counter-intuitive piece on how despite recent events people may still be trusting too much.

But the real payoff is the first piece in the package, by James O’Toole and Warren Bennis.   O’Toole is the Daniels Distinguished Professor of Business Ethics at the University of Denver’s Daniels College of Business, and Bennis is University Professor at the University of Southern California.  The two are co-authors (with Daniel Goleman and Patricia Ward Biederman) of Transparency: How Leaders Create a Culture of Candor (Jossey-Bass, 2008).

The special report opens with O’Toole’s and Bennis’ conclusion:

“We won’t be able to rebuild trust in institutions until leaders learn how to communicate honestly — and create organizations where that’s the norm.”

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A public apology is a good way to express remorse and offer reconciliation to an affected party. But the very act of apologizing can be daunting.

If delivered effectively, an apology can mend relationships and restore trust between two or more parties.

If delivered effectively, an apology can help maintain company’s competitive advantage, reduce litigation costs and minimize business disruptions.

If delivered effectively, an apology can create a perception of genuine regret on behalf of the offender and mend his or her reputation.

But here is a question:

Can an effective delivery distract the audience from an insufficient apology?

And,

Can a weak delivery diminish a powerful message of a genuine apology?

I invite you to look at three recent apologies and share your opinion about the effectiveness of each apology is in terms of its message and its presentation.

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