Sometimes how leaders react during a business crisis can have more of an impact than the crisis itself.
Remember when Equifax announced that the personal information of over 143 million Americans was compromised in a huge cybersecurity breach? The company claimed they learned about the attack in July 2017, but didn’t share that information with the public until September. They caught flak for not only failing to alert customers, but for a lack transparency in general — the result of a reactive, poorly executed public relations strategy.
So why are CPAs blogging about public relations? Ask Equifax CEO Richard Smith, who stepped down after 12 years at the helm. Shares of Equifax declined more than 23%, and the company logged over $87 million in costs related to the privacy breach.
PR is too often viewed as “feel good” marketing fluff. But when bad news hits the fan, a well-crafted PR strategy can help mitigate its impact on your bottom line — very much the purview of a CFO.
Not convinced? Here are four ways that first-rate PR can help protect your reputation as well as your earnings:
1. Managing media relations during a crisis. Let’s say your company is responsible for an accident that pollutes a local waterway. Now imagine that you’re in the middle of negotiating a major deal when the news breaks. The accident can hurt your company and put the deal in jeopardy. What can you do?
A skilled PR person — whether an employee of your organization or outside counsel from an established public relations firm — knows how to mitigate the potential damage to your brand and assist your organization in properly taking responsibility in a manner that engenders trust, restores brand confidence, stems sales attrition and re-establishes good will.
The problem? Many organizations first contact a PR firm in the midst (or the immediate aftermath) of a crisis, when significant brand damage has already occurred and public trust has eroded, according to Kathleen McMorrow, principal at The Communications Optic, a strategic communications and media advisory firm based in Chatham, NJ.
“The midpoint of a crisis is certainly not the ideal time to onboard a PR firm,” says McMorrow. “A far better strategy is to have established a relationship before a problem even occurs. That way, the firm can be a true partner to your organization, performing at an optimal level to contain the damaging effect of a negative incident far better than someone who just received your panicked call and knows nothing about your company.”
2. Overseeing relationships during litigation. Some types of legal actions, like those involving insurance coverage, for example, are between companies that have ongoing, profitable business relationships. A skilled professional can help balance your lawyer’s strong advocacy on your behalf with sensitivity to the business relationships that keep your company financially healthy.
Here’s where having an established relationship with a PR pro can also pay dividends, according to McMorrow. “When your PR firm is already your trusted advisor, fully engaged with your business strategy and market position, they’ll understand the nuances of your other business relationships and will act to protect them, along with your public image.”
3. Boosting employee morale during tough times. Sometimes, reaching out to the media can help with employee morale. Here’s an example: Your company is forced to make cutbacks, and remaining employees are losing confidence in their future with the firm.
Of course, establishing or maintaining professional development or other performance incentive programs can help keep staff engaged and productive. But think how much more effective your effort would be if a PR professional helped you relay this positive story to the media. Impartial media coverage would go a long way toward reassuring current employees and helping to attract talented candidates in the future. In addition, your strategic partners and vendors might have greater confidence and enthusiasm in their dealings with your organization.
4. Presenting a consistently positive image of your company. The court of public opinion is a powerful force in today’s justice system. Crisis management strategies can be enhanced by a consistently positive image of your company.
We’ve all seen the trend toward frivolous lawsuits and noticed the skepticism toward corporations in light of well-publicized abuses by a few firms. If people see that a company is investing in the community, giving back at charitable events or providing generous volunteer opportunities for employees, they might be less likely to sue for minor injuries or infractions. At the very least, they may accept a reasonable settlement if offered.
CFOs can’t afford to ignore reputation management in today’s litigious world. Rather than viewing a strategic PR plan as fluff, you might want to huddle with your marketing team and learn about the relationships and resources they have in place to prevent bad news from turning into a bottom-line nightmare.