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SKILLS FOR SUCCESS

May / June 2007

FOCUS ON…

RE-BRANDING STRATEGIES

Changing a Corporate Culture with Minimal Collateral Damage

Kathy Magnuson
EVP, Managing Director
Brand Pharm, A member of the Publicis
Healthcare Communications Group (PHCG)

Changing a corporate culture in a way that is positive—and that results in the least amount of collateral damage—is always a challenge. The key is to have an idea of what the culture can become before initiating the changes.

Most of us become part of an organization believing that the corporate culture is firmly established and with some predefined idea of how we will fit into that culture. While we may have some impact on that culture, we do not expect that we will be making wholesale changes. In today’s evolving healthcare environment, however, there is a greater need for companies to present a new face to customers and prospective employees, and many of us will be expected to significantly revise how our companies operate.

Recently, I had the opportunity to reshape an established culture when we decided to create a fresh advertising agency within PHCG by building upon the heritage of Nelson Communications. During this journey, we reached many crossroads that required careful decisions, and many lessons were learned. But in the end we were successful in creating a culture we could thrive in and be proud of: we launched Brand Pharm.

Determining the Cultural Direction
The first steps in deciding where you want the culture to go include understanding the current culture, and knowing exactly how much you wish to change it. At Brand Pharm we started by conducting research with clients and employees (past and current) to better understand the perceptions of the existing agency. We then worked with senior staff to brainstorm our ideal culture, to imagine exactly where we wanted to evolve. We sought to create an agency that encourages people to approach their work from alternative perspectives, thereby stimulating thoughts on how to provide clients with business solutions that went beyond the expected.

Our vision and value statements were crucial to determining how significant the cultural shift would be, and who we would need to help us make that shift.

Addressing Staffing Needs
Having a clear-cut vision allows you to hire new people who will help drive that vision forward. As you work to create a specific type of environment, the culture itself helps determine the right types of employees who will thrive and act as agents of positive change. And sometimes it becomes apparent that not everyone currently in the organization will continue to fit as the culture evolves. Most will recognize this and seek opportunities elsewhere. With others, it may be necessary to make the hard decision to redeploy them. It is recommended that these changes be made sooner rather than later, so as not to impede the ongoing evolution. Since cultural shift is often unsettling to those employees who are moving forward with the organization—particularly if that shift involves significant changes in staffing—management should be very forthcoming about future plans and should provide factual information as well as emotional support.

Cultural Shift Comes from the Top Down and the Bottom Up
While it is crucial that every senior manager embrace the cultural changes, it is equally important that the new culture is moved forward by those at the entry levels of the organization and everyone in-between. Cultural shifts cannot happen if everyone doesn’t work together as agents of change to bring the vision to life.

While senior managers are the first faces on view to the industry, those at the lower levels are the ones who truly act as catalysts during the process of evolving. For this reason, they may be the best recruiters for attracting like-minded peers eager to thrive and participate in the new culture and push it toward fruition. It is imperative that management remains attuned to any grumblings of unrest that may occur within the teams. By developing projects that allow everyone to actively participate in the process of change, employees should experience less uneasiness. Instead they will feel more like they are a part of the cultural shift with some measure of control over the process.

Arriving at the Final Destination
When Brand Pharm first announced the new name, the vision, and values for the agency, some expressed uncertainty about the prospect of these changes. It took about three months before the new culture really took root and began to flourish. A clear vision, a well-drawn road map, staff buy-in, and management support are all critical for changing a corporate culture with the least amount of collateral damage.

Hot Topic…
Crisis Management

Bad News Happens … But it Doesn’t Always Have to be a Crisis

Donna K. Ramer
President, StrategCations, Inc.; Vice President/Senior Counselor, CRT/tanaka

The company president is arrested. A disgruntled employee shoots three colleagues. Safety concerns lead to a massive product recall. Activists target your company for a boycott. A crusading attorney general sues the organization. Your company’s largest union goes on strike.

Time for the public relations department to pull out the crisis management plan? Well, maybe not so fast.

Crisis management has become one of the hottest specialties in the communications field. Indeed, most corporate public relations managers, especially in the healthcare industry, devote significant resources to their crisis management plans, and for good reason. Mismanaging a public response to a crisis carries terrible consequences, for the manager’s company and career.

The problem is that all the attention on crisis management has escalated the concept of a corporate crisis to cover almost any kind of negative event. By reacting to every negative event in crisis mode, communications managers risk creating a self-fulfilling prophecy: treating a negative event as a crisis can turn it into a crisis, even if it is simply bad news.

A true corporate crisis is an event or set of circumstances so disastrous that the company’s entire reputation is jeopardized; the future of product, a brand, or even the company itself may be threatened. Think about the Exxon-Valdez oil spill, the Union Carbide Bhopal accident, and the Tylenol tampering incident.

Of course, a negative event doesn’t have to be of such magnitude to constitute a crisis. For instance, with the obvious exception of the tobacco industry, a bona fide corporate crisis emerges any time a company’s products are found to harm its customers. Consider the recent pet food recall, the E. coli cases linked to spinach and a fastfood chain, or, classically, the Tylenol crisis of 1982.

But what about the examples cited at the start of this article? Bad news, certainly. Negative consequences, of course. But crises? Not necessarily. Dealing with these kinds of events responsibly and effectively requires the communications manager to understand how a crisis differs from an emergency or a controversy.

Emergencies are unexpected but usually discrete negative events that require urgent responses. Natural and man-made disasters or tragedies; industrial accidents; severe financial, legal or regulatory setbacks; accusations of corporate malfeasance—all qualify as emergencies. Outcomes are generally predictable. Consequences, while serious, are not dire. Media attention is intense but brief.

Controversies are ongoing disputes in which a company becomes a high-profile target of a special interest or activist group. Strikes, lawsuits, protests, boycotts, and hostile accusations are all features of modern corporate controversies. Consequences are usually limited, and attention from the mainstream news media tends to be sporadic.

Corporate crises are emergencies or controversies that have escalated beyond the managers’ ability to control developments, either because of human failure or the force of external events. Outcomes are highly unpredictable, consequences are dire, and media attention is both intense and lasting.

Communications managers should think of controversies, emergencies, and crises as different points on the spectrum of bad publicity. Response plans for all three types of events should come from the same playbook, which, for convenience, can even be titled “Crisis Management.” But the first step in crafting a response is properly classifying the negative event.

Accurately classifying an event as a controversy, emergency, or crisis enables you to select the proper tone for your response. This, in turn, helps you decide whether, when and how to convey authority, accountability, defensiveness, remorse, sorrow, contrition, righteousness or some other sentiment. Choosing a tone appropriate to the nature of a negative event will also help guide your choice of language, which is important because words convey, and elicit, emotion. And that’s important because in times of stress, companies—like people—are judged less on the basis of facts than feelings.

When faced with bad news, it is not uncommon for communications managers to launch immediately into crisis mode. Some do it out of panic or inexperience; others from a misguided sense of corporate battle lust and the adrenaline rush of managing a “war room.” Whatever the reason, working in crisis mode inevitably sends an unmistakable message that your company is, in fact, facing a crisis. And there’s nothing like a crisis to set off the classic media feeding frenzy.

Business reporters can smell crisis mode like sharks can smell blood, and the response is similar. Suddenly, news reports are filled with terms such as “high stakes” and “questionable future” and “matter of time.” Your company’s actions and executives are scrutinized and second guessed by media-appointed experts on cable talk shows. Bloggers start predicting your company’s demise. Politicians pile on.

Now you really have a crisis—one of your own making, because a negative event that could have been manageable has spun out of control.

Communications managers who overuse the term “crisis” also risk being seen as the boy who cried wolf. If every bad event is treated as a crisis, what happens when there really is a crisis, when the future of your company is truly at stake? Will you get the corporate support you need to control the company’s response, or will the delays of battle-weary colleagues thwart your efforts at damage control?

A crisis is a situation with a strong possibility of a highly undesirable outcome. With good management, it is a condition that companies should rarely, if ever, face. While prudence dictates crisis preparedness, the trend to label every emergency and controversy a crisis invites the very result that communications managers should fear most

THE POTENTIAL CONSEQUENCES OF A CRISIS
Simply put, there are three potential outcomes to a crisis, and the degree to which a company is punished, paroled, or praised is strongly related to the quality of crisis communications planning within the organization. Similarly, a crisis can affect a company’s bottom line in six ways:

• Contamination, tampering, or recalls may require you to stop selling your product.
• Disparaging reports or activist attacks can cause consumers to question your products and as a result, they may stop buying them.
• If you’re prohibited from selling your products or if consumers question your reputation, you may lose the loyalty of your marginal customers who may turn to competing products/categories... and you may lose these sales forever.
• Legislation, regulation, and negotiation resulting from a crisis can increase your cost of production.
• Increased concerns about your creditworthiness among bankers and investors, who may increase your financing costs.
• Most serious of all—but highly unlikely—is a crisis of such magnitude that you are forced out of business.