Archive for February 7th, 2007

When the regulators stab you in the back

February 7, 2007

I’m back from Mexico and found things pretty active while I was gone. Fortunately I unplugged pretty well, otherwise I would have gotten pulled into kind of a nasty one. I’m not going to be very specific here but this is a situation faced by a great many companies who are closely regulated by oversight organizations at the state, federal or local level. This could apply to financial regulators, utilities, industry for a variety of things including environmental, even tax issues.

In this situation the company was bending over backwards to address all the concerns that the regulatory agency was raising. They knew there was a problem and proactively discussed and brought all the relevant details to the agenct representatives attention. Everyone knew the seriousness. And the agency folks were highly complimentary about the company’s cooperativeness, transparency and proactive planning to address the concerns. But the governor needed to make some hay apparently. Or answer to critics about the toughness of the agency on industry.

So, while the nice talk continued in the conference room, the agency’s communication people went to work crafting a press release designed to make the company look like it wore horns and waved a forked tail. The old black hats white hats ploy was in full play and you know which color was on each side’s heads.  The word had come down apparently–make us look good by making them look really bad.

There was some cooperative work on the press release, a slight toning down of the hyper aggressive tone and implied name calling, but by the time it hit the media it was ugly. Of course, they buy into the “good guys-bad guys” story hook line and sinker. What is the company to do? Publicly call out the fact that they have been stabbed in the back by agency folks answering to a higher authority? There is nothing they can do except see all their hard work to be cooperative, to be proactive, to be responsible citizens go for nothing as it relates to their reputation.

Think this can’t happen to you? I’ve seen it over and over and over–with big companies and small companies. It is one of the most common reputation threats out there. And the threat is not you as a company making a mistake–but the politicians who control these agencies looking desperately for any opportunity to make themselves look good at your expense. After all, how can they be hurt in this environment by making some huge bank, powerful industry association, Fortune 100 industrial firm, large private utility or just about anybody big and powerful look bad?

I would love to hear from some of you experienced crisis managers out there discuss your approach to dealing with this. My sense is that it is one of the most common reputation hazards that we in crisis management have to deal with but one of the most intractable. Your thoughts?