The link between reputation and company value–BP shows the high cost

Public relations pros often deal with the question as to how to get CEOs to pay more attention to the vital role of reputation management. Some CEO’s seems to inherently “get it,” and others, often financial-metric driven, have a harder time understanding the link because they don’t see an obvious connection between investments in reputation management or protection to the all-important quarterly results.

Crisis expert James Donnelly pointed this out in a recent post referencing a Forbes article which suggested we may be entering an age of reputation management. But, if anyone doubts the stunning impact of reputation loss on economic value, all one has to do is look at BP. One of the highest value and most respected (albeit hated by anyone who thinks hydrocarbons are evil) companies, has dropped out of the list of the 100 most valuable brands as a result of the catastrophe in the Gulf of Mexico. This according to brand valuation expert Interbrand.

I suspect that BP will be used for many years by anyone pitching PR services and particularly crisis preparation services to senior leaders. And well they should be. But I do have a fear. I’m afraid the pitch will be: See what happens when you don’t do good PR? Your reputation will go to heck and your brand value will be destroyed.  A much better pitch in my mind would be: There are some problems that even great PR can’t fix, so if you have any chance of doing some really serious damage to people, their futures or the environment, let’s look first at minimizing the risk of those bad things happening, and then let’s look at how to respond effectively if some really bad things do happen.

On BP reputation issues–Reuters gets it wrong, Dezenhall gets it right

It’s been fascinating to me to watch the PR pundits deal with BP’s reputation issues. I haven’t commented too much because BP is longtime client in crisis communication and I and others in my company are involved in this situation–that means anything I say will be dismissed by those who disagree and I can’t be as free to comment as I would be if I was not involved.

Reuters has an in-depth article about BP’s PR blunders–a topic that seems to provide endless fascination for the PR press as well as general media. A number of excellent points are made in this article, in addition to the tiresome re-hash of supposed gaffes. For example, the oft-repeated sloppy journalism story about BP’s faulty initial flow estimates–as I pointed out before only Factcheck.org and the Rolling Stone got this right–these were estimates from Unified Command. These were government estimates. Then of course there is the statement by CEO Hayward that he wanted his life back. This is simply unfair–silly perhaps to make a comment like that when so many in the gulf would like their life back, but it seems rather obvious that he was trying to say that there are few people more eager to get the hole plugged and the oil cleaned up more than him. Still, a vitally important media training lesson. Don’t allow your CEO (or Chairman for that matter) to just talk endlessly off the cuff for hours and days on end because sooner or later they will say something that the sharks will bite on.

But while no doubt BP has made a number of serious PR mistakes, this article misses the main point. Of all the commentators on BP’s PR problems, the only one I’ve seen who got it seriously right is Eric Dezenhall. I’ve been a fan of Eric for a long time–I quoted him from his book “Nail ‘Em” quite often when I wrote my book Now Is Too Late. I learned a lot from him about the nature of the media and the truly ugly game infotainment has become.

Here’s what Eric says in the Reuters article:

“PR is not the antidote to what’s happening here. Whenever something like this happens it is a 100 percent certainty that the public relations will be deemed to be botched,” said Eric Dezenhall, a crisis PR specialist for almost 30 years,

Washington-based Dezenhall said BP’s communications efforts must be judged over the longer term.

“All of these PR chestnuts that sound wonderful in a college class, about apologizing and contrition, there is very, very weak data to show these cliches bear out in reality.”

As to where I stand, I have been doing a series of by invitation only webinars and at the end I discuss why the public opinion about BP and the spill response is so bad, considering that earlier on they were doing a pretty darn good job of communicating about what was going on (in my opinion that has deteriorated badly in the last few weeks). Here are my reasons:

1) Media blame game-it’s just the way media is done these days, particularly around big disasters where people are getting killed or hurt bad. Everyday they have to come up with something new to compete for the eyes on the screen or page and what sells is “new revelation” of dastardly deeds or incompetent failures.

2) Politics–politics is simply going to be involved in events of this magnitude. Elections are at stake. Lots of them. And this fact combined with the media blame game means all elected officials from the president to parish presidents are doing their absolute darndest to 1) avoid any of the blame game falling of them and 2) get credit for anything good that happens. In this case, BP provides a completely understandable foil for every political message related to those two point. So all the blame is going to fall on them, and all the credit will be assumed by others–and not much BP can do about it.

3) Ignorance of Unified Command–its clear that few in this country understand the Oil Pollution Act of 1990 that has been driving much of the response and communications, nor do they understand the National Incident Management System or Incident Command System and the Joint Information Center concept.This ignorance has led to some very stupid things being said by politicians, by the press and by pundits.

4) The industry everyone loves to hate. All the reputation studies show that the oil industry is near the bottom of the list in public trust. So every oil company executive starts every day in a deep reputation hole. This is of their own doing in many ways, but the fact is that public opinion is not favorable to fossil fuels and getting less favorable every day–even while we consume like crazy. It’s one thing if a candy company has a crisis, its quite another if an oil company does. By the way, only the media business has a lower trust rating–how ironic.

5) Toxic talk–this is the lack of civility and decency in our public discourse, so well documented by the recent WeberShandwick study. Over 50,000 people have submitted comments to the response and to BP through the response website and BP’s state response websites. A great many have been very very negative–a disconcerting number threaten violence. It’s a sad part of our culture but it contributes to an overall attitude of animosity, venom and cultural dis-ease.

6) It’s a very very bad event–this is undoubtedly the biggest reason. The fact is that oil continues to flow as it has for over two months. It is still not stopped and the threat to people, environment and wildlife continues to grow. People cannot understand how this can happen and why it can’t be stopped. It makes everyone furious and frustrated. So, whether you are at fault or not, if you stand up and say, we are responsible you are going to take the brunt of that anger and frustration. That’s far beyond any PR fix.

7) BP mistakes–yep, there have been a number. Mistakes of omission and commission. Avoidable mistakes and a lot of “spinning” of bad information and minor gaffes. But BP cannot avoid responsibility for their situation entirely. But, like Dezenhall suggests, it makes more sense when trying to analyze this for future crises, to consider the whole picture.

I once went to a doctor who advised me if I wanted to live long that I should pick my parents carefully. If BP, or any other company wants to protect its reputation, don’t dump gazillions of gallons of oil into any water.