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JUST A THOUGHT
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Denial is the single biggest enemy of crisis management.
Jonathan Bernstein |
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FROM THE EDITOR
As this issue goes to print, Congressman Anthony Weiner is the topic du jour. Already bearing the tagline "Weinergate," the media is having a feeding frenzy with this story as a result of backwards crisis management on the Congressman's part, and there's no quick end in sight. Crisis Manager publisher Jonathan Bernstein predicts that "You really Weinered that one" will become a new catch phrase.
This time around we start off with an article by guest author and PR pro Pete Webb that addresses a common cause of business crises - white collar crime. After that, take a look at highlights of our latest blog posts covering the latest and greatest in the world of crisis management, followed by a new section, Apropos of Nothing.
Then, if you'd like to get crisis management analysis of breaking news and issues on a more frequent basis, be sure to check out the links to our three blogs, in the right-hand column of this ezine.
As always, if you like what you see, please share it with others by using the "Forward Email" link at the bottom of the ezine and tell them to subscribe! IMPORTANT NOTE: If you just "Forward" using your own email program's "Forward" function and your recipient thinks they're being spammed, they can click on the Opt Out link and opt YOU off the list. So use the "Forward Email" link, please.
My best to all,
Erik
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STEALING FROM WITHIN,
COUNSELING THE WAY OUTBy Pete Webb
| White collar crime, and particularly employee malfeasance, is often listed as a "classic" business crisis situation. The Commerce Department reports employee theft costs U.S. businesses nearly a billion dollars per week. But in most cases there's seldom a textbook response on how to manage communications surrounding business embezzlement or employee fidelity issues. It can't, by any stretch, ever be considered "good news" about a company and its public image.
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Pete Webb |
In the past two years we've had two clients come to us for assistance in dealing with in-house embezzlements that had the potential of creating uncomfortable media attention. And yes, in both cases, media coverage did result, but we were able to manage and deftly mute the media furor because of the key steps we engaged in as details of the crimes unfolded.
The first case involved a bookkeeper at a retirement home community, who had not only stolen from her employer's accounts, but also stolen from residents whom she'd befriended. As more details about the pattern of the individual's behavior unfolded, it became apparent she had a profound gambling problem. All of the money she was stealing was being lost at casinos, or spent on expensive gifts for her children. She was caught after being dismissed for regulatory errors, and as managers were cleaning out her desk, they found residents' checkbooks and information on the company's accounts.
The second case, in a different state, also involved gambling. The project accountant for a major construction company had been creating false invoices and fictitious subcontractor files, until a regional auditor started questioning some of the outbound payments. The district attorney's investigator determined the accountant used her husband to cash the checks, and both were regulars at a casino.
The reaction from clients is always shock, and disbelief. After all, they've worked with these people, they trusted them with financial access, and alarm bells hadn't been going off. When they call you, it's apt to be a visceral, "This is going to hit the papers and we'll look like fools" reaction. Here's what I've learned over the years.
Get the details up front
Learn as much as you can about the employees' job responsibilities, their time at the business and how they were able to apparently pull off the crime. In addition to the "how," the mechanics of the crime, delve into the "why?" about their motivation. It's often drugs, gambling, a relative needing help, or a pattern of living beyond their means. In some cases, it clearly will point to a lack of supervision or a checks and balances system that's missing at the business, an issue that will have to be addressed.
Involve the client's attorneys from the start
In fact, the company's legal counsel probably got the first call. The lawyers may have contacts at the DA's office, so they'll want to report the crime. They'll be providing advice to their clients about how to handle the employee. In some cases, they may make the notification to the client's insurance carrier, to assure that a claim has been filed. But you'll also want to reinforce to the attorneys that you appreciate the sensitivity of this apparent crime, and that it may bring attention to the company, and you're prepared for unfavorable scrutiny.
Immediately report the thefts as a crime
Whether to the local police, or to the District Attorney's White Collar Crimes unit, the circumstances have to be reported. In some states, knowledge of a crime and failure to report that crime is a criminal offense in and of itself. It's a protection that the alleged perpetrator won't skate for the offense, and your client is concerned enough that they are reporting that they've been victimized. If it's not reported, do you want that employee to go on to another company and repeat the same crime?
Stress that your client is the victim
That's right - your client (or in one case, their customer) is the victim in these circumstances. They didn't willingly allow themselves to be the target of a thief, it's a vast imposition on their privacy and their well-being, and it's a definite impediment to a successful business operation.
Know how the system works
You should have some understanding of what steps the investigators will follow, and the legal process. After an investigation, if evidence of a crime exists, there's an arrest. The suspect may be picked up on a warrant, or turn themselves in. There will be an advisement, bond hearing, arraignment, preliminary hearing, perhaps even evidence hearings, before there's a trial or plea bargain. Every one of those court proceedings is an opportunity for the media (and some newspapers still do have reporters tracking the courts) to report on the case. In many cases, the client's attorneys have never been involved in trial work, or criminal cases. You'll be telling them the next steps for potential media exposure.
Discuss the circumstances with the PIOs
We've found police public information officers, or DA's PIOs, to be helpful and cooperative. But they do their job by providing information to media, and some reporters still go through the daily reports and court filings to find stories. You can often "partner" with the PIOs by providing detailsabout your client's business, and how this crime has impacted them. (In one case, we found out the DA had an absolute threshold for putting out a media release - any theft more than $100,000. By adding information about our client, the DA established that the client was the innocent victim.)
Internal messages are more important thanexternal - but do both
The greatest impact from a white collar crime is internal - people can't believe they've been duped, that someone they trusted is at fault, and of course, that the money is surely gone, with little chance of recovery or restitution.
Internal messages are essential, not only to accurately establish the facts and control rumors, but to let employees (or residents) know that the losses are covered by insurance, and this incident will not adversely affect business or the company. Of course, it will, because people will have lost their sense of trust. But reassuring employees has to be done swiftly and repeatedly. If the theft was discovered through internal procedures, it's a worthwhile, but subtle message about the expectation for integrity, and that the company has systems in place to detect theft.
With arrests, court filings and the details of the crime available in affidavits, the media has almost everything it needs for a story. You'll need to be ready with a statement about the company's role, what's been done to foreclose future incidents, and the reaction to learning about this breach of trust. With every step of the legal process, the client's name will be brought up again, and the amount taken.
Use a white-collar crime event as an occasion for change
This might be just the impetus for the company to switch to that new accounting system, or set up the inventory control mechanism for high-value products. Maybe it is time to commission background checks for new employees, or rechecks for employees who are being promoted to areas involving financial responsibility. We had one client who said, "Our system worked, we caught the thief." That's one way of looking at it, but the aggravation over the loss, the insurance filing, the diligence applied to new hiring, and the unwanted media attention aren't generally listed in a year's positive forecast.
The bottom line: counsel
When theft is occurring within an organization, there are both internal and external repercussions and your client will be looking for guidance and counsel. Executives feel duped, reporters may be looking for the "gotcha" story, and things move quickly. Be the voice of reason; deal with facts and ask the tough questions. You may need to tell the client what steps to take. Ultimately, it is your view from the outside that will allow the client to see how the situation will be viewed by the public. It is your level head that allows the client to convey the proper messages to its employees, and it's your opportunity to be the trusted counselor and to shepherd the process. If you do it right, you will have a client who trusts you for life.
Pete Webb is a Principal and Partner at Webb PR, a Denver-based strategic communications firm, with an extensive crisis communications background. You can reach him at
303-796-8888, or [email protected].
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TOP BLOG STORIES
By Erik Bernstein
| You can't look at a newspaper (who am I kidding? Google News, right?) without seeing more crisis-related stories than you can count on both hands. In a world where the only best informed and most prepared make it through the tough times, it pays get a handle on the latest techniques or get insider's view of precarious situations. To that effect, we invite you to check out the Bernstein Crisis Management blog and our blog at Carter McNamara's Free Management Library.
Here's a peek at the latest hot stories:
FEMA Declares Eric Cantor a Disaster Area
This post from the masters of irony at the Borowitz Report was too much to pass up, lampooning Rep. Eric Cantor for his cold hearted response to local's requests for tornado relief following the disaster in Joplin, Missouri.
Weiner Scandal
We rarely run guest pieces this close together, but Congressman Anthony Weiner has been the hot topic for some time now, and his recent admission of guilt has only turned up the fire. In this post, guest author Mark Macias breaks down the Congressman's initial crisis management.
Zombies Attack
The CDC's "Zombie Apocalypse" campaign was perhaps the most inventive and widely supported disaster preparedness campaign in history, prompting thousands of pages to sport the related badge and information that could save lives in the event of a real disaster like tornado, flood, or earthquake. What can you do to shore up your defenses? You'll have to read the real thing!
Social Media Saves Lives
Recent flurries of tornados have hit the U.S. hard, but the casualties could have been much higher had social media not filled in where traditional TV and radio systems were inoperable. This piece looks at the story of a local meteorlogist who saved lives across Alabama with his Twitter coverage.
He'll Be Back
Is a scandal involving a secret family enough to ruin a political career? Likely. Luckily for Ex-California Governator Arnold Schwarzenegger, the only question he's worried about now is whether it will trash plans to continue his career in Hollywood.
Ancient Wisdom for the Modern Corporate World
Sun Tzu's teachings have been applied to everything under the, well, sun. As you may have guessed from the title of this post, his theories, although thousands of years old, work especially well in modern business. Following this simple wisdom could very well change the way you work, so read on.
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APROPOS OF NOTHING
By Jonathan & Erik Bernstein
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We're always being asked stuff like "What's your favorite computer/online tool for doing ____? Where can I learn more about crisis management, public relations or creating a blog? "What do you play online?"
In other words, questions that may be apropos of nothing we write about regularly, but about which there seems to be genuine interest. So...we're going to start featuring some of our "favorite things" in this section, even at the risk of letting you know more about us than you might want to know (we say, with grins on faces). We'll add our initials after each entry so that you know who originated each of them.
- Hey, when did Entrepreneur magazine unstuff itself? I just got a complimentary copy because it featured client Craig Newmark, and it's become amazingly entertaining and useful! And yes, there really IS a Craig who created craigslist and, most recently, craigconnects. -- JB
- Read On Web has become one of my most-used browser add-ons; strips all ads, images from any page and allows you to read or print it out CLEAN. -- JB
- We just humbly returned this ezine to Constant Contact, having tried MailChimp, which is cheaper -- for a reason. We appreciated Constant Contact having held on to all our data, they've probably seen this happen before! -- JB & EB
- I had completely lost interest in online gaming for years, after everything seemed to involve swords, secret rooms and character creation. I'm already a character -- and a long-time WWII tank warfare buff. I am now officially hooked on World of Tanks; which is kinda like paintball (in which I competed for years) with two teams of tanks. No blood and gore, just good old fashioned fun that I can play online with my sons. -- JB
- Gaming runs in the family, and I've been stuck on Riot Games' League of Legends. Most games last under an hour, making for a perfect work break. -- EB
- After making a habit of slamming all things Apple, I have a guilty secret to admit...I've ditched my Blackberry for an iPhone 4 and am completely infatuated. Why did I wait so long?? -- EB
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BUSINESS ANNOUNCEMENTS
(aka blatant self-promotion) Keeping the Wolves at Bay: Media Training What has 80+ pages of hard-hitting, entertaining and easy-to-read guidance on how to deal with both traditional and online media during times of crisis? The answer is
Keeping the Wolves at Bay - Media Training. The, four-color, perfect-bound, 8x10 manual is currently available both in hardcopy ($25) and PDF form ($10). Volume discounts are available; write to Jonathan Bernstein for that information. Here's a couple of teaser reviews for you: Jonathan Bernstein's Keeping the Wolves at Bay is an eminently practical guidance for anyone - business leader, celebrity, politician - who must willingly or unwillingly face the glare of media attention. It appears
at a moment in time when the social media and other digital communications have upped the ante exponentially.
Bernstein's practicum on media relations takes on renewed urgency as news, gossip, and opinion now drive
public perception virally and at the speed of light.
Richard Levick, Esq.
President & CEO
Levick Strategic Communications, LLC
Even if you think you'll never, ever be interviewed by the media, buy this book and read it cover to cover. It isn't a substitute for media training. But it will give you the tools and confidence to go head to head -- and possibly even defang -- rabid reporters, blood-thirsty bloggers and social networking buffoons who are out to besmirch your good name. Joan Stewart, The Publicity Hound The book and other products can be found at the Crisis Manager Bookstore
Want To Blog And Tweet About
Your Organization But Don't Have Time?
Missing out on all the promotional and SEO advantages of doing so? Hire someone to be your voice...like Erik Bernstein, editor of Crisis Manager.
More info:[email protected]. |
GUEST AUTHORS
GUEST AUTHORS are very welcome
to submit material for "Crisis Manager." There is no fee paid, but most
guest authors have reported receiving business inquiries as a result of
appearing in this publication. Case histories, experience-based
lessons, commentary on current news events and editorial opinion are
all eligible for consideration. Submission is not a guarantee of
acceptance.
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ABOUT THE PUBLISHER AND EDITOR  Jonathan Bernstein is both publisher of Crisis Manager and president of Bernstein Crisis Management, Inc., a national crisis management public relations agency providing 24/7 access to crisis response professionals. The agency engages in the full spectrum of crisis management services: crisis prevention, response, planning & training. He has been in the public relations field since 1982, following five-year stints in both military intelligence and investigative reporting. Write to Jonathan at: [email protected]. Erik Bernstein is editor of Crisis Manager and is also a writer, publicist and SEO associate for Bernstein Crisis Management, Inc. Write to Erik at: [email protected]. |
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LEGAL DISCLAIMERAll information contained herein is obtained by Jonathan Bernstein from sources believed by Jonathan Bernstein to be accurate and reliable. Because of the possibility of human and mechanical error as well as other factors, neither Jonathan Bernstein nor Bernstein Crisis Management is responsible for any errors or omissions. All information is provided "as is" without warranty of any kind. Bernstein Crisis Management and Jonathan Bernstein make no representations and disclaim all express, implied, and statutory warranties of any kind to the user and/or any third party including, without limitation, warranties as to accuracy, timeliness, completeness, merchantability, or fitness for any particular purpose.
Unless due to willful tortuous misconduct or gross negligence, Jonathan Bernstein and Bernstein Crisis Management shall have no liability in tort, contract, or otherwise (and as permitted by law, product liability), to the user and/or any third party.
Under no circumstance shall Bernstein Crisis Management or Jonathan Bernstein be liable to the user and/or any third party for any lost profits or lost opportunity, indirect, special, consequential, incidental, or punitive damages whatsoever, even if Bernstein Crisis Management or Jonathan Bernstein has been advised of the possibility of such damages.
A service of this newsletter is to provide news summaries and/or snippets to readers. In such instances articles and/or snippets will be reprinted as they are received from the originating party or as they are displayed on the originating website or in the original article. As we do not write the news, we merely point readers to it, under no circumstance shall Bernstein Crisis Management or Jonathan Bernstein be liable to the user and/or any third party for any lost profits or lost opportunity, indirect, special, consequential, incidental, or punitive damages whatsoever due to the distribution of said news articles or snippets that lead readers to a full article on a news service's website, even if Bernstein Crisis Management or Jonathan Bernstein has been advised of the possibility of such damages. Authors of the original news story and their publications shall be exclusively held liable. Any corrections to news stories are not mandatory and shall be printed at the discretion of the list moderator after evaluation on a case-by-case basis.
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