Eighteen months ago who had heard of Carlos Ghosn, outside of his industry circles? Now, of course, the case of the senior executive of Nissan who fled Japan while awaiting trial is known worldwide. The Ghosn incident is a cautionary tale of how alleged wrongdoing can cause significant reputational harm to both the accused individual and the company they represent. This harm is severe, even before a legal judgement has been made. Despite Nissan sacking Ghosn, most people would currently associate the brand with him.
The ongoing Ghosn saga also illustrates that, in any crisis, there is always both a legal case and a reputation case to be managed. And it is the effective marrying of the legal response and the PR response that helps senior executives and the corporations they serve to best prepare for, and manage and recover from, a crisis situation.
Setting the scene: regulation, cultural change and heightened awareness
Today, companies operate in a highly regulated global business environment. Legislators are tightening their regulatory belts across financial impropriety, corporate governance, mis-selling, bribery and corruption and unfair competition. And the activities of large organisations and their leaders continue to come under increasing glare of a global media spotlight powered by instant news and social media. Cultural shifts such as the #MeToo Movement have also prompted companies to look carefully at how historic organisational behaviours might conflict with their desired brand positioning and values.
All of this means that, in a crisis, the reputations of senior executives and the companies they represent are inextricably linked. This is extremely important for both the senior executive and the company when formulating a legal and PR response. For example, does the company stand behind its senior executive or wish to detach itself to minimise brand damage? When considering their legal and PR position, the senior executive will need to look carefully at their employment contract, the nature of any internal or external investigation they might face and any confidentiality issues related to that investigation, and how they manage any media attention. Often this will mean the company has their own set of legal and PR representatives and the senior executive will need to appoint their own legal and PR advisors.
Managing issues before they become crises
When it comes to crises, the old adage ‘prevention is better than cure’ rings true. Companies can take a positive stance in communicating how they are adapting their cultures to deal with issues that could damage their reputations or turn into crises. From a legal and HR perspective, this can include new polices and complaints mechanisms, such as independent whistleblowing hotlines. From a PR perspective, it can include having consistent and impactful internal communications that spell-out what is expected of staff at all levels within the organisation so there is absolutely no ambiguity as to what constitutes unacceptable behaviour.
What to say and when to say it
When a complaint against a senior executive is made, lawyers and PR advisers will need to work closely together in managing both the organisational response and communications on behalf of affected stakeholders, including other staff, clients, suppliers and, where relevant, the regulatory authorities. Communications materials including media statements need to be prepared, ready to be distributed at the appropriate time.
If the crisis involves allegations that are being investigated and live or potential litigation, care needs to be taken with the information that is used in any communications. This is where PRs must work closely with lawyers to determine how much can be said, what information can be legally disclosed and when that information can be disclosed. Here, there is often a ‘communications tension’ in crisis communications, with the legal team being cautious about disclosing sensitive information that could point to liability or potentially breach confidence, and the PR team who may be more concerned about the organisation communicating openly to appear transparent.
Handling the media
The media plays a crucial role in exposing corporate wrongdoing and in holding senior executives to account. But whilst internal investigations are ongoing and not yet public, companies should avoid being pressured into giving a knee-jerk reaction to a media inquiry. Trial by media is a dangerous thing, particularly when it leads to false accusations being made on social media. One-dimensional media coverage that leads to witch hunts can prejudice an investigation and can have a devastating impact on the protagonists involved. This is where media lawyers often work closely with PRs in managing the media’s duty to fair and accurate reporting, advising on pre-publication reputation management strategies and potential legal remedies in the event of inaccurate reporting.
Can Ghosn ever recover from the crisis he is facing? Skipping bail and fleeing the country clearly hasn’t helped his position, with the attendant media coverage this has generated. If he is found guilty by a court of law for the allegations being made against him, then it might be impossible for him to work in the same field again. He also faces an uphill battle in the court of public opinion. However, we haven’t yet fully heard his side of the story and his lawyers and PR team are mounting their own defence and counter attacks as this article goes to press.
What lessons can senior executives who have faced career crises learn from their mistakes? The crisis management PR textbooks and case studies point to companies and individuals who recover their reputations by saying sorry and meaning it and becoming more responsible companies and individuals as a result. In this sense, crises can be a pivotal turning point in the rehabilitation of companies and the senior executives who lead them.
Gus Sellitto is managing director of Byfield Consultancy and specialises in litigation and crisis PR
Managing Reputation Risk For Senior Executives And Founders - How can a Senior Executive Rebuild their Reputation after Facing Public Allegations of Wrongdoing? will be debated on 4 February at a One Day International Conference on Risk, Reward and Reputation Management Issues for Senior Executives and Founders, on 4 February 2020 at One Whitehall Place, 1 Whitehall Court, Westminster, London SW1A 2EJ. Full conference programme and registration details can be found here.
The International Conference is the inaugural event of the newly launched International Forum of Senior Executive Advisers (IFSEA) – a membership group launched by specialist employment and partnership law firm, CM Murray LLP for professional advisers around the world who specialise in advising Senior Executives and Founders.