Royal Bank of Scotland’s Hester No Fool

 Royal Bank of Scotlands Hester No Fool

THE PR VERDICT: “D” (PR Problematic) for the UK government. (Pictured: Royal Bank of Scotland’s Stephen Hester)

Government, it seems, is no match for bankers and executives who run the world’s most powerful financial institutions. The world got another reminder of this on Wednesday when Stephen Hester, Chief Executive of Royal Bank of Scotland, abruptly tendered his resignation. The news might have slammed Hester as another wealthy banker too arrogant to work under government supervision. Instead, Hester left his post like a hero, with lavish praise from the folks who fired him and the admiration of shareholders.

News of his departure sent the stock down, triggered headlines about bereft employee morale, and prompted a Treasury minister to address the UK’s House of Commons with a statement full of hyperbole about Hester’s success at getting the job done.

The reason for the departure? Apparently the government wants to “turn the page” on RBS and divest itself of the business it bailed out. Investors in a privatization deal will not view Hester’s leadership favorably, reckoned the bureaucrats. Instead, so their thinking goes, the market wants to see a leader who represents the future, not the past. Fair enough but for the unanswered questions: Who is Hester’s replacement? And if he’s as good as you say, why show your most capable leader the door? Why not let him help you through the “transition?”

THE PR VERDICT: “D” (PR Problematic) for the UK government for badly mishandling an announcement with a communications strategy that begs many questions.

THE PR TAKEAWAY: Before firing, have a replacement lined up, or suffer the consequences. The RBS privatization has a chance to succeed, but the government just raised its cost of capital unnecessarily by showing the current CEO the door, with no apparent plan for replacement. Once the press statements were finalized and the polite, politic resignation letter released, Hester told the truth that he’d wanted to stay after all. While he got to appear as though he’d orchestrated an effective career transition, Chancellor of the Exchequer George Osborne et al were left holding a bag of empty words. Next time, think before you pink slip.

 Royal Bank of Scotlands Hester No FoolPRV Contributor Pen Pendleton is a communications professional with 20 years experience in business and financial public relations. He began his career as a newspaper reporter and now works as a consultant in New York. 

The PRV Report Card: This Week’s Winners and Losers

 The PRV Report Card: This Weeks Winners and LosersPR WINNER OF THE WEEK: “A” (PR PERFECT) TO Fran and Jane Murnaghan, the parents of a 10-year-old girl, Sarah, who was dying of cystic fibrosis. Because she is under 12, Sarah was not eligible to be put on the adult national organ donor list for the lung transplant that could save her life. (Children are not eligible because most adult-sized organs simply won’t fit inside their smaller bodies.) “Sarah is being left to die,” her parents told the media, causing outrage and a debate. Was this about ethics, politics, or medical practicality? No answer there, but speedy congressional review resulted in doctors being able to request exceptions to the ruling. Sarah was bumped to the top of the donor list within days of launching their effort.  The media had been mobilized. Her transplant was successful. PR can sometimes work miracles.

 The PRV Report Card: This Weeks Winners and LosersPR LOSER OF THE WEEK: “F” (FULL FIASCO) TO James Clapper, the US Director of National Intelligence, for his explanation of why he lied to Congress about wide-ranging surveillance programs. In March, when asked by Sen. Ron Wyden (D-Oregon) if the National Security Agency was collecting data on millions of Americans, Clapper responded “No, sir…not wittingly.” As we now know, the NSA was very wittingly doing so. This week, Clapper said he felt trapped by the question so gave the “least untruthful” response. As a general rule, truth is pretty binary – something is either true or it’s not. He also said he misinterpreted the word “collect.” Who knew the Director of Intelligence had such comprehension problems? Interestingly, while Clapper’s inability to understand basic English may sink him from a PR perspective, it may also protect him from perjury charges. Perhaps the director is smarter than he seems.

 The PRV Report Card: This Weeks Winners and LosersTHE PRV “THERE’S NO ‘THERE’ THERE” AWARD to Kanye West, whose interview this week with The New York Times sets a new standard for unintended self-satire. His narcissistic ramblings on his own “awesomeness” could have appeared, unedited, in The Onion. The self-styled “Michael Jordan of music” has won “the most Grammys of anyone my age” and is “so credible and so influential and so relevant that I will change things” – like maybe how to conduct an interview? After earning a brief moment of pathos at the mention of his deceased mother, he notes that the “idea of Kanye and vanity are like, synonymous,” and inserts himself in a pantheon of visionaries that includes Miles Davis, Walt Disney, Henry Ford, and Steve Jobs. Of the latter, he notes: “I am undoubtedly, you know, Steve of Internet, downtown, fashion, culture. Period. By a long jump.” After more than 4,000 words of Kanye, mostly from his own mouth, one sort of hopes that will be a long jump off a short pier.

 

IRS’s Reputation Taxed by Scandal

 IRSs Reputation Taxed by Scandal

The PR Verdict: “F” (Full Fiasco) for the IRS.

The United States Internal Revenue Service has never been the most popular government entity, but lately its reputation has taken a severe shellacking. The first problem came to light a few months ago, when it was revealed that the IRS had been targeting the Tea Party and other conservative political groups, putting their finances under close scrutiny. But on the PR embarrassment scale, that was nothing compared to the Star Trek video.

As the IRS finds itself under close scrutiny, a series of mortifying gaffes are now on public display. An astounding $50 million, all taxpayer money, was spent during 2010 and 2012 on 225 IRS conferences. The expenditures included training – or, rather, a rah-rah ha-ha training video with a Star Trek theme. And line dancing classes at the conferences. And baseball tickets, and stays in presidential suites for conference attendees, and a “happiness expert” who cost over $11,000. The list goes on and, unfortunately, on.

The congressional hearings investigating the conservative targeting are the equivalent of an audit for the IRS, and as with anyone else, the unpleasant receipts are being discovered. Daniel Werfel, the new IRS head, said he took the job because he thought he could be helpful. “The IRS is an agency in need right now,” he said in an understatement, in between apologies and explanations that can’t begin to defray the damage.

THE PR VERDICT: “F” (Full Fiasco) for the IRS. The government entity will have a long road of recovery after shooting itself in the foot.

THE PR TAKEAWAY: Think before you line dance – or make a video of it. The scrutiny of conservative groups is now being blamed on orders “from Washington”; if true, the resulting issues were unavoidable. But the silly, expensive training videos, the line dancing, the happiness expert? Someone along the way must have asked what this would look like to the outside world, or should have. In PR, an ounce of prevention is far more effective than ten pounds of damage control. At this point, confession and sincere apologies won’t make a dent in the IRS’s accounts.

To see the IRS Star Trek video, click here.

Bachmann Video: What a Long, Strange Clip It’s Been

 Bachmann Video: What a Long, Strange Clip Its Been

THE PR VERDICT: “D” (PR Problematic) for Michele Bachmann.

US Congresswoman Michele Bachmann is a lot of things, but predictable isn’t one of them. The Minnesota Republican has once again made headlines, this time with the unexpected announcement that she won’t seek re-election in 2014.

The Tea Party darling’s reasons for stepping down are murky, and her announcement only made the waters more turbid. The first mistake was in dropping her bombshell via a YouTube video, an indication that she didn’t want to face questions about her decision or her future plans. Then there’s the video itself. Against an odd Chariots of Fire-style musical backdrop, Bachmann begins by rambling about term limits, then launches into a list of reasons she’s not retiring: certainly not because she faces a tough re-election campaign against a candidate she narrowly defeated last year, or because of a federal inquiry into possible misuse of her presidential campaign funds. In the remaining seven minutes of the video, she bashes the Obama administration, slams the “liberal media,” and rattles off a laundry list of issues she’ll continue to support or fight in her remaining 18 months in office.

Political swan song or groundlaying for another presidential bid? It’s impossible to tell. Bachmann says the country is on the wrong track and in the worst shape she’s ever seen, yet there is no opportunity, political or otherwise, that she won’t consider in the future. More than one copy editor must have smiled in appreciation at New York magazine’s headline, “Michele Bachmann Retires as President of Crazyland.”

THE PR VERDICT: “D” (PR Problematic) for Michele Bachmann. The Minnesota congresswoman befuddles, per usual.

THE PR TAKEAWAY: If you’re not going to say anything, say it as succinctly as possible. Bachmann announced her retirement, yet her constituents still have no clue why she’s leaving or what the future holds. It may well be that she doesn’t want to reveal all at this time, but a concisely worded press statement issued through her office would have accomplished the same goal without a move that only added to her already bizarre reputation.

To watch the video, click here.

Austere Today, Gone Tomorrow?

 Austere Today, Gone Tomorrow?

THE PR VERDICT: “F” (Full Fiasco) for the proponents of austerity, who continue to lose a losing battle.

What now for the proponents of austerity? Up until last month it seemed they had won the policy and PR debate. With disciples across Europe and the US, and with Angela Merkel as its high priestess, fiscal restraint was positioned as a dose of much needed tough medicine. The mantra was clear; no pain, no gain. Politically unassailable, this was one helluva PR launch with some influential backers. Over the last month, however, things have become a little more complicated: austerity may have lost its PR claim as a cure all.

Last week, economists at the University of Massachusetts reviewed calculations cited in Growth In a Time of Austerity, the bible for those justifying tightened fiscal policy, as flawed. The claim? The research published in January 2010 by Harvard University included “selective exclusion of available data and unconventional weighting of summary statistics.” The case for austerity is now not so clear.

Since then, austerity seems to be losing more and more PR steam. EU nations are sliding deeper into recession, with unemployment in Spain and Greece topping 30 percent. In Britain, austerity is responsible for a limp 0.3 percent growth, while Germany, the champion of austerity, is teetering on the edge of recession. Has austerity fallen out of fashion? The headlines would seem to suggest that less has not added up to more.

THE PR VERDICT: “F” (Full Fiasco) for the proponents of austerity, who continue to lose  a losing battle.

THE PR TAKEAWAY: Product launches can teach us something about ideological launches. If austerity was a consumer product, it would now be sitting on the supermarket shelves unloved and unwanted. Why? Because not one of its proponents have been able to demonstrate tangible benefits. Despite a big and loud launch, its advocates seem to be retreating into the shadows. Where are the business leaders confirming they are hiring in the face of cutbacks? Without some simple proof points and enthusiastic advocates, this is one launch that might have seen its brief vogue run right out of steam and into the dustbins of economic history.

 

JP Morgan: It May Take Two

 JP Morgan: It May Take Two

THE PR VERDICT: “D” (PR Problematic) for JP Morgan. (Pictured: JP Morgan CEO Jamie Dimon.)

Megabank JP Morgan hit the headlines over the weekend with news that it was mobilizing its senior management to defeat a shareholder vote on corporate governance. In advance of a vote at next month’s annual meeting, board members are planning to sit down with some of the bank’s biggest shareholders, encouraging them to block a motion to separate the role of CEO and Chairman.

Momentum for the proposal has gathered steam following the losses from the London Whale trading episode and JPM’s nearly $6 billion in losses. Fairly or unfairly, questions about the CEO have been raised, and whether or not it is possible to manage a firm of JP Morgan’s size. Following some recent ugly congressional hearings, the new catch cry is not only too big to fail abut also too big to manage. This recent suggestion, to split the current Chairman/CEO role into two is an attempt, so say its proponents, to get another set of eyes overseeing day-to-day management.

The Board of JP Morgan isn’t in favor of the change, while press reports have CEO Jamie Dimon being alternatively sanguine about the proposal or threatening to leave, if the motion is approved. To avoid ongoing external scrutiny and to appease fierce critics in Washington and elsewhere, this may be one battle not worth fighting.

THE PR VERDICT: “D” (PR Problematic) for JP Morgan and its decision to oppose suggested governance reforms.

THE PR TAKEAWAY: Give an inch to keep a mile. It’s not really clear what JP Morgan’s objections are to splitting the role of CEO and Chairman. It is, after all, a structure that is already in place in many companies around the world, and splitting the roles is generally perceived as a desirable safeguard. For a firm that has been dragged through acres of tough media coverage about its internal management controls, this might have been one relatively painless and not unreasonable concession to make. Another financial loss or management failure around the corner, and JP Morgan may rue the day it so vociferously opposed such a modest reform.

SAC May Be Too Calm As It Carries On

 SAC May Be Too Calm As It Carries On

THE PR VERDICT: “C” (Distinctly OK) for SAC capital and its business as usual PR tactic.

Keep calm and carry on. In the world of crisis PR, that British wartime slogan is the standard mantra, but Steve Cohen, founder of beleaguered hedge fund SAC Capital, seems to be taking it to heart. The hedge fund, center of a long-running investigation into insider-trading, was in the headlines again last week when one of Cohen’s key lieutenants was arrested. The news capped a week of astonishing headlines.

As arrests mount and a $600 million penalty to settle some civil claims is in the works, founder Cohen’s PR response has been to carry on as normal. But what is normal for one of the world’s largest and most successful hedge funds? A spending spree to change the mood.

Three items made the news: the purchases of a Picasso painting for a cool $155 million, and of oceanfront property in East Hampton for $60 Million. Then throw in the sale of a Manhattan condo for $115 million and it’s clear that at SAC, the recent headlines are not putting the firm into crisis. They’re distracting, yes, but apparently, the show must go on.

THE PR VERDICT: “C” (Distinctly OK) for SAC capital and its business-as-usual PR tactic.

THE PR TAKEAWAY: Chutzpah has its merits – until it strays into willful arrogance. There is some wisdom in brazenly continuing with a business-as-usual approach while others might describe the sky as falling. Keeping calm and carrying on reassures investors, clients, and above all employees that this too will pass. In this case, however, SAC’s actions seem akin to thumbing their proverbial nose at authority. In a fight over potentially criminal allegations, SAC has less leverage than it thinks. This might be the moment to lay a little lower and not inflame prosecutors wanting their day in the sun.

JP Morgan’s Whale of a Hangover

 JP Morgans Whale of a Hangover

THE PR VERDICT: “C” (Distinctly OK) for JP Morgan. (Pictured: JPM chief Jamie Dimon.)

Stiff drinks for the staff at JP Morgan? A martini or two might have helped ease the pain from Friday’s Congressional hearing in Washington, which examined the firm’s now infamous $6 billion loss known as the “London Whale.” The trade generated not only steep losses but a level of scrutiny from regulators and the media that has had JP Morgan’s management on the hoof for months.

Friday’s hearing was brutal for JPM’s top brass. The list of accusations by the Senate’s Permanent Sub Committee on Investigations was simple enough: a risky proprietary trading strategy, concealing losses, manipulating pricing models, and lying to investors and regulators. Anything else? Actually, yes; the fallout continues as Senate aides are now pondering referrals to regulators and the Justice Department. This was a bad day for JP Morgan, and a very good day for the Senate’s PR machine.

Despite a parade of embarrassing and contradictory testimony, the thrust of JP Morgan’s response remains unchanged: “Management always said what they believed to be true at the time, period. In hindsight we discovered some of the information they had was wrong.” Fair enough, but unlikely to break the momentum on a train wreck of an issue that continues to gain momentum.

THE PR VERDICT: “C” (Distinctly OK) for JP Morgan. A straightforward and expected defense, though it’s unlikely to make much of a difference.

THE PR TAKEAWAY: Life is not always fair. Despite its clout, JP Morgan was always going to be outgunned in a public hearing concerning its embarrassing  losses. The bad news for the firm is that there is little that can be said to disrupt the forward movement on this issue, apart from what they’ve already said. Admitting you got it wrong may not be enough in an environment that continues to be out of love with banks. It will take more critical and remedial changes in management and strategy before the heat is turned down. Until then, another round, please…

The PRV Report Card: This Week’s Winners and Losers

 The PRV Report Card: This Weeks Winners and LosersPR WINNER OF THE WEEK: “A” (PR PERFECT) to the Vatican. The seat of Catholicism gets our top grade – but not without qualifications. Our simple advice to the new Pope? Enjoy the honeymoon. The appointment was a big PR hit, no doubt: Francis, the first Pope from the Americas and a humble man who embraces a vow of poverty, gave the Vatican the forward-thinking PR page it is looking for. But storm clouds are already gathering. His age (76) will inevitably mean his tenure is abbreviated, while rumors are already surfacing about how he allegedly turned a blind eye to torture abuses during Argentina’s military rule. A high grade for a good start, but the challenge will be staying there; just ask Pope Benedict.

 The PRV Report Card: This Weeks Winners and LosersPR LOSER OF THE WEEK: “F” (FULL FIASCO) to the TSA. The Transportation Security Administration continues to stand by their decision to allow small knives and other potentially dangerous tools and devices aboard aircraft, despite rising hue and cry from flight attendants, passengers, and politicians. Their defense? They want to turn attention to finding the hundred larger, deadlier threats – like the stun gun one passenger packed in his carry-on baggage this week (missed by security) or the fake bomb strapped to the leg of a security agent during a test (also missed). They have a point, but it’s blunted by another, oft repeated: the 9/11 attacks were begun by box cutters that would be waved right on through with this order.

 The PRV Report Card: This Weeks Winners and LosersTHE PRV “THERE’S NO ‘THERE’ THERE” AWARD to Kanye West and Justin Timberlake. Enthralled by their current imbroglio? Yeah…neither are we. For those who missed it: West, in his own inimitable and unprintable way, criticized Timberlake’s single “Suit & Tie” at a concert last month. Timberlake struck back this week while hosting Saturday Night Live by changing a line of the same song, crooning  “My hit’s so sick got rappers actin’ dramatic.” Take that, Kanye! Who knows how the unpredictable West will respond – and does anyone really care? Ho-hum. We’ve come a long way from the East Coast-West Coast rap wars of the 1990s, folks. Maybe they should, too.

TSA Safety Reversal: Turbulence Ahead

 TSA Safety Reversal: Turbulence Ahead

THE PR VERDICT: “F” (Full Fiasco) for the TSA.

Lately, the Transportation Security Administration (TSA) just can’t seem to do anything right. The agency, created after 9/11, has at various points been accused of failing to find weapons in undercover tests, conducting overzealous body searches, and allowing agents to sleep on the job. The latest snafu occurred this week, when it announced one of its most significant policy changes: it will begin allowing small knives (and various pieces of sporting equipment) aboard airplanes.

The change in the banned-items list was immediately met with harsh criticism. Pilots and flight attendants voiced the reasonable concern that allowing knives may imperil safety. Even passengers, who have chafed under the restrictive list, were disparaging. “It seems to be a poorly thought-out decision. I don’t pretend to understand the logic behind it,” Brandon M. Macsata, executive director of the Association for Airline Passenger Rights, told the Los Angeles Times. After all, the September 11 attacks were committed with box cutters, which are smaller than the knives that will now be permitted.

For its part, the TSA noted improved safety features on airplanes since 2001 and said the change will bring it in line with international standards and allow it “to focus on threats that can cause catastrophic damage to an airplane.” It seems they’ve forgotten that small knives can, in fact, cause catastrophic damage to airplanes, and buildings, and lives.

THE PR VERDICT: “F” (Full Fiasco) for the TSA. A poll conducted in September 2012 found that 90 percent of respondents thought the TSA was doing a “poor” or “fair” job in security screenings. This latest action won’t improve those results.

THE PR TAKEAWAY: Cover your bases before making a controversial announcement. Although they don’t appear to realize it, the TSA has a brand – one it’s managing very poorly. The agency’s raison d’etre is to ensure the safety of  airline personnel and the air-traveling public. The smart tactic would have been to confer with key players ahead of time and gauge their sentiment on the potential policy change. That way, they are involved in the process, can raise objections privately, and everyone is on the same page when the media comes calling. A handful of public endorsements from interested parties would have made this announcement turbulence free. As is, they should fasten their seat belts.