Royal Bank of Scotland’s Hester No Fool

June 17, 2013 by Leave a Comment
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. 

Filed Under: Companies & Markets, Finance, International News, Regulatory Matters Tagged With: , , , , , , , ,

J.C. Penney: Everything Old is New Again

April 10, 2013 by 1 Comment
J.C. Penney: Everything Old is New Again

THE PR VERDICT: “F” (Full Fiasco) for the board of J.C. Penney.
(Pictured: ousted CEO Ron Johnson.)

Shareholders may be asking the board of J.C. Penney “Penny for your thoughts?” Or perhaps demanding it, after the startling news of a CEO switcheroo this past Monday. That CEO Ron Johnson was ousted is not a surprise. The real surprise came when the board announced Johnson’s replacement: his predecessor, Myron Ullman, who was fired by that same board in 2011.

When Johnson arrived he moved forward with a radical makeover for Penney: boutique stores under one roof. This idea included securing Martha Stewart, who assured Johnson she could step out of her exclusive contract with Macy’s. That plan blew up like a bad soufflé, with Johnson in court admitting he’d never read the fine print of Stewart’s contract with Macy’s, and thousands of Martha’s products being court-barred from shelves.

Now comes news that Johnson is being replaced by the very predecessor he took over from, ostensibly because the man wasn’t doing a bang-up job to begin with. JCP’s price tumbled 10.3 percent after a brief spike when Johnson’s termination was announced. Shareholders aren’t just calling for a replacement for him, but for the entire board. This is practically a textbook example of PR “dont’s.”

THE PR VERDICT: “F” (Full Fiasco) for the board of J.C. Penney.

THE PR TAKEAWAY: When playing poker, keep your hand facing in – no need to show all cards to the other players. A new CEO, a drastic new plan; where were the checkpoints along the way? With only one of the ten J.C. Penney board members having retail experience, no wonder the organization is in trouble. The board clearly realized that it needed to oust Johnson to stem the falling revenues and bad publicity, but the answer is rarely to go back in time. As Plan B is nothing more than a return to former issues, then it may be worth delaying until a more palatable alternative is found. If the board insists on reuniting with a former CEO, then coach the ill-chosen replacement not to admit that he was re-hired only last weekend and has no plan to speak of. Showing the losing hand is always a losing tactic and in this case, likely to cost JCP a pretty penny.

Filed Under: Advertising and PR, Branding, Companies & Markets, Marketing and PR Tagged With: , , , , , , , , , , , , , ,

More Turbulence for Abercrombie & Fitch

October 23, 2012 by Leave a Comment
More Turbulence for Abercrombie & Fitch

The PR Verdict: “D” (PR Problematic) for Abercrombie &Fitch and CEO Mike Jeffries.

When is someone going to make a reality TV show about life at retailer Abercrombie & Fitch? The racy clothier (and public company) continues to have more than its fair share of outrageous accusations and legal suits. The latest drama is a lawsuit filed by the pilot of Abercrombie’s corporate jet, Michael Bustin, who claims he was replaced by a younger man. The claim is part of his age discrimination suit that alleges Abercrombie & Fitch prefers younger people – yet another in a growing list of complaints.

The documents filed for the lawsuit make for thrilling reading. Bustin gives an insider’s view of Abercrombie & Fitch’s oddly secretive corporate culture and vaguely culty ways. He includes details of life aboard CEO Mike Jeffries’s corporate jet, on which the flight attendants are male models and everything is rigorously managed to alarming levels of micromanagement.

The 47-page in-flight instruction manual spares no detail, including the seating arrangement of the CEO’s dogs and the precise temperature at which the crew may wear winter coats. The flight crew/models onboard must respond to the CEO by saying “No problem”; other phrases, including “Sure” or “Just a minute” are verboten. Stuff like this would make a great TV show, but for a public company, this sort of PR is a headache.

The PR Verdict: “D” (PR Problematic) for Abercrombie &Fitch. CEOs should always be worried about tales from the corporate jet.

The PR Takeaway: Times have changed, and the imperious CEO is out of fashion. For a firm that has so closely monitored its marketing image, there is something genuinely puzzling about the scant attention paid to its corporate profile. The business page headlines regarding A&F have focused for some time on lawsuits and declining sales. For CEO Mike Jeffries, this can only mean trouble. If A&F were a private company, the heat might be lower, but as the file of media cuttings thickens, the life of the controversial CEO inevitably shortens. It’s a PR lesson Jeffries may want to learn sooner rather than later. To read more, click here.

Filed Under: Advertising and PR, Branding, Companies & Markets, Featured News Stories, Lowest Graded, Marketing and PR, Media Tagged With: , , , , , , , , , , , , , ,

Former Citigroup CEO: “Too Big” Can Fail

July 27, 2012 by 1 Comment
Former Citigroup CEO: Too Big Can Fail

The PR Verdict: “B” (Almost a Winner) for Sandy Weill, who has joined the chorus of concern about the “too big too fail” banking ethic.

So Sandy Weill, Citigroup’s former CEO, is now conceding that what he spent his lifetime proudly building maybe wasn’t such a great idea after all. The former architect of megabank Citigroup stunned the market this week with his observation that banks may be too big to manage. Why not split up investment banking from regular banking, he suggested during an interview on CNBC. Weill revealed a new mantra: bigger may no longer be better.

Quite a volte-face from the man who fought tooth and nail for the repeal of the Glass–Steagall Act, which previously drew a line between commercial and retail banks. Visitors to Weill’s offices when he was at Citigroup could feast their eyes on a proudly-displayed plaque that read, “The Shatterer of Glass Steagall.”  Back then, Weill and his peers credited themselves with creating a brand new banking world.

Why turn back the clock now? As an explanation, Weill’s was masterful in its positioning. Nothing wrong with what he did at the time; it’s just that well, NOW, the situation has changed, Weill explained. This was not an admission of personal responsibility–just that what was once right at the time is “not right anymore.” That was then, this is now.

The PR Verdict: “B” (Almost a Winner) for Sandy Weill, who has now joined the chorus of concern about “too big too fail”. Weill has done a neat (albeit cynical) job of personally shifting from “man in charge” to curious bystander.

The PR Takeaway: Context gives plenty of air cover. By concentrating on the macro, not the micro, Weill has moved into the debate without any personal admissions of failure. This was about what works in the market and nothing to do with his own personal role in the crisis.  Not really a change of heart, more of an update about what the markets are saying.  That makes it so much easier to swap sides and means he can now sit with the cool kids at the school cafeteria.

What’s your opinion of Sandy Weill’s about-face on banking? Give us your PR Verdict!

Filed Under: Companies & Markets, Featured News Stories, Finance, Regulatory Matters Tagged With: , , , , , , ,

Bob Diamond: Was It Something I Said?

July 3, 2012 by 5 Comments
BobDiamondresignation 300x194 Bob Diamond: Was It Something I Said?

The PR Verdict:”F” (Full Fiasco) for Bob Diamond, resigning CEO of Barclays.

One down and another just gone. Monday morning saw the resignation of Barclays Chairman Marcus Agius, following news of the Libor rate scandal. “The buck stops here” Agius said.  Exit stage right.  Oddly enough, his number two, CEO Bob Diamond, remained standing. By Tuesday, Diamond’s resignation had been accepted.

Up until then, Diamond apparently felt the buck didn’t really stop with him. While suitably contrite, with public apologies and regrets that made it clear that rate fixing failed to meet Barclays’ standards, there was no hint of a resignation. Hell no! Dismissing any suggestion that he was about to lose his position, Diamond told the media he wasn’t going anywhere. Two days later, he was out of a job.

Diamond’s headstrong comments over the weekend pushed forward the likelihood of a resignation. After all, if the Chairman had resigned, why didn’t the CEO, who is in charge of day-to-day business? Given that Diamond has previously fought PR clouds over his compensation and autocratic style, this unlucky third strike was bound to have him preparing the cardboard box for his belongings.

The PR Verdict: “F” (Full Fiasco) for Bob Diamond. Telling the media and staff he had no intention of leaving his post wasn’t his call. An oddly cavalier declaration when his Chairman had decided to take his public lumps.

PR Takeaway: Is it the role of a CEO to decide if he should keep his job or not?  Remember, each person is only a guest in his or her position, and the invitation can be pulled at any time. Better to have deferred the issue to the Board and say that the matter of continued service was a decision for them. Diamond unwittingly gave everyone from the UK Prime Minister on down the opportunity to cry foul. With little incentive for powerful stakeholders to come out in support of Diamond’s tenure, his remaining days were nothing more than a countdown to the inevitable.

Should Agius and Diamond have resigned simultaneously? Would that have been the better PR tactic? Give us your PR Verdict below.

We will be back July 5 with a new PRV. Happy July 4 to all our readers

 

Filed Under: Companies & Markets, Crisis Communictions, Finance, Lowest Graded, Regulatory Matters Tagged With: , , , , , , , , , , , , , ,

How Sorry Are You, Barclays?

June 29, 2012 by 4 Comments
How Sorry Are You, Barclays?

The PR Verdict: “D” (It’s a Dud) for Barclays. (Pictured: Barclays CEO Bob Diamond)

Isn’t it nice to know that Barclays PLC and its subsidiaries have agreed to pay more than $450 million to settle charges that it attempted to manipulate key global interest rates? The announcement of the largest-ever fine was accompanied by much huffing and puffing about market integrity. Everyone agrees; terrible business. Why, even Bob Diamond, Barclays CEO, and his three chief lieutenants waived their bonuses in recognition of the seriousness of the issue.

Barclays said all the right things on the day. It humbly acknowledged the actions “fell well short of the standards to which Barclays aspires.” This was a mea culpa, albeit somewhat measured, given that the Department of Justice is continuing with its criminal probe. This could get uglier, no doubt.

But was that it? Was there a lost paragraph to the announcement? Yes, investigations are continuing, yes other firms are involved, and yes, Barclays has been assisting every regulator it possibly can. Fair enough, but the key question remained unanswered in Barclays’ formal statement. Has ANYONE lost their job or been suspended? Has there been a clearing of the decks?

The PR Verdict: “D” (It’s a Dud) for Barclays for avoiding disclosure of the most important piece of news: Is anyone’s head going to roll?

PR Takeaway: One way to draw a line over bad behavior is to draw a line over bad employees. If the bank is committed to turning a new page in ethics, why not update stakeholders about who was, or will be, fired? Even if previously disclosed, say it again. Waiving a bonus counts for something, but making it clear to inside and outside stakeholders that certain behaviors will not be tolerated goes further. This was an odd omission in a statement that went to lengths to make it clear that these issues won’t happen again.

Did Barclays go far enough by apologising and waiving bonuses, or should heads have rolled? Give us your PR Verdict, below.

Filed Under: Companies & Markets, Featured News Stories, Finance, Marketing and PR, Regulatory Matters Tagged With: , , , , , , , , , , , , , , ,

Google and Larry’s Laryngitis

June 26, 2012 by 3 Comments
Google and Larrys Laryngitis

The PR Verdict: The PR Verdict: “D” (It’s a Dud) for Google. (Pictured: Google CEO Larry Page.)

Larry Page, Google’s CEO, regrets he is unable to lunch today. And not just today, it seems, but all the way into mid July. The reason? Larry has “lost his voice” and “can’t do any public speaking engagements for the time being,” says Google. That includes the second quarter earnings conference in three weeks’ time. His voice is gone, and it isn’t coming back anytime soon.

The announcement has spooked investors. In an industry that endlessly speculated about the on again, off again health of Steve Jobs at Apple, this sort of news gets the rumor mill activated. Google says it is business as usual and that Page is “OK”  and continuing to run the company. “He’s running all the strategy business decisions and all that,” reassures Google.

Not all investors buy it. JP Morgan described the announcement as ”odd,” and others are wondering. One told the Wall Street Journal that the decision to miss an earning call was “highly unusual.” He said, “It’s hard to imagine a CEO missing that much stuff and not having a serious problem,” echoing what could become a rumbling chorus.

The PR Verdict: “D” (It’s a Dud) for Google. Who knows what the real situation is, but this explanation doesn’t reassure the market. Already suspicion is growing that Google is being less than frank.

PR Takeaway: Don’t overcomplicate. Let’s face it, losing your voice doesn’t last three weeks. If Page can’t speak at earnings in three weeks’ time, it’s not a bad idea to flag it beforehand–but why not suggest that he’s having a minor medical procedure/treatment that will put him out of action for a fixed period? Use calming words to minimize the fuss and reinforce that it’s not market moving and material. Something is up, and now Google has more explaining to do. It might have been easier to have been straightforward from the start.

To read more, click here.

Should Google have anticipated investor worries, or is this a case of the truth just not being good enough these days? Give us your PR Verdict, below.

 

Filed Under: Advertising and PR, Companies & Markets, Finance, Marketing and PR, Media Tagged With: , , , , , , , , , , , , , , , , , , ,

How Will Citigroup’s Sandy Weill be Remembered?

May 9, 2012 by 2 Comments
sandyweill2 How Will Citigroups Sandy Weill be Remembered?

PR Verdict: “F” for Sandy Weill and his attempt to be secure a kinder slot in the history books.

How will history remember Sandy Weill, the former CEO of Citigroup and architect of the largest financial services firm that nearly went under?  Judging by a recent article published in Fortune, if he has his way, he would like to be remembered as a visionary philanthropist.  History may not be so kind.

In an embarrassingly soft-ball article, the former CEO waxes lyrical about his philanthropic endeavours for the first part of the interview.  These include the creation of the National Academy Foundation as well as generous contributions to the arts and healthcare, obligingly listed by the magazine.

As for the tough questions about the near collapse of the financial system, his own bank’s astonishing destruction of value and the excesses of executive compensation, Weill says nothing of any interest.  Given his experience and formerly revered status, now was the time, at the age of 79 to rescue an irredeemably doomed reputation.  Regarding executive compensation Weill sounds more like a PR intern working on a draft Q&A, opining,  “people should be paid appropriately”.  He adds that fixing banks that are  ”too big to fail is a problem” but offers no solution or insight.  He concedes that “people made mistakes that created issues” but blithely adds “it’s time to move on.”

PR Verdict:  “F” for Sandy Weill and his attempt to secure a kinder slot in the history books.  Speaking in generalities and turning attention to philanthropic endeavours will not redefine a hopelessly damaged reputation.

PR Takeaway: If you want to change a point of view say something surprising.  Salvaging a reputation requires more than throwing money at charitable causes.  At Weill’s venerable age he has nothing to lose. Why not make some radical fundamental observations while also acknowledging some personal role in the crisis? It might have given him the reputational rewrite he seems to crave.   Next time have a look at Warren Buffett for some pointers on how to make people sit up and listen.

To read the article click here. To read more click here.

What’s your PR Verdict?

Filed Under: Companies & Markets, Finance, Lowest Graded Tagged With: , , , , , , , , , , , , , ,

Did Warren Buffett Have To Say Anything?

April 20, 2012 by 1 Comment
warren buffett2 300x203 Did Warren Buffett Have To Say Anything?

The PR Verdict: “A” for Buffett's consistently smart PR.

So, Warren Buffett has stage one prostate cancer.  The famous investor isn’t worried and nor are his doctors.  Investors are sanguine and the media says unanimously it isn’t life threatening.  In a statement issued by his firm Berkshire Hathaway, Buffett, Chairman and CEO, said the news “is not remotely life-threatening or even debilitating in any meaningful way…I feel great.”

What then were the obligations to disclose the news?  Particularly given Buffett is already 81 years old.   Might it have been easier to sit tight and not mention it?

Buffett’s genial PR profile has long been associated with transparency.  He routinely tells investors when he gets things wrong and has often been his own harshest critic.  Making the announcement makes no difference to the day-to-day running of the firm.  But it does put him firmly in control of his own PR and keeps his reputation consistent with his public persona.  Smart move.

The PR Verdict: “A” for Warren Buffett’s consistently smart PR.  By making the announcement himself he was always in control of the message.

PR Takeaway:  Always better to make the announcement yourself than have someone else make it a scoop, and do it for you.  Buffett was in tight control of the agenda and was presumably pointing journalists to medics who were giving informed and on-message analysis of his prognosis.  With talk of who will be Buffett’s successor still ongoing, this could have been a gateway into a far more destabilizing media controversy for Berkshire.  No wonder he chose to go public.

To read more click here and here.

Filed Under: Companies & Markets, Crisis Communictions, Finance, Highest Graded Tagged With: , , , , , , , , , , , , , ,

What To Think Of Buffett’s Succession Plan?

February 27, 2012 by Leave a Comment
warrenbuffet What To Think Of Buffetts Succession Plan?

The PR Verdict: “B” for Warren Buffet and his handling of a succession plan.

Warren Buffett released financial results for Berkshire Hathaway in a 22-page letter to investors on Saturday. What caught the headlines was that the world’s most famous CEO finally confirmed that a successor has been identified. While the 81-year-old declined to name the candidate, he reassured investors that the transfer of leadership would ultimately be “seamless”.

Buffet made a clever distinction in the announcement by highlighting that the news was about a succession plan and not identifying the replacement.  With his characteristic talent for the sound bite he said, “This is not the if-I-get-hit-by-a-bus plan. This is the succession plan.”

Buffet in his letter went on to reassure: “Directors are “enthusiastic about my successor as CEO….When a transfer of responsibility is required, it will be seamless.”

The PR Verdict: “B” for Warren Buffet and his handling of a succession plan. A sensible strategy but sooner or later investors will begin to wonder if there is also a timeline in the works.

Less that 12 months ago Berkshire disclosed it had identified four current managers who were potential CEOs. But just weeks after that filing, David Sokol, considered the front-runner, quit when he was accused of violating the company’s insider trading policies.  This was a major embarrassment for Buffett.

To avoid any further mis-steps it seems sensible to hold fire until the new person formally takes the seat. It keeps Buffett firmly in charge and protects the newly anointed from being exposed prematurely. The PR challenge will be to keep media and investors refraining from endless speculation, which can be just as distracting and divisive as not having a plan in the first place.

To read more click here to read the Letter to Shareholders click here.

 

 

 

 

Filed Under: Companies & Markets, Finance Tagged With: , , , , , , , , , ,
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