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1. Election fraud claims
It is difficult to think of a crisis that created such an existential threat to the companies involved than the allegations that voting machine companies Dominion Voting Systems and Smartmatic were involved in a conspiracy that “switched” votes for Donald Trump so that they were counted as votes for his opponent Joe Biden.
It is also difficult to imagine a crisis more typical of 2021, a crisis manufactured entirely out of half-truths and complete misinformation, paranoia and magical thinking. Yet the fantastical conspiracy theories, involving imagined ties to former Venezuelan president Hugo Chavez, were taken seriously by many voters—so seriously that Dominion employees had their lives threatened.
Trump lawyer Rudy Giuliani claimed that Smartmatic was founded in Venezuela by former dictator Hugo Chavez to help him fix elections, and that it was involved in “switching” votes in key swing states. The company had no connection to Chavez, and it’s only involvement in the 2020 elections was in Los Angeles. Another lawyer promoting election fraud claims, Sidney Powell, named Dominion in several lawsuits as a party to the supposed fraud—often in states where Dominion machines were not even in use.
To help fight the misinformation campaign, Dominion hired Hamilton Place Strategies, a Washington, DC-based firm that includes several well-connected Republican strategists, so that those defending the company in public and on social media included Michael Steel, former spokesman for House Speaker John Boehner, and Tony Fratto, a former George W. Bush spokesperson.
In late November, Dominion’s Greek (not Venezuelan) founder John Poulos published an op-ed in The Wall Street Journal that set the record straight. Then, in early January, the company filed a defamation lawsuit against Powell, alleging she made “demonstrably false” claims about the company and saying the company had “suffered enormous reputational and financial harm” due to “false accusations disseminated to a global audience.”
But the most dramatic element of the companies’ crisis PR response came in the form of highly unusual public statements from Fox News and Newsmax—two of the right-wing media networks that had promoted false claims about the companies and were being threatened with legal action as a result.
A nearly two-minute pre-taped segment was aired on Fox Business Network shows hosted by Lou Dobbs and Maria Bartiromo, and a Fox News Channel show with Jeanine Pirro—all of whom had featured guests who promoted the conspiracy theories. The segments, which looked more like old-fashioned video news releases than network-produced segments, were question-and-answer sessions between an offscreen voice and Eddie Perez, a voting technology expert at the Open Source Election Technology Institute, during which Perez debunked the claims about vote-switching.
Eventually, Fox News and its conservative peers Newsmax and OAN all broadcast on-air clarifications distancing themselves from Powell’s claims.
“I’ve never seen anything quite like it,” said one crisis communications expert, who asked not to be named. “These networks essentially gave over several minutes of air-time to what were obviously corporate segments debunking their own coverage. It was a complete capitulation, an admission that the charges were false.
“Whether it will be enough to rescue the companies’ reputations is another matter. But expect to see more companies demanding this kind of coverage in the future if they are the subject of false stories.” — PH
2. AstraZeneca botches vaccine announcement
In late November, pharmaceutical company AstraZeneca announced that it had developed (in partnership with Oxford University) a Covid-19 vaccine that was up to 90% effective in countering the virus. Taken together with the announcement a few days earlier of a Pfizer vaccine of similar efficacy, the announcement prompted a wave of optimism that the coronavirus pandemic that had disrupted life for almost a year might soon be over.
But within days, the company acknowledged a key mistake in the vaccine dosage received by some study participants, raising questions about whether claims about the vaccine’s efficacy would be supported by additional testing. The New York Times reported that “scientists and industry experts said the error and a series of other irregularities and omissions in the way AstraZeneca initially disclosed the data have eroded their confidence in the reliability of the results.”
Given the general mistrust of vaccines that has been on the rise in western countries for a decade, and the sheer volume of politically-motivated misinformation about the pandemic, anything that increased skepticism about the Covid vaccine clearly had the potential to create a significant problem.
“I think that they have really damaged confidence in their whole development program,” said Geoffrey Porges, an analyst for the investment bank SVB Leerink.
“We can definitely say that the transparency from Oxford and AstraZeneca has not been on a par with what we have seen from the others,” said Rasmus Bech Hansen, chief executive of Airfinity, a London-based life sciences analytics company.
While medical and scientific experts generally defended the company—emphasizing the complex issues involved in releasing highly-technical information to the general public, the company didn’t do itself any favors when Menelas Pangalos, an executive responsible for the company’s research and development, responded to questions about why information had not been shared with the public by telling the reporter: “I think the best way of reflecting the results is in a peer-reviewed scientific journal, not in a newspaper.”
From a technical and scientific perspective, that’s probably true. From a communications perspective, however, it’s completely unhelpful. The critical issue is whether the vaccine is trusted and taken by the general public—many of whom are profoundly skeptical. Those people don’t read peer-reviewed journals; they get their news from newspapers and television and social media—and that’s where issues need to be addressed. — PH
3. 5G causes Covid?
The coronavirus epidemic gave rise to all kinds of conspiracy theories. Most of them—like the idea that it had been released deliberately by the Chinese government—had little to do with the corporate world, but one of them had the potential to impact technology and telecommunications companies: the idea that the pandemic was actually caused by the rollout of 5G networks around the world.
In the US, for example, four of Vodaphone's towers were attacked by people convinced of a sinister relationship between the technology and the pandemic. Earlier, several cell towers across Britain had been set on fire, including one owned by BT that provided 2G, 3G and 4G services but did not have 5G capability.
Then video surfaced of telecom workers being harassed by people convinced that the technology was dangerous. Celebrities including actor Woody Harrelson and Madonna also fueled the fake news about 5G.
Vodafone, the world’s second-largest mobile operator, said the attacks had become a matter of national security, warning that they threatened "the very networks that are providing essential connectivity to the emergency services...during this difficult lockdown period.” In the UK, NHS England’s national medical director Stephen Powis, said: “The 5G story is complete and utter rubbish, it’s nonsense, it’s the worst kind of fake news. The reality is that the mobile phone networks are absolutely critical to all of us.”
Professor Karen Douglas, a psychologist who studies conspiracy theories at the University of Kent says direct challenges to false beliefs can be counterproductive: “Often, these people are very worried about something and this issue is important to them. It would not be constructive to go into the conversation in a hostile manner, because this delegitimises their concerns and might alienate them even more.”
The best advice on how to deal with conspiracy theories suggests engaging respectfully with believers— “without respect, compassion, and empathy, no one will open their mind or heart to you; no one will listen,” MIT Technology Review senior writer Tanya Basu explains. That may be a challenge for PR people who know that claims are completely false, but it’s the only approach that has any chance of success, experts say.
On the company’s role in spreading propaganda, he adds: “Facebook is one of the wealthiest companies in the world. It absolutely has the resources to seriously crack down on the misinformation and hate speech that proliferates on its platform.”– PH
4. Rio Tinto's Jukaan Gorge destruction
In May of last year, Rio Tinto — seeking to expand its giant iron mine in the region — destroyed an Aboriginal site at Juukan Gorge in the Pilbara region, where evidence of human habitation dates back 46,000 years — the only inland site in Australia showing human occupation continuing through the last Ice Age.
The timing of Rio Tinto’s actions was particularly bad. The destruction of the ancient site occurred just days before Reconciliation Week, “a time for all Australians to learn about our shared histories, cultures, and achievements, and to explore how each of us can contribute to achieving reconciliation in Australia,” which the company marked with a 90-second Twitter video touting its “lasting, positive impact” on the world and promising: “As we look to the future, we will do our part. Because we’ll always be in this together.”
Not only that, but this was the same week that the death of George Floyd at the hands of the Minneapolis Police Department reignited the Black Lives Matter campaign and turned it into a global movement, with thousands taking to the streets in Australia.
Despite the immediate anger, Rio Tinto’s early response fell far short of what was needed. The company initially claimed the incident was a “misunderstanding”, suggesting it was not made aware of the cultural significance of the site by the traditional landowners. But the BBC reported that " in the days running up to the caves' destruction in May, Rio Tinto hired lawyers from MNC firm Ashursts in case opponents tried to seek injunctions to stop them," suggesting the company was aware of the site’s significance.
A month after the destruction in Juukan Gorge, the company issued an apology and said it would support strengthening legal protections for Aboriginal heritage sites. CEO Jean-Sébastien Jacques, who had been the target of criticism after he took two weeks to make his first public comments on the demolition, appeared before a parliamentary inquiry in August and insisted he did not know of the importance of the caves prior to their destruction.
Amid continued dissatisfaction among shareholders including large Australian pension funds and some small UK investors, the company then said it would deduct a total of £4 million from the bonuses of Jacques, iron ore business head Chris Salisbury and corporate affairs head Simone Niven — but insisted they were the right people to help the company rebuild its reputation.
If Rio Tinto believed those measures would quell the criticism, it was seriously mistaken. By September, Jacques, Salisbury and Niven were gone, in an unusually resounding victory for stakeholders who had demanded that the company take dramatic action, and for shareholder activism in Australia.
“From a reputation, stakeholder and public relations perspective, it’s hard not to be simply scathing about Rio’s decision to blow up the Juukan Caves, and its subsequent response to the crisis it caused," says SenateSHJ managing partner Angela Scaffidi, pointing to two key lessons from a decision that was "driven by shareholder and financial returns [and] compounded by a failure to respond appropriately."
"First, it’s clear that culture underpins all reputations," explains Scaffidi. "Culture — and its various elements of purpose, values, the day-to-day behaviours of leaders and staff — shapes what an organisation does and how it does it. Culture as a result has a direct impact on how people perceive an organisation. A culture in which values, purpose and behaviours are either misaligned or focused solely on shareholder returns, creates huge reputational risks. In this case, it’s hard to understand how anyone thought the decision would not create waves both among stakeholders, and the general public.
"Second, expectations of companies and government continue to shift," continues Scaffidi. "Stakeholders no longer accept what once they might have. The lens good communication practitioners place over even the most mundane company decisions must be risk based, they must take a stakeholder lens, considering the social, economic, political context. The rise of ESG among institutional shareholders should sound an alarm to organisations, and their decision making."
The departure of Niven, whose next move is not yet known, led to the creation of a new social performance function headed by Mark Davies – who had been vice president of corporate procurement and was most recently group executive, safety, technical and projects – with a focus on maintaining the company’s commitment to safety, health and the environment. — AS
5. Huawei's geopolitical quagmire
Chinese technology champion Huawei is no stranger to these pages, having found itself increasingly ensnared in the global tech cold war between the US and China. In 2019, for example, we examined the public relations lessons that Huawei had learned from its decade-long effort to win over sceptical international audiences. At the time, the diagnosis was cautiously optimistic; despite the perils posed by an increasingly unpredictable global environment, Huawei’s willingness to embrace a more transparent mindset was beginning to pay dividends.
A lot can change in less than two years. The global trade war between the US and China has mushroomed into multiple challenges for Huawei, which has found that a superior product strategy cannot overcome persistent questions regarding its links to Beijing. After being deemed a national security threat by the US, the UK reversed its decision and excluded Huawei from the country’s 5G networks last year. Others, notably Canada, New Zealand and India, are following suit, undoing much of the progress that Huawei made from its previous efforts to build a stronger business case for its technology.
"2020 was the year when the company’s perceived close association with the ruling Chinese Communist Party created a severely problematic PR dynamic which stoked several communications crises across a range of issues," says Signal Leadership CEO Bob Pickard. "Meanwhile, the increasing international alignment into two polarities — a Chinese sphere of influence in the East and an American-led sphere of the West — complicated Huawei’s efforts to transcend its country of corporate citizenship as a truly global company.
Huawei CFO Meng Wangzhou remains under arrest in Canada following accusations that the company skirted sanctions on Iran. Meanwhile, the Trump administration imposed visa restrictions on Huawei employees who it claims are contributing to human rights abuses against Uighurs in China’s Xinjiang region.
It was the latter issue that proved especially perilous for Huawei in 2020, following reports that it was involved in the surveillance of the Uighurs, via facial recognition software that could send automated “Uighur alarms” to government authorities when members of the oppressed minority group are identified. This issue also cost Huawei its director of communications in Denmark, who was reported to have resigned on principle over the matter.
In a statement, a Huawei spokesperson said: “Huawei opposes discrimination of all types, including the use of technology to carry out ethnic discrimination. We are continuously working to ensure new and evolving technology is developed and applied with the utmost care and integrity.”
"But by then, the damage was done, with the company again seen as a tool of Beijing’s blunt policies, in this case as the provider of technology used to police social control in a dystopian surveillance society," says Pickard. "This incident was pure poison to Huawei’s image which was sullied outside of China, again reminding people that the company could be inextricably interconnected with the communist government of China and an accomplice to unethical practices antithetical to human rights."
Pickard, who previously led the Asia-Pacific operations of key Huawei agency Burson-Marsteller, notes that the company's communications challenges have escalated into complex, concurrent battles which must be incredibly difficult to manage.
"Not too long ago, Huawei’s issues management challenges were compact, with finite crisis comms fires that could be snuffed out quickly," he notes. "Because there are now so many crises burning all at once, these have conflated into a reputation management firestorm of truly gigantic proportions.
"Huawei is now trying to wage a world PR war on too many fronts, and often they are fighting Beijing’s battles which in some cases they just can’t win, particularly in the Western democracies," adds Pickard. "When it comes to public relations, Huawei always seems to be on the defensive rather than being proactive. The company communicates almost like a machine or a thing rather than a real person. There is a cold calculation to their communication rather than a warm engagement."
The onset of the Biden administration is expected to signal a more lenient approach to the company, and Huawei continues to trounce rivals in numerous markets across the globe. Even so, Pickard thinks that Huawei's ensnarement in the geopolitical quagmire is taking a significant toll on the company's momentum. "Huawei is increasingly paying an exceptionally high price for China’s increasingly bellicose and pugilistic state communications stance." — AS
6. McKinsey helps Purdue Pharma 'turbocharge' sales
Management consulting giant McKinsey made it onto our list of the biggest corporate crises of 2020 in a tangential way, as part of our examination of the rise of employee activism. We referenced a New York Times story that revealed how McKinsey had given Purdue Pharma advice on how to “turbocharge” sales of its opioids, how to counter efforts by drug enforcement agents, and how “to counter the emotional messages from mothers with teenagers that overdosed” on the drug.
But 2020 brought even more damaging revelations about McKinsey’s work with Purdue, with a new Times report revealing that the consulting firm had been an architect of Purdue’s “aggressive” opioid sales strategy, and had recommended offering pharmacy companies such as CVS “rebates” for overdose-related fatalities.
“This is the banality of evil, M.B.A. edition,” says Anand Giridharadas, a former McKinsey consultant interviewed by the Times. “They knew what was going on. And they found a way to look past it, through it, around it, so as to answer the only questions they cared about: how to make the client money and, when the walls closed in, how to protect themselves.”
Added Andrew Rice, who has written about McKinsey for New York magazine and other outlets: “This is kind of what they do. They solve problems, for better or, in this case, very much worse.”
In December, facing mounting internal and external criticism over its role in the opioid crisis, McKinsey issued a rare apology: “As we look back at our client service during the opioid crisis, we recognize that we did not adequately acknowledge the epidemic unfolding in our communities or the terrible impact of opioid abuse and addiction on millions of families across the country
“We have been undertaking a full review of the work in question, including into the 2018 email exchange which referenced potential deletion of documents. We continue to cooperate fully with authorities investigating these matters.”
But maybe all the negative coverage is not a crisis for McKinsey at all. Says Rice: “There is a cynical view of this, which I don’t fully embrace but I think may be true to an extent, which is that even this bad PR is good for McKinsey’s business.
“If you’re a big corporation with some ethically problematic business issues to solve, who better to hire than the firm that’s not afraid to come up with creative solutions like paying pharmacies bonuses for overdoses? I mean, another way to put it is who wants a scrupulously moral consulting firm? You pay McKinsey, or the many other firms like it, an ungodly sum of money to provide you every possible alternative and to never, ever, ever tell anyone about it.” — PH
7. Tyson Foods' Covid-19 woes
One of America’s largest meat suppliers, Tyson Foods, found itself under fire several times during the pandemic for its failure of transparency, safety, and empathy. In April, Tyson Foods published an alarming full-page ad in The New York Times that declared: “The food supply chain is breaking” and made the case for its plants to remain open to feed families in America. The ad warned that “millions of pounds of meat” would disappear and set in motion a spurt of meat panic-buying. At the time, Tysons was already taking heat for reports that it failed to provide PPE for its workers at the start of the pandemic and workers weren’t clear whether they were to come into work while sick.
These crises that emerged early in the pandemic had a long-tail that hammered the company’s reputation all year. By July, Democratic Senators Elizabeth Warren and Cory Booker announced an investigation of Tyson Foods — along with JBS USA, Cargill and Smithfield Foods — for exporting a “record amount” of pork to China after sounding the alarm on US shortages and for worker safety breaches during the pandemic. In November, allegations emerged that Tyson managers at an Iowa plant participated in a betting pool on how many employees would fall ill with Covid-19 after the family of a deceased employee filed a lawsuit. The investigation, which was led by former US Attorney General Eric Holder, ultimately led to Tysons firing seven managers at the plant.
“Tyson Foods did not protect their own workers, who, in my professional opinion, have never been treated with the respect, safety guidelines and pay they deserve,” says Mike Paul, president of Reputation Doctor. “Other meat plants nationwide handled the pandemic better than Tyson because their systems, procedures, communication, respect and investment for their own were more secure.”
Paul adds, moving forward, Tyson Foods should operate as though trust is “the most valuable currency on earth.” This includes making it clear that health, ethics and morality factor into their decision-making “and not just seeking to cut costs and treat their employees and customers like an ‘other.’”
By December, Tyson was touting its $540m investment in protective measures at its US facilities with its EVP/chief human resources officer acknowleding: “We’ve learned a great deal during the pandemic and are implementing measures such as a new Covid-19 testing strategy, which are enabling us to move from defense to offense in our efforts to actively search for and fight the virus.” But has the company adequately addressed the culture that allowed for the betting scandal to take place?
Robin Kim, global technology & innovation head at Ruder Finn, says Tyson has focused its communications too heavily on its transformed operations, failing to address how it would protect employees as part of its culture and community. “Employees also needed clearer guidance and training on how to communicate and behave in challenging times, especially as it may not have been clear to them how words and actions could be perceived in the broader context. Tyson managers might have acted differently as a result: one manager fired for the betting scandal for example said that the office pool was spontaneous fun, meant to boost morale, and belied their care and concern for worker safety.”
She also emphasized that trust is critical for the company, in particular as it resolves its legal challenges. “Workers will need to hear how Tyson is applying pandemic lessons in ways that show that Tyson is prioritizing people vs. profit. Managers will need tools and training to speak and act as effective advocates for the company and its community. Shareholders will need to know how business actions will ensure a better, consistent and more stable foundation. Finally, the promise of a vaccine is not a guarantee of a happy ending: Tyson will need to double down on putting employees first, physically and emotionally, short and long term, through this pandemic and the next.” — AaS
