Who to Call in a PR Crisis
from Winter 1999
by Peter Keating and Desmond Wolfe
So you’re walking your CEO back to his office after lunch when a gritty-looking octogenarian heads your way from across the lobby. It’s Mike Wallace, he’s got a “60 Minutes” cameraman with him—and just then your companion decides to tell you about an accounting scandal that the auditors have turned up.
Nightmares are made of such events. Witness the battering Coca-Cola recently took all over Europe following the news that Cokes sold in Belgium smelled bad and tasted worse. The media—especially those for whom French is the language of choice—had a field day.
A big part of Coke’s problem was the inept way it handled the event. For one thing, it took CEO Douglas Ivester 10 days to arrive on the scene, by which time the governments of France, Luxembourg, and the Netherlands had joined Belgium in banning various Coke products. Some papers got Ivester’s first name wrong (see opposite page), but that didn’t help.
Nobody enjoys a disaster as it unfolds, but since Johnson & Johnson faced up to the horror of poisoned Tylenol in 1982, many companies have learned that crises can present opportunities as well as threats. Raise money for accident victims when a drunk driver crashes into one of your restaurants, as Pizza Hut did in 1995, and you’ll ride a wave of community support. Pay your employees to picket the local EEOC office after some of your executives are charged with sexual harassment, as Mitsubishi did in 1996, and you’ll be on everybody’s most-hated list. As futurist author Watts Wacker has said, consumers today “don’t evaluate you on whether you make mistakes but on how you fix them.” And, of course, saying sorry doesn’t hurt, either.
In the spirit of the healed broken bone being stronger than the original, we present our list of 10 top public relations firms to hire in a crisis, culled from interviews with various sources, including client companies that have been glad to have their help. But first, listen to what Larry Smith, senior consultant for the Institute for Crisis Management in Clarksville, Indiana, has to say. “Most crises aren’t sudden, like fires or explosions,” he observes. “They’re smoldering situations that blow up.” Smith’s research shows that the companies that are most effective at dealing with crises are those that recognize the value of public relations. This means a board would be well-advised to have someone savvy in the ways of public relations always involved in the decision-making process. That individual can then work with the external public relations firm to make sure its efforts are closely coordinated with those of your executives. Here then, is our roll call, beginning with the West Coast:
Sitrick And Company
LOS ANGELES
Who to Call: Michael Sitrick, chairman and CEO (310) 788-2850
Number of Crisis Professionals: 37
Institutional Expertise: California celebrities and crises, federal criminal cases, event-based crises, litigation support, media relations, public affairs
Clients: Food Lion (which sued ABC for fraud); National Medical Enterprises (accused of health care fraud); Orange County, California (bankruptcy); boxing promoter Don King; actor Christian Slater.
If you’re in a jam, Sitrick’s your man—just ask him. The combative and voluble crisis counselor—and author of the recently published book, Spin—“isn’t known to be shy about himself,” as one colleague says. Adds Sitrick: “I like a fight, and I’m a bad loser.” Sitrick specializes in high-profile bankruptcies and crisis management. He’s a tough guy to go up against, as a customer at El Torito restaurant in Orange County, California, discovered. He claimed to have been served a frog in a taco and told a local newspaper, “I bit the damn head off.” Sitrick urged the restaurant to put out a statement that pledged it would get to the bottom of “this very serious matter.” Sitrick, meanwhile, sent the frog off to a lab for examination and ran a check on the complainant. It turned out that the man was wanted in Utah for credit card fraud—a fact Sitrick passed on to the press—and the frog was whole and uncooked. End of case. A number of journalists have gone to work for Sitrick, including former editors of BusinessWeek, Newsweek, and Forbes. “It’s not so much that we are looking for people with lots of contacts, but it’s easier to teach journalists what PR is than to teach PR people what a news story is,” says Sitrick. “We know that if you do your due diligence, that if you lay out the facts of your case and show the media the evidence, most journalists want to do the right thing.”
The MWW Group
EAST RUTHERFORD, NJ
Who To Call: Michael W. Kempner, CEO (201) 507-9500
Number of Crisis Professionals: 50
Institutional Expertise: consumer issues, employee issues, litigation support, management changes, manufacturing and environmental issues, mergers and acquisitions, public affairs, reputation management, restructurings
Clients: Bally Total Fitness; Barneys; Merry-Go-Round; Today’s Man.
Don’t be misled by the fact that the head offices of the MWW Group are in the ’burbs. This emerging player in the upper tier of the PR realm can compete with its Gotham rivals any time. Noted for its work in corporate makeovers, MWW has held the front line of communications for big-name companies going through various ordeals, including Chapter 11 restructuring. One of them, Barneys, with its upmarket New York City clientele, presented some unique challenges. “In many cases, your client’s customers don’t read the business papers,” says Kempner. “In this case, they did.” Another retailer MWW represented was Today’s Man, which filed for Chapter 11 after expanding too fast. To help rebuild confidence among suppliers and creditors, the PR firm took company founder David Feld to meet with them so that he could explain where he’d gone wrong and how he planned to correct the course. Feld also met with members of the press. The appearances won valuable time for the company. It later emerged from Chapter 11 having paid 100 cents on every dollar it owed.
Abernathy MacGregor Frank
NEW YORK CITY
Who To Call: Joele Frank, Vice Chairman (212) 371-5999
Number of Crisis Professionals: 25
Institutional Expertise: event-based crises, mergers and acquisitions
Clients: AMP (at the time of a hostile takover bid by AlliedSignal); Hasbro (in rejecting a merger with Mattel); Banca Serfin (a Mexican bank in an international drug money laundering case); Worldcom (during its 1997 merger with MCI Communications).
Known both inside and outside the public relations industry as an expert in M&A, Abernathy MacGregor Frank increasingly is called into every stripe of merger situation, not only when it’s a war. “Even a friendly acquisition is such an abnormal event in any company’s life that I think you can easily call it a crisis,” says Frank. M&As have ramifications for a company’s shareholders, managers, employees, customers, and suppliers. During AMP’s 1999 battle with AlliedSignal, the PR firm urged the company to release its better-than-expected earnings earlier than usual. This helped AMP beat AlliedSignal in court. Soon thereafter, AMP’s directors accepted a higher offer from another suitor. AMP’s victory gave Frank’s reputation a big boost, and the firm was one of seven that American International Group told its crisis-threatened policyholders they could hire without getting the insurer’s preapproval.
BSMG Worldwide
NEW YORK CITY
Who to Call: Edward Nebb, principal
(212) 445-8000
Number of Crisis Professionals: 30
Institutional Expertise: public affairs, reputation management
Clients: Pharmaceutical Researchers & Manufacturers Association of America (mauled during the health care reform debates of 1993 and 1994); RJR Nabisco, now RJ Reynolds (under attack through much of the 1990s by such high-powered shareholders as Carl Icahn).
BSMG (Bozell Sawyer Miller Group) is a PR and advertising conglomerate, perhaps most famous for the milk mustache ads it does on behalf of the dairy industry. But the firm’s most valuable skill may be in resuscitating the reputations of unpopular clients and repelling the brickbats that come their way when they close facilities, downsize work forces, or recall products. Hired to help rebuild the public image of major drug makers, the firm found that the first problem was that the manufacturers cited cost to justify their prices—and nobody believed them. “There was a basic information gap. Even opinion makers thought that the companies got new drugs from university research centers and then simply manufactured them,” says BSMG President Jack Leslie. “At the same time, we knew that the public hated the idea of price controls if it meant interference in the development of new medicines. So we launched an education and information program, advertising on TV, the ‘Today’ show, and in print. The effort is still going on. The ads are aimed at the opinion elite, the top 8% to 10% of the public that thinks about these issues.”
Burson-Marsteller
NEW YORK CITY
Who To Call: Raymond O’Rourke, managing director (212) 614-4000
Number of Crisis Professionals: 50-plus
Institutional Expertise: environmental disasters, labor issues, litigation support, major product problems
Clients: Pan Am (after the Lockerbie crash); Ryder System (which rented trucks to the terrorists who bombed both the World Trade Center and the Federal Building in Oklahoma City); Perrier (during the world’s biggest-ever product recall); Johnson & Johnson (in the Tylenol poisonings); and the U.S. Olympic Committee (the Salt Lake City bribery scandals).
Burson’s client list indicates its ability to play on the world stage and includes foreign governments. To back up its big international reputation, the agency employs 2,200 people in 72 offices in 35 countries. One challenge of a truly global nature: the 1990 Perrier recall. A filtration problem in a French processing plant, where Perrier water is treated when it first comes out of the ground, resulted in benzene contamination that was only discovered after the affected water had been bottled and shipped all over the world. Burson was able to field crisis teams in Europe, the United States, and elsewhere that oversaw what the company told its customers. When Perrier made it back into stores a few weeks later, Burson ran the publicity campaign, an event that included live entertainment and mammoth giveaways of free samples.
Fleishman Hillard
NEW YORK CITY
Who To Call: Peter McCue, senior partner (212) 453-2000
Number of Crisis Professionals: 25
Institutional Expertise: Event-based crises, labor communications, litigation support
Clients: The Processed Apples Institute (faced with the Alar chemical scare in 1989); Caterpillar (in its long labor wars); TWA (after the 1996 crash of Flight 800).
McCue likes to quote a rule coined by General Mills spokesperson Fletch Waller in 1979: “For every Ph.D. there is an equal and opposite Ph.D.” McCue’s translation: “No matter where consumers turn for answers during a crisis, they are confronted with dueling experts who leave in their wake piles of statistical chaff.” To keep consumers focused on the wheat when companies face a public relations crisis, McCue wishes there were an independent scientific body that would evaluate wildly differing claims on their merits and not on the emotions of the situation. This, says McCue, “would introduce perspective rather than hysteria into the national discourse.”
The firm represented Southwestern Bell, whose headquarters were three blocks from the Oklahoma City Federal Building. After the terrorist blast of 1995, the company offered its facilities to local firefighters as a place from which to coordinate the initial search-and-rescue operation. Soon thereafter, the building was converted to a command post for the FBI and other agencies. Several hundred phone company volunteers conducted blood and clothing drives and distributed food and teddy bears.
Kekst and Co.
NEW YORK CITY
Who to Call: Gershon Kekst, president (212) 521-4800
Number of Crisis Professionals: 35
Institutional Expertise: financial crises, mergers and acquisitions, reputation management
Clients: Kohlberg, Kravis, Roberts; Cendant; Citigroup; Time Warner.
Clients call Kekst their rabbi; competitors have compared him to the Wizard of Oz. They all have a point. Kekst has an understanding of what makes top-tier executives tick—and knows how to help them maintain their calm in a crisis. “He occupies a unique position in this country,” says lawyer Martin Lipton of Wachtell, Lipton, Rosen & Katz. “I don’t think anyone has the relationships he does with CEOs and investment bankers.” Kekst’s personal networking has helped build his company, which he founded in 1970, into the preeminent takeover PR firm in the United States. Kekst is so prominent, in fact, that he has represented both sides in several major mergers, including Daimler Benz and Chrysler, Disney and Capital Cities, Time and Warner, and Citibank and Travelers. Kekst represented KKR through its go-go LBO spree during the 1980s, and it has handled IPOs from Deutsche Telekom to Lucent. The firm is often the top PR choice for companies in critical financial situations, such as Cendant. Kekst has argued that in public relations—unlike law, say—there is no “body of knowledge” other than experience and judgment. He has loads of both.
Ketchum
NEW YORK CITY
Who to Call: Thomas Barritt, senior vice president (212) 448-4200
Number of Crisis Professionals: 45 to 50
Institutional Expertise: media relations, crisis prevention
Clients: Dow Chemical (the breast implant controversy); Burger King (after its withdrawal from France); Federal Express (following a 1997 plane crash at Newark, New Jersey and during the 1997 UPS strike).
Ketchum is well-known for its overall excellence and creativity. The firm won five Silver Anvils, one of the PR industry’s top awards, for its work in 1998, more than any other agency. It is also the only firm named Agency of the Year three times by Inside PR magazine. Interestingly, one of Ketchum’s greatest triumphs came when a crisis hit one of its clients’ competitors. The extra business resulting from the 1997 nationwide Teamsters strike against UPS threatened to overwhelm FedEx. As it happened, two years earlier, Ketchum had developed a contingency plan for this exact scenario. Working from the Ketchum blueprint, FedEx was able to double its average daily volume while keeping both its work force and shippers satisfied. FedEx emerged from the UPS strike with its public image improved. The FedEx story underscores two of Ketchum’s significant strengths. First, its forte is crisis prevention. As Barritt puts it, “We’re not going to come in at the last minute and put a Band-Aid on the situation.” Further, Ketchum specializes in a few key sectors—health care, packaged goods, and transportation. “We don’t do general-issues crisis management as much as we have a team of people constantly following emerging issues in those fields,” says Barritt.
Manning Selvage & Lee
NEW YORK CITY
Who to Call: Joe Gleason, managing director, Washington, D.C. Office (202) 467-6000
Number of Crisis Professionals: 15
Institutional Expertise: crisis simulations, financial issues, health care issues, racial and sexual harassment cases
Clients: Denny’s (racial incidents); Honeywell (for controversial sale of arms to Iraq); Mitsubishi (sexual harassment complaints); Sega (video game violence).
As the partial client list shows, Manning Selvage & Lee is familiar with serious problems and controversy. Rather than attempting fast cures, the firm prefers to take clients through what it calls “a preference creation” process that emphasizes long-term planning. Sega provides a good example. In December 1993—eight days before Senate hearings on violent content in video games and at the height of the holiday shopping season—the game manufacturer asked the firm to develop a crisis-survival strategy. “The first round of media had been pretty ugly, and the long and short of it was there was no way out,” says Gleason. But within a week, MS&L obtained commitments from 125 industry leaders to establish a new set of video game ratings.
