Today is National Bike to Work Day and if my tiny one bedroom allowed for the storage of one, I’d be riding in today. Instead, I crammed into a 150 degree subway train and got up close and personal with some pretty cranky commuters. I am looking forward to this July when the much anticipated bike share program launches in New York and I can pick up one of the thousands of bikes available, use it to get where I need to go, and then drop it off at one of the hundreds of stations that will be scattered around the city.

Bike share programs aren’t new, but what is interesting about this program is that it will be privately sponsored. Citibank is getting behind this public transportation idea to the tune of $41 million. With the cleverly named “Citi Bike,” Citibank gets to associate their brand with a highly visible and innovative public program.

Win Win right? The public gets a cheap and convenient transportation option. The city gets a bike share program without dipping into public funding. And Citibank gets linked with a positive program that is green and provides a low-key solution to people’s transportation stresses.

Only, I’m not so sure. It doesn’t feel authentic.

It feels like a one-off disconnected activity that is interesting and fun, but unlinked to business competencies or aligned with the Citibank brand. Creating authentic CSR is by no means an easy process. Citibank is not alone. Many companies aren’t clear on goals or strategies to pursue. The result is often a random collection of unfocused and unrelated strategies in search of an overarching goal.

But when done well, like Patagonia’s creation of the Sustainable Apparel Coalition to ensure quantifiable standards for environmentally responsible clothing production, it can mean great things for your organization, employees, customers and shareholders.

I look forward to watching how this one plays out. ‘Till then, happy biking.

mtorres CSR, Public Relations

Investor relations used to be about telling a company’s value story and managing the flow of information to shareholders. But like all communications over the last decade, what used to be one-way disclosure has turned into a two-way conversation. Lately, it has escalated into more of a screaming match.

Those tasked with shepherding the reputation of a public company have often argued that rich executive pay packages were necessary and appropriate to assure performance and protect investors – essentially paying for quality.  Lately, shareholders are voicing a different opinion.

The new say on pay provisions have empowered shareholders to issue their own wake up call to Boards and Chief Executives.  Last year, shareholders only rejected 2 percent of compensation packages. In the U.K., at least three CEOs have been ousted in the last month over executive pay. In the U.S., Citigroup shareholders held a non-binding vote rejecting an executive compensation package that totaled $15 million, in the wake of the bank’s poor stock price performance and a lackluster recovery from the crisis.

Shareholder activism hasn’t been confined to rejecting remuneration. A Yahoo! shareholder has demanded the documents involved in the hire of CEO Scott Thompson after it was revealed pieces of the CEO’s professional bio may have been fabricated. Investors of Indian tech company Infosys are clamoring for changes to the corporate culture to return the company to profitability.

It’s not just shareholder activists, but activists turned shareholders, in some cases buying single shares of companies to gain admittance, participate in votes, and cause disruptions at shareholder meetings around the country. What used to be a perfunctory event has turned into blog fodder and backdrops for the nightly news.

Politicians are taking a more active role in influencing and empowering shareholders. At the beginning of this month, a UK parliamentary committee declared Rupert Murdoch to be “unfit” to lead NewsCorp. While this backfired in the short term (stock prices went up since the report was released), it continues to blur the lines between investor, politician, and concerned citizen.

All indications suggest this is only the beginning of a global movement of shareholder unrest. Frustrations will continue to rise, fueled by income disparity, political pressures, and the Occupy movement.

These trends pose some interesting questions: will revolts die down as the economy picks up? Or does this mark a fundamental change in how companies communicate with shareholders? Will they need to campaign just like anyone else to shore up shareholder support of new proposals, executive pay increases, even CSR and sustainability programs?  Will CEOs approach shareholder meetings like a Presidential candidate approaches Super Tuesday – counting votes, and crossing fingers?

It’s hard to argue that giving shareholders a greater voice in the process is a bad thing.  But the current trend seems to pose more questions than answers.  Is “say on pay” effective or disruptive?  Or is it yet another example of a proposal’s intent being diluted or altered when it comes to practical implementation?  Will we see CEOs “campaigning” for their jobs, and their pay?  Or will executive compensation be restructured to fall just below the “friction point” for shareholder approval?

What are your views?

cwinters Investor Relations Citigroup, Infosys, NewsCorp, Say on Pay, Yahoo

Since the announcement last week that a large bet on Euro markets orchestrated by JP Morgan’s London trading desk, led by a gentleman referred to by awestruck compatriots as “the whale,” had failed spectacularly and caused at least a $2 billion loss, there has been much talk in Washington, on Wall Street and in the media on what the real costs will be.  Politicians and pundits fired new salvos about the evils of banks, lessons of 2008 not learned and the need for more and stricter regulation, including speeding up the tortoise pace of Dodd-Frank regulatory enactments.

On Wall Street, there was concern about whether there were any similar issues at other investment banks (and scrambling within to find any potential problems), pontificating about the merits of risk taking and even some whispers about credit rating concerns.  JP Morgan went into full crisis mode, sending out CEO Jamie Dimon to provide multiple mea culpas to investors, employees and Sunday morning shows and providing talking points to try to explain away the situation to customers and shareholders.  Mr. Dimon will no doubt do much of the same at tomorrow’s Company annual meeting.

Yesterday, there were news reports of the imminent resignations of JP Morgan’s Chief Investment Officer and two other executives, including “the whale.”  In the case of the CIO, it appears that she had offered to leave last month when the issue first came to but Mr. Dimon held off accepting until it became all too apparent that some heads needed to roll to satiate the masses and start repairing the Company’s reputation.

In the scheme of things, for a mammoth global banking power like JP Morgan, $2 billion (or even $4 – $5 billion as some commentators see the final tally of winding down the position) is just pocket change.  The Company made roughly $39 billion in profit last year and nearly $10 billion in the first quarter of 2012.

The $2 billion loss sliced $14 billion off JP Morgan’s market cap on Friday and overage is an indication of the reputational loss the Company suffered. There will no doubt be Congressional and regulatory hearings in short order that will further heighten the significance of this very bad trade, rehashing 2008 and shining a spotlight anew on the Volcker Rule, Dodd-Frank and how banks should approach risk and playing with house money.  Further, Mr. Dimon is now facing questions about his leadership abilities, hence his forceful public response with words and actions that would make you think this was a much bigger financial hit to the Company.

This story is still in its early days, but in the metrics of reputation, the $2 billion loss will cost the Company much, much more in terms of its valuation, standing with customers and public perception as well as any new legislative or regulatory rules that come from this.  Mr. Dimon understands the serious and potentially far reaching impact this can have on the JP Morgan brand and is doing the right thing in trying to get out in front, taking responsibility and treating this as a far greater issue that just a rounding error on its massive balance sheet.  The leadership of the other megabanks (and in fact any Company) should take note as they look closely to examine their books for any issues as “the whale” was not a rogue trader, just someone doing his job poorly with lax oversight.

rtauberman General Corporate Dodd-Frank, Jamie Dimon, JPMorgan Chase, Volcker Rule

In the annals of corporate perks, Chesapeake Energy made the Top 10 list by allowing co-founder and CEO Aubrey McClendon to buy into 2.5 percent of every well the oil and gas company drilled.  Even better, Mr. McClendon paid for the very lucrative perk with personal loans he arranged with companies Chesapeake did business with such as Wells Fargo and Goldman Sachs, an innovative new spin on payola.

The story gets even better.  At first, the Company, through its general counsel, said that the Chesapeake board “was fully aware” of the very comfy financing arrangements.  But then with the glare of media lights and the scorn of shareholders upon them, the board walked it back and provided a public clarification that it was only “generally aware” of the deals that had Mr. McClendon use his stakes in the Chesapeake wells as collateral.  Not sure how close “generally” is to “fully” but it looked to provide some cover. 

The parsing of words did not do much to quell the shareholder outrage and today word comes that Chesapeake’s directors have forced Mr. McClendon to step down as Chairman.  All this comes after shareholder outrage last year forced the board to rejig Mr. McClendon’s compensation to make it performance-based, a concept that seemingly took some time to reach the old-boy and one-girl board in Oklahoma.

Chesapeake, which calls itself “America’s Champion of Natural Gas” on its website homepage, touts “Bold Moves, Big Future” but unfortunately, Mr. McClendon’s bold moves for his personal gain combined with  rock-bottom natural gas prices have smacked the Company’s stock price and made many question the oversight and independence of its board.  The board of directors’ influence on a corporation’s reputation is probably greater now than it ever has been and missteps can counteract even the best corporate responsibility programs. 

Directors need to be not only on top of all that goes on in the companies they serve but also the reputational impact of what they do and what they say.  New regulations on things like “say on pay” (as Citigroup recently found out) are just part of the brighter spotlight and great scrutiny on boards.  Communications expertise and issues/crisis management counsel must no longer stop at the executive suite.  Smart boards, when faced with situations like Chesapeake, need to examine closely not only their words, but the optics, because it all plays out from share price to corporate standing to the bottom line.

rtauberman Crisis Communications Aubrey McClendon, Chesapeake Energy, Citigroup, Goldman Sachs, Wells Fargo

It’s no surprise that the Susan G. Komen Foundation is having trouble fundraising after their giant missteps in the handling of grants to Planned Parenthood.   As the former pink powerhouse struggles to regain its footing, it is comical to hear their issues described as a communications problem.

They failed to keep local Chapters in the loop.  They failed to communicate the changes in their position promptly.  Didn’t apologize fast enough.

That isn’t a communications problem.  It’s a policy and strategy problem.

This notion that any policy, strategy, action or decision can be communicated away is at the heart of the bad reputation PR has earned.  Some call it spin.

Is it better for people to hear bad news from the source?  Absolutely.  Prudent to communicate and explain a controversial decision, rather than just putting it out there?  Of course. But sometimes a strategy or policy problem is just that….a strategy or policy problem.

How can you tell the difference?

1. Is the “disconnect” due to old facts vs. new facts?

 A communications problem stems from lack of insight, understanding or recognition of a strategy, policy, issue or “truth” about your Company.  Perhaps you have retooled your direction, and are still being judged by the old benchmarks.  When your stakeholders understand the issue, but don’t support it – that isn’t a communications problem. 

2. Does your “news” take you away from your core constituencies, without a good strategic reason?

Sometimes, companies will do something that purposefully takes them in a new direction, often in an effort to expand their customer base.  Sometimes these are adjacent businesses….GAP Kids; or appealing to a different demographic…Banana Republic, GAP, Old Navy.  If investors, employees, mall owners seemed resistant to that story, that might be a communications problem.  Completely alienating your core…strategy problem.

3. Are you choosing not to communicate about something significant?

Hoping people don’t notice is rarely an effective communications strategy – and a pretty good indicator that perhaps this is a flawed business strategy – both for the business and from a communications perspective.  You can run, but you can’t hide – at least not for long. If you don’t want to see it in the headlines, maybe you shouldn’t do it.

One of the hardest tasks for a communicator is identifying the difference between strategy issues and communications issues, and counseling their clients, whether internal or external, about the difference.

cwinters General Corporate Planned Parenthood, Strategy, Susan G. Komen Foundation, The Gap

There’s an interesting piece about Walmart running into trouble with its U.S. expansion in the wake of the Mexico bribery scandal. 

Walmart presents a tricky issue for community, civic and government leaders.  Organized labor opposes them…for their refusal to commit to union construction, and for their large, unrepresented work force.  Community watchdog groups bemoan the traffic and congestion that accompanies a new store.  But consumers (aka voters) love their value prices and one stop shopping.

Is the Walmex scandal really the reason Walmart is facing opposition?  Or is it a convenient excuse for their opponents to rattle the sabre and rally the troops?  And will it really prevent them from expanding?

It should be interesting to watch…would love to hear your views.

cwinters Crisis Communications Unions, Walmart, Walmex

The world doesn’t need another blog about Walmart’s Mexico problem.  We all know the deal: allegations of bribery pose reputational risk.  So does obstructing and covering up an internal investigation…offenses that lead to textbook responses: board and executive resignations, the appointment of watchdogs, a re-examination of policies. And as we know, Walmart has had plenty of practice with implementing textbook responses.

For me, the bigger question is why Walmart continually has these kinds of problems.  Discrimination, sustainability, living wage, healthy eating, health care – the biggest issues imaginable seem to dog the biggest retailer on the planet. We already know that Walmart is politically polarizing. Labor unions, environmentalists and employee advocates oppose them at every turn. Now in the wake of the Mexico scandal, some are calling Walmart an international embarrassment. It’s only a matter of time before one of these issues  — if not the cumulative impact of all of them  – destroys the retailer’s reputation for good.

With so much crisis communications experience under their belt, you’d think Walmart would have it figured out by now. But instead, Walmart’s reputation problems are precisely because they follow the crisis communications checklist above all else. They create rigorous supply chain policies to serve as a shield against environmental activists.  They create such stringent ethics policies that you can be fired for letting a contractor buy you a soda. They appoint watchdogs for everything that ails them.  And then they wear those policies and procedures like a bulletproof vest enabling them to do whatever they need to do to make a buck.

It isn’t bulletproof. In fact, the excessive reliance on stringent policies suggests an underlying truth: they don’t trust their people, including their own leaders, to act ethically, responsibly and in alignment with their values.  And when you expect very little of your people, they rarely disappoint.  They extort compliance from their suppliers, then turn around and do something entirely different.

You can’t legislate morality or corporate culture.  The question of culture is a complicated one – but it’s one that is increasingly coming under scrutiny.  Corporate citizenship isn’t just about eco-responsibility and philanthropy – and it’s clear that the behavior and culture of an organization will continue to be front and center.

So, yes, Walmart has a trust issue alright – they don’t trust their employees, their partners or their vendors.  And they’ve demonstrated that they shouldn’t be trusted either.

To solve this problem, Walmart doesn’t need another czar, policy or another initiative.  They need another outlook.  Maybe even another leadership team. (Here is an interesting piece suggesting that what they really need is a female CEO.) They need to shock their system, or there will be a steady stream of Mexicos down the line.

But the real risk facing Walmart is not Mexico or whatever big issue comes next… it’s the danger that people will decide that the high price they pay for low prices isn’t worth it, and vote with their wallets.

cwinters Crisis Communications Leadership, Mexico, trust, Walmart

Businesses are expected to do more these days. They must treat employees ethically. They must be transparent with consumers. They must be sophisticated in their CSR programming and initiatives. They must set long-term sustainability and community engagement goals. And they must constantly report on how they are doing. 

The list goes on.

Business leaders know that they have to do this. They’ve seen the studies that show again and again that being a good corporate citizen is also good for corporate performance. Even amid tensions from investors and increased expectations from consumers, CEOs are realizing that it pays to deliver on your CSR promise.

Then why is it that so many still do it wrong? Or, even some cases, not at all?

Perhaps they just don’t have the role models.

So here’s one: Starbucks CEO Howard Schultz, who from the start, had a goal to build a company with a soul and social conscience. From a new U.S. jobs program, to comprehensive health insurance for part-time workers, and a focus on ethical sourcing and environmental stewardship, Starbucks has made investing in communities a key element of their brand promise. And it has paid off. Starbucks is enjoying record profits, with Schultz contributing success to the company’s conscience.

Need more evidence that companies can satisfy both consumer and investor pressures? Take a look at what Schultz chose to talk about during his remarks at the annual shareholders meeting last month – the importance of giving back to communities.

Take notes.

cwinters CSR CSR, Howard Schultz, Starbucks

Although we won’t see the flurry of Corporate Social Responsibility (CSR) Reports for a few weeks, companies everywhere are madly finalizing reports for release on Earth Day later this month.

CSR reports have evolved from the exception to the expected – valued documents that, when done right, offer objectivity, balance and transparency. An effective CSR report can engage stakeholders in honest and relevant dialogue, building trust, demonstrating progress and openly sharing a commitment to supporting the environment, employees and communities.

That said, there are many pitfalls on the path to good CSR reporting. As we approach the CSR report season, don’t fall victim to these three:

EXCESS FLUFF: CSR reports are not a megaphone through which to scream about how nice you are. A CSR report is a place for rigor, intelligent analysis and a strong measurement and evaluation framework. Save the warm and fuzzy for your internal recognition efforts.

THROWING IN THE KITCHEN SINK: One of the hardest choices you’ll have to make is not what to include in the report, but what to leave out. It might be tempting to throw in every initiative, activity and program that you’re involved in, but without discretion, these reports can feel more like a scattered list of disjointed efforts. When pulling together your report, focus is the Holy Grail.

HIGHLIGHTING ONLY THE WINS: The first thing usually cut in CSR reports is arguably what stakeholders find most interesting – the challenges. Consumers are looking for a commitment to improvement, and they know that, like in all aspects of life, improvement does not come without some hiccups. By excluding these bumps, you risk mortgaging the trust and transparency you are working to build.

Avoiding these three CSR report hazards requires more focus and more discipline – but it is time and effort well spent.  The end result will be a CSR report that strengthens credibility, increases brand reputation and matters more to consumers, investors, employees and the communities where you work.

mtorres CSR CSR, CSR Reports

Yesterday I wrote about the latest Goldman Sachs reputation issue, and made the statement that Reputation Begins at Home….what your employees think and do is more import than anything a Company spokesperson says. Nowhere is this principle more evident than in social media.  More specifically, in a Company’s approach to social media policy.  To some, social media is the Wild West…uncontrollable, prone to “shoot-outs” and fraught with risk.  These companies either prohibit use of social media in the workplace, restrict employees from identifying their employer, or regulate the heck out of it with restrictive, complicated social media policies.

But many are realizing that while the mediums are changing, the issue of employees as brand evangelists (or not) hasn’t.  Employee tweets aren’t really that different from their conversations with friends and neighbors in the supermarket, at the ball field or the church potluck.  The only difference is the size of the audience, the speed of the message movement and most importantly, your ability to know what they think and say, and if anyone is paying attention.

Trust and Relevance are the foundation of reputation.  The key question is this:  Do you trust your employees to say and do things that make you relevant in a way that builds and enhances your reputation? Or not?  If the answer is no, you have a culture problem – not a social media problem.

This is not to suggest that social media policy isn’t important.  It is very important.  You wouldn’t build a swimming pool in your back yard without teaching your children to swim. How do you make a social media policy that does its job, without crushing your company’s culture and soul?

1. Reflect the medium – social media is conversational.  It’s short.  Pithy even.  A long, legal-eze policy sends the wrong message.
2. Teach them to swim – rather than provide long, legal sounding lists of DON’T’s or rules, tell them what they should do, and why.  Create a common vision and goal for what social media can do for your reputation, your brand and your company – and invite employees to participate and support those goals.
3. Keep the DON’T DO list very short.  When my kids were learning to swim we had two rules – you never go in the pool, not even a little toe, without a grown up.  And you only jump feet first, facing front.  We only got into discussion of diving vs. jumping and water depth once they had mastered the basics. If the DON’T list is short and straightforward enough, people will comply.
4. Be realistic, and provide a safety net – Let’s face it, #@$%! happens. And when it does, employees need to know what to do, and where to go for help. Speed is the name of the game here…if employees can recognize their own “oops” and get help correcting it, you will fare much better than if you find out once you are a trending topic.

Seems to me that The GAP is getting it right, in terms of policy.  Will that translate into social media reviving the brand?  Too soon to say.  What are the best practices in social media policy?  Would love to hear your thoughts.

cwinters Social Media Goldman Sachs, reputation