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 by Richard S. Levick, Esq.
Levick Strategic Communications

Remember the book and movie Love Story that was popular around thirty-five years ago? There was a famous line from that story: "Love is never having to say you're sorry."

Of all the dumb things that were said in the 1960s, that was certainly one of the dumbest.

Shrewder advice, from our political pundits, reminds us that the American people tend to err on the side of forgiving transgressors. In fact, apologies can be tactical weapons that actually increase the popularity of the accused. It's the lesson of the "Checkers" speech, but let's be careful in our generalizations. Apologizing requires strategic thinking. It requires art.

Richard Nixon practiced it well in 1952. Ten years later, John Kennedy took full responsibility for the Bay of Pigs, even though he could have truthfully blamed it, in large part, on screw-ups by the previous administration. But he apologized effectively, and his popularity numbers shot up.

Four decades later, Bill Clinton was harder pressed. His apology, woodenly delivered (especially for him), was in-effective because he had already directly lied. He lied both off TV (the perjury that got him impeached) and, equally devastating, on TV ("I did not have sex with ...").

The widespread perception was that he was apologizing because he had run out of options.

Resolute Messaging

Translate the art of public repentance to business, with an eye to the ongoing corporate scandals, and the process is just as dicey. If anything, the contingencies are more complicated and often more dangerous. Jobs are at stake. Brands are at risk.

And, there are legal strategies in place. Will a corporate mea culpa undermine those strategies, increasing exposure in multiple venues long after the public apology is forgotten? Will a corporate mea culpa land an executive or two in prison who might not have to go to prison otherwise?

No doubt about it, your clients should definitely talk to you before they apologize for anything.

That said, corporations are well advised to understand how, if properly managed, an apology for past mistakes can in so many instances roll back tidal waves of unfavorable testimony in the court of public opinion. But take a lesson from our wayward Presidents. Strength and consistency are the initial keys to effective public penitence.

In 1952, Nixon may have been apologizing, but he looked like a man who believed in himself withal. He reaffirmed his value to the community even as he regretted not being quite as clean as Ike's now-proverbial hound's tooth.

Today, by contrast, the tobacco companies find themselves in the same spot Clinton was in during his scandal. The public is lukewarm in their response to the current anti-smoking messages and related shows of corporate good citizenship because these folks staunchly resisted such messages for decades.

To achieve consistency, corporations must engage in formal crisis planning. As part of that planning, spokespersons are to be assigned; the fewer the better, and preferably including the CEO. Having a trained spokesperson is especially important when the company is apologizing for a mistake. You can't have bunches of people going around saying "I'm sorry" in public. The content and tone of the apology has to be a lot more strictly controlled than that.

And there's a final, powerful reason to pick the best spokesperson/apologist. The public doesn't forgive corporations. What do they care about the alphabet soup of power: IBM or NCR or AT&T or IT&T? But they do care about people. It's people they're eager to forgive. No matter how high and mighty, whether you're the Secretary of Defense or a CEO, being human personalizes the relationship with public jurors and improves your odds.

Tougher Crowd

The extent to which it is efficacious to assume responsibility (and, if necessary, blame) becomes significantly apparent when we take a look at your corporate clients' toughest audience: their major shareholders and the analysts who guide them. With a billion here or there at stake, these folks are less likely to be impressed by even the glibbest C-Suite's most artful mea culpa.

On the other hand, an article in the Wall Street Journal ("Corporate Mea Culpas Shown to Pay," by Jane J. Kim, April 21, 2004) reports on a forthcoming study that, in fact, provides powerful evidence that-if apologies play well on the front page of the Daily News-they are also communications tools positively affecting the headier deliberations of institutional investors.

Co-authored by professors Fiona Lee of the University of Michigan Business School, Christopher Peterson of the University of Michigan, and Larissa Tiedens of the Stanford Graduate School of Business, the study shows that the stock prices of companies that took responsibility for their own poor financial performances outperformed the shares of companies that, instead, blamed someone or something else.

"Poor financial performance" may be a different kind of problem than polluting Alaska or dishonestly characterizing debt and equity in financial reports, but the communications issue is still the same. You've got something that's bad on your plate and there are powerful forces in the community that, for whatever reason, are going to be very, very concerned.

The report collected data on 14 companies from 1975 to 1995 and found that, as the Journal put it, "Shares of the companies that took on the most blame for negative outcomes out-performed the shares of firms that laid the most blame on external factors-such as the government, trade policies, the economy, or inflation-by about 14 percent to 19 percent."

Such a handsome return on an "honesty-is-the-best-policy" approach confirms the advice that the best PR counselors have long been giving corporate America-you just cannot spin your way out of a corner. Or, to put it another way, the best spin is no spin.

Medium Is the Message

If the dynamics of apologizing and winning forgiveness from the general public are complex, we suspect that, with the investment community, there are additional strategic factors to consider in the pursuit of effective penitential communications.

One complicating factor may be the longevity and history of your client's current management team. Here, in fact, we might need to qualify the conclusions of the Michigan/Stanford study. A new management team is in a very advantageous position. They can assume blame even though everyone knows they're not really to blame, because they simply were not in power during the fiscal year when things went south.

At the same time, they are presenting a solution, a formal plan to ensure better performance. The new team is perceived to be (a) not culpable, yet (b) willing to assume responsibility for prior culpability, and, therefore, (c) they've learned the lessons of past failures, so it now looks as if (d) the company is optimally positioned to correct the problems.

Assumption of blame, even somebody else's blame, thus invests the leadership message with an evangelical credibility. No one preaches like the converted. The unqualified assumption of responsibility for past mistakes by present management at companies like, say, WorldCom sends a clear message that, because the company has learned so much from its own mistakes, you're not going to find a better financial reporting system anywhere than at WorldCom.

Shareholders, to be sure, like those kinds of messages. Here too, the penitent winds up in better shape, in terms of the perceptions of key constituents, than if there had never been a failure or a transgression in the first place. Rising stock prices can then cover a multitude of future sins. (Returning to our political examples, Mr. Clinton's mea culpa did finally allow him to survive, but mainly because the economy-the politician's decisive stock index-was still at flood.)
The art of the mea culpa may, finally, be a more potent weapon in Investor Relations than in any other communications sector, for a simple profound reason.

Companies that assume blame, and apologize, are sending a potent message that, unlike Enron or Adelphia, they can afford to tell the truth and take the heat. The medium thus becomes the message. Maybe shareholders won't even read or care about the specifics of the apology. The very fact that the apology was made, that it could be made, confirms for them the intrinsic value and viability of their investment.

It's the same with all public relations initiatives, whether the company is apologizing for mistakes or celebrating triumphs. On a long-term basis, you simply cannot sustain a PR program without legitimate facts. For companies creaking toward obsolescence, or destined to bemire themselves in new rounds of scandal, spin is a bandage, but the bleeding won't stop.

By contrast, take a look at companies that have successfully grown their public relations activities over two or three decades. Again, investors may not even need to know what those activities specifically are. The very fact that the activities exist to the extent that they do should reinforce their confidence.
 

Richard S. Levick, Esq. is President of Levick Strategic Communications, which has handled the media on the highest profile matters, from Enron and Napster to the Florida election recount and the Catholic Church controversy. Their new book, Stop the Presses: The Litigation PR Desk Reference, is available free by emailing stopthepresses@levick.com.

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