Business Lessons Learned From News Corp.

In the Boardroom:

Business Lessons Learned from News Corp. Events

Premium content from The Business Journal – by Ruth Kinzey, Contributing writer

Date: Friday, July 22, 2011, 6:00am EDT

Rupert Murdoch’s News Corp. withdrew a takeover bid of BSkyB and shuttered its popular weekly tabloid, News of the World. Why? Because of increasing revelations the publication used unethical and even illegal practices to obtain information on relatives of murder victims and high-profile individuals, such as politicians and celebrities. Despite the rhetoric being exchanged and public fascination with this unfolding scandal, there are business lessons that can be learned from the management of this event:

*A chain is only as strong as its weakest link. Perhaps, it is prophetic this saying originated in the UK. While the News of the World only accounts for 3 percent of News Corps.’ recent quarter’s profit, the actions of this small division has tarnished the reputation of its parent organization and financially impacted it. The message is clear: Don’t underestimate the degree of reputational damage that can occur from a subsidiary, department or scenario that seems small.

*Prepare for the worst. Act immediately and have a crisis plan. News of the World’s information gathering practices were even questioned back in 2003. But the company does not appear to have acted upon the inquiry.

When accusations arise, begin an internal investigation to uncover where problems could be, attempt to understand how or why such allegations materialized, and review internal processes and procedures that safeguard organizational integrity. Remember, it is easier to reduce or temper internal planning and responsiveness than to correct or recover from a “too little, too late” reaction.

*Never assume a potential scandal won’t grab public attention. Many media viewers and readers are fascinated by scandals. The News of the World should have been acutely aware of this. That’s why it is particularly surprising it took 10 days of public outrage before they brought in the public relations firm, Edelman, to assist. The lesson? Have media and reputational support in place to assist you in the event of a crisis.

*PR has its limits. Even with the help of well-known PR strategists, public relations can only do so much. When faced with a crisis, a company must understand that a significant operational shift, new process or procedural change may be required. Such actions prove to investigators – and the public – that there is a clear acknowledgement an error occurred, responsibility is accepted, and the firm cares about correcting the issue in a manner that will help to ensure the situation doesn’t occur again.

*There is no substitute for good ethics. Corporate trust is a necessity for success. If trust in a company’s ethics is shaken, investors may be hesitant to continue investing; government officials and other business advocates may distance themselves; customers may question the reliability and accuracy of information and possibly discontinue their relationships with the organization; and the competition has a ready platform on which it can discount its market rival.

Good ethics are foundational to trust and a respected reputation. If compromised, accountability and retribution for illegal actions will be expected.

*Helping employees avoid temptation. In today’s world, personal and business information is easier and easier to access – both legally and illegally. In the highly competitive marketplace, the pressure for business to produce strong corporate earnings is intense. As a result, some employees are tempted to take ethically questionable actions by illegally obtaining confidential data to meet corporate goals and objectives.

How leadership responds to unethical behavior is a reflection of organizational integrity and philosophy. Consequently, there may be numerous rules, a written code of ethics, and even formal procedures to demonstrate a company’s commitment to ethical standards. However, management at all levels must adhere to these principles to ensure ethics are part of the cultural fabric rather than simply noted in a document.

*Don’t judge all members of the press. Having worked with some leaders who believe all journalists “do whatever it takes to get a scoop,” I feel compelled to defend the profession. In the interest of full disclosure, I possess a master’s degree in journalism and have worked in public relations for more than 30 years. Having said this, I assure you there are journalists committed to covering events and issues in a fair, well balanced, and comprehensive manner. These professionals want to present the truth, are conscientious, committed to accuracy, and dedicated to ethical behavior. So, don’t judge all journalists by this scandal or discount the importance of media relations in your communication and marketing plans.

Ruth Ellen Kinzey, The Kinzey Company is a corporate reputation strategist, consultant, and professional speaker. Want to hear more about a specific topic? She can be reached at (704) 763-0754 or http://www.kinzeycompany.com.

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