PR News asked EKA Partner Eric Rose for his views on how Adani Group should respond to the allegations from Hindenburg Research. Rose was quoted explaining how Adani must employ a coordinated, comprehensive legal, investor relations and financial approach to counter Hindenburg. Read more: https://prnewsonline.com/week-in-review-hindenburg-adani-mms-chatgpt/
EKA partner Eric Rose was quoted in a recent Washington Post article covering the Southwest Airlines flight cancellation debacle:
Crisis communication and reputation management expert Eric Rose, a partner at EKA, said Southwest has done some things right: Leaders apologized with empathy, pledged refunds and reimbursement and acknowledged the concerns of Transportation Secretary Pete Buttigieg.
“But this is a crisis that is not over because they haven’t solved the problem,” he said.
Rose said the airline still needed to make outreach to customers like him – not just people whose travels were disrupted – to address the issue and explain what’s being done to fix the problem.
“They need to be a lot more specific about the failure and very specific about what they’re doing to assure people that it’s won’t happen again,” he said.
By Eric Rose
Usually, stories are written about how companies handle PR crises well or botch them when they’re occurring or shortly after they end. Yet a 2019 McDonald’s crisis has provided years of news, including some today (Jan. 9, 2023), well after the crisis ostensibly ended.
Indeed, the Securities and Exchange Commission (SEC) added an exclamation point to the McDonald’s-Stephen Easterbrook brouhaha. In short, it emphasized the importance of transparency in corporate communication, even well after a crisis and its legalities are finished.
The Background
In Aug. 2020, McDonald’s re-wrote the playbook for corporate America about dealing with a crisis months after its board fired CEO Easterbrook, in Nov. 2019. That’s when it learned about Easterbrook’s consensual, non-physical relationship with an employee.
At the time, Easterbrook acknowledged the relationship. He admitted it went against corporate rules. Easterbrook agreed he should leave. He apologized and was fired. His payout was estimated at $40+ million.
Later, after receiving a tip about other Easterbrook relationships, McDonald’s began a second investigation. It uncovered “undisputable evidence” of three sexual relationships.
Investigators found nude photographs from Easterbrook’s McDonald’s email account. In addition, they discovered he’d granted company shares worth hundreds of thousands of dollars for one of the employees “shortly after their first sexual encounter.”
Swift Action
When McDonald’s fired Easterbrook in 2019 “without cause,” it said evidence pointed to a single, non-physical, consensual relationship, consisting of intimate text messages and video calls.
After learning of the other relationships during the second probe, the fast-food giant took an unprecedented step. It sued the now-former CEO, seeking millions from the lucrative departure package it provided him. The company charged Easterbrook hadn’t come clean in 2019. Moreover, he destroyed evidence, it alleged.
In 2021, the former CEO and McDonald’s settled. Easterbrook returned more than $105 million in equity awards and cash to McDonald’s.
SEC Drops Hammer
Today the SEC provided a third burst of news about the incident. The SEC put corporate America on notice, announcing it charged the disgraced CEO with misrepresenting his November 2019 firing. Moreover, Easterbrook, the SEC said today, agreed to a $400,000 fine. In addition, he agreed to forego serving as an officer or director for any SEC-reporting company for 5 years.
“When corporate officers corrupt internal processes to manage their personal reputations or line their own pockets, they breach their fundamental duties to shareholders, who are entitled to transparency and fair dealing from executives,” said Gurbir Grewal, director of the SEC’s Division of Enforcement.
McDonald’s Faulted, Spared
McDonald’s didn’t escape blame. It violated the Exchange Act, which prohibits companies from material misrepresentations and omissions in proxy statements sent to shareholders, the SEC said.
However, Washington spared the Golden Arches. It did not impose a financial penalty on the company. McDonald’s provided “substantial cooperation” during the SEC’s probe, the agency said. On top of that, the fast-food giant implemented “remedial measures,” including clawing back millions from Easterbrook, the SEC said.
Neither Easterbrook nor McDonald’s admitted or denied the SEC’s findings.
In a statement, McDonald’s said the SEC’s actions reinforce what it’s communicated about Easterbrook’s misconduct. “The Company continues to ensure our values are part of everything we do, and we are proud of our strong ‘speak up’ culture that encourages employees to report conduct by any employee, including the CEO, that falls short of our expectations.”
Model for Handling Crisis
It is noteworthy how quickly and resolutely McDonald’s handled this crisis. Leadership was transparent from the beginning and took swift, decisive action. It got ahead of the story and put itself in line with societal expectations.
The changes in its corporate culture did not go unnoticed. Indeed the SEC approved of how the board promptly handled the Easterbrook matter. Without explicitly saying so, the SEC appreciated how McDonald’s set the tone of accountability in corporate America.
Eric W. Rose is a partner at EKA
By Eric Rose
Southwest Airlines (SWA) is facing the mother of airline crises and its reputation is at stake.
Can the airline win back passengers’ trust, given that the latest meltdown was the result of a culmination of problems building for years?
For example, some SWA passengers remember October 2021, when the carrier canceled more than 2,000 flights. It blamed bad weather in Florida, air traffic control issues and staffing shortages. At the time, Southwest assured customers it would solve those problems.
Still, this latest collapse had SWA sending mixed messages about the situation’s root cause.
Given that other major airlines did not experience the same issues late last month, the problem seems bigger than the severe winter storm.
As is often the case during a PR crisis, in the absence of clear, prompt communication from company leaders, someone else will supply a narrative. In this case, an explanation of the airline’s failure came from a union leader. Worse, the union is locked in negotiations with the airline.
Captain Michael Santoro, VP of the Southwest Airlines Pilot Association, blamed airline leadership Dec. 27. “The storm that hit last week was the catalyst…but what went wrong is that our infrastructure for our scheduling software is vastly outdated. It can’t handle the number of pilots and flight attendants that we have in the system with our complex route network.”
It was a theme the union repeated on TV news shows and in a lengthy Dec. 31 letter. The union’s missive blasted Southwest’s leadership, calling it “a headquarters-centric cult” that’s destroyed “the most stable and profitable airline in history.” It cited 15 years of operational meltdowns that culminated with last month’s disaster.
Despite a loyal customer base, SWA seems to have ignored a golden rule of crisis management: crisis responses are prepared long before a disaster occurs.
In the latest crisis, SWA was caught flat-footed. It seemed ill-prepared, failed to set the right tone and didn’t put the right people out front to address issues promptly.
For Southwest, regaining customer trust will require more than a sincere apology, empathy and compensation for passengers. While it cannot control how customers perceive its message, Southwest must get in front of underlying issues to win trust.
As the airline canceled more than 13,000 flights since Dec. 22, CEO Bob Jordan immediately apologized, telling Good Morning America Dec. 30, “ I am extremely sorry. There’s just no way to almost apologize enough.”
On Jan. 3, Jordan attempted to acknowledge what went wrong and take responsibility. “We’ll move forward with lessons learned here, as we always do. We have plans to invest in tools and technology and processes, but there will be immediate work to understand what happened,” he told employees.
SWA issued similar statements after the 2021 self-created crisis. This historical record of system failures may push loyal customers, particularly business travelers concerned about being on time, to other carriers.
Recovering fully from the self-inflicted reputation harm will be a challenge. Unlike other airline reputation hits, i.e. United’s David Dao incident, Southwest’s fiasco touched countless loyal passengers who’ve vowed they’ll never fly the airline again.
With potential action from the U.S. Department of Transportation and congressional hearings looming, if Jordan hopes to win back customers’ trust, he must do more than offer 25,000 reward points to people whose flights were canceled. He must communicate with all customers, employees and the media and explain what led to the operational meltdown during the busy holiday travel season.
Moreover, the beleaguered airline must tell stakeholders clearly the steps it’s taking to ensure this does not recur and provide a timeframe for upgrading its technology, which contributed heavily to the chaos.
In addition to compensating passengers, the airline should create incentives for customers, creating continued loyalty.
While Southwest struggles to make things right with customers, subsequent issues will garner coverage. With thousands of news stories and social media posts that chronicled cancelled flights, difficulties reaching customer service and the baggage debacle, it will take years for Southwest to recover fully.
The next big winter storm will determine whether passengers can trust the airline.
Eric W. Rose is a partner at EKA
EKA partner Eric Rose was quoted in a December 29, 2022, article appearing in the Los Angeles Times, Southwest hopes to resume normal operations Friday. Can the airline rebound from its historic meltdown?
“Unless they demonstrate to customers that this problem, which is unique to Southwest Airlines, has been solved, the carrier risks this snowballing into a significant issue that will negatively impact the brand in the years to come,” said Eric Rose, a crisis and reputation management expert at the Los Angeles communications firm EKA.
EKA partner Eric Rose is quoted in a summarization story of the Johnny Depp / Amber Heard defamation lawsuit:
Eric Rose, a crisis management and communications expert in Los Angeles, called the trial a “classic murder-suicide.”
“From a reputation management perspective, there can be no winners,” he said. “They’ve bloodied each other up. It becomes more difficult now for studios to hire either actor because you’re potentially alienating a large segment of your audience who may not like the fact that you have retained either Johnny or Amber for a specific project because feelings are so strong now.”
EKA partner Eric Rose commented on the public relations strategy being used by Jussie Smollett in the wake of his surprise release from jail:
Under the conditions of the sentence imposed by Cook County Judge James Linn, Smollett must now serve the 30-month probation, though he may leave the state and travel without restrictions. That means he could travel to places like Los Angeles and New York to try to resurrect his career.
But that will be difficult to do, publicists say, and the latest developments may not have done him any favors.
“I think he’s actually doing more harm than good” by fighting the conviction and sentence, said publicist Eric Rose. People can be very forgiving of celebrities who admit wrongdoing and apologize, he said, but instead Smollett is keeping his name and face in the headlines, reminding people of the circumstances of his conviction.
“That’s what we call ‘death by 1,000 cuts,’” Rose said. “From a reputation perspective, that is horrible.”
EKA partner Eric Rose provided analysis to this TheHill.com piece focused on the future of CNN in the post-Zucker era:
Some observers say WarnerMedia’s decision to push Zucker out could be part of a larger effort to rebrand the company as less tolerant of transgressions and improper behavior, even for high-profile figures, ahead of its impending merger with media conglomerate Discovery.
“The new owner John Malone has signaled a new hardened news focus, so removing Zucker makes the makeover that was planned for CNN easier with him out of the mix,” said Eric Rose, a crisis communications expert based in Los Angeles. “There might be internal strife at CNN and it might be a pivotal moment … but at the same time they’re signaling their new way of doing business.”
EKA partner Eric Rose was quoted in a recent LA Times article on an incident at SoFi Stadium during the Rams-49ers NFC Championship playoff game:
Eric Rose, a public relations executive and well-known crisis manager in Southern California, said he was giving the Rams and stadium officials the “benefit of the doubt” because they may not have had all the facts, but “what they do going forward is going to decide their reputation in the community.”
So far, the response has not been robust.
In a statement provided to The Times, SoFi Stadium officials said they were “aware and saddened by the incident.”
“Our thoughts are with Mr. Luna’s friends and family during this difficult time. We are working with law enforcement officials in their investigation,” stadium representatives said.
EKA partner Eric Rose was quoted in a recent article about Chris Cuomo:
“It’s extremely ironic that a professional like Chris Cuomo who has covered a number of crises and was attempting to help his brother with a crisis, has in fact created a crisis for his network,” said Eric Rose, a crisis communications expert based in Los Angeles. “No matter what they [CNN] do, they’re going to upset a number of people. The fact that he misled CNN, that the evidence is now before them, requires them to take swift and immediate action. If for nothing else, so that the story can fade away and they can be moving on with their news operations.”