On Communications: Change in control

A new environment of open dialogue is in the offing as the voice of the customer makes itself heard.

by Tom Kowaleski, World Business
Last Updated: 23 Jul 2013

While never simple, at least it was once clear what a company needed to do to build image and successfully manage reputation. Know what you stand for, select the right transmission channels, control your message and communicate with sublime simplicity and effectiveness. Get out in front, be on constant watch for the unexpected, nip crises in the bud if possible, and if not, ride them out, because there's always a new one from someone else to eventually knock you off the front page. Ahh, the good old days.

But wait a minute, what's going on? Those important constituencies that were once conditioned to being 'talked to' are now 'talking back', thanks to the new world of interactive communication that fosters two-way conversation.

And in this new world, as paradoxical as it sounds, building one's image now often entails surrendering control, getting hit, taking it and sometimes giving back as good as you get. Better get used to it because critical mass has been established and it's growing rapidly. US retailer Home Depot's annual shareholder meeting on 25 May and the resulting conversation is just the latest example.

In practically every public company, these yearly events are endured rather than enjoyed. The real issues are handled in the proxy process and by the time the annual meeting occurs, there's little more than the formal announcing of the vote. Gadflies get in front of the microphone to tell you how the company should be run. Management thanks them for their concern, support, candour, criticism and beneficial ideas. This is conducted in front of an assembled media corps, sometimes at the cost of a day's headlines proclaiming shareholder restlessness. And then life carries on for another year.

But Home Depot had a better idea of how to manage this yearly event.

The company's chairman, Bob Nardelli, had become this year's whipping boy of executive compensation excess. Annual meetings are the perfect place to face the criticism, so Home Depot had a simple plan. Have very few senior management there. Ditto for the board of directors. Don't allow any shareholder to speak for more than one minute. Answer no questions substantively. Get out of town in just 37 minutes.

Home Depot is a big, profitable, adept and well-run company. It knew the potential for a hit in the media, but this too shall pass. Then something happened. It didn't pass. The conversation over the internet had already begun with the compensation issue and the annual meeting was the kerosene that kept it going. The blogs revved up, the traditional media had a front-row seat at the conflict and Home Depot was on the spot.

So what did the company do? It got in the game. It clarified its position.

It released information on shareholder voting. It ate some humble pie and said it would return to a "more traditional format" next year. It responded to bloggers on a one-to-one basis. But the bloggers kept it up. Some even balanced the bad news with the good, such as digging up a quote from management consultant Ram Charan in Harvard Business Review that lauded the cultural change at the company, led by Nardelli. Did all this wipe out the mistake made by Home Depot and its reformatting of the annual meeting? Did it completely counter the negative Wall Street Journal and New York Times stories? No, but independent third-party balance en-tered the debate and Home Depot said it was pleased with the reception of its broader message. Not a bad thing all round.

Home Depot is by no means alone. This 'change in control' is going on every day and what corporations have been professing for years is now a fully fledged reality. The voice of the customer is being heard. So beware, even if you haven't yet encountered this environment of open dialogue and exchange, your turn is coming. Just remember: it's okay that you're no longer in total control of the message. You still get to hit the ball first so do it well, but get ready for that wicked backhand shot across the net.

Engage in the debate and don't hide. Senior management has always 'allowed' the communications staff to be engaged instead of itself when things get sticky. Putting your name and face in the conversation, in the right way and at the right time, can have the same benefits as being in the middle of critical policy and labour discussions at a critical time.

Keep your eye on the image you want to build. Don't get sidetracked by the noise of the conversation. Most probably, you can stand the criticism, particularly if yours is a company that has a reputation for doing the right things in good and not so good times. Stay in the conversation with your message, keep shaping the discussion and maintaining the dialogue.

Learn to enjoy the give and take, but remember, just like in real life, getting the final word does not always ensure victory. And this most certainly is real life.

- Tom Kowaleski is head of communications consultancy actk2. He was vice-president of global communications at General Motors before retiring in March 2006.

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