Written by Andrew Gordon
PR Week
Published on July 26 2004
A rock and a hard place. What PR person
hasn't been caught in that clichéd netherworld at one time or
another? Companies often find themselves in situations where they
want to comment but can't - or don't want to comment - as a matter
of policy, but face greater problems if they keep quiet. Indeed, a
PR person's true mettle is sometimes tested not necessarily by what
they say, but when they say it.
For example, the day before
the IPO of Salesforce.com, rival Siebel Systems sent out an e-mail
pointing out potential problems with the CRM firm. While Siebel
denied it used the e-mail to take advantage of Salesforce.com not
being able comment because of an SEC-mandated quiet period, a
Business 2.0 writer still drew that conclusion on his
blog.
"Salesforce.com's delayed IPO is expected for
tomorrow," wrote Brian Caulfield in his blog. "Lucky for us,
Siebel's PR shop is happy to point out their upstart rival's
supposed problems."
Caulfield reprinted part of the e-mail
from Siebel, which quoted negative comments from an analyst such as
"Functionality too limited." Siebel added: "Assessments like these
call into question whether Salesforce.com's stock or products are a
solid long-term buy."
Caulfield noted: "Of course, Siebel's
PR agency, knowing that Salesforce.com wouldn't comment because it's
in an SEC-mandated 'quiet period,' neglected to mention that the
same analyst feels that Salesforce.com's 'immediate future is very
bright.'" (Steve Diamond, Siebel senior director of PR, said the
e-mail's content was a joint effort of the in-house team and its
agency, OnPR. The agency sent out the e-mail.)
Ironically,
the outspokenness of Salesforce.com chairman and CEO Marc Benioff
got the company's IPO postponed when the SEC said it violated the
quiet period (PRWeek,
June 14, 2004).
The power of rumor
A more
common incident is when companies face rumors, something they go
through several times a week, if not each day. In June, McAfee
Security took the unusual step of denying a rumor that Microsoft was
buying the security tech firm.
Companies rarely, if ever,
comment on rumors. But with McAfee CEO George Samenuk, speaking at
the Wachovia Securities 14th annual Nantucket Conference to address
potential investors, he felt it was disingenuous not to quash gossip
that the company was for sale.
"If there's a rumor out there,
sometimes it's best to let it die on the vine," says Ronald Hanser,
president of Hanser & Associates, West Des Moines, IA. "Don't
work from the gut. See if the rumor is getting traction. Are
customers or investors concerned? Are you getting calls? Don't panic
into saying something. It takes a wise person to sometimes do
nothing."
But looking at the other side
of the coin, Mike Paul, president of MGP & Associates PR in
New York, argues that perception is king. If stakeholders think you
have done something based on a rumor, then you have to respond to
that. "You can't have employees coming into the office and hearing
these rumors without responding in some way," Paul
argues.
"Most companies will tell you they have a
policy not to comment, and they still comment," adds Michael
Robinson, a VP with Levick Strategic Communications in Washington,
DC. "That disconnect is not a surprise. Companies are by and large
facile. It's important for them to make sure the information in the
marketplace is timely and accurate. You owe that to your
shareholders, employees, customers, and any and all constituents. If
you don't respond, it can create tremendous angst."
Paul understands companies' apprehension to respond to
a rumor, knowing that it sets a precedent and that the media will
expect an answer to every rumor. That could leave a company
responding to rumors around the clock, especially as rivals throw
out nugget after nugget.
"There is a learning curve," says
Paul. "You don't want your client to get burned, but you have to be
quick. You don't have time to wait."
Paul pointed to the scandal-ridden University of
Washington. Scandals involving sex, gambling, and swindling the
government have plagued the university for nearly two years. In a
recent story in the Seattle Post-Intelligencer about the
scandals, Paul urged the new university president to address each
scandal quickly, publicly, and aggressively.
"If you're not
going to say anything, you better be really sure," says Paul.
"Because if your have the truth, and you're comfortable with the
truth, why not share it?"
Avoiding the 'no
comment'
What if you want to say something, but can't
because of a gag order or other legal restraint? Susan Tellem,
president and CEO of Tellem Worldwide, Los Angeles, finds herself
asking that very question every day. As the media contact for the
district attorney in the Michael Jackson child-molestation lawsuit,
Tellem Worldwide finds itself bombarded with media calls, but not
able to say much.
"The media call here every time there's a
rumor," Tellem says. "And that's why there's often a gag order.
Rumors that are flying hot and heavy often come from leaks in the
case. So while I never say 'no comment,' you can provide character
witnesses, people who haven't been subpoenaed. Because if you don't
comment, the press will just hound you. A rumor can be damaging if
it grows because no one deals with it."
Paul agrees that having others prepared to speak on
your behalf can help take pressure off a company that can't or won't
comment.
Having third parties who are not bound by such
restrictions - such as customers, vendors, or partners - speak
favorably on the behalf of a company that has to be quiet is one way
of getting around not being able to comment, says
Paul.
If you can't comment, make sure the media and
others clearly understand why you aren't commenting, whether it's a
gag order, an SEC quiet period, or medical privacy laws, says Paula
Lovell, president of Lovell Communications in Nashville. She advises
her clients not to talk, because commenting on some issues but not
others can hurt a client's credibility.
"Obviously the
quiet-period rule is set forth so everyone can have a level playing
field," explains Hulus Alpay, SVP and head of the IR practice at
Makovsky & Company in New York. "Private companies [that plan to
go public] should establish some track record of working with the
external world. Before going public, companies need to spend time
showing how transparent they are."
Companies should
anticipate anything that could come its way, Alpay explains. A
company that is going public should act like one that is already
public and know how to deal with situations where silence is golden,
such as before earnings announcements. That means having others
ready to speak for you - whether it's analysts or customers - when
you can't speak for yourself.
If a company does decide to
respond, that decision should not be made in a vacuum, advises Tim
O'Brien, principal of O'Brien Communications in Pittsburgh.
Executives should be part of the process, so that whatever is said
is in sync with the actions of the company and its leaders. And make
sure whatever is said also has the legal team's stamp of
approval.
Saying "no comment" is tantamount to saying "guilty
as charged," adds Levick's Robinson. "No comment is the easy way
out. There is almost always a way to comment beyond 'no comment.' To
do any less is not to do your job."
