Interview with Michael W. Robinson, Senior Vice President, Levick Strategic Communications

In the wake of the economic downturn, new financial challenges, tighter governmental oversight, and increased demand for greater corporate accountability have all refigured the business landscape and set new business and communications standards for boards, CEOs, and corporate legal departments. News of layoffs, litigation, M&A negotiations, or bankruptcy that leak into the media or onto social media message boards can savage stock values within minutes. Now more than ever, businesses must proactively respond.

Michael Robinson, a senior vice president of a leading crisis communications firm, Levick Strategic Communications, provides strategic counsel to global C-Suites, elected officials, and financial market leaders. A former spokesperson for the Securities and Exchange Commission (SEC), Mr. Robinson has been directly involved with the highest-profile business, financial, and policy issues of the last 25 years. He currently focuses his practice on reputation leadership for public and private companies; crisis communications; regulatory/legal investigations and litigation; public affairs and legislative advocacy; corporate governance; and investor relations.

In this interview, Mr. Robinson discusses the new business and communications challenges posed by the economic downturn and the role of corporate counsel in preventing and managing crises.

Q.: What, specifically, do the economic crisis imperatives mean for in-house counsel? In what ways is their role changing?

A.: In the current economic environment, companies are guilty until proven innocent in the Court of Public Opinion. There is no reservoir of goodwill to draw from and there is no shortage of adversaries that will seize any opportunity to highlight a company's public missteps to gain a strategic advantage in the courtroom. Thus, in-house counselors need to think counter-intuitively.

When facing high-profile litigation, the natural instinct is to hunker down and say as little as possible. But given the new imperatives of this economic environment, stonewalling the media or issuing no-comments is the biggest mistake a company can make. Rather than be guided by what might be lost if the company is quick and aggressive in sharing its crisis messages, in-house counselors need to be guided by what can be gained. For the media (not to mention bloggers) today, “no comment” is just another way of saying “guilty.”

Q.: Are there general rules in-house counsel should advise corporate communicators to follow in the midst of litigation that arises from the current financial crisis?

A.: First, like voting in Chicago, in-house counsel should be advising communications teams to share their litigation messages early and often. The level of anger toward corporate America ' and its leaders ' right now is difficult to overstate. To overcome the biases that judges, juries, and the media will bring to trial, companies need to flood the zone with messages that appeal to audiences on an emotional level. The public needs to feel, not just think, that you're a responsible steward of the nation's economic well-being. The only way to achieve that is to proactively share your narrative at every opportunity. Again, this likely goes against the in-house counselor's nature ' but aggressive communications is now an essential element of winning litigation strategies.

And second, the corporate communications team needs to have its finger on the pulse of digital and social media. More often than not, issues arise on the blogs, Twitter, Facebook, and in myriad other online media long before they reach the mainstream ' which is probably why more than three-quarters of traditional journalists now use social media to guide their story ideas. That means a comprehensive strategy to monitor and engage enables companies to respond to potential issues at the earliest possible point and to shape the narrative before it reaches CNN and The Wall Street Journal as well.

Q.: When disclosing bad financial news to the marketplace, what can companies do to minimize the negative reputational impact?

A.: There's an old crisis communications adage that states, “If you're explaining, you're losing.” So don't make excuses or get trapped talking about the missteps that led to a negative quarterly report or a sudden decline in the share price. And certainly don't obfuscate, bend the truth, or do anything that contradicts a commitment to full transparency. The trouble that can arise from being anything other than forthright far outweighs the temporary reputational pain of honestly reporting bad financial news.

Instead, reverse the dynamic and talk about the measures the company is taking ' or even better, the measures you're already begun ' to ensure that a similar event doesn't happen again. If you focus on the future, the media, analysts, and investors will do so too.

Q.: If a company initiates layoffs or closes offices due to tough economic times, what can it do to demonstrate compassion for those hardest hit by its decisions?

A.: Just as in any other internal communications situation, companies need to be honest, immediate, and empathic in their messaging to employees that are being laid off or otherwise negatively affected by a company's decisions in a tough economy. The most important thing to do is put yourself in the shoes of your audience. Employees will want straightforward information. They will want to know what's being done to soften the blow ' through retraining programs, severance, or other initiatives ' and, above all, they want to hear the bad news directly from their corporate leadership.

It's all about demonstrating respect for those being let go and consideration for those still there (who think they could be next). That's the best way to protect against litigation that may arise and simultaneously send a positive message to those employees who will still be there.

Q.: With a turbulent annual meeting season already underway, what issues are likely to drive shareholder prerogatives when it comes to corporate governance? Will companies have to be more amenable to shareholder desires than they have been in the past?

A.: Executive compensation is an issue that's been around a long time and is picking up steam as a result of the current economic crisis. Repaying the government is a huge issue for companies that accepted TARP funds. And enhanced risk management procedures are also going to be on a lot of shareholders' minds.

Public companies have always been in the position of having to show that they take shareholder demands seriously but, today, that dynamic is even more intense. PricewaterhouseCoopers just issued a report detailing a dramatic rise in securities class action litigation. In such a perilous environment, agitated investors are the last thing that a company wants. So be ready for the tough questions and be prepared for a lot of resolutions. The patience of shareholders with business as usual is likely at an end.

Q.: How do digital and social media impact the way that companies must communicate during the financial crisis? To what extent should in-house counsel be involved in these efforts?

A.: As we discussed above, social media are where the news is coming from ' so it's imperative to engage that space with messages that help shape the traditional news commentary that, in turn, is now based on social media reports. Whether it's through a corporate blog, a Twitter account, a Facebook page, or posting comments to other social media outlets discussing your brand, a social media engagement program is no longer novelty; it's necessity.

That said, in-house counselors should absolutely have a say in what kinds of social media engagements are allowable, and what kinds are taboo. All posts should be subject to legal review and relevant disclaimers should accompany any information that requires them.

Q.: What messages should companies be sending to consumers during this economic crisis? How can in-house counsel work with executives to formulate those messages and why is it important that they do so?

A.: Effective consumer messaging during this economic crisis depends a great deal on what it is that your company does. The automobile manufacturers, for instance, need to reassure the customer base that they'll still be around next year. The financial services sector needs to be talking about reforms in the ways they do business ' and the same goes for insurance companies. At times like these, consumers need to feel confident in their buying decision, which means that they also must feel confident in the sources from whom they are buying.

It also never hurts to remind consumers that you understand what they're going through and that you are taking steps to help them cope with tough economic times.

Q.: How has the communications landscape changed for companies accepting TARP funds?

A.: First and foremost, they need to understand that they've got 535 bosses in the United States Congress who will be second-guessing every decision they make. Is that fair? No. But that's the reality. In today's environment, just about every legislator and state attorney general is looking to leverage a TARP company's bad decisions into political advantage. It's just one of the reasons why companies who took TARP funds want to repay that money quickly as possible.

Similarly, executive compensation, bonus schedules, and other pre-Era of Accountability perks need to be reexamined in light of the new reality that now exists. It also means that TARP-funded companies have to develop thicker skins. They are going to take some lumps ' but if decisions can be justified on both intellectual and emotional levels, then it will be all the easier for policy-makers to sell your plans to their constituents.

Q.: Are there examples of corporate communications during this financial crisis that stand out as particularly effective?

A.: Goldman Sachs is a company that immediately jumps to mind. It was one of the first companies to pull back executive compensation and bonuses and is actively working to repay its TARP funds. And it's been able to hold on to most of its talent during these times when compensation is restricted.

What's most important to remember about what Goldman Sachs has done, however, is that, while in the strictest sense these moves make good business sense, they also send a powerful message to the marketplace that this company isn't like all of the others. Goldman Sachs understands the symbolic power that these kinds of gestures exert. And it also understands that you can't talk your way out a problem you've behaved yourself into. You must take action.

Q.: What are the three most important things that corporate leaders can do to protect their reputations ' and those of their companies ' in the TARP era and beyond?

A.: First, view every decision you make as if you were Joe Public. Always think about how your stakeholders will perceive your actions and remember that regaining their trust is Priority One.

Second, understand that past performance is no guide for what you should do in the future. Business as usual is over. Those companies that do not change to reflect the prevailing public sentiment will remain mired in levels of public anger that we haven't seen since the Vietnam era.

And third, understand that there is, in fact, a plethora of leadership opportunities for companies that engage in real and lasting reform. You can be the gold standard that all competitors are forced to rally around ' but only if you are a driver of change and articulate what it is that you are doing to set an example that all of corporate America should emulate.

Adam J. Schlagman is Editor-in-Chief of this newsletter.

In the wake of the economic downturn, new financial challenges, tighter governmental oversight, and increased demand for greater corporate accountability have all refigured the business landscape and set new business and communications standards for boards, CEOs, and corporate legal departments. News of layoffs, litigation, M&A negotiations, or bankruptcy that leak into the media or onto social media message boards can savage stock values within minutes. Now more than ever, businesses must proactively respond.

Michael Robinson, a senior vice president of a leading crisis communications firm, Levick Strategic Communications, provides strategic counsel to global C-Suites, elected officials, and financial market leaders. A former spokesperson for the Securities and Exchange Commission (SEC), Mr. Robinson has been directly involved with the highest-profile business, financial, and policy issues of the last 25 years. He currently focuses his practice on reputation leadership for public and private companies; crisis communications; regulatory/legal investigations and litigation; public affairs and legislative advocacy; corporate governance; and investor relations.

In this interview, Mr. Robinson discusses the new business and communications challenges posed by the economic downturn and the role of corporate counsel in preventing and managing crises.

Q.: What, specifically, do the economic crisis imperatives mean for in-house counsel? In what ways is their role changing?

A.: In the current economic environment, companies are guilty until proven innocent in the Court of Public Opinion. There is no reservoir of goodwill to draw from and there is no shortage of adversaries that will seize any opportunity to highlight a company's public missteps to gain a strategic advantage in the courtroom. Thus, in-house counselors need to think counter-intuitively.

When facing high-profile litigation, the natural instinct is to hunker down and say as little as possible. But given the new imperatives of this economic environment, stonewalling the media or issuing no-comments is the biggest mistake a company can make. Rather than be guided by what might be lost if the company is quick and aggressive in sharing its crisis messages, in-house counselors need to be guided by what can be gained. For the media (not to mention bloggers) today, “no comment” is just another way of saying “guilty.”

Q.: Are there general rules in-house counsel should advise corporate communicators to follow in the midst of litigation that arises from the current financial crisis?

A.: First, like voting in Chicago, in-house counsel should be advising communications teams to share their litigation messages early and often. The level of anger toward corporate America ' and its leaders ' right now is difficult to overstate. To overcome the biases that judges, juries, and the media will bring to trial, companies need to flood the zone with messages that appeal to audiences on an emotional level. The public needs to feel, not just think, that you're a responsible steward of the nation's economic well-being. The only way to achieve that is to proactively share your narrative at every opportunity. Again, this likely goes against the in-house counselor's nature ' but aggressive communications is now an essential element of winning litigation strategies.

And second, the corporate communications team needs to have its finger on the pulse of digital and social media. More often than not, issues arise on the blogs, Twitter, Facebook, and in myriad other online media long before they reach the mainstream ' which is probably why more than three-quarters of traditional journalists now use social media to guide their story ideas. That means a comprehensive strategy to monitor and engage enables companies to respond to potential issues at the earliest possible point and to shape the narrative before it reaches CNN and The Wall Street Journal as well.

Q.: When disclosing bad financial news to the marketplace, what can companies do to minimize the negative reputational impact?

A.: There's an old crisis communications adage that states, “If you're explaining, you're losing.” So don't make excuses or get trapped talking about the missteps that led to a negative quarterly report or a sudden decline in the share price. And certainly don't obfuscate, bend the truth, or do anything that contradicts a commitment to full transparency. The trouble that can arise from being anything other than forthright far outweighs the temporary reputational pain of honestly reporting bad financial news.

Instead, reverse the dynamic and talk about the measures the company is taking ' or even better, the measures you're already begun ' to ensure that a similar event doesn't happen again. If you focus on the future, the media, analysts, and investors will do so too.

Q.: If a company initiates layoffs or closes offices due to tough economic times, what can it do to demonstrate compassion for those hardest hit by its decisions?

A.: Just as in any other internal communications situation, companies need to be honest, immediate, and empathic in their messaging to employees that are being laid off or otherwise negatively affected by a company's decisions in a tough economy. The most important thing to do is put yourself in the shoes of your audience. Employees will want straightforward information. They will want to know what's being done to soften the blow ' through retraining programs, severance, or other initiatives ' and, above all, they want to hear the bad news directly from their corporate leadership.

It's all about demonstrating respect for those being let go and consideration for those still there (who think they could be next). That's the best way to protect against litigation that may arise and simultaneously send a positive message to those employees who will still be there.

Q.: With a turbulent annual meeting season already underway, what issues are likely to drive shareholder prerogatives when it comes to corporate governance? Will companies have to be more amenable to shareholder desires than they have been in the past?

A.: Executive compensation is an issue that's been around a long time and is picking up steam as a result of the current economic crisis. Repaying the government is a huge issue for companies that accepted TARP funds. And enhanced risk management procedures are also going to be on a lot of shareholders' minds.

Public companies have always been in the position of having to show that they take shareholder demands seriously but, today, that dynamic is even more intense. PricewaterhouseCoopers just issued a report detailing a dramatic rise in securities class action litigation. In such a perilous environment, agitated investors are the last thing that a company wants. So be ready for the tough questions and be prepared for a lot of resolutions. The patience of shareholders with business as usual is likely at an end.

Q.: How do digital and social media impact the way that companies must communicate during the financial crisis? To what extent should in-house counsel be involved in these efforts?

A.: As we discussed above, social media are where the news is coming from ' so it's imperative to engage that space with messages that help shape the traditional news commentary that, in turn, is now based on social media reports. Whether it's through a corporate blog, a Twitter account, a Facebook page, or posting comments to other social media outlets discussing your brand, a social media engagement program is no longer novelty; it's necessity.

That said, in-house counselors should absolutely have a say in what kinds of social media engagements are allowable, and what kinds are taboo. All posts should be subject to legal review and relevant disclaimers should accompany any information that requires them.

Q.: What messages should companies be sending to consumers during this economic crisis? How can in-house counsel work with executives to formulate those messages and why is it important that they do so?

A.: Effective consumer messaging during this economic crisis depends a great deal on what it is that your company does. The automobile manufacturers, for instance, need to reassure the customer base that they'll still be around next year. The financial services sector needs to be talking about reforms in the ways they do business ' and the same goes for insurance companies. At times like these, consumers need to feel confident in their buying decision, which means that they also must feel confident in the sources from whom they are buying.

It also never hurts to remind consumers that you understand what they're going through and that you are taking steps to help them cope with tough economic times.

Q.: How has the communications landscape changed for companies accepting TARP funds?

A.: First and foremost, they need to understand that they've got 535 bosses in the United States Congress who will be second-guessing every decision they make. Is that fair? No. But that's the reality. In today's environment, just about every legislator and state attorney general is looking to leverage a TARP company's bad decisions into political advantage. It's just one of the reasons why companies who took TARP funds want to repay that money quickly as possible.

Similarly, executive compensation, bonus schedules, and other pre-Era of Accountability perks need to be reexamined in light of the new reality that now exists. It also means that TARP-funded companies have to develop thicker skins. They are going to take some lumps ' but if decisions can be justified on both intellectual and emotional levels, then it will be all the easier for policy-makers to sell your plans to their constituents.

Q.: Are there examples of corporate communications during this financial crisis that stand out as particularly effective?

A.: Goldman Sachs is a company that immediately jumps to mind. It was one of the first companies to pull back executive compensation and bonuses and is actively working to repay its TARP funds. And it's been able to hold on to most of its talent during these times when compensation is restricted.

What's most important to remember about what Goldman Sachs has done, however, is that, while in the strictest sense these moves make good business sense, they also send a powerful message to the marketplace that this company isn't like all of the others. Goldman Sachs understands the symbolic power that these kinds of gestures exert. And it also understands that you can't talk your way out a problem you've behaved yourself into. You must take action.

Q.: What are the three most important things that corporate leaders can do to protect their reputations ' and those of their companies ' in the TARP era and beyond?

A.: First, view every decision you make as if you were Joe Public. Always think about how your stakeholders will perceive your actions and remember that regaining their trust is Priority One.

Second, understand that past performance is no guide for what you should do in the future. Business as usual is over. Those companies that do not change to reflect the prevailing public sentiment will remain mired in levels of public anger that we haven't seen since the Vietnam era.

And third, understand that there is, in fact, a plethora of leadership opportunities for companies that engage in real and lasting reform. You can be the gold standard that all competitors are forced to rally around ' but only if you are a driver of change and articulate what it is that you are doing to set an example that all of corporate America should emulate.

Adam J. Schlagman is Editor-in-Chief of this newsletter.