Reputation is not built
in a day

Wal-Mart launches
PR program

Customer service myth... CIBC

Even in 2005, the number of CEOs and other C-level executives who fail to understand that the reputation of an organization is its most valuable asset, is impressive. Without a solid reputation among employees, customers, regulators, suppliers, and the public-at-large, an organization faces a tough road ahead. Further, an organization’s reputation is like money in the bank; you constantly have to make regular deposits because some day, you may need a large withdrawal.

A case in point: Wal-Mart. Mario Pilozzi, CEO of Wal-Mart Canada, is now trying to set the record straight about Wal-Mart’s bad PR and unionized store closing in Jonquière, Quebec. On Monday, February 14, Wal-Mart ran full-page ads in several Quebec newspapers to appeal to its 10,000 Quebec-based employees. Here's a paragraph from a Globe and Mail story today, by retailing reporter Marina Strauss.

Mario Pilozzi, also chief executive officer of Wal-Mart Canada, said in a rare interview yesterday that he wants to raise his visibility with the media and the public when necessary as a way to "set the record straight."

He's a little late getting out of his office and into the spotlight.

1. Building a reputation is an ongoing process. Starting reputation building when you’re in hot water looks defensive, no matter what the organization says. To be believable, reputation management must be carried out constantly by the CEO and the executive team. In short, every organization needs to "stand up and be counted." Hiding in the weeds does not work.
    

2. Using media relations to conduct employee communications is not a good idea. First, it looks suspect. The primary audience of Wal-Mart’s full-page newspaper ads was not Wal-Mart employees, but rather the public-at-large. Second, it points to the fact that most organizations do not have an effective way to reach all their employees internally. Up-to-date employee records for any large organization are always a challenge. And reaching them with a message, especially when employees do not sit in front of computers all day, is difficult.
    

3. Most organizations do not tap into their existing workforce when doing reputation management planning. The 10,000 Wal-Mart employees in Quebec would be very effective ambassadors of the company. Who doesn’t talk about their job at home? Never mind what the organization tells its employees or the media. What really counts is what employees tell their friends and family about their workplace. These are the people most qualified to answer the question: "Is Wal-Mart a good employer?" Ah, that’s where the rubber meets the cash register.

The world’s largest retailer (and also the largest private employer in the U.S. with 1.2 million employees), began a huge PR blitz to defend itself from "Wal-Mart bashing" on Thursday, January 13, 2005. The barrage of criticism has become so loud lately that the Bentonville, Arkansas, retailer could not afford to ignore it any longer.

The company launched the campaign with full-page ads titled "Wal-Mart is working for everyone," which consisted of an open letter from Wal-Mart CEO Lee Scott in more than 100 daily newspapers across the U.S.

These ads were tailored to regional audiences and touted the sales tax revenues Wal-Mart pays, contributions to local charitable causes, its employee benefits package including health care, the diversity of its workforce and the jobs it plans to create this year. Wal-Mart also stationed executives in key markets around the country.

The company also launched a website to support its campaign: www.walmartfacts.com

"For too long, others have had free rein to say things about our company that just aren’t true," Scott said in a statement. "Our associates are tired of it and we’ve decided it’s time to draw our own line in the sand." He also appeared on Good Morning America.

Even Wal-Mart recognizes that corporate social responsibility, reputation, and image are as important to its success as profitability.  Moreover, when was the last time any organization said: "We’re not going to take it any more?" That’s the good news. Apparently, Wal-Mart has brought out the full artillery: their PR agency of record is Fleishman-Hillard, but Hill & Knowlton has also been pulled in to work of the current campaign.

The allegations against Wal-Mart are serious. Allegations of locking workers overnight in stores, subcontractors hiring illegal immigrants, driving smaller rivals out of business, and sexual discrimination (a class action suit covering the 1.6 million women who have worked at Wal-Mart since 1998) plagued the company in the last year.

These are serious operating and policy issues and Wal-Mart has vigorously fought these court actions. Everything points to the erosion of trust among Wal-Mart and its various stakeholders. Was launching the PR campaign a good strategic move? Time will tell.

PR cannot—should not—be a cover-up for shady and unethical business practices. The role of effective PR is to advise on operating and policy issues while these decisions are being made—not to "clean up the mess" after the fact. That’s when PR is accused of "spin" and "damage control."

How will Wal-Mart prove that it is sincere and genuine about its PR efforts, and more importantly, about the way it does business? In the words of Michael Sabia, CEO of Bell Canada Enterprises: "If you put lipstick on a pig, it still oinks!"

Effective organizational communication is the bane of all large organizations. In the "hot seat" since the story broke on late Thursday, Nov. 25 on the 6 pm local news is the Canadian Imperial Bank of Commerce (CIBC), Canada’s third largest bank. Many CIBC branches throughout Canada have been faxing confidential customer information since July 2001 to Wade Peer, a junkyard operator in Ridgeley, West Virginia.

When Peer tried to bring this matter to CIBC’s attention, CIBC employees sloughed it off: "Not our problem," and hung up the phone. Peer even contacted some of CIBC’s customers from the faxed information in an effort to get customers to deal directly with CIBC about the information leaks. All to no avail.

Peer kept the hundreds of faxes in a locked filing cabinet in his office guarded by the proverbial junkyard dog, Captain Morgan the rottweiler. In fact, Peer received two more faxes on Friday, Nov. 26 with confidential customer information after CIBC issued a complete ban on faxes early Friday afternoon.

How do these things happen? Organizational communication has been my specialty for more than 20 years. Here are some observations:

1. Many head offices work under wrong assumptions: "We sent the information to employees. Therefore, the employees read it, understood it, digested it, and acted on it." WRONG. WRONG. WRONG. Typically, there is slippage throughout the communication chain.

2. Most organization have no mechanism for emergency communication with their own employees.

3. Organizations fail to understand that frontline employees defend the organization’s reputation. Customers don’t talk to an organization; they talk to employees in that organization.

4. No one has courage to act in a large bureaucracy. Fear of job loss and obsession with making quarterly quotas are largely to blame for wiping out courage to act.

5. People make mistakes but the time crunch means no one takes the time to check their work such as double-checking the fax distribution list or programmed auto-dialer numbers.

6. Huge organizations—huge inertia. I have heard "I’m not authorized to do that" more times from a customer service representative than I can count.

7. Customer "service" centres are a joke: wait times for customers are long, employees are paid minimum wage, customers cannot know employees’ last names for "security reasons," and the bonuses of customer service managers are tied directly to how much money they (don’t) refund to customers. The strategy of many customer service centres is to "wear out customers," so they’ll give up in disgust.