Thursday, December 20, 2007

The Power of the Mea Culpa

By: Ross Hendin, Hendin Consultants

According to Wikipedia: Mea culpa is a Latin phrase that translates into English as "my fault", or "my own fault". In order to emphasize the message, the adjective "maxima" may be inserted, resulting in "mea maxima culpa," which would translate as "my most [grievous] fault."

The power of the media has evolved to a point where every comment we make, every email we send, and every place we've been will be exposed at some point if we ever step into the spotlight. Since nobody's perfect, the world has come to accept the mea culpa as a way to cleanse the professional spirit. The world has become desensitized to people that break the law and say they are sorry. Look at what happened years ago to Jimmy Swaggart (YouTube video), and juxtapose that to Martha Stewart and the Imclone scandal. Jimmy didn't do the hard time that Martha did for her crimes, but Martha used the challenge, the apology and the mea culpa to catapult her brand to an amazing recovery. Celebrities found driving drunk do a mea culpa on a blog, go to rehab and get a clean slate. Michael Richards gives one of the most venomous rants outside of a Klan meeting, does a mea culpa on Letterman, and its forgotten about a month later.

In the finance world, the dynamics are a bit different when shareholders are involved, because investors today are not only more sophisticated, they also have access to more information than they ever did. Don't forget, Ms. Stewart had to do some hard time before as part of the process.
Communication strategy is becoming as important as legal or political strategy. As applied to the ABCP situation, anyone and everyone involved should be able to look like they are the “good guys” in all of this, if they follow the right steps. The groups all seem to be taking a lot of time to see how the dust will settle, and to perhaps prepare articulate strategies. Well, in the PR world, we would call the time between the August meltdown and right now (after the missing of the December Montreal Accord voting date) "crisis time", and in a time of a crisis, proper crisis management should be used. Many tell me they believe that the real crisis time will come after, when there may be lawsuits, or there may be a need to assert oneself in a public forum. In the meantime, nobody wants to say the wrong thing in the media and get sued for it.

Just as there is a process to rolling paper, rating companies, and filing a motion for any number of civil charges, so too is there a process (albeit a more fluid one) for controlling a situation and rallying for support in your favor.

Properly managed, BP have re-branded themselves "Beyond Petroleum" and publicly state that they are working day and night on a smart solution to oil and fossil fuels that we can all use and enjoy. Somehow, that makes it OK that they are one of the world’s biggest contributors to one of the atmosphere’s most damaging practices.

Everyone involved in this situation, or who is about to get involved in the coming weeks, should remember that when defining moments come, the people who are remembered as the best leaders and the companies who are remembered most fondly are not always the ones who are right. They are ones who managed the situation properly.

National Bank did the right thing, and has been viciously attacked for it by shareholders like Jean Coutu, when they really should be praised and celebrated.

Royal Bank has announced a second rating on their ABCP conduits from Moody’s, and they may add another as well. While DBRS may fight a more convincing lawsuit by keeping quiet, will it matter if nobody feels comfortable using them again?

And what about Mr. Crawford? Nobody doubts that he’s doing the best he can, and that he’s making the efforts he should to seem like his Committee is communicating effectively. But, if he’s unable to save the day, and an enquiry is done about what went wrong, a hearty “I tried, and am sorry” will go a lot further than having that enquiry discover in week one that there was no need to lock the data room, discover in the next week that he only reached out to the banks the week before the deadline and didn’t have a plan, week three examine what he did or said to get the banks (perhaps even TD?) to take on the liquidity risk. Transparency now and an “I’m sorry” later will make him a hero either way.

If we see Jimmy, Michael, Martha, and the other most profitable sinners in the world winning back the hearts of their customers with a mea culpa and some good PR, there must be something to it.

Ross Hendin is CEO of Hendin Consultants, and is a Senior Advisor to the Canadian office of a leading multi-national PR firm. With strategic communication experience in more than 20 countries around the world, Ross specializes in litigation, financial and political strategic communication. He has worked in the ABCP niche since 2006. Hendin Consultants is in Toronto and London, UK, and is on the web at Email Ross at

No comments: