Mike Paul's Blog - A Week from Hell for Reputations

Below is a list of the top 5 reputations in crisis for the first week of January 2006:

1. WILBUR ROSS AND HIS INTERNATIONAL COAL GROUP's SAGO MINE – the king of turning distressed companies into gold is in hot water. Billionaire Wilbur Ross is the man that owns the mine 12 miners 260 feet below ground were killed in last week in West Virginia. The real tragedy the entire world learned about was the owner of the mine knew for some time the mine was not safe. In the last year alone, the mine’s owner, International Coal Group (ICG), was issued 205 citations, including 46 during the most recent inspection of the Sago Mine from early October to late December 2005. Federal inspectors listed 96 citations as “serious and substantial,” i.e., those MSHA believes could cause an accident serious enough to injure or kill a miner. These included violations of approved roof control and mine ventilation plans intended to prevent the buildup of explosive methane gas. Bottom line: safety is a reputation and life-saving must.

2. KEN LAY – Rick Causey, the former chief accounting officer at Enron, made a deal with federal prosecutors, in which he'll plead guilty to any number of 34 criminal charges, cooperate with the law, and of course flip on his former boss, Ken Lay, by testifying in a sure-to-be-messy Enron trial. The Ken Lay trial starts January 30th. In late December, Lay was feeling pretty sure of himself and even gave a speech in Houston late December to try to win local support, and influence potential jurors, by explaining his innocence through the media. Well, he is sure not feeling as confident today as Causey was a man Ken Lay worked closely with at Enron and a man who knows both the truth and the lies. Prediction: Ken Lay will be sharing a prison cell for 25 years, equal to the time Bernie Ebbers is now in prison for his misdeeds at WorldCom.

3. APPLEBEE's – An angry mother is suing Applebee’s for carelessly serving her 5-year-old a Long Island iced-tea, a powerful alcoholic drink, in a restaurant kiddie cup at Applebee’s, instead of an order of apple juice. Stupidly, the popular restaurant chain is only saying “no comment” to the media and kicking reporters, interested in giving them a fair chance to tell their side of the story to the public, out of the New York City restaurant. Bottom line: Applebee’s will lose in both the court of law and in the court of public opinion. However, the court of public opinion is more important here because Applebee’s brand, stock price and customer base are all affected by their reputation in crisis.

4. THE WALL STREET JOURNAL's KAREN ELLIOTT HOUSE – as mentioned in the New York Times, for the time being, the glass ceiling for some women, including Karen Elliott House, is a skating rink. An arena in which she can show off her substantial skills, but it could contain unseen trapdoors. Karen Elliott House, the publisher of The Wall Street Journal, just ended up falling through one. When the board members of Dow Jones & Company chose a chief executive, they bypassed Ms. House, a Pulitzer Prize-winning journalist who was both professionally and personally wedded to Peter R. Kann, the outgoing chief executive, in favor of Richard F. Zannino, a vice president of the company who came from Liz Claiborne in 2001. Ms. House, who had been at the company 32 years, found herself out of a job. A hard-charging journalist and executive - some would say a bit too driven, a frequent charge against successful women - her career and personal life became defined by her alliance with Mr. Kann. Once she was at the top, the glass ceiling became a mirror, a reflection of choices made. Bottom line: being married to the boss, him naming you his number 2 at work, and sleeping with the man many at the Wall Street Journal have hated for years really didn’t help her reputation, nor allow her own talents to shine bright enough.

5. MARTHA STEWART – A U.S. Federal Appeals Court on Friday upheld the conviction of Martha Stewart and her former stockbroker, Peter Bacanovic, for lying about a lucrative stock sale. The Court of Appeals for the Second Circuit in Manhattan rejected arguments put forth by lawyers for both defendants, that their trial was tainted by prosecutorial misconduct, juror misconduct, extraneous influence on the jury and erroneous jury instructions. In one sense, neither Ms. Stewart, the founder of Martha Stewart Living Omnimedia, nor Mr. Bacanovic had much riding on the outcome of the decision; both have already served their prison sentences. But the appeal was a last-ditch effort - and by most accounts, this will be their last - to clear their names. A spokeswoman for Martha Stewart Living Omnimedia, Allyn Magrino, said the company was "disappointed for Martha." Advice for Martha: It bothers you so much because you didn’t get away with it and you think you should have and maybe even know friends who have gotten away with it. Sadly, your heart will continue to harden unless you are honest with yourself first and then give a humble mea culpa with no “ifs” or “buts” for all the world to hear.

So let’s remember a few reputation management tips from our famous friends:

• Unlike Wilbur Ross, always put the safety of your employees above your financial goals because death can happen when we make inappropriate decision.

• The world will soon learn during the Ken Lay trial that both the court of law and the court of public opinion lead with truth, transparency and accountability to result in either an excellent reputation or one in crisis, and can result with the rest of your life in prison or ultimate freedom.

• Learn a lesson which Applebee’s had to learn the hard way: a reduced staff with too many customers, carelessness and frustration in dealing with a child as a customer, no comment through the media, and a mother on a mission to best protect her child all equal a winnable lawsuit and a reputation in crisis.

• Karen Elliott House must learn an excellent reputation as a leader needs many people willing to follow, along with empathy and humility towards your workforce, not just a husband in power and hundreds of journalists who don’t trust you.

• Martha, Martha, Martha, where do I begin? Hubris and a losing appeal will not make a felony conviction escape your rap-sheet and reputation for life. We must all learn humility, honesty, accountability and transparency today before we have a reputation in crisis like Martha.

Mike Paul is editor of The Reputation Doctor blog. The Reputation Doctor is a nickname given to him by various clients. Mike's blog is located at www.TheReputationDoctor.com. He appears regularly on Fox News Channel, CNN, MSNBC, Court TV, ABC News, ESPN, CBS News, BBC, and others as a weekly contributor and expert in the global news regarding leaders, celebrities, corporations and other organizations with reputations in crisis. Mr. Paul is also president and senior counselor of MGP & Associates PR (www.mgppr.com), a leading strategic public relations and reputation management firm based in New York. For interview requests, speeches or business opportunities with Mr. Paul, call 212-595-8500.

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Comments:

Comment from: Sarah Harrison (L.A.) [Visitor]

The mine story sure is a crisis. Good tips.

Jan 10, 2006, 7:09 pm

Comment from: Ingrid Parker [Visitor]

Great list. Martha just can't get it right can she? I've learned a lot about reputation management from your blog. I look forward to more.

Jan 10, 2006, 7:34 pm

Comment from: Mike Fitzgerald (Chicago) [Visitor]

Your comments on Karen Elliott House at the WSJ are right on point! As you say, "your reputation is everything!" Marvelous blog. I have sent many colleagues to the site to learn a few things. Thanks.

Jan 11, 2006, 10:09 am

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