Temin and Co.


"Life is a storm... You will bask in the sunlight one moment, be shattered on the rocks the next. What makes you a man (or woman) is what you do when that storm comes.” — Alexandre Dumas

The Wall Street Journal's "Crisis of the Week"

Each week, The Wall Street Journal features a "Crisis of the Week." Temin and Company's CEO Davia Temin is one of the experts who is asked to comment regularly on those crises.

Following is a compilation of her comments since the feature's inception, starting with the most recent.

Crisis of the Week: Gynecologist’s Actions Bring Down USC’s President

Ben DiPietro, The Wall Street Journal's Risk & Compliance Journal, June 4, 2018

University of Southern California President C.L. Max Nikias agreed to step down late last month, just over a week after allegations were made public that a longtime gynecologist at the school's student-health center had sexually abused patients.

Mr. Nikias' decision came after a letter signed by 200 tenured USC professors called on him to resign. It followed a Los Angeles Times report detailing accusations that university gynecologist George Tyndall for decades conducted improper pelvic exams on female students and made inappropriate comments.

A May 25 statement from the university's executive committee of the Board of Trustees said the committee and Mr. Nikias "agreed to begin an orderly transition and commence the process of selecting a new president."

A May 21 statement from university Provost Michael Quick denied university leadership knew of the doctor's improper behavior, stating: "It is true that our system failed, but it is important that you know that this claim of a cover-up if patently false." Prior to that, the university issued statements about the matter from Mr. Nikias on May 18 and May 15, and statements from other university officials on May 15 and May 16. University administrators also are contacting students.

Three crisis-management experts evaluate the university's publicly released statements.

Davia Temin, president and chief executive, Temin and Co.: "USC's formal responses...ring curiously hollow. One of the worst aspects of some crisis responses being edited by lawyers is they can have a pulled-back, wordsmithed, bloodless quality, borne from fear of being quoted in future lawsuits. They appear to defend when they should apologize and make common cause with victims. So at the very moment USC needed to show itself to be trustworthy, honest and authentic and devastated, its statements made them appear otherwise.

"No crisis response needs to be more emotionally resonant, believable, and true than from a college or university. After all, the crisis almost always has something to do with young people, whose welfare the school is entrusted with protecting. I've written hundreds of such responses. The effort needed to show real humanity, corrective action, and trustworthiness, even when the facts are sketchy or ambiguous. USC's statements do not universally exhibit such effort.

"The only statement that really fit the bill is of USC's new board chairman, Rick Caruso, in his [May 25] announcement. That quote speaks compellingly of his personal outrage and commitment."

To read the full article, CLICK HERE.

Crisis of the Week: Harassment Claims Cost Wynn Resorts its Leader

Ben DiPietro, The Wall Street Journal's Risk & Compliance Journal, February 27, 2018

Steve Wynn resigned as chairman and chief executive of casino and hotel company Wynn Resorts Ltd. this month following an article in The Wall Street Journal which, drawing on interviews with dozens of people who have worked for Mr. Wynn, described behavior that amounted to a decadeslong pattern of alleged sexual misconduct by the CEO.

They included an allegation Mr. Wynn in 2005 paid a $7.5 million settlement to a manicurist who told people at the time that Mr. Wynn forced her to have sex with him.

Mr. Wynn told The Journal before his resignation: "The idea that I ever assaulted any woman is preposterous," blaming his ex-wife for "the instigation of these accusations."

The company issued a Feb. 6 press release announcing Mr. Wynn's resignation, calling him "an industry giant...[who] played a pivotal role in transforming Las Vegas into the entertainment destination it is today." Mr. Wynn said in the same release he's "been the focus of an avalanche of negative publicity" and "reached the conclusion I cannot continue to be effective in my current roles."

Wynn's board named Matt Maddox, the company's president, as its new CEO and initiated an outside investigation of Mr. Wynn's conduct but canceled it because Mr. Wynn resigned. It hired a different law firm to conduct the probe.

Three crisis-management experts analyze the responses of the company and Mr. Wynn.

Davia Temin, president and chief executive, Temin and Co.: "Wynn Resorts' and Steve Wynn's responses...are par for the course among organizations that choose to defend themselves and not admit wrongdoing publicly. The exact same statements could be made by guilty and innocent alike. This throws us back to a highly advanced game of 'he said, she said.'

"Mr. Wynn's personal responses were emotional and moving. It used to be emotional, high-valence comments were rare and could win the day. That no longer works; everyone has ratcheted up the emotionalism, until we are at a fever pitch. The problem is you can have dueling facts because, in these kinds of cases, the facts are rarely neat: They are muddy, embarrassing, nuanced, messy and open to widely varying interpretations. This is why companies often rely on outside investigations, which can carry an imprimatur of authority.

"Unfortunately, the board just fired one investigating law firm only to hire another. This smacks of expert-shopping and casts doubt on the earnestness of the board's efforts."

To read the full article, CLICK HERE.

Crisis of the Week: NBC News Faces Questions After Lauer Firing

Ben DiPietro, The Wall Street Journal's Risk & Compliance Journal, December 12, 2017

NBC News is in crisis after it fired longtime "Today" show anchor Matt Lauer after he was accused of sexual misconduct. The move came hours before the magazine Variety published a story detailing some of Mr. Lauer's alleged actions with female staffers. The day after the firing, two more women came forward to accuse Mr. Lauer, who apologized and said: "Some of what is being said about me is untrue or mischaracterized, but there is enough truth in these stories to make me feel embarrassed and ashamed."

NBC News President Andy Lack issued a statement on Nov. 29, saying the "detailed complaint" against Mr. Lauer was a "clear violation of our company's standards." He said the priority is to create a workplace environment where everyone feels safe, adding "any actions that run counter to our core values are met with consequences, no matter who the offender." At the time of the firing, the network said it didn't know of any complaints against Mr. Lauer during his time at NBC, only to later say no complaints had been made to "current management." Mr. Lack sent a memo to staff on Dec. 1, saying the company is reviewing Mr. Lauer's prior behavior and that it needs to "build a culture of greater transparency, openness and respect."

The experts break down how well NBC News handled this crisis from a communications standpoint.

Davia Temin, chief executive, Temin and Co.: "NBC's handling of the Matt Lauer affair is a fascinating example of the almost-triumph of alt-fact and spin. In the end, though, it turned out to be a serious breach of public trust. At first blush, when Andy Lack announced the firing, from his comments it appeared NBC was really doing the right thing: getting ahead of the issue, showing moral courage to jettison a money-maker the minute they had evidence he sexually harassed one or more women. The statement was noble and perfectly done.

"The only slightly disingenuous note was struck when he proclaimed this was 'the first complaint about his behavior in the over 20 years he's been at NBC News...' as there have been persistent rumors about Mr. Lauer's conduct. It seemed improbable this was the first time allegations had been made known to NBC management, despite their spokesperson's later assertion this was true, at least to current management.

"However, Mr. Lack's words and actions needed to be completely re-evaluated in light of the revelation Variety was about to publish that same Wednesday a damning report of Mr. Lauer's being accused of sexual harassment by multiple women. The Variety piece was the result of a two-month investigation NBC had known about—yet it only took action on the morning of the article's publication. In this light, all of the statements Mr. Lack made needed to be re-evaluated, and came out wanting. Then it was NBC that suffered reputational harm, not just Mr. Lauer. If NBC News can't face the truth about its own shop without fear or favor, how can we trust what it reports?"

To read the full article, CLICK HERE.

Crisis of the Week: Equifax Hit With Massive Reputation Breach

Ben DiPietro, The Wall Street Journal's Risk & Compliance Journal, September 19, 2017

The hack of personal information of around 143 million people has put credit-monitoring service Equifax Inc. in the crisis bullseye. Hackers swiped Social Security numbers, birth dates, addresses and driver's license numbers, leaving consumers trying to figure out their next moves—and unhappy with how Equifax was handling the situation. The breach is under investigation by the Federal Bureau of Investigation, Federal Trade Commission and several states.

Equifax issued a statement on Sept. 7 notifying the public about the breach—weeks after it said it first learned of the incursion. It issued 'updates' on Sept. 8, Sept. 11, Sept. 13, Sept. 14 and Sept. 15, the last one announcing the retirements of its chief information officer and chief security officer. Bloomberg reported three executives sold stock days after the company learned of the breach but NPR reported Equifax said in a statement not posted on its website the executives "had no knowledge that an intrusion had occurred at the time they sold their shares." The company's chief executive, Robert F. Smith, said the incident is "the most humbling moment in our 118-year history" and promised changes.

The experts evaluate how well Equifax has handled its crisis communications.

Davia Temin, chief executive, Temin and Co.: "Just terrible. Equifax's public response to its breach affecting 143 million Americans remains one of the worst yet, serving only to exacerbate the crisis–and the company took over a month to plan it. It made pretty much every crisis communications gaffe in the book, systematically destroying public trust with every move.

"Equifax completely and purposefully understated the problem. 'This is clearly a disappointing event for our company...' the CEO said. Disappointed? Really? What about devastated? What about disconsolate? What about abjectly sorry? Second, it included its marketing brand message in its announcement: 'We pride ourselves on being a leader in managing and protecting data.' This set up an internal comparison between what it promises in its marketing and what just happened. 'Proud?' It should be ashamed. This simply served to magnify its fail–and the company's complete cluelessness as to what it was about to unleash.

"The utter stupidity of Equifax appearing to pull a fast one on the American public by tying its acceptance of an offer for a year of free credit monitoring to the waiving of one's right to a trial and mandating the use of arbitration is stunning. Only after a huge public outcry and the involvement of New York's and other state's attorneys general getting involved did it amend the offer to include a 'write-us-within-30-days-to-opt-out' clause. No matter what its 'clarification' noted, it was far too little, too late. What could have been a one-day killer of an announcement...has turned into a category 5 debacle for Equifax."

To read the full article, CLICK HERE.

Crisis of the Week: Fujifilm Addresses Accounting Problems

Ben DiPietro, The Wall Street Journal's Risk & Compliance Journal, June 19, 2017

We head to Asia for this week's crisis, where Fujifilm Holdings announced losses from accounting irregularities in New Zealand were much larger than first thought and extended to the company's Australian office-equipment unit. The announcement left some to wonder how much control the company has over its overseas units.

The company said it conducted a review and found the losses would widen further but did say it found "a problem" with controls at its Fuji Xerox subsidiary. Fujifilm said inappropriate accounting occurred in part because of commission and bonus "incentives" for managers and employees that "placed an emphasis on sales." It said six board members at Fuji Xerox would resign to take responsibility for the losses that now total around $340 million. It also docked the pay of all Fuji Xerox board members and two other senior executives.

Using Fujifilm's statements and those of its executives, the experts break down the company's crisis management performance in this instance.

Davia Temin, chief executive, Temin and Co.: "Fujifilm's public response to its 'inappropriate accounting' crisis was enough to be effective as witnessed by the fact the story lasted no more than a few days in the global news cycle. While the company's public responses were terse, minimal and occasionally odd, they were unprecedented in their openness and disclosure. They came from President and Chief Operating Officer Kenji Sukeno, who accepted responsibility and announced sweeping changes in governance and operations of the company. The company released details of an independent review of the accounting debacle. All the findings and remedies appear to have been announced at the same time, with no more shoes to drop. The company spoke with its actions, with six board directors and more executives being held accountable and leaving or being sanctioned.

"Cross-cultural crisis communications are always difficult, especially between Asia and the U.S., as standards of public disclosure, responsibility, apology and reparation are very different. But they are also beginning to converge. In this most recent Fujifilm crisis, the company walked the line carefully and understatedly but spoke openly of the need for it to regain public trust. It also, in a rare display of public self-reflection and responsibility, at a news conference proffered a reason for its mistakes: 'We showed too much respect for Fuji Xerox because it contributed to profits when Fujifilm was reforming itself after its film business peaked in 2000. We didn't nag at Fuji Xerox very much, and that is something we now regret.' I've never heard of 'not nagging enough' being offered as a reason for governance failures but the meaning is clear.

"In evaluating such a crisis response it is important to judge it not solely by U.S. and Western standards, or by Japanese standards, but by how the company fused the two in its communications. In this case, the company created a hybrid response that got the job done without catapulting it to major coverage. And that must be considered a major win."

To read the full article, CLICK HERE.

Crisis of the Week: Hacked Twitter Account Gives McDonald’s Indigestion

Ben DiPietro, The Wall Street Journal's Risk & Compliance Journal, March 27, 2017

The crisis magnifying lens puts it focus on McDonald's Corp. after a message was sent on the company's Twitter account calling President Donald Trump "a disgusting excuse of a President" and trolling him by saying he has "tiny hands." The White House did not comment, but some supporters of the president called for a boycott of the burger chain.

McDonald's said it was notified by Twitter that its account was hacked. McDonald's deleted the tweet, secured its account and said an internal investigation found the account had been hacked by "an external source." The company put out a statement apologizing that "this tweet was sent through our corporate McDonald's account."

The experts evaluate how well McDonald's handled this crisis.

Davia Temin, chief executive, Temin and Co.: "The fake tweet sent from McDonalds' Twitter account on March 16 that disparaged President Donald Trump catapulted the company into the land of alt-tweetdom. Today, as companies and individuals alike struggle to delineate truth from fiction in public discourse, McDonalds had an immediate imperative to let the public know it had not officially sent the insulting tweet. It had to act quickly to set the record straight, before it even knew what really had happened. It couldn't let a lie stand.

"It did an excellent job. I usually say you have 15 minutes to respond to a crisis these days. McDonald's took the tweet down within 20 minutes, issued an apology that was just right, announced it had 'secured its account' and was investigating what happened. It followed up by saying Twitter had informed it to say its account had been compromised. It was a perfectly done, two-step response. Immediately the company acknowledged the problem and acted, promising an investigation. It followed up, as promised, with results saying its site was hacked. Not too much, not too little.

"Plus, it rightly knew it couldn't control the Twitter responses from the public, which ran the gamut from jokes and hilarity to a threatened boycott. So, it didn't even try, though [it's likely] the company monitored it closely and was prepared to act if needed. But it was an essentially small matter and McDonald's let it play itself out within a day or two, with no further comment; it didn't let itself get 'twitterpated.' Had it continued to talk about it, it would have kept the issue alive even longer. McDonald's deserves a break today on this one: its communications team gets an A-plus."

To read the full article, CLICK HERE.

Crisis of the Week: Qualcomm Chips Away at South Korea Probe

Ben DiPietro, The Wall Street Journal's Risk & Compliance Journal, January 9, 2017

Chip maker Qualcomm Inc. takes crisis center stage this week after a regulator in South Korea said it would fine the company $853 million for alleged antitrust violations related to its patent-licensing business.

Qualcomm denounced the decision by the Korea Fair Trade Commission, calling it "inconsistent with the facts and the law" and vowing to appeal. "For decades, Qualcomm has worked hand in hand with Korean companies to foster the growth of the wireless Internet," the company said in a statement. "Qualcomm's technology and its business model have helped those companies grow into global leaders in the wireless industry. This decision ignores that win-win relationship."

The experts evaluate how well the company is handling this crisis.

Davia Temin, chief executive, Temin and Co.: "Qualcomm's press release response to the ruling of the Korea Fair Trade Commission threaded the needle very well. It is cogent, nuanced, well-stated and argued, and persuasive without being overly aggressive or over-wrought. The communication had a number of goals: to respond to the markets and investment community, to put Korea on public notice that it will appeal and begin to frame the elements of that appeal while trying to not antagonize the Korean government or the court, since Qualcomm is relying on the court's favorable hearing of the appeal.

"Qualcomm is facing a severe threat to its business model worldwide with this ruling, and in answering it appears to be setting its defensive arguments for many countries to come. Given the importance of a nuanced response, Qualcomm could not offer up a marketing or PR-like overstatement; it needed a clear but lawyerly response, delivered by its general counsel–and that is exactly what it provided. The right person is quoted, and Don Rosenberg's pull-out quote is effective.

"Will it win the day? Yet to tell, but the response is thoughtful, strategic and understatedly persuasive. [The company has not] answered questions from the media...but it will have to answer questions from analysts on its next earnings call, and the media will be listening in, so they will need to be consistent and additive as this story unfolds.

To read the full article, CLICK HERE.

Crisis of the Week: Tyson Finds Itself in Game of Reputation Chicken

Ben DiPietro, The Wall Street Journal's Risk & Compliance Journal, October 19, 2016

Food processor Tyson Foods Inc. takes crisis center stage after being accused of rigging poultry prices. Lawsuits filed against Tyson allege the company and other producers engaged in fixing prices for its poultry products, prompting one analyst to issue a report suggesting the issue could become a big problem for Tyson—news that sent the company's stock price lower. Other reports struck a different tone about the company, and the stock rebounded the next week.

Tyson sent out a statement in which it vowed to defend itself against the allegations, saying: "While we don't normally make substantive comments regarding pending litigation, we dispute the allegations in the complaints as well as the speculative conclusions reached by the analyst, and we will defend ourselves in court."

Using the company's statement, the experts break down its response, how well it communicated its message, and what it should do next?

Davia Temin, president and CEO, Temin and Co.: "Tyson Foods felt it had to respond when an industry analyst advising hedge funds issued a report that sent the company's share price into a dive. And probably, to its lawyers, it did seem like a spirited and substantive response–but not really. In reality it was a three-sentence statement that said almost nothing."

"Terse corporate responses to lawsuits have turned into an art form. Less is almost always more. Usually words like 'frivolous,' 'we intend to defend ourselves vigorously' and 'without merit' are invoked. But old hands in this game can learn a lot by what is said and what isn't. For example, Tyson did not say the lawsuit was without merit...only that it 'dispute(s) the allegations.' Without merit means it's totally untrue. Saying we dispute allegations doesn't quite mean it that strongly, it's one step less severe and means we will dispute some of the allegations but possibly not all of them–which could mean there might be some elements that are true. In reality the company made a denial that isn't completely a denial–which only raises more questions. This breaks crisis rule No. 1.

"Moreover, in repeating the allegation in its denial, it broke crisis rule No. 2: Never repeat the allegation, otherwise, the denial only serves to convince folks the allegation is true. What should Tyson Foods do, then, as the issue is clearly not dying down as quickly as it might like? Ideally, it should come back with an even stronger statement that is a little less expected–one is often far more believable when one's denial is unique and authentic. Or, its lawyers could craft a persuasive legal response and then quote parts of it in the company's public response.

"Or, if neither of those two strategies is practicable, Tyson should–like its fellow defendants–hunker down, say nothing further, fight in court or settle and soldier through it. After all, the business is not going away, it has experienced challenges like this before and the public still likes its chicken."

To read the full article, CLICK HERE.

Crisis of the Week: Delta Grounded After Computer Crash

Ben DiPietro, The Wall Street Journal's Risk & Compliance Journal, August 22, 2016

Delta Air Lines finds itself in the crisis spotlight following a power failure that led to a crash of its computer network that prompted the cancellation of more than 1,000 flights on the first day alone, with around 1,000 more flights canceled on the second and third days of the event.

The company's chief executive, Ed Bastian, apologized in a video statement and took full responsibility for the system meltdown, saying in a second video statement the snafu was a one-time event started by a power outage and a small fire. "We realize we've let our customers down," said Mr. Bastian. The company provided updates, offered travelers $200 vouchers, waived flight-change fees and put hundreds of fliers up in hotels.

Using the statements made by the airline and the comments of Mr. Bastian, the experts evaluate how well Delta handled this crisis.

Davia Temin, chief executive, Temin and Co.: "Delta did not improve its reputation for trustworthiness with its early statements about its recent computer system crash causing thousands of cancelled flights. First, it said it had experienced a power outage but that was rebutted by local power authorities. Then it said there was a fire, but that small fire seemed not to be the full reason for such a broad-scale failure. Delta appeared to be more worried about minimizing its damage first, only [later] acknowledging the full severity of the situation–during which time social media was ablaze with customer rage and protest.

"Had Chief Executive Ed Bastian's second video of explanation and apology–issued two days later–been his first, Delta would have been better off. That apology felt somewhat sincere. His earlier one seemed forced, badly edited and still in denial. Yet, even his later statement–'This isn't who we are'–immediately rang false because furious flyers saw this was exactly who Delta had just been.

"We all know a company in crisis can't find out all the details immediately, but in this kind of predictable crisis, Delta should have been far more prepared to apologize immediately, communicate what it did know incessantly, over-compensate those disadvantaged from the outset and take full responsibility in a non-trite way–no 'The buck stops here' nonsense.

"It needed to stay in the pain longer and explain what it was going to change so it wouldn't happen again. And it needed to do this in a way that the public would believe them. Delta was far too eager to control the damage of this failure before, during and after it transpired–and in so doing may have exacerbated it."

To read the full article, CLICK HERE.

Crisis of the Week: Signet Confronts Diamond Debacle

Ben DiPietro, The Wall Street Journal's Risk & Compliance Journal, June 13, 2016

The crisis this week involves Signet Jewelers, which is battling allegations employees substituted premium diamonds with cheaper, man-made substitutes. The company's stock price declined following the reports.

Signet—which owns national jewelry-store brands Jared, Kay Jewelers and Zales—issued a statement strongly refuting the allegations. "Signet Jewelers' entire team culture is directed toward ensuring that we earn and maintain customer trust," the company said. "Incidents of misconduct, which are exceedingly rare, are dealt with swiftly and appropriately."

Using only the statement issued by the company, the experts break down the effectiveness of its communications, highlighting what's good about its messaging and tone and delivery, and what's not so good. How should the company proceed?

Davia Temin, chief executive, Temin and Co.: "Disparagement of a company's reputation these days can come from all sides, including Wall Street and social media. Signet has just experienced incoming on both fronts, with Wall Street's questioning of its credit business far more worrisome, as it appears to have some validity and can affect share price valuation immediately, necessitating real business-model changes. It is very difficult to respond publicly to such a situation, as it is changing rapidly, and one can never make assertions that might need to be taken back later, as more information comes to light. Signet has done what it can, so far, although a more fulsome statement will have to be forthcoming at some point.

"As to attacks on social media regarding gem swapping, Signet has done many things quite right in its response, but it just did not go far enough and was not quite as earnest as it could have been in my opinion. The statement it issued was comprehensive, specific and acknowledged what consumers are looking for when buying a diamond. Wisely, it did not mention the specific allegations against it until the second paragraph. I might not have mentioned them at all. Moreover, I would not have relied on trite phrases that, when used, serve to fuel disbelief because they are so trite, such as 'take seriously,' 'earn trust,' etc.

"Trust is a hard thing to claim you have earned: You earn it or you don't. Signet says rightly it 'seeks' to earn trust, which speaks to its intent, and that is good. But what it does not do is speak to the specifics of whether there is any merit in the reports of its detractors, and what it has done about it. It needs that one element added to its proclamations of good intent to be really believable, and not to be viewed as press release double-speak.

To read the full article, CLICK HERE.

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