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.
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