ANALYSIS <b>Crisis Communications</b>: Industry rumors challenge even the savvy PR veteran

Addressing industry gossip head-on can be a risky proposition, but there are far better ways to handle conjecture than the dreaded 'no comment.'

Addressing industry gossip head-on can be a risky proposition, but there are far better ways to handle conjecture than the dreaded 'no comment.'

A rock and a hard place. What PR person hasn't been caught in that clichéd netherworld at one time or another? Companies often find themselves in situations where they want to comment but can't - or don't want to comment - as a matter of policy, but face greater problems if they keep quiet. Indeed, a PR person's true mettle is sometimes tested not necessarily by what they say, but when they say it. For example, the day before the IPO of Salesforce.com, rival Siebel Systems sent out an e-mail pointing out potential problems with the CRM firm. While Siebel denied it used the e-mail to take advantage of Salesforce.com not being able comment because of an SEC-mandated quiet period, a Business 2.0 writer still drew that conclusion on his blog. "Salesforce.com's delayed IPO is expected for tomorrow," wrote Brian Caulfield in his blog. "Lucky for us, Siebel's PR shop is happy to point out their upstart rival's supposed problems." Caulfield reprinted part of the e-mail from Siebel, which quoted negative comments from an analyst such as "Functionality too limited." Siebel added: "Assessments like these call into question whether Salesforce.com's stock or products are a solid long-term buy." Caulfield noted: "Of course, Siebel's PR agency, knowing that Salesforce.com wouldn't comment because it's in an SEC-mandated 'quiet period,' neglected to mention that the same analyst feels that Salesforce.com's 'immediate future is very bright.'" (Steve Diamond, Siebel senior director of PR, said the e-mail's content was a joint effort of the in-house team and its agency, OnPR. The agency sent out the e-mail.) Ironically, the outspokenness of Salesforce.com chairman and CEO Marc Benioff got the company's IPO postponed when the SEC said it violated the quiet period (PRWeek, June 14, 2004). The power of rumor A more common incident is when companies face rumors, something they go through several times a week, if not each day. In June, McAfee Security took the unusual step of denying a rumor that Microsoft was buying the security tech firm. Companies rarely, if ever, comment on rumors. But with McAfee CEO George Samenuk, speaking at the Wachovia Securities 14th annual Nantucket Conference to address potential investors, he felt it was disingenuous not to quash gossip that the company was for sale. "If there's a rumor out there, sometimes it's best to let it die on the vine," says Ronald Hanser, president of Hanser & Associates, West Des Moines, IA. "Don't work from the gut. See if the rumor is getting traction. Are customers or investors concerned? Are you getting calls? Don't panic into saying something. It takes a wise person to sometimes do nothing." But looking at the other side of the coin, Mike Paul, president of MGP & Associates in New York, argues that perception is king. If stakeholders think you have done something based on a rumor, then you have to respond to that. "You can't have employees coming into the office and hearing these rumors without responding in some way," Paul argues. "Most companies will tell you they have a policy not to comment, and they still comment," adds Michael Robinson, a VP with Levick Strategic Communications in Washington, DC. "That disconnect is not a surprise. Companies are by and large facile. It's important for them to make sure the information in the marketplace is timely and accurate. You owe that to your shareholders, employees, customers, and any and all constituents. If you don't respond, it can create tremendous angst." Paul understands companies' apprehension to respond to a rumor, knowing that it sets a precedent and that the media will expect an answer to every rumor. That could leave a company responding to rumors around the clock, especially as rivals throw out nugget after nugget. "There is a learning curve," says Paul. "You don't want your client to get burned, but you have to be quick. You don't have time to wait." Paul pointed to the scandal-ridden University of Washington. Scandals involving sex, gambling, and swindling the government have plagued the university for nearly two years. In a recent story in the Seattle Post-Intelligencer about the scandals, Paul urged the new university president to address each scandal quickly, publicly, and aggressively. "If you're not going to say anything, you better be really sure," says Paul. "Because if your have the truth, and you're comfortable with the truth, why not share it?" Avoiding the 'no comment' What if you want to say something, but can't because of a gag order or other legal restraint? Susan Tellem, president and CEO of Tellem Worldwide, Los Angeles, finds herself asking that very question every day. As the media contact for the district attorney in the Michael Jackson child-molestation lawsuit, Tellem Worldwide finds itself bombarded with media calls, but not able to say much. "The media call here every time there's a rumor," Tellem says. "And that's why there's often a gag order. Rumors that are flying hot and heavy often come from leaks in the case. So while I never say 'no comment,' you can provide character witnesses, people who haven't been subpoenaed. Because if you don't comment, the press will just hound you. A rumor can be damaging if it grows because no one deals with it." Paul agrees that having others prepared to speak on your behalf can help take pressure off a company that can't or won't comment. Having third parties who are not bound by such restrictions - such as customers, vendors, or partners - speak favorably on the behalf of a company that has to be quiet is one way of getting around not being able to comment, says Paul. If you can't comment, make sure the media and others clearly understand why you aren't commenting, whether it's a gag order, an SEC quiet period, or medical privacy laws, says Paula Lovell, president of Lovell Communications in Nashville. She advises her clients not to talk, because commenting on some issues but not others can hurt a client's credibility. "Obviously the quiet-period rule is set forth so everyone can have a level playing field," explains Hulus Alpay, SVP and head of the IR practice at Makovsky & Company in New York. "Private companies [that plan to go public] should establish some track record of working with the external world. Before going public, companies need to spend time showing how transparent they are." Companies should anticipate anything that could come its way, Alpay explains. A company that is going public should act like one that is already public and know how to deal with situations where silence is golden, such as before earnings announcements. That means having others ready to speak for you - whether it's analysts or customers - when you can't speak for yourself. If a company does decide to respond, that decision should not be made in a vacuum, advises Tim O'Brien, principal of O'Brien Communications in Pittsburgh. Executives should be part of the process, so that whatever is said is in sync with the actions of the company and its leaders. And make sure whatever is said also has the legal team's stamp of approval. Saying "no comment" is tantamount to saying "guilty as charged," adds Levick's Robinson. "No comment is the easy way out. There is almost always a way to comment beyond 'no comment.' To do any less is not to do your job."

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