How ‘Salarygate’ poisoned reputations: Part 2

Former State Enterprises and Parastatals Minister Gorden Moyo

A crisis can happen to any organisation at any time and it can shatter a reputation that has been painstakingly built over years.

It is the preparedness that makes all the difference. Experts suggest that strategy should address reputation weaknesses through evolution not revolution.

Last week we examined how the crisis known as “Salarygate” in Zimbabwe negatively affected organisations whose CEOs were named and shamed in corporate scandals that had to do with what the media exposed as outrageous salaries paid to the same.

The chief executive officers (CEOs) of State enterprises such as the Zimbabwe Broadcasting Corporation, the Premier Service Medical Aid Society and a host of other organisations were among those implicated.

They were then suspended to make way for investigations to create a secondary crisis. The third crisis was the paralysis of the boards in the absence of the suspended CEOs in acting to try and cushion their organisations from the negative effects of the scandals.

The apparent indecision by the boards and management and their propensity to lie low and wait for the next government ministerial statement on what to do next made things worse.

In the absence of an approved crisis management strategy, the worst that any organisation is tempted to do in such a situation is to maintain a vow of silence. This is enforced as a gag order issued under executive duress and usually going against the wise counsel of public relations experts.

Organisations under siege may think that this is the safest thing to do. It’s based on the assumption that silence will keep them below the media radar. This is in the hope that this would buy them time and hopefully all the undue attention will eventually go away.

Unfortunately, it’s the opposite that usually prevails as stories stocked by unofficial sources rage in the media and the organisation’s name continues to be dragged in the mud, popping up in the headlines for all the wrong reasons.

There is the urgent need for the affected organisation to act promptly, decisively and truthfully to salvage its image and reputation. No matter what the crisis is, whether political or non-political, the organisation has to tell its side of the story.

In a situation where the CEO has been taken out of the picture through suspension as in this case, the next person in the line of authority or the board are expected to take over the reins. The counsel of the public relations expert becomes critical at this point.

The board or the second in command should assume the lead in rescuing and managing reputation in the absence of the CEO. The reason being that the organisation and its employees remain and continue operating long after the CEO, and indeed, the crisis are long gone.

Leaders should employ all the resources at their disposal to tackle crises or manage issues that can shatter their reputations for a long time to come. The nature of the new digital news order with its 24-hour news cycle demand that CEOs and their organisations shift from being reactive to proactive.

The conventional wisdom on how parastatals operate is that they are under the oversight of government, it being the sole shareholder.

However, the same government oversight has been seen to have been eroded over time allowing the elements that led to salarygate to manifest.

Former Minister of State Enterprises and Parastals, Gorden Moyo, stated that the temptation to personalise State assets becomes very great when accountability is eroded by political patronage.

“They are about the economy of the party, jobs for the party, funding for the party and resources for the party,” Moyo lamented on the state of parastals in Zimbabwe.

Parastatals or state enterprises are still accountable to all their stakeholders besides government.

And these stakeholders hold certain perceptions about the organisation based on actions, words and behaviour. Hiding behind the coat tails of government has only made things worse.

The organisations’ leadership may not be sensitive enough to the perceptions that are out there. It might also seem too much to demand that management grow their organisations into enterprises whose values represent those sought by their stakeholders. These are expectations that are common in the civilised world.

Enterprises need to communicate messages founded on truth and fact. Messages that must be measured by their ability to change or enhance perceptions held by stakeholders towards the enterprise and their brand.

Perception is reality to stakeholders until they are convinced to believe otherwise.

The salarygate saga exposed the leadership of affected State enterprises as ill-prepared to handle crises.

Lenox Mhlanga is a communications and media consultant as well as an accredited trainer. He can be contacted at lenoxmhlanga@gmail.com

Also read:

http://nehandaradio.com/2014/02/23/mugabe-lacks-guts-deal-salarygate/

How ‘Salarygate’ poisoned reputations Part One

WHEN the news of what is now known as “salarygate” broke out in the Zimbabwean media, there was shock and outrage right across all levels of society.

Yet what seemed to escape the attention of many was the untold damage the revelations were doing to the reputations of the organisations headed by the chief executives accused of alleged impropriety.

The scandals had to do with allegations of chief executive officers (CEOs) of parastatals and State enterprises being awarded “outrageous” salaries and perks against a background of negative balance sheets, dysfunctional service delivery and employees going without pay for months on end.

Without doubt, “salarygate” has been the most catastrophic crisis to negatively impact on the reputation of statutory bodies since independence in 1980.

Fed by social media networks, the 24-hour news cycle and wide mobile phone coverage, the media frenzy raged like a veld fire showing how it is becoming increasingly difficult to manage people’s perceptions about organisations and their performance.

Granted that the majority of these organisations are State enterprises, it did not surprise anyone that the scandals hogged the limelight receiving front page treatment, and that the “culprits” deserved whatever was coming to them.

From a public relations point of view, most of the affected public corporations have failed the basic test of crisis management.

This is by maintaining a vow of silence or simply going underground in the face of intense media scrutiny hoping that it would eventually go away.

Not while the media are stocking the fire.

A media consultant has put it this way: “You can’t hide your face when your bare behind is exposed for all to see.”

He was referring to the classic ostrich “head in the sand” defensive poise.

“The fundamental mistake that these organisations were making was in hoping that the scrutiny would go away if they remained below the radar,” he said.

Some organisations fail to appreciate that how they behave, act and respond to the crisis at hand as individual entities impacts on their reputations. Any moves to hide from scrutiny translates into culpability in the perceptions of many.

There is no safety in numbers in such cases. Ultimately, the kind of behaviour that matters is how each entity manages the crisis.

This actually matters more than the crisis itself.

Corporate reputation provides the most credible assurance to consumers that their products or services are desirable and safe. And yet a reputation that has been built over years can be destroyed in one fell swoop in a crisis.

According to Balmeri, reputation is the enduring perception held of an organisation by an individual, group or network that forms a collective system of beliefs and opinions that influence people’s actions with regards an organisation.

Corporate reputation is arguably the most valuable asset entrusted by the shareholders and board to the CEO and the management team. It is thus worth protecting.

According to reputation expert Charles Fombrum, building a good reputation relies on reliability, responsibility, credibility and trustworthiness that contribute to creating a good culture.

From an operational perspective, the CEO as head is the face of the organisation. If he is found guilty of any misdemeanour, it goes without saying that this is bound to negatively affect its image and reputation. This depends on how visible he is.

Martha Stewart was the identity, heart and soul of her organisation. When she was convicted of insider trading in 2008, the share index of Martha Stewart Inc. took a severe knock.

That was until the organisation forced a Caesarian section that effectively separated the battered image of the embattled CEO and that of her company.

The public’s perception of the whole organisation, along with that of other stakeholders, is affected by the blunders or the impropriety of its CEO.
The entire image of the organisation rests with the CEO and the way he represents it to stakeholders through the media.
Conversely, the way the media portrays the CEO has a positive or negative impact on his organisation’s reputation.
In an ideal situation, the CEO and his organisation should be well equipped and trained to tackle any crisis — particularly one that is generated by the media.
However, in the case of Salarygate, we had, and still have, what strategic planners call a worst case scenario, a situation where a crisis evolved out of another crisis.
Next week we examine what these crises were and how the leadership of the affected
organisations could have handled them.
A crisis can happen to any organisation at any time and it can shatter a reputation that has been built over time. It is the preparedness that makes all the difference. Experts suggest that strategy should address reputation weaknesses through evolution not revolution.

Lenox Mhlanga is a commmunications and media consultant.    lenoxmhlanga@gmail.com

Also read:     http://nehandaradio.com/2014/02/23/mugabe-lacks-guts-deal-salarygate/