Look at Kerry Washington as crisis management expert Olivia PopeScandal, then you know that a PR crisis can be a messy affair for a company. One misstep can quickly turn into a PR disaster that wreaks havoc on a brand's reputation. An example of business communication failures can be found in any industry, but following internal communication best practices can help your organization avoid them.
Learn how the right software can help your organization avoid common business communication pitfalls.
What are business communication errors?
When an organization's internal stakeholders are aligned with its mission and have a clear understanding of goals and strategy, positive business outcomes result.
Successfulcorporate communicationsdepends on several key factors:
- Transparent communication
- Authentic leadership
- Involving all employees in communications for a bottom-up leadership style
- Silo-free platforms for seamless information exchange and workflows
The two must-haves of effective crisis management are athe planand aTeam. But even the best plans can fail. Business communication failures can occur in any organization that deviate from internal communication best practices.
The results can only cause a small disruption in operation, but sometimes they can have more serious effects, such as:
- Disrupted workflows
- Negatively impacted brand reputation
- Shut down value proposition
Whether it's a product recall, a data breach, or a viral customer interaction (think of the infamous video of a man being dragged off a United flight for overbooking the plane), businesses large and small are equally susceptible to controversy communication crisis. As Warren Buffett said, "It takes twenty years to build a reputation and five minutes to ruin it."
Here are five examples of business communications gone wrong and how the companies involved responded.
1) Nike: failure of business communication at the top
Ever since 1971, when the Swoosh logo was officially unveiled, Nike has been one of the biggest names in the sneaker world. With endorsement deals from some of the most famous names in sport, Nike consolidated its position as a leader in the footwear industry and reported annual profits of$36 billion.
But despite its place as one of the most profitable apparel brands in the world, Nike has had some PR crises that required a major fix.
In 2018, female employees spoke out about the male-dominated culture that encouraged harassment and discrimination in the workplace. It began with an anonymous survey of a group of women at the company's headquarters in Beaverton, Oregon, about their experiences. The troubling results were shared with CEO Mark Parker.
Some examples of internal communication issues gone wrong here are:
- It took a rogue survey of a group of employees to uncover this toxic culture
- Lack of trust in HR
- A leader who says he wasn't aware of the problems
- Inefficient methods of bottom-up communication
Nike took dramatic steps to address these issues by laying off C-suite executives, including the head of diversity and inclusion, introducing mandatory management training, a commitment to a more inclusive culture, and an overhaul of their HR procedures and internal reporting processes.
Pro tip: Be proactive and get ahead of the narrative with authentic, transparent communication.
2) Wells Fargo: Learn to take responsibility
In any business, it's always good to be agile and ready to focus on onecrisis communication planwhen the time comes. When it happened to Wells Fargo, the second largest bank in the United States, they only seemed to dig themselves into a deeper hole that made it harder to bounce back.
It started in 2016 when authorities like the Consumer Financial Protection Bureau were alerted to potential fraud. In response to a top-down request for aggressive customer quotas, employees at local branches created more than two million fake bank accounts on behalf of customers, but without their consent. The bank was fined $185 million.
Wells Fargo's leadership reaction could be as damaging to the banks' image as the initial scandal.
- The company's early public statements declined to accept responsibility, nor did they offer apologies. Instead, they downplayed the scam. An apology only came from the CEO when he had to testify before the US Senate Banking Committee.
- The leadership blamed 5,300 low-level employees and then fired them.
- The CEO sold $61 million of his Wells Fargo stock a month before the investigation began.
How do you deal with such a situation? An immediate, proactive response.
- Thoughtful, authentic, direct communication with both internal stakeholders to restore trust and establish an open culture
- Apologies to the public for what happened
- take responsibility
- Take high-profile action changing policies and procedures to ensure this never happens again
Wells Fargo is still in business, but its reputation remains tarnished.
3) Starbucks: Align every employee with core values
In April 2018, two men went to a Starbucks in Philadelphia to meet a friend. They sat at a table, waited for orders and asked to use the restroom. The result? The manager on duty called the police and the two African American men were arrested - wrongly - for trespassing.
Video of the arrest went viral and the next day #boycottStarbucks was trending on social media. What might have started as a store manager trying to follow company policy turned into a racially biased encounter that even the Starbucks CEO described as a "reprehensible result."
This CEO, Kevin Johnson, immediately released aopinionthis included a direct apology to the two men. He said to employees and customers: “You can and should expect more from us. We will learn from this and get better.”
He also outlined a list of internal actions the company would take. A month later, Starbucks closed 8,000 stores to train 175,000 employees on racial prejudice and make every customer feel like they belonged.
- Align the entire organization with the company's core values and mission.
- Solicit bottom-up feedback from partners on how they think the company has performed.
- Adopt best practices and review policies that create a culture of inclusion and equality.
Starbucks, recognizing major failures in their internal communications procedures and how their "practices and training led to a poor outcome," conducted an internal investigation into their policies. It was widely seen as a transparent, authentic answer.
Pro tip: Don't pay lip service to your employees and customers. Learn from your mistakes and take action to revise your policies.
4) Yahoo: A deafening silence amplifies a crisis
In September 2016, Yahoo's leadership admitted to a 2014 data breach that exposed 500 million users' accounts to hackers. Then, three months later, in December, the company announced that there was another breach from 2013 that affected one billion accounts. Almost a year later, in October 2017, Yahoo announced that the data breach was indeed affecting everyone3 billionhis customers.
Failure of Yahoo's business communications? Don't communicate. Turns out, company insiders actually knew about the breach when it happened years earlier but were keeping it under wraps.
Not only was this extremely poor business communication, it was poor risk management. Running a business means running the gauntlet of risks. Businesses must have a risk management framework in place to prepare for any number of threats. data breaches happenevery 39 seconds. They're a risk a tech company like Yahoo was aware of and should have been prepared for.
an internalinvestigation has shown that"Failures in communication, administration, investigation and internal reporting all contributed to the failure to properly understand and address the 2014 security incident." By not addressing a crisis with internal stakeholders and customers, companies with communication problems face:
- depreciation:In this case, Yahoo was in the process of selling part of their business to Verizon, who scooped $350 million off the asking price because of this mistake.
- Damaged Brand Reputation:People are less willing to trust a company that not only mishandles their personal information, but also doesn't tell them their names, phone numbers, and passwords have been stolen. For many alternative search engines and email providers, Yahoo's failure to communicate most likely resulted in a loss of users.
- Loss of employee trust:Trust is an important element that ensures high employee trust and commitment. A moment like this makes employees question the cultures and values of the organization they work for.
5) IHOP: A communication error turns into a feeding frenzy
Not every failure in business communication becomes a scandal. Sometimes they become great PR opportunities.
When IHOP announced it was changing its name to IHOB, the social media stunt of incorporating its new menu item (burgers) became an unlikely crisis. His loyal customers were thrown into a frenzy, upset that their favorite pancake spot was changing.
IHOP took the communication error and ran with it, addressing the ensuing chaos with humor. Which would have put the company in the spotlight for the first time in decades, attracting new customers andquadrupledburger sale? IHOP handled the communication and flipped the narrative, made it fun and most importantly reassured customers it was still the same brand they had come to love.
Failures in business communication can lead to a serious PR crisis for any company. But the right business communications can also save a company's reputation without having to call Olivia Pope.
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The most frequently asked questions
How do misunderstandings arise in the office?
Miscommunication occurs when communication is not effective. This is when the intent of a transmitted message is misunderstood.
What are some examples of misunderstandings?
This blog post covers examples of miscommunication from Nike, Wells Fargo, Starbucks, Yahoo, and IHOP.