Reputation Mismanagement, PR Style

April 10, 2008

One of the great frustrations for any profession is to be defined in the public’s collective mind by the unethical or scandalous antics of a handful of individuals whose behaviors or values don’t mirror the majority of those in their industry. Just ask any reputable lawyer, car salesman, mechanic, or real estate agent.

Or ask someone in private equity. That sector is most often associated with the likes of Blackstone’s Stephen Schwarzman, who has reaped billions of dollars by buying healthy companies, crippling them with debt and massive layoffs, and then selling them at a huge profit. Although there are countless private equity firms who have contributed mightily to the economy and the public good, the average Joe or Jane steadfastly identifies the industry with greedy individuals who pillage companies and feast on $40 crab claws.

The PR profession certainly isn’t immune to public misperceptions either, which is more than a tad ironic. Indeed, we are the proverbial shoemaker’s children when it comes to our own reputation management. Our public credibility gap has, sadly, only widened lately thanks to the headline-generating missteps, blunders, and ethical breaches of some high-profile practitioners. While these individuals may occupy corner offices, I am loathe to use the term “industry leader” to describe any of them for they have shown via their actions, words, or values that they do not represent the trail-blazing people in the PR industry who truly deserve professional respect and admiration.

Mark Penn, the CEO of Burson-Marsteller, is the industry’s embarrassment du jour. While the mainstream media has been highly critical of Senator Hillary Clinton’s decision to allow Mr. Penn to keep his day job while serving as a key advisor on her presidential campaign, Burson-Marsteller has largely been given a free pass on its equally problematic decision to allow Mr. Penn to continue on as its CEO.

As someone who has generated a significant amount of new business through referrals from people with whom we work, I appreciate the value of having a CEO who is so connected as to have the ear of someone who could very well be the next president. But one of the cardinal rules of reputation management is that you should never act behind the scenes in a way that would prove to be embarrassing or detrimental if it was covered on the front page of the newspaper.

Mr. Penn’s decision to meet with officials from Colombia, which hired Burson no doubt in part because of Mr. Penn’s connection to Senator Clinton, and subsequent apology after his meeting became public, was an insult to the firm’s employees who dutifully uphold the firm’s published commitment to avoiding conflicts of interest and to all the clients who were taken in by the firm’s grandstanding about its ethical approach to business. It also demonstrated that Mr. Penn’s greater loyalty is to the Clinton campaign rather than to Burson’s clients.

But the Colombia incident isn’t the only instance of ethical malfeasance at Burson under Mr. Penn’s leadership. The Wall Street Journal in September reported that Burson was aggressively waging a campaign advocating against Google’s planned acquisition of DoubleClick. But in its outreach to reporters, Burson representatives failed to disclose to reporters that it was working for Microsoft, a major Google competitor. According to the Public Relations Society of America (PRSA), such subterfuge is wholly improper and a significant ethical breach.

Harold Burson, an industry luminary and the co-founder of the firm that employs Mr. Penn, also has ethical problems with PR firms not disclosing their vested interests. “I’m totally opposed to front organizations that do not disclose where their funding comes from and to my knowledge – we’re a big company – we have never started or organized a group where the funding sponsorship was unknown,” Mr. Burson said in a 1999 interview that was first cited by PR blogger Mark Rose. Things have clearly changed at Burson since Mr. Penn assumed the leadership.

Further, Mr. Penn reportedly has been actively involved in Burson’s representation of troubled mortgage lender Countrywide Financial. For an inside look at one of the most dubious reputation management campaigns ever waged, this article in the Wall Street Journal and this one in Salon is must reading.

Regrettably, Burson isn’t the only global PR firm causing the industry considerable embarrassment. It was reported on Gawker, a media-focused website, that Edelman, which also made pledges about its ethical approach to business and commitment to honesty, tells clients that it is okay to lie to the media. CEO Richard Edelman denies the story, of course.

I’ve met Richard Edelman and even once entertained thoughts of joining his firm (heck, we once cheekily considered calling this blog “5:45 a.m.” as opposed to his own “6 a.m.” blog to suggest we were at work before the Big Boys of the industry). My take from afar? Mr. Edelman is decidedly one of the most decent, personable, trusting, and gracious senior executives in the PR business. But his trust has repeatedly been misplaced. In recent years he has increasingly chosen to surround himself with political operatives, including Leslie Dach, who worked at Edelman for nearly two decades, albeit with some sabbaticals to work on various political campaigns.

Mr. Dach, the subject of an extremely damning profile in The New Yorker, formerly oversaw Edelman’s Wal-Mart account and he has since joined the giant retailer. During Dach’s leadership, Edelman initiated the “Wal-Marting Across America” blog, supposedly penned by a couple of customer enthusiasts who turned out to have been bought and paid for by the PR firm. That campaign was one of the most egregious communications frauds in recent memory. Edelman still retains the Wal-Mart account, which suggests the controversial retailer wasn’t too chagrined after being outed for the deception.

Then there is the issue of Ronn Torossian, the CEO of 5WPR, which claims to be one of the fastest growing PR firms in the industry. Mr. Torossian has a penchant for threatening litigation (see Strumpette’s Torossian Lawsuit countdown clock), a brash style, and a rather skewed perception of where he fits in the pecking order of industry giants (To wit, he reportedly said this a few years ago with respect to legendary PR man Howard Rubenstein: “5WPR are the new kids on the block to challenge him as the leading PR person in NYC.”). I will let the folks at Gawker fill you in on a major reason why Mr. Torossian comes to mind while writing this particular post.

Finally, there is Michael “The-Flack-When-You-Are-Under-Attack” Sitrick. As I’ve noted before, I admire Mr. Sitrick’s willingness to rough up reporters who write negative stories about his clients (although some of the reporters he has taken on are among the smartest and fairest in the business) and I salute Mr. Sitrick for his ability to dupe 60 Minutes into doing an uncritically sympathetic story about his controversial client Biovail being an unjustified victim of short sellers. Yet his outrages and messianic attacks on short sellers for their dubious activities loses some of its steam when you read that his firm has apparently engaged in some highly questionable practices itself.

(Full Disclosure: I briefly was retained by an attorney to assist in a matter involving Spyro Contogouris, a hedge fund researcher who was a prime target of Mr. Sitrick’s attacks)

Over the years I have been frequently criticized by PR people for being “extremely naïve about PR” and “thinking too much like a reporter.” I’ve been told that PR is an inherently dirty business that often requires the use of dishonesty and deception to get the job done. But I don’t buy that, nor do the people who work here. At the end of the day, our reputation for integrity and transparency is our most cherished corporate asset, and no client, project, award, or piece of business is worth its sacrifice. These values have served us well.

The PR industry has no shortage of practitioners who are quick to advise others how to manage their reputations. It’s high time we did something about our own.