Reputational Risk

How Disgruntled Employees Tarnish Your Social Media Branding and Reputation

The NY Daily News suffered a reputation hit after fired employees used its social media accounts to state their displeasure. Other companies can learn a thing or two from this mishap.
By: | August 13, 2018 • 4 min read

Late last month, nearly a year after acquiring the New York Daily News, media company Tronc made the decision to drastically restructure the newspaper, reportedly paring down its scope to focus on breaking news.

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In one fell swoop — or in this case, one fell email — Tronc cut the paper’s size by half, terminating the editor-in-chief and managing editor, most of the photography staff, much of the sports department, and numerous other journalists.

Among the terminated were the paper’s entire social media team … a fact that perhaps Tronc should have given some deeper thought to. Shortly following the restructuring email to staff, the Daily News Twitter feed went chaotic. In between scheduled Tweets, the feed was peppered with gifs and memes registering the staff’s shock and outrage.

The posts, if embarrassing for Tronc, were largely harmless, but were picked up by other national media outlets including Ad Age. The company’s seemingly mercenary act probably did little to earn Tronc any public goodwill.

But the nominal amount of damage was only due to the apparent restraint of the departing social media team. Far more vindictive individuals could have published more damaging information — from confidential internal emails to public swipes at company investors to the spread of fake news designed to expose the paper to liability or risk defamation accusations.

Some companies allow their social media team a level of autonomy that is necessary from a responsiveness perspective but is difficult to maintain control of. A sophisticated social media footprint can involve multiple plug-ins and automation services, all of which would need to be reset in the event of a staffing change.

Much in the way that a company might immediately lock a terminated employee’s email account or deactivate a building key card, access to company property such as social media accounts should be considered as part of the larger picture of employment actions.

The Daily News incident, said Nir Kossovsky, CEO of Steel City Re, is “a fundamental failure in proper human resources-related management of discharging employees.”

“Whether you’re laying off one person or half of your staff, what are your corporate policies regarding how layoffs are managed?” asked Elizabeth Carmichael, president of Carmichael Associates. Those policies should include how company-owned Twitter accounts or other social media accounts are regulated or closed.

Implement Moves Carefully

Protecting access to social media accounts aside, there’s little chance that Tronc could have avoided some form of backlash. Within a day or two, global news outlets were referring to the situation as the “Daily News Bloodbath.” The departing editor-in-chief tweeted from his personal account: “If you hate democracy and think local governments should operate unchecked and in the dark, then today is a good day for you.”

Meanwhile, New York’s Gov. Andrew Cuomo and Mayor Bill de Blasio took to Twitter as well, with de Blasio tweeting a message calling the layoffs a “greedy decision” and a “disaster for NYC” and Gov. Andrew Cuomo issuing a statement urging Tronc to reconsider.

Stirring up ire at that level could have longer-term consequences for Tronc, said Kossovsky, who writes on this very topic as a Risk & Insurance® Risk Insider. “A city like New York has a very strong regulatory structure. There is a reputational risk to Tronc within the New York environment in how the city may give breaks or not give breaks to the newspaper.

“In terms of reputational risk, companies need to look beyond customer reaction, which is where most people focus, and consider both the regulators and the activists that have the power to mobilize them.

“Oftentimes,” Kossovsky said, “you forget the importance of managing the regulators’ expectations — meaning anyone in a government position. Never underestimate the power of a governing body or a regulatory authority to have its expectations missed and react strongly using the full authority invested in it to challenge a company and its decisions.

“This has to be factored into the tactical management of these difficult strategic decisions.”

There’s no question that, in the age of social media, corporate moves that could raise hackles — no matter how valid — require a risk management perspective. Open lines of communication between human resources, public relations and risk management can ensure a more carefully managed execution of business moves, even unpopular ones.

“These are enterprise-level considerations,” said Kossovsky.

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Engaging a crisis communications team is key, said Carmichael, especially in a high-profile situation like the one faced by the Daily News. Employment actions, obviously, and not unexpected events: “It’s not like they woke up on Monday morning and said ‘oh gosh we’ve got to lay off half of our people,’ ” she said.

The outcome might have been more favorable had the crisis team made a public announcement a minute before the staff was given notice. That, she said, would have allowed the company to get out in front of the situation.

“A lot of companies don’t have a crisis communication plan in place,” said Carmichael. “That’s your first line of defense. Engage a crisis communications team, in the most confidential of ways, to talk about what’s going to happen. Work with that entity to figure out what could go wrong and how do we get ahead of it. How do we tell our story first, and loudest … how do we control the message versus forcing us to be reactive.” &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

2018 Risk All Stars

Stop Mitigating Risk. Start Conquering It Like These 2018 Risk All Stars

The concept of risk mastery and ownership, as displayed by the 2018 Risk All Stars, includes not simply seeking to control outcomes but taking full responsibility for them.
By: | September 14, 2018 • 3 min read

People talk a lot about how risk managers can get a seat at the table. The discussion implies that the risk manager is an outsider, striving to get the ear or the attention of an insider, the CEO or CFO.

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But there are risk managers who go about things in a different way. And the 2018 Risk All Stars are prime examples of that.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Goodyear’s Craig Melnick had only been with the global tire maker a few months when Hurricane Harvey dumped a record amount of rainfall on Houston.

Brilliant communication between Melnick and his new teammates gave him timely and valuable updates on the condition of manufacturing locations. Melnick remained in Akron, mastering the situation by moving inventory out of the storm’s path and making sure remediation crews were lined up ahead of time to give Goodyear its best leg up once the storm passed and the flood waters receded.

Goodyear’s resiliency in the face of the storm gave it credibility when it went to the insurance markets later that year for renewals. And here is where we hear a key phrase, produced by Kevin Garvey, one of Goodyear’s brokers at Aon.

“The markets always appreciate a risk manager who demonstrates ownership,” Garvey said, in what may be something of an understatement.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Dianne Howard, a 2018 Risk All Star and the director of benefits and risk management for the Palm Beach County School District, achieved ownership of $50 million in property storm exposures for the district.

With FEMA saying it wouldn’t pay again for district storm losses it had already paid for, Howard went to the London markets and was successful in getting coverage. She also hammered out a deal in London that would partially reimburse the district if it suffered a mass shooting and needed to demolish a building, like what happened at Sandy Hook in Connecticut.

2018 Risk All Star Jim Cunningham was well-versed enough to know what traditional risk management theories would say when hospitality workers were suffering too many kitchen cuts. “Put a cut-prevention plan in place,” is the traditional wisdom.

But Cunningham, the vice president of risk management for the gaming company Pinnacle Entertainment, wasn’t satisfied with what looked to him like a Band-Aid approach.

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Instead, he used predictive analytics, depending on his own team to assemble company-specific data, to determine which safety measures should be used company wide. The result? Claims frequency at the company dropped 60 percent in the first year of his program.

Alumine Bellone, a 2018 Risk All Star and the vice president of risk management for Ardent Health Services, faced an overwhelming task: Create a uniform risk management program when her hospital group grew from 14 hospitals in three states to 31 hospitals in seven.

Bellone owned the situation by visiting each facility right before the acquisition and again right after, to make sure each caregiving population was ready to integrate into a standardized risk management system.

After consolidating insurance policies, Bellone achieved $893,000 in synergies.

In each of these cases, and in more on the following pages, we see examples of risk managers who weren’t just knocking on the door; they were owning the room. &

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Risk All Stars stand out from their peers by overcoming challenges through exceptional problem solving, creativity, clarity of vision and passion.

See the complete list of 2018 Risk All Stars.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]