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Leadership Ideas

Published on October 3rd, 2013 | by Jonathan Gifford

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Jack Welch on how to handle a PR crisis

 

Back in the 1980’s, the General Electric Company found itself in the middle of a PR disaster that stemmed from an apparently minor issue (a tiny minority of workers at a plant producing components for the US military were fiddling their time cards to get a bit of unearned extra pay) and escalated into a major ‘GEC defrauds Uncle Sam’ melodrama.

A chap called Jack Welch was at the helm of the company at the time. You may have heard of him.

What he had to say about PR crisis management has stood the test of time.

‘Fraud, waste and abuse’ in military expenditure

When the story first boke, GEC investigations suggested that the fraud was on a very minor scale, and that over 99% of time-cards at the plant were fairly and accurately completed. But the issue became a major PR disaster for the company when Caspar Weinberger, then recently appointed as Secretary of Defence by President Ronald Reagan, raised the issue in support of his campaign against ‘fraud, waste and abuse’ in military expenditure.

In his 1980 presidential campaign Reagan had promised a significant increase in military expenditure, whilst also promising smaller and more efficient federal government; there was a drive to ‘obtain the best value for our defence dollars.’  The affair of the fraudulent GEC timesheets became a major issue played out in the national media.

Jack Welch, who was chairman and CEO of General Electric from 1981 to 2001, faced this crisis early in his career. His advice to leaders, based on his experience, is to assume the following when a problem enters the public arena. In his book, Winning, Welch gives his advice.

Jack Welch’s rules for handling a PR crisis

  1. The problem is worse than it appears

  2. Everyone will eventually find out everything

  3. You and your organisation’s handling of the crisis will be portrayed in the worst possible light

  4. Changes in process will have to be put in place and there will probably be personnel changes (‘blood on the floor’)

  5. The organisation will survive, and in the long term will be stronger for having ridden out the crisis.

In a 2009 interview for Harvard Business Review, Dr Ram Charan, business advisor and author, confirms that leaders tend not to assume the worst.

Misplaced optimism

“Actually, in a crisis most leaders tend to be too optimistic rather than the contrary. They overestimate how well their company will fare because they want to believe everything will turn out well. This misplaced optimism allows them to think that they don’t have to make painful decisions or take drastic action.

“To guard against this, I advise all leaders to map out worst-case scenarios. If you deliberately plan for the worst, you’ll probably encounter something less dire and come out ahead when it’s all over.”

‘Assume the worst’ features as  chapter 93 of  100 Great Leadership Ideas

       





About the Author

I write and blog about the human aspects of business and leadership, with an interest in the lessons that we can learn from history, including recent history. Please do leave a comment if anything occurs. You can sign up for my occasional newsletter, highlighting some recent blogs. I live in Oxfordshire, England.



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