SYCO 'How not to be threatened by a crisis'


SYCO – “How not to be threatened by a crisis”

13 Sep , 2011  

1.0 Introduction

SYCO (Founded by mogul Simon Cowell) is the sole distributor for highly successful television products, X Factor’ and ‘Britain’s Got Talent’ created by ITV and SYCO. SYCO is currently the most successful label within Sony Music which contributes 70% percent of the organisations entire revenue in the United Kingdom. This success is attributed to the collaboration of TV networks (ITV – UK & Fox – USA) to exploit, sell and promote new music acts through the most popular television shows.   2.0 Characteristics of Communication

Crisis management is a process designed to prevent or lessen the damage a crisis can inflict on an organisation and its stakeholders (Harvard Business School Press:2004). Consideration will be given to the extent to which crisis communication planning and implementation can save and/or minimise the impact of disaster.

This process is divided into three phases, 1 pre-crisis (concerned with prevention and preparation), 2 crisis response (management must actually respond to a crisis) and 3 post-crisis (ways to better prepare for the next crisis and fulfil any commitments made during the phase including relevant follow-up information. Barton (2001) and Coombs (2006)

SYCO currently do not have any crisis procedures in place, the organisation has not developed one and have ultimately been reliant on the existing processes of Sony Music and the networks of ITV/FOX to manage the external communications.

The lack of crisis communication planning has meant that key stakeholders such as media organisations and subscribers to social media blogs have been able to place the organisation under negative criticism leading to a down turn in trust, credibility and accountability by consumers resulting in poor reputation.

Further characteristics that are associated with organisations working well and that should be adopted to SYCO are; communications that are timely, updated, appropriate, regular, correct, concise, be communicated through a knowledgeable PR spokesperson, ensure right messaging at the right time. Achieving the implementation of key identified areas will allow SYCO to work towards building key relationships with media relations and stakeholders limiting negativity to reputation.

SYCO who have traditionally been reliant on external crisis communication planning and management need to now take control and engage this strategic process. It is a fair conclusion then that the current corporate damage to SYCO caused by media and stakeholders was not limited and managed effectively enough by the external the companies SONY/ITV/Fox hence the now urgent implementation for an internal crisis process to manage and support SYCO’s products. Limiting, responding and managing these constantly impacted areas will help the organisation return to a trusted credible brand that can be respected corporately within the entertainment industry.

Both Barton (2001) and Coombs (2006) documented that organisations are better able to handle crises when they

1.  Have a crisis communication plan and update it at least annually. 2.  Have a designate crisis communication team that is properly trained. 3.  Conduct exercise at least annually to test the crisis communication plan and team. 4.  Pre-draft select crisis communication messages including content for dark web sites and templates for crisis statements.  Have the legal department review and pre-approve these messages. Table 1: Adapted from The Crisis Preparation Best Practice. Barton’s (2001)

The ever increasing and important role of key stakeholder groups that can influence SYCO’s reputational performance provides further justification as to why they need to adopt this strategic process. The process should be constantly reviewed and flexible from the pre-crisis to post crisis in order to form effective crisis activities that can meet stakeholder’s needs. Vital planning will serve to primarily enhance SYCO’s reputational understanding and competency and refresh organisational facilities. Augustine (1995) notes that plans and teams are of little value if they are never tested.  Management will not know if or how well an untested crisis management plan with work or if the crisis team can perform to expectations.

It is therefore imperative that SYCO need to become more reactive to its daily business activities;

• Rapid technology expansion (Digital news feeds, blogs and fan sites, status updates such as Twitter and Facebook), • Climate changes (Carbon Footprint of SYCO/CSR), and • Economic changes (Customers varied ‘channels’ of purchase (Itunes and Spotify, consumer culture and choice of music purchases)

3.0 Types of Communication and Reputational Impacts   A crisis communication plan (CCP) is a reference tool that provides key contact information, reminders of what typically should be done in a crisis, and includes forms to be used to document the crisis response thus increasing response time during a crisis by pre-assigning relevant tasks, pre-collecting information, and serving as a critical reference source.

Managed communications will provide SYCO with excellent stability and sustainability however unmanaged they are all able to impact negatively unless appropriate processes are in place and constantly monitored.

Barton (2001) identifies the common members of the crisis team as public Relations, legal, security, operations, finance, and human resources (See Appendix 8).  However, the composition will vary based on the nature of the crisis (E.g. Information Technology would be required if the crisis involved the website or internal computer systems). SYCO therefore require a specialist crisis team with relevant PR skills for crisis communications and planning to meet Barton’s directive. Such individuals should be able to negotiate a range of skills such as digital security (mp3 products) and digital PR (social media analysis)..

Mitroff, Harrington, and Gia (1996) emphasize that training is needed so that team members can practice making decisions in a crisis situation. It is critical then for SYCO to ensure that after the formation of their crisis team that is it tested regularly, be highly effective, flexible and capable of adapting to current and future crisis situations.

A recent crisis that SYCO faced began with the exposure internally by an undisclosed source to a major tabloid to discredit the brand, X Factor. The first allegation was one of technical rigging to enhance live vocal performances of the audition process (previously not used) to improve the output of the shows vocalists. A very embarrassed ITV had to face a full on show down with the media until the CEO of SYCO was forced to admit in a statement that it was true and that the device known as auto tune would be removed immediately for the rest of the competition.

This allegation and admission shocked the general public and SYCO’s stakeholders yet despite a desperate bid from the CEO to admit ‘All PR is good PR’ was clearly not correct at the brand took a huge drop in trust as the press encourage the general public to feel duped and mislead. The essence of this negativity spawned a frenzy of even more amazing revelations seemingly from inside the SYCO Company describing allegations of contestant fixing, deportation of an African contestant and foul play through deliberate poor song choices to rid contestants as the production company knew the public would vote for the most popular songs they cherished.

The crisis which peaked around mid-season saw an unprecedented intervention from Sir Phillip Greene (Simon Cowell’s new business partner) step in and put together a focus group held privately at his Arcadia head offices to a panel of X Factor fans selected randomly with Simon. The aim was to show the negative stakeholders that the CEO was not out of touch and that he was actively trying to take on opinions and seek to manage the process better, spearheading change. Again the admission only fuelled further negative social media interest aimed at the persistent and continued constant failings of the senior management teams. The Crisis was so intense that even ITV and Sony Music did not have strategic response that could effectively control the spiralling situation.   Lerbinger (1997), Feran-Banks (2001), and Coombs (2007) devote considerable attention to media relations in a crisis.  Media training should be provided before a crisis hits.  The Crisis Media Training Best Practices (Appendix 7) are key appropriate guidelines that the SYCO PR person should utilise.

4.0 Anticipating and Planning for a Crisis

Preventing and anticipating crisis situations by a regular risk assessment of products and key stakeholders and then ensuing communication planning and implementation into SYCO’s risk assessment process through a likely range of possible scenario planning will be crucial to how effective the decision making communication and planning process are. Management and training of a crisis communication process and plan which will need to be tested regularly to ensure its competences are relevant will allow SYCO to adopt a reactive, informative approach to deal with risk, achieving this will help increase the corporate reputation.

As previously identified SYCO currently do not have a Crisis process in place therefore I will suggest why suitable planning, correct infrastructure and effective implementation can provide crucial organisational benefits.

Once a competent crisis team has been employed and that the correct resources are at their disposal to enable effectively fast management of a crisis, it will be critical to set out key best practise guidelines for their consideration. SYCO’s Crisis team will need to:

Be quick and have initial response within the first hour, Be accurate by carefully checking all facts, Be consistent by keeping spokespeople informed of crisis events and key message points, make public safety the number one priority, Use all of the available communication channels including the Internet, Intranet, and mass notification systems, Provide some expression of concern/sympathy for victims, Remember to include employees in the initial response, Be ready to provide stress and trauma counselling to victims of the crisis and their families, including employees.

Understanding the highly relevant time frames, source credibility and response information will act as a key performance indicator to the SYCO reputation. Well managed communication will delight stakeholders, enhance corporate trust and reliance of the quality of key communication will lead to a highly positive advantage from displaying and implementing best business practises. From this the Crisis team should also be providing a constant and precise risk assessment of music products and influential media to support the new communication strategy. Primary influences of the news / social media that have a essential part to play in the broadcast of information positive and negative and will be increasingly difficult to accurately anticipate and react to emerging crisis due to the ever growing opinion makers and digital channels of information / communication that they use. Mismanagement will ultimately lead to a negative impact onto the corporate reputation.

An example of good crisis communications and management is included in Appendix 9.

5.0 Evaluating the plan

The potential effectiveness of the crisis plan will be reliant on the creation and implementation of the new highly skilled crisis team (PR/Spokesperson) that will allow SYCO to manage its communications in house for the first time. Identifying and reacting to potential threats from this team will allow SYCO to become more effective at managing stakeholder relationships but devising a strong robust process. Measures to assess the effectiveness of the team’s activities will be made through radar scanning, constantly monitoring the communications environment and to implement an early warning system from the team to assess and mange information that require reactive responses to prevent crisis. The control of response time, release of credible critical information, and effectiveness to ensure stakeholder satisfaction will enhance the corporate communications and add additional corporate value to the operation of the organisation to help them secure the brand’s positioning to meet the corporate objectives and vision.

To ensure the effectiveness of crisis plan, the crisis team must be concerned at all times with the best practise methodology and follow the key three stage process of pre-crisis, crisis response post-crisis (As discussed in 2.0). It is critical that all three stages are address quickly, efficiently and with finite detail so that any affected parties are kept satisfied and fully informed to ensure complete competency, this provides the team with a clear strategy for successful implementation. The team should be able to control this stage by stage and by using the identified step by step process to ensure total accuracy and relevancy to any changing crisis environment that they are facing.   Quality human resources with specialised backgrounds and relevant previous employment and training qualifications will be a critical measure for SYCO when employing suitable team members and mangers. SYCO has excellent finance resources to implement any HR, structural and technology developments that are relevant to the crisis plan that will help achieve the international vision. Constant training and internal reviews of staff and system capability will be vital in monitoring the new infrastructure allowing to further enhance the team’s knowledge for anticipating and dealing with crisis’. This process will be particularly useful for the constant evolvement of social media and digital platforms that have been responsible for recent negative impacts to SYCO.

It will also be important to equip the team in order to meet their radar scanning objectives the latest technological resources to work (Offices, laptops, mobile communication devices, blog services) to monitor and react effectively at any point during the day and evening. Allowing this emergency crisis service to exist constantly will allow SYCO to avoid further crisis and begin to rebuild the brand reputation more efficiently. This will result in further competitive edge, market growth, and long term sustainability of the product portfolio and secure financial streams and ultimately, effectiveness. 6.0 The Future of Corporate Communication

Improving the quality of communication activities will predominately lie within the quality of crisis team members and their competency to effectively react better to crisis. To inform stakeholders coherently with good credible messages whilst correctly managing and implementing the designed communication process so that it positively reflects on the corporate reputation of the SYCO brand. Future quality measures will also be achieved by constant and continued assessment of the potential crisis environment to ensure stakeholder confidence with the organisational capability to demonstrate transparency and effectiveness to deal with impending issues.

Having such highly effective monitoring processes and reactive plans particularly with emerging digital platforms (Looking forward), this will remind and persuade stakeholders that their needs and wants are met effectively to encourage future confidence within SYCO. It is important for SYCO to demonstrate this as all future information promised to stakeholders should be delivered as soon as key information is known. Keeping stakeholders regularly updated on the progression of crisis recovery and management of efforts that should includes corrective measure assessments will provide clarity of application and justification in order for SYCO to return to a robust credible company that will in turn be able to focus on achieving long term corporate aims and objectives.

The crisis team / PR media person should also critically analyze the crisis management efforts for lessons and integrate those lessons and information gained from them back into SYCO’s crisis management system to improve efficiency and to demonstrate that the ethos of constantly training and improving internally has a positive effect externally to meet the fast ever changing corporate communication environments.

SYCO therefore requires a highly skilled PR/Spokesperson with relevant crisis training to ensure competency and credibility of information and responses with media organisations and stakeholders to ensure satisfaction as a key figurehead allowing the development of personable trust for SYCO, this would then add a key element which would allow for the reputation to be better managed and protected. This key spokesperson should also ensure that the channels for crisis information are formalised and made clearly available for internal and external customers (Recommendation: a unique web page for the organisation externally and an internal intranet for employees).

It is highly important for SYCO to remember that most of its communications failure in 2010 resulted from no or poor communication via the digital platforms from products such as X factor. Therefore when engaging these new processes, digital crisis communications must be a priority in this social media lead environment. Crucially then the crisis team and organization should constantly seek ways to improve prevention, preparation, and/or the responses and improve any of the three key process stages to ensure clarity and best business practises throughout SYCO.

Regularly feedback from stakeholders will also enhance SYCO’s core communications activities by recognising that a two way information process is meant to provide effective open relationship that can help build and respond rather than their current zero policy approach.

Excellent monitoring, effective scenario planning and preparing operationally to deal with crisis communications are all key to reputational survival and the building blocks of crisis communications and  recognising this and then and acting upon crisis points will then reflect to the overall strategic marketing plan to enable organisational long-term sustainability.

Justification to support my recommendations for SYCO’s future is endorsed by the following exert from a New York marketing post.

According to Josh Bernoff author of Empowered, The Huffington Post blog, (September 2010) marketers who are seeking to sustain real-time marketing communications are now no longer in control of their brand messages and brand communications, thanks to the real-time web. “With your established processes and departmental boundaries, you move too slowly.” But that doesn’t mean marketers have to accept these organisational challenges. It’s possible to successfully embrace real-time marketing and evolve from campaign management to conversation management.

Adopting these recommendations will allow SYCO to effectively compete internationally against market leading competitors to produce higher quality products, higher revenue and sales and larger market share which will enhance its reputation.

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