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Forget finances, Old Mutual is set to pay dearly in the reputation stakes

The financial services giant set off on the wrong foot with the Peter Moyo crisis. But, how is Old Mutual managing its crisis after firing Moyo twice? Neeran Naidoo, partner in Hewers, assesses this from a crisis communication perspective.
It is not often that a leading CEO gets fired twice in as many months. The optics don’t look good for Old Mutual.

It looks like an incoherent crisis plan in the c-suite is what’s driving its bid to protect its reputation and brand and restore confidence and trust in the institution. Hardly a day goes by without a new development in this tit-for-tat saga, putting Old Mutual’s communications department in an impossible situation to deal with the situation effectively. The recent Sunday Times half-page explanation of Old Mutual’s position was its clearest communication yet on this issue, which regrettably came several weeks after it first fired Peter Moyo, its embattled CEO.

There are a few key lessons in crisis communications corporate SA can glean from Old Mutual’s palace purge. One of these is that the goal should be business continuity. It’s not about winning or losing a public argument. It’s about ensuring institutions can continue business unhindered by the distraction, risk and escalating cost such cases inflict on corporates. That is why most companies throw money at a problem in the hope the risk will quietly wither away from the public gaze.

Another lesson is that reputation crises are an opportunity to demonstrate your values under fire and in the glare of the public eye. Entering into a battle with your CEO that starts with name-calling is bound to go south very quickly. This does not sway public sentiment in anybody’s favour.

Doing so raises questions about your credibility among key stakeholders and your commitment to your stated values, and fosters public sympathy for the perceived victim. It is worth asking whether the name-calling infringed on Old Mutual’s values of “Dignity, Respect and Integrity”. Corporate behaviour that strays from its values consistently results in reputation damage. It also has the unintended consequence of other employees feeling entitled to infringe hard-earned values if leaders are seen to get away with it.

In a crisis, the media and the public will tend to side with the perceived victim. That is a natural human instinct in a David and Goliath battle. Woolworths’s battle with Frankie’s ginger beer and Momentum’s dispute with Mr Ganas are both cases in point. The public sentiment such issues potentially evoke are ignored at the corporate’s peril as this erodes trust, confidence and the share price.

The media need to frame issues to be able to tell their stories in a crisis. They need a victim, a villain and a vindicator: Moyo the victim, Old Mutual the villain, and the courts the vindicator. It is possible to move from one frame to the next, but it requires exceptional skill and tact to achieve.

The problem is that Old Mutual did not do itself any favours with its initial personal and public attack on Moyo. It broke one of the golden rules in a crisis: never attack the perceived victim. If you do, you will lose the battle for public sympathy. Corporates often have to make the choice between winning the legal battle — being “right” — and winning public sympathy. Momentum has learnt this the hard way.

It does not appear that Old Mutual expected the backlash it received. Journalist Ferial Haffajee conducted an interview and found Moyo to be a perfectly decent human being, and investors understandably urged Old Mutual to seek a speedy resolution of the issue. One would expect an organisation that trades in risk to understand the risk involved in firing the CEO, given the circumstances. Meanwhile, the costs are surely mounting, in terms of share value and reputational damage.

Corporates lose credibility by the way they manage a crisis, rather than the issue itself. Old Mutual’s Sunday Times explanation should have been just one part of an arsenal assembled before it embarked on such action.

There is a point at which information released too late does not matter in a crisis. This is usually when the media die is cast, and firm positions are rooted and established in the public discourse, often reinforced by social media and dinner conversations. Then, the facts don’t matter. The public has already decided who is right and wrong and who they support. That was the hard lesson Woolworths learnt when it took four days to respond to the Frankie's passing-off allegation. It started on the back foot and never got ahead of the story.

It is curious that Old Mutual bought a half-page advert in the Sunday Times, with its large weekend readership, to tell its side of the Moyo story, yet ignored its own social media channels, with tens of thousands of followers who might be more inclined to support its narrative. Old Mutual did, however, use email to speak directly to its customers. But this was rather inconsistent, leaving the narrative to be told and influenced largely through the media.

When corporates don’t speak up in a crisis others will speak on their behalf. It gives media enormous power to speculate and use third-party sources. The question is, who would you prefer to tell your story? Your customers, shareholders, the media? Or would you prefer to tell your own story, unfiltered by others? You simply don’t have a choice when your brand is threatened and reputation is questioned the way Old Mutual’s has been over the past two months.

To its credit, Old Mutual avoided the outdated “sub-judice” armour often used as a shield for the lazy to hide behind when their dirty washing is thrust into the public domain. This dates back to when there was a risk of media commentary influencing a jury, a system that is no longer in effect in SA.

Moyo and Old Mutual seem keen to win both public sympathy and the legal battle. And well they might as we enter a new era of litigation in the court of public opinion.

First appeared in Business Day, 5 September 2019.

Naidoo is a partner in Hewers, a crisis communication and reputation risk consultancy.

About Neeran Naidoo

I've honed by skills in managing crisis and issues through a combination of many years of strategic communications, research, knowledge and experience as well as the application of international best practice. Hewers also measures reputation to mitigate risk and drive reputation. The unique model works for our clients and will work for you. Let's chat.

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