Companies That Returned Federal Funding

Controversy swirls as companies grapple with whether to keep or return federal funding for the COVID-19 crisis. Distributions from the Paycheck Protection Program (PPP) seem unfair as some small businesses—the intended recipients—can’t get forgivable loans, while some larger businesses received millions of dollars that, at least in some cases, isn’t needed as emergency funding.

As the first and most highly publicized company, Shake Shack returned $10 million. Forbes tallies several others, including Ruth’s Hospitality Group, Sweetgreen, and the Los Angeles Lakers.

Store image source. Food image source.

Discussion:

• What’s your view of companies that returned money compared to those that didn’t?

• How should a company decide whether to return the funding?

• Shake Shack doesn’t include a press release on its website or a tweet about the decision. What’s your view of this approach? Should the company promote the decision more boldly? Why or why not?

Lysol Disputes Claims of Cure

During his press conference, President Trump questioned whether disinfectants could be used internally to fight the new coronavirus:

“I see the disinfectant that knocks it out in a minute, one minute. And is there a way we can do something like that by injection inside, or almost a cleaning? Because you see it gets inside the lungs and it does a tremendous number on the lungs, so it would be interesting to check that.”

The president later said, “I was asking a question sarcastically to reporters like you just to see what would happen.” But Lysol executives are concerned that people may take the idea seriously and try to treat themselves. Reckitt Benckiser, which makes Lysol products, issued a statement, “Improper Use of Disinfectants.”

Lysol image source.

Discussion:

• Watch the president’s comment during the press conference. What’s your view of his speculation?

• Analyze the Lysol maker’s response. What works well, and what could be improved? What is appropriate or inappropriate for a brand’s parent to dispute the president’s claim in this way?

Employees Seek Better Benefits from Applebee's and IHOP

Employees of Applebee’s and IHOP are asking for better benefits from the restaurants’ parent company, Dine Brands.

The group’s website, Applebeesisrotten, paints a dire picture of the impact of the pandemic on restaurant workers and asks people to sign their petition for “comprehensive paid sick leave, paid family and medical leave, and income relief to all works.”

A tweet posted on April 22 indicates that company executives haven’t responded to the group’s demands.

Discussion:

• Analyze the group’s use of persuasive strategies on the website. How well do they balance logic, emotion, and credibility? What suggestions for improvement would you offer?

• The petition shows less than 7,000 signatures as of today. What, if any, effect might this have on the executives’ response.

• Should the executives respond? If so, how?

Improving Column Charts

So many charts about COVID-19 could be improved. Here’s one from a Business Insider article, which compares death rates for the flu and COVID-19.

Discussion:

• What issues do you see in the graphic? (Hint: Check the x axis, and describe what the percentage on the y axis represents.) How would you fix the problems?

• What are the consequences of designing charts in this way?

• Find another recent chart to analyze. In what ways does the graphic convey information accurately, and how does it fall short?

Luckin COO Fabricated Sales Data

Luckin’ Coffee, China’s largest coffee chain, is suffering the consequences of publishing false sales numbers. Ernst & Young discovered the misconduct, which took place in 2019, during an audit, concluding that “management personnel engaged in fabricated transactions which led to the inflation of the Company’s income, costs and expenses.” An investigation blames the chief operating officer and others.

A report details “the fraud and the fundamentally broken business,” including “smoking gun” evidence and “red flags.” The anonymous authors compare video recordings of store foot traffic to reported sales.

In response to the news, Luckin’s stock declined between 75 and 80%. Starting in February, when the anonymous report was made public, the company has been posting notices about the situation on its website.

Discussion:

• Analyze the anonymous report, including the audiences, objectives, organization, writing style, etc. What works well, and how would suggest that the writer improve the report?

• How well did the company address concerns? Begin with the first response in February.

• What leadership character dimensions does this situation illustrate?

WHO Official Bungles Interview

World Health Organization (WHO) senior adviser Bruce Alyward wanted to avoid a reporter’s question about Taiwan becoming a member of the organization. A video of the interview shows an awkward exchange, with Alyward remaining silent (but we still see him moving and hear sounds), saying “Sorry, I couldn’t hear your question,” asking the reporter to move onto another question, and then, finally, ending the call. During a follow-up call, Alyward refers to China and then abruptly ends the call.

Taiwan has had good success in controlling COVID-19, and the government claims to have warned the WHO back in December 2019 about the contagion.

As of today, Alyward’s name is removed from WHO’s website listing advisers to the organization.

Discussion:

• What is a better way for Alyward to have handled the reporter’s question?

• Why do you think the WHO ignored warnings from the Taiwanese government?

Email Scammers

Remember those quaint email scams that were riddled with grammatical errors? A Wall Street Journal article describes new, sophisticated training for email scammers in Africa. A Nigerian is quoted: “You know how you guys play baseball when you are growing up? Here many of us learn fraud.”

Former scams involved people sending email asking for money for people in trouble or promising big returns on small funds. Today’s scams involve hacking into accounts and people learning about connections, for example, what vendors a company uses. A fake invoice to a known vendor is more likely to get paid. Using a grandson’s real name could lead a grandmother to Wal-Mart to send money to him, which happened to my friend’s mother.

About $1.7 billion was lost to email scams in 2019, and complaints are rising steadily. The article describes a “grooming” process “like organized crime.”

Discussion:

• We hear a lot about victims’ vulnerability, but what creates a culture of scammers? What makes people vulnerable to commit this fraud? For more about this, watch The Weekly documentary about love scams on Facebook.

• What’s your view of the bar chart in the WSJ article? How could it be improved? Would you prefer a more creative graphic, or does this work as is?

Comparing Headlines About the Market

How does the media describe the recent stock market decline? Let’s compare a few headlines:

• Dow falls 1,191 points -- the most in history (CNN)

• Coronavirus Drives Stocks Down for 6th Day and Into Correction (New York Times)

• U.S. Stocks Slide Into a Correction as Virus Fears Show No Sign of Easing (Wall Street Journal)

• Dow's point drop worst on record as stocks fall into correction (Fox News)

• Dow drops 1190 points amid coronavirus fears, S&P 500 sees fastest correction in history (Yahoo Finance)

Of the five, Fox is the only one that didn’t place a headline about the market at the top of its web page.

Discussion:

• What do you make of these headline choices, including placement? What might the wording indicate about the media group’s beliefs or audience?

• In class after a previous decline, I took issue with headlines like CNN’s. Do you see an issue? (Hint: What does a raw number tell us?)

MLB Players Dispute Response to Cheating Scandal

Several players have criticized how Major League Baseball Commissioner Rob Manfred handled the recent cheating scandal. Calling the Houston Astros’ sign-stealing “the biggest scandal in the sport since the steroid era,” an ESPN writer concludes that “fallout continues.”

In an interview, Manfred explained the decision to recall the Astros’ 2017 World Series title and how the first apology didn’t go over very well. Manfred referred to the World Series trophy as a “piece of metal.” Mike Trout of the Los Angeles Angels spoke against Manfred’s reference:

“For him to devalue it the way he did [Sunday] just tells me how out of touch he is with the players in this game. At this point, the only thing devaluing that trophy is that it says ‘commissioner’ on it.”

Manfred has since apologized:

“In an effort to make a rhetorical point, I referred to the World Series trophy in a disrespectful way, and I want to apologize for that. There’s no excuse for it. I made a mistake. I was trying to make a point, but I should have made it in a more effective way.”

NBA star LeBron James weighed in on Twitter, encouraging the MLB to “listen to your players speaking today about how disgusted, mad, hurt, broken, etc etc about this.” As expected, some appreciated his perspective, while others didn’t.

Manfred image source .

Discussion:

• What’s your view of the controversy? Are you also critical of Manfred’s handling of the situation?

• How well did Manfred handle the criticism of his “piece of metal” comment?

• Should LeBron James have entered the debate, or should he have avoided it, as some suggest? Why or why not?

Barnes and Noble Changes Course on Black History Month

To celebrate Black History Month, Barnes and Noble bookseller altered classic book covers with people of color. Reactions were not positive. The author L.L. McKinney explains her position:

“They're essentially just slapping a cover on it to 'celebrate diversity.' But a lot of us felt that you're just trying to cash in on the fact that it's Black History Month, and now all of a sudden, black faces and brown faces will sell books. Just maybe one, two years ago, people were saying in meetings, 'Yeah, you can't put black people on covers. It's not going to sell the book.'“

Discussion:

• What’s your view of the original campaign? How would you describe the backlash?

• Assess the statement from Barnes and Noble. How well did the company address and respond to concerns?

Wells Fargo Former CEO Banned

In what the Wall Street Journal calls “unprecedented” and “an extraordinary sanction for a top executive at a large bank,” former CEO John Stumpf has been barred from the banking industry. The decision—and a $17.5 million fine—were part of a settlement between Stumpf and the Office of the Comptroller of the Currency (OCC) for millions of fake bank accounts created at Wells Fargo.

The OCC concluded that Stumpf should have known of the systemic problems and that “there was a culture in the Community Bank that resulted in systemic violations of laws and regulations.” When the scandal became public, employees complained of extreme stress because of pressure to sell more bank products. This pressure led employees to create fake accounts for customers.

Other Wells Fargo executives have been fined and charged, but none have been banned from the industry.

Image source.

Discussion:

• Do you think the decision is fair? Why or why not?

• This decision represents a shift from the 2008/2009 financial crisis, when banks paid significant fines but very few individuals were charged. What’s your view of the change?

Emails Show USC's Potential Role in the Admissions Scandal

Actress Lori Loughlin and her fashion-designer husband Mossimo Giannulli have been charged with bribing University of Southern California athletic officials to get their daughter admitted. Now emails from USC show that the school was courting them by asking for donations and arranging for personalized campus tours. In one email, a university official wrote, “I’d also be happy to flag her application.”

A New York Times article summarizes how accused parents plan to defend themselves against charges:

Motions by several of the defendants suggest they will argue, essentially, that they could not have defrauded the university, as prosecutors say, because the university was actively seeking such donations and offering a leg-up in admissions in return.

In a statement, USC downplayed the special treatment:

“What was being offered to the Giannullis was neither special nor unique. Tours, classroom visits and meetings are routinely offered. The primary purpose of a flag is to be able to track the outcome of the admission review process. It is not a substitute for otherwise being qualified for admission to USC.”

Parents are expected to say that their donations were legitimate, but USC is expected to say that the bribery was specific to the crew team official, who “agreed to pass the couple’s two daughters off as coxswains.”

Image source.

Discussion:

• What’s your view of this situation? Do you agree more with the parents’ or with the school’s perspective?

• What, if anything, do the school’s emails reveal? Consider this message to the parents: “Please let me know if I can be at all helpful in setting up a 1:1 opportunity for her, customized tour of campus for the family, and/or classroom visit?”

Carlos Ghosn's News Conference

Former head of Nissan Motor Co. and Renault SA Carlos Ghosn delivered a news conference from Lebanon after his escape from Japan. Ghosn was arrested in Tokyo in 2018 for misreporting income and misusing company funds. He left through a well-orchestrated exit in a box by private plane to his home country.

In what the Guardian calls “a lengthy and often rambling press conference in Beirut,” Ghosn spoke in four languages to defend himself. He criticized the Japanese criminal justice system and accused the Japanese government of working with Nissan executives to conspire against him.

Ghosn was adamant about his innocence:

“I don’t consider myself as a prisoner in Lebanon. I prefer this prison to the one before. I am ready to stay a long time in Lebanon, but I am going to fight because I have to clear my name.”

The Japan Times reports that the new conference “will have done little to turn the tide of public opinion in Japan and restore his reputation, which has been tainted by his alleged financial wrongdoing.” A former prosecutor in Japan said, “Ghosn didn’t have anything substantive to say. If he wants to restore trust, he shouldn’t do a self-absorbed speech like he did, but he should calmly make specific explanations and present evidence supporting those explanations.”

Discussion:

• Watch parts of the news conference. How well does Ghosn restore his image and prove his innocence?

• How should Ghosn communicate differently if he wants better outcomes?

WSJ Opinion About Boeing Emails

A Wall Street Journal writer argues that Boeing employee emails “explain nothing.” A previous WSJ article concluded that emails demonstrated a “cavalier attitude towards safety,” and a Reuters article concluded that employees “distrust the 737 MAX” and “mock regulators.”

The opinion writer, Holman Jenkins Jr., argues, “all of corporate America, not just Boeing, lives these days by employing creative, freethinking people who spout off acerbically, critically and colorfully in electronic messages.” Jenkins questions the reporting of these emails and what is omitted.

Jenkins also asks why these employees didn’t write about MCAS design flaws: “If the hypercritical people seen in these messages had known about MCAS’s design flaws, it never would have gotten through.” He also notes that the only emails referring to MCAS were from 2013, although system changes were made in 2016.

Image source.

Discussion:

• Read Jenkins’ article. What do you consider to be his strongest and weakest arguments?

• Based on his argument and your own reading of media reports, what’s your opinion about the significance of the emails?

• What issues of integrity does this situation raise?

Boeing Internal Documents Don't Reflect Well on Safety

The lead article in today’s The Wall Street Journal is titled, “Internal Boeing Documents Show Cavalier Attitude to Safety.” In 150 pages of emails and other documentation, employees worry that they don’t have enough time to correct safety issues and refer to regulators as “morons” and “stupider.”

In February 2018, one employee wrote, “Would you put your family on a MAX simulator trained aircraft? I wouldn’t.” A pilot wrote, “I still haven’t been forgiven by god for the covering up I did last year. Can’t do it one more time. Pearly gates will be closed.” Still another employee wrote, “This airplane is designed by clowns, who in turn are supervised by monkeys.”

A defense attorney argues that employees were just “blowing off steam” in their emails.

In the past few months, Boeing’s culture has come to light—once lauded as a place where people felt proud to work but now a place where people feel stressed and remorseful. CEO Doug Muilenberg has since been terminated and replaced temporarily by CFO Doug Smith.

Image source.

Discussion:

• Read more about the internal communications. What lessons can employees and their managers take away from this story?

• What’s your view of the emails? Do they indicate big problems at the company, or is the attorney right that employees are just venting to each other? How does the concept of “cherry picking” come into play?

• What should Boeing do to manage this situation? Consider this news in light of the company’s crisis communication planning you read about in another post.

Accountability in the News

Two situations this week remind us that CEOs should take accountability for mistakes in their companies.

On an investor call, Home Depot CEO Craig Menear said retail theft is on the rise:

“This is happening everywhere in retail. We think this ties to the opioid crisis, but we’re not positive about that.”

Menear faced criticism on Twitter for blaming the opioid crisis rather than taking responsibility for product loss at a warehouse.

On another call, Costco CFO Richard Galanti talked about losses because of a website crash:

"It was unfortunate. Despite all the efforts to have plenty of processing capacity, if you will, there was something that occurred." He also acknowledged, “[W]e did leave something on the table.”

In both situations, the executives could be more direct.

Discussion:

• Do you agree with my assessment? Why or why not?

• What evidence should Costco provide to back up its claim?

• What else could the executives have said differently? (Hint: Note Galanti’s use of passive voice.)

• In addition to accountability, what leadership character dimensions are illustrated by these examples?

JPMorgan Recorded Phone Conversation

Jimmy Kennedy, an African-American former National Football League player, tried to open a private wealth account at JPMorgan but had trouble getting attention. He recorded a conversation with an African-American employee, Richardo Peters, who said, “You’re bigger than the average person, period. And you’re also an African-American. We’re in Arizona. I don’t have to tell you about what the demographics are in Arizona. They don’t see people like you a lot.”

In a New York Times article that published the recording, Peters recounted a specific example of discrimination against a Black customer. When he was trying to bring on another new client, who had received a large settlement, his manager said, “You’ve got somebody who’s coming from Section 8, never had a nickel to spend, and now she’s got $400,000, What do you think’s going to happen with that money? It’s gone.” His manager’s position was that the customer would not invest money with the bank.

Other incidents at the bank led to Peters’ termination, and he is suing for racial discrimination. JPMorgan also recently settled a class-action lawsuit for $24 million to Black employees who claimed discrimination: according to a New York Times report, “in some cases by isolating them from colleagues and dumping them in poorer branches.”

A few days later, CEO Jamie Dimon addressed the situation in a memo to employees.

Discussion:

• How do you assess this situation at JPMorgan? Read more in the NYT article.

• A February Essence article describes and praises JPMorgan’s Advancing Black Pathways program to support the Black community. What’s your view of the effort in light of this news?

• How do you assess CEO Jamie Dimon’s response in the memo? We don’t see the entire memo, but CNBC posted quotes.

Data in the Uber's Safety Report

Uber published its first safety report, and the company is lauded for its transparency. A Wall Street Journal article leads with the number of sexual assaults reported during the last two years: 5,981. Of course, any number is too many—no one should be assaulted in an Uber or anywhere else. And sexual assaults are notoriously underreported, so we have no idea how many have actually occurred.

At the same time, a skeptic might want to know the total number of rides in order to put the number of reports in context. The report does provide this information (see the report for footnotes):

View fullsize

The report makes additional attempts to put the numbers in context:

All of that work culminates in the Safety Report that we are sharing with you, the public, today. To put US safety challenges in context:

• In 2018, over 36,000 people lost their lives in car crashes in the United States alone (3)

• Approximately 20,000 people were the victims of homicide in 2017(4)

• Nearly 44% of women in the US have been a victim of sexual violence in their lifetime—which means that more than 52 million women live with that experience every day (5)

Every form of transportation is impacted by these issues. For example, the NYPD received 1,125 complaints of sex offenses in the transit system during the same time period covered by this report.(6,7) In the United States alone, more than 45 rides on Uber happen every second. At that scale, we are not immune to society’s most serious safety challenges, including sexual assault. Yet when collecting data for that portion of our report, we found there was no uniform industry standard for counting and categorizing those types of incidents.

The 84-page report is incredibly detailed and includes external reports for credibility and the number of charges for various types of assaults.

Discussion:

• Analyze the report: the audience, communication objectives, organization, writing style, format. What works well, and what could be improved?

• Does the context in these examples convince you that the numbers aren’t so bad? Why or why not?

• Otherwise, how well does Uber address the safety issues? How do you assess the report credibility? What other questions do you have?

Communications Criticized at Syracuse University

A Chronicle of Higher Education article says that communications at Syracuse University “didn’t help” the racial issues. In the past few weeks, videos, slurs, and drawings, such as swastikas, culminated in a rumor that a “white-supremacist manifesto” was sent to students’ phones. The manifesto was said to be a copy of the one associated with the March New Zealand shootings, and Chancellor Kent D. Syverud responded, “It was apparent that this rumor was probably a hoax, but that reality was not communicated clearly and rapidly enough to get ahead of escalating anxiety.”

The response didn’t address student concerns, which have been bubbling for years. Syverud was criticized for his response in 2014 during campus protests about climate. To the recent racist incidents, students are demanding quicker and more direct action. The chancellor’s choice of words is also at issue, as expressed by Mona Lisa Faz, a graduate student of communications:

“Since when did calling someone the n-word or creating a swastika in the snow ever count as bias?” she wrote in an email to The Chronicle. She called Syverud’s response “a whitewashing and playing down of what is really happening. I get you don’t want to alarm people, but I’m a Latina, and when you play down a hate crime, THAT is alarming to me and my community.”

The University is trying to catch up, posting a chart showing students’ demands and actions taken.

Notes image source.
Protest image source.

Discussion:

• Read more about the Syracuse University situation. What were the administration’s major missteps? How can they best recover now?

• What’s your view of the chart? What works well about this approach, and how might it fall short?

• Some are calling for the chancellor to resign. Should he? Why or why not?

• What leadership character dimensions are illustrated by this situation?

Prince Andrew's BBC Interview Does Not Go Well

Prince Andrew took a BBC interview to explain his relationship with Jeffrey Epstein, who had served prison time for having sex with a minor. The Duke of York spent a night at Epstein’s mansion, which some victims called a ”House of Horrors.” The Duke is shown in photographs, along with photos of young women coming into and leaving the house. One woman claims that, when she was 17, she was forced to have sex with Prince Andrew. Since that time, Epstein committed suicide in jail, where he was facing sex trafficking charges.

Prince Andrew told the BBC interviewer, “I kick myself for on a daily basis because it was not something that was becoming of a member of the Royal Family and we try and uphold the highest standards and practices and I let the side down, simple as that."

When asked about his stay at the mansion, Prince Andrew replied, "It was a convenient place to stay. I mean I've gone through this in my mind so many times. At the end of the day, with a benefit of all the hindsight that one can have, it was definitely the wrong thing to do. But at the time I felt it was the honourable and right thing to do and I admit fully that my judgement was probably coloured by my tendency to be too honourable but that's just the way it is."

He also referred to Epstein’s behavior as unbecoming: “Do I regret the fact that he has quite obviously conducted himself in a manner unbecoming? Yes.” When questioned, he said, “I’m sorry. I’m being polite. I mean in the sense that he was a sex offender.”

Responses to the interview have been negative. Since the interview, AON, Cisco, KMPG, and a British charity have removed or are considering removing their brand affiliations with the prince’s name and his work.

Prince Andrew has since tweeted his sympathy and decision to “step back from public duties for the foreseeable future.”

Discussion:

• Describe the arguments for and against Prince Andrew’s decision to take the BBC interview.

• Looking at the BBC interview, do you think he could have handled the situation better? What could he have done differently?

• Analyze the prince’s tweet. What’s your view of that decision and communication? How well is the prince managing the fallout?

• What leadership character dimensions are illustrated by this situation?