Tourism CEOs Meet with President Trump

President Trump invited CEOs of major tourism companies to discuss the COVID-19 response.

Hilton CEO Christopher Nassetta began by highlighting issues in the industry:

“Hilton’s been around 100 years -- we’ve never closed a hotel that wasn’t going to be demolished or rebuilding, The bulk of our hotels in the major cities are closing as we speak.”

Nassetta was also complimentary to President Trump and Vice President Pence and said that he wanted to protect employees. The president reassured him that they’ll be up and running soon, although both said the situation is currently a “disaster” “all over the world.”

Discussion:

• How would you describe the purpose of this gathering? What are President Trump’s objectives?

• Assess each of the CEOs during the meeting. How well did they represent their brand?

Singapore PM Lee Hsien Loong

Two students sent me Singapore Prime Minister Lee Hsien Loong’s news conference as a positive example. I can see why: he gives a model speech, balancing emotional appeal and straight talk. He is proud of Singapore’s response, and yet he is honest about the challenges ahead. The PM also gives examples from other countries and the lessons learned.

Discussion:

• What are the strengths of the Prime Minister’s speech?

• Assess his delivery skills.

• How have leaders in other countries followed this example—or how have they fell short?

• Which leadership character dimensions does the PM demonstrate in his speech?

Comparing Airlines Messages About COVID-19

Transportation companies would like to see more people travel, yet people are wary of COVID-19. Compare these emails to travelers:

United Airlines

Allegiant

Delta

American Airlines

Discussion:

• Analyze the messages: audience, communication objectives, organization, writing style, etc.

• In what ways are the messages similar and different? How might the travel mode—airline or bus—affect the communication choices?

• Which messages are most and least effective and why?

• What’s your view of the American Airlines video? How does the media choice affect the message?

More Toyota Recalls

About a month after the last recall, Toyota announced another recall for a total of 1.8 million vehicles. The issue is a fuel pump that fails, causing the car to stall and possibly not restart.

In both statements, Toyota calls the recall “voluntary,” but the number of models is significant, dating back to 2013. Like most recall messages, Toyota’s is straightforward and focuses on affected vehicles and the remedy—in this case a new fuel pump for free.

Image source.

Discussion:

• Analyze the recall message. Who are the primary and secondary audiences, and what are the communication objectives?

• Analyze Toyota’s website. How easy is it to find information about the recalls? What, if anything, could be improved?

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?

Communications About Kobe Bryant

NBA superstar Kobe Bryant, his daughter, and seven others died in a helicopter crash, and many are mourning the loss. At the Emmy’s, celebrities paid tribute to his life, and the NBA postponed a Lakers—Clippers game.

The helicopter company, Sikorsky, owned by Lockheed Martin, posted two tweets and a short statement on its website:

We extend our sincerest condolences to all those affected by the January 26th Sikorsky S-76B accident in Calabasas, California. We have been in contact with the NTSB and stand ready to provide assistance and support to the investigative authorities and our customer.  Safety is our top priority; if there are any actionable findings from the investigation, we will inform our S-76 customers.

Discussion:

• Analyze the Sikorsky messages. Who are their primary and secondary audiences? What are the communication objectives, and how well did the company achieve them?

• Have you seen other communications from Sikorsky? Should the company do or say more? If so, what?

Wells Fargo Earnings Call

The Wells Fargo scandal of creating fake accounts became public in 2016, and the company is still suffering the repercussions. Profit is down 53%, and stock performance is lagging.

On an earnings call, Charles Scharf, who has been the CEO since October 2019, explained the bank’s current position:

I was honored to be chosen to lead Wells Fargo because I believe this is an extraordinary company that plays an important role in this country. We came out of the financial crisis as the most valuable and most respected bank in the US, but as you know, we made some terrible mistakes and have not effectively addressed our shortcomings. These circumstances have led to financial underperformance, but we have one of the most enviable financial services franchises in the world and employees that want to do what's necessary to again be one of the most respected and successful banks in the US.

Discussion:

• Read the earnings call transcript. What’s your view of how Scharf and John R. Shrewsberry, EVP and CFO, addressed concerns?

• How well has the bank recovered its image since 2016? What examples of their communications can you cite?

• What could bank executives have done differently in the past four years?

• How well does the line chart work to compare Wells to other leading banks? What could be improved?

Boeing's Crisis Communication Plan

During the holiday break, several news items about Boeing were relevant to business communication and character. In one article, the New York Times revealed internal Boeing documents showing a company trying to rebuild its image after two MAX crashes within a year..

The documents give us an inside view of how the company plans to use persuasive strategies to win back customers. In one graphic, we see customers’ willingness to fly. In another, we see customer concerns and ways Boeing can address them, for example, with FAQ cards, “pilot confidence videos,” or personal connections (for example, “Flight attendant offers comfort and information on the safety of the MAX”).

Discussion:

• What persuasive strategies does the company plan? Try to find examples of logical argument, emotional appeal, and credibility.

• What are the consequences of this information becoming public? Does it likely endear the public to the company’s concerns, embarrass the company, or something else?

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?

Layoffs Planned at WeWork

After a failed IPO and questions about its leadership and financials, WeWork is planning to downsize. New co-CEOs Artie Minson and Sebastian Gunningham warned employees to expect layoffs but said they will be handled “humanely.”

The new leadership had already prepared employees: "While we anticipate difficult decisions ahead, each decision will be made with rigorous analysis, always bearing in mind the company's long-term interest and health." The new information gives employees a better sense of what will come.

But news stories aren’t consistent. Fortune reports 2,000 layoffs or about 16% of WeWork employees affected, while Dice reports 5,000. Dice acknowledges differences in reporting.

Affected employees could be in business segments that will be spun off, so they may still have a job. WeWork may try to sell Meetup, Managed by Q, and Conductor brands.

Discussion:

• Assess WeWork’s communications to employees so far. Even if the percentage were clear, the number of layoffs may change. Are the new leaders doing the right thing in giving an estimate now?

• Employees know layoffs are coming “soon.” Should they have more specific dates? Consider whether this is a good idea.

https://fortune.com/2019/09/25/wework-new-ceos-memo-employees/

Forever 21 Files for Bankruptcy

Retailer Forever 21 has filed for bankruptcy, and employees are not happy. In its Letter to Customers, posted on the website, the company explains the process:

This does NOT mean that we are going out of business – on the contrary, filing for bankruptcy protection is a deliberate and decisive step to put us on a successful track for the future.

Hundreds of employees are planning to unionize with United for Respect, which also represented employees from Sears and Toys R Us during their bankruptcies.

The Washington Post reports employees’ reactions to the Forever 21 decision:

[S]everal employees cited past instances where Forever 21 swiftly closed stores with little warning or explanation, which prompted their concerns over how the company would treat employees amid bankruptcy.

Unions are seeing opportunities in retail employees. Private-section union membership has been shrinking in the U.S. and is now only 6.4%, compared to 33.9% of government workers. As retail employees get discouraged by their employers, union organizing activity has been increasing.

Cover image source.

Image source here.

Discussion:

• Analyze the Letter to Customers. Which principles of communicating bad news are followed? How could the message be improved?

• Explain the ethics of a company filing for bankruptcy. Use an ethical decision-model, such as that in Chapter 1, to determine the effects.

• What’s your view of retail employees unionizing? What are the benefits to employees and potential downsides of union activity and of forming a union?

Juul CEO Steps Down

With new reports about the dangers of vaping, Juul is replacing its CEO, Kevin Burns, with former Altria tobacco executive K.C. Crosthwaite.

Following several deaths and worrying data about increasing numbers of young people vaping, the company also announced a pause in all advertising. The decision comes after major media companies and networks banned e-cigarette advertising. Juul had already stopped marketing and selling its flavored products.

The company’s news statement is typical for a CEO announcement with confidence expressed about the departing CEO (Kevin Burns), the new leadership, and the direction of the company. Below is the Kevin Burns’ quote:

“Working at JUUL Labs has been an honor and I still believe the company’s mission of eliminating combustible cigarettes is vitally important. I am very proud of my team’s efforts to lead the industry toward much needed category-wide action to tackle underage usage of these products, which are intended for adult smokers only. Since joining JUUL Labs, I have worked non-stop, helping turn a small firm into a worldwide business, so a few weeks ago I decided that now was the right time for me to step down. I am grateful to be able to confidently hand the reins to someone with K.C.’s skill set, which is well-suited to the next phase of the company’s journey.”

Juul image source.

Burns image source.

Discussion:

• What are the communication objectives of the news statement? How well does it meet those objectives?

• Assess Burns’ quote. What are the objectives of his statement, and how well does it meet those?

• Altria had bought a 35% stake in Juul, so the CEO decision makes sense, and Crosthwaite is an industry insider. How do you view the decision?

WeWork Co-Founder and CEO Steps Down

WeWork announced that Adam Neumann will leave his position after controversy about the company’s financial situation and the co-founder and CEO’s behavior. Within a week, the company went from preparing for an IPO to facing criticism that led to this ouster and a delayed public offering.

The company valuation has been reduced from about $47 to $15 billion based on governance issues and what the Wall Street Journal calls “ballooning losses.” The Journal also reported on Neumann’s “eccentric behavior,” including a heavy-party lifestyle that recently involved bring marijuana on a plane to Israel and saying that he might like to be the prime minister.

In its news release, WeWork provided scant information and a few quotations, including this from Neumann:

“As co-founder of WeWork, I am so proud of this team and the incredible company that we have built over the last decade. Our global platform now spans 111 cities in 29 countries, serving more than 527,000 members each day. While our business has never been stronger, in recent weeks, the scrutiny directed toward me has become a significant distraction, and I have decided that it is in the best interest of the company to step down as chief executive. Thank you to my colleagues, our members, our landlord partners, and our investors for continuing to believe in this great business.”

Neumann image source.

WeWork office image source.

Discussion:

• Compare the company’s news release to others announcing CEO departures. How does this one differ, and why would the company take this approach?

• What are the communication objectives of Neumann’s statement? How well does his quote meet those objectives? What else, if anything, should Neumann say or do?

United Air Kerfuffle

A United Airlines representative participated in an entertaining Twitter exchange about seat prices. The customer has a point: it’s silly to have empty seats on a plane. But United also has a point: the seats are more expensive, and this customer didn’t pay the extra fee.

The Lexus analogy is a curious one. The better analogy may be stadiums or theaters. In some cases, we will see people move closer to a field or a stage, but I understand (although I’ve never been) that this isn’t allowed at the U.S. Open.

Discussion:

• What’s your view of United Airlines’ policy? What other examples are similar? Can you think of a better analogy?

• What’s your view of the Twitter exchange? Is the customer right, antagonistic, rude, or something else? How about the United rep?

Dorian News Conferences

Local officials are holding news conferences about the impact of Hurricane Dorian.

Miami Mayor Francis Suarez announced mostly good news for the city, but he also addresses the terrible impact on the Bahamas.

Bahamas Prime Minister Hubert Minnis announced worse news: five fatalities. Since then, the number has risen to 30.

Discussion:

• Compare these two presentations, particularly the content and tone. What differences do you notice?

• How effectively did each government official convey the news?

• What leadership character dimensions did they demonstrate?

Howard Schultz Update

Former Starbucks CEO Howard Schultz has decided not to run for president, after all. He communicated the news in an email and on his website. In the email, fonts changed in the middle, but it looks better online. At right are the first few paragraphs.

The full message explains his reasons, which include the election process and his health.

Discussion:

• Analyze the message. Consider the audience, communication objectives, writing style, organization, and reasoning. What works well, and what can be improved?

• At what point does he announce the news?

• What are his strongest and weakest arguments for not running for president?

• What causes fonts to change in the middle of an email, and how can you avoid this in your own writing?

Overstock CEO Resigns

Overstock CEO Patrick Byrne resigned after admitting to a relationship with Russian agent Maria Butina. Butina is serving prison time because of her attempts to gain political access during the 2016 U.S. presidential election.

Byrne announced his decision in a letter to shareholders. He begins with the news:

“In July I came forward to a small set of journalists regarding my involvement in certain government matters. Doing so was not my first choice, but I was reminded of the damage done to our nation for three years and felt my duty as a citizen precluded me from staying silent any longer. So, I came forward in as carefully and well-managed fashion as I could. The news that I shared is bubbling (however haphazardly) into the public. Though patriotic Americans are writing me in support, my presence may affect and complicate all manner of business relationships, from insurability to strategic discussions regarding our retail business. Thus, while I believe that I did what was necessary for the good of the country, for the good of the firm, I am in the sad position of having to sever ties with Overstock, both as CEO and board member, effective Thursday August 22.”

Byrne’s letter then describes his thinking about Overstock, including blockchain technology, retail, and strategy.

This announcement came 10 days after Byrne wrote a news release titled, “Overstock.com CEO Comments on Deep State, Withholds Further Comment.” In that post, he refers to “Men in Black” and his “Omaha Rabbi,” reinforcing perceptions that Byrne is a controversial figure.

MarketWatch shows the stock performance during this period.

Byrne image source.

Discussion:

• What’s your view of Byrne’s decision to resign? Consider his history with Overstock, company performance, and the company trajectory.

• CNN referred to Byrne’s first news release as “strange.” Do you agree?

HP CEO Resigns

HP CEO and President Dion Weisler will step down after about four years in the position. In a news release titled, “HP Announces CEO Successor, the company identified Enrique Lores as the next company executive.

The announcement has the typical quotes, from the incoming and outgoing executives and from the board chair. Weisler’s decision is positioned as “due to a family health matter” and notes that “he will be returning home to Australia.” Chip Bergh, the board chair, reinforces the message in his quote:

“On behalf of the board, we respect Dion’s decision to support the needs of his family. We thank him for leading HP post-separation, building a strong team and restoring the company to drive strong shareholder value creation over the last four years.”

In after-hours trading, HP shares dropped more than 6%, according to a Wall Street Journal article.

Weisler image source.

Discussion:

• How does this company news release compare to others announcing CEO resignations, for example, Overstock?

• What’s your view of mentioning Weisler’s personal situation in the announcement? Why would the company include this? From Weisler’s point of view, what are the reasons to include or exclude this information?

Capital One's Response to the Breach

A hacker got access to 140,000 Capital One customers’ credit information and social security information, and about 106 million people were affected by other leaked information. Officials arrested Paige A. Thompson, who goes by “erratic” and was a former Seattle technology company software engineer.

In a bar chart, a BBC article puts this breach in context of others. Capital One’s press release describes the company’s quick response:

“Capital One immediately fixed the configuration vulnerability that this individual exploited and promptly began working with federal law enforcement.”

The release also includes a statement from Chairman and CEO Richard Fairbank:

"While I am grateful that the perpetrator has been caught, I am deeply sorry for what has happened. I sincerely apologize for the understandable worry this incident must be causing those affected and I am committed to making it right."

In addition, as expected, the release includes information for customers, offers free credit monitoring, and provides an FAQ.

Image source.

Discussion:

• Analyze the press release. Consider the audiences, objectives, organization, tone, and so on.

• How well does Fairbanks demonstrate humility in the press release? What other leadership character dimensions are illustrated? How well does he inspire confidence in Capital One?

• Analyze the BBC chart shown here. What works well about the chart, and what else would be helpful to understand these breaches in context?

Fisher-Price Recall

At first, the company stood by their product, but after 10 infant deaths since 2015, Fisher-Price voluntarily recalled its Rock ‘n Play sleeper. The decision affects 4.7 million products, and the notice is now prominently displayed on the Fisher-Price homepage. When you follow the link, you see the page at right, which lists all “Recall & Safety Alerts.”

The announcement on April 5 points to a Consumer Product Safety Commission (CPSC) alert, which suggests that customers stop using the product for infants more than three months old, when they can turn over and suffocate.

The announcement on April 12 is a full recall, which urges customers to “immediately stop using the product” and return it for a refund.

Discussion:

• Analyze the communication situation. Who are the primary and secondary audiences of Fisher-Price’s messages? What information do those audiences need? How might they react emotionally? What are the company’s communication objectives?

• Product recall messages typically follow a particular structure and provide specific content. What do you observe from this message?

• Should Fisher-Price have issued the recall earlier? Why or why not?