How To Do Crisis PR — HP Style

By Dominic Jones, IR Web Report

HEWLETT-PACKARD Co. is going on the PR offensive in a bid to save the career of its CEO and rescue its reputation from the wreckage of its spying operations against journalists, its own directors and members of their families.

The New York Times reported Friday that HP’s CEO Mark Hurd “was preparing a plan to present to the board for how get the company beyond its current problems.” The newspaper cited “several people with close ties to board members” as the source of the information.

Earlier, HP announced that Hurd was willing to testify at a House subcommittee hearing on the case. HP spokesman Ryan Donovan told Reuters: “Mark wants to be as transparent as possible, he wants to apologize publicly and talk about how we are ensuring that these events will not happen again.”

To the eye of a seasoned flack catcher, the PR guy’s statement is a goldmine of insight into how HP intends to spin its way out of the public mess it has put itself in.

It’s textbook crisis communications strategy. And it comes in response to evidence that the company’s credibility and reputation are suffering from the continuing revelations about its unethical and possibly illegal investigation methods.

According to a Washington Post article quoting figures from research consulting firm Brandkeys Inc., HP has lost 14% of its “brand strength” with consumers and has tumbled from third in the sector to seventh. Furthermore, the company’s claim to be a privacy leader is now the butt of jokes.

Investors also have reacted badly to news tying HP CEO Mark Hurd to the company’s wayward investigation methods. The company’s shares had their worst day in two years after newspapers published details of internal emails saying Hurd personally approved aspects of the investigation.

Now HP is going on the PR offensive in a bid to save face and reassure stakeholders that all is under control. Here’s what you can probably expect from the company in the coming days:

• Hurd will acknowledge making mistakes. He will say the company did wrong and should have handled its concerns about leaks differently.
• He will apologize. He will say sorry for letting people down and for not exercising better judgement. He will apologize to all who were subjects of the investigation.
• Hurd will promise that steps are being taken immediately to act on recommendations from the company’s corporate governance committee to ensure that something like this never happens again. He will use the word “transparency” repeatedly.
• He will pledge that the company will cooperate fully with investigators. If they determine someone broke the law, then the legal process must run its course. (HP probably already knows by now from its lawyers the chances of anyone being prosecuted inside the company. Whoever is legally at risk will be cut loose.)
• HP will say that even if no one at HP is prosecuted, it is clear to Hurd and the board’s corporate governance committee that senior people at the company did not live up to the company’s standards of integrity. Furthermore, the company has let down its customers, employees and other stakeholders.
• We may hear of some resignations and terminations. Nothing serious, though.
• There will be new appointments to the HP board.
• The board might instruct Hurd to implement mandatory ethics training for senior managers and directors.
• There may be some civil penalties and damages to be paid. They will be settled as quickly as possible and with the minimum of publicity and fuss.

All the while, the core objective of all of this is to obscure as much as possible the central questions that need to be answered.

What type of corporate leaders allow themselves to engage in activities that invade people’s privacy, undermine the free workings of the media, and possibly even break the law just because someone speaks out of line?

What type of people don’t see that they must fall on their swords when the company’s name is being dragged through the mud because of actions they are responsible for?

And finally, why should shareholders have to put up with them?

Update, Friday Sep. 22 — Hurd Addresses Media: HP’s CEO Mark Hurd spoke publicly about the scandal for the first time today. This is playing out much as expected. The surprise for me was that Patricia Dunn resigned from the board effective immediately.

Hurd said a lot of things I thought he would say (see Wired report and transcript).

David Kirkpatrick, Fortune senior editor, has the best analysis of the HP press lecture today (they didn’t take questions so it can’t be called a press conference). He also reports that two lower-level employees involved in the investigation were fired today.

Generally, the media seems unimpressed with Hurd’s performance. He should have answered questions. The lawyers told him not to, apparently because he is testifying before a House subcommittee next Thursday.

HP needs to understand that they don’t have a legal mess on their hands as much as a media relations and credibility crisis.

Update, September 28, 2006:- Hearing day. Well, well. I’m impressed. I was pretty accurate. HP went on a major PR offensive over the past week. Big media outlets like Business Week and the New York Times got exclusive interviews with Hurd, in which he followed the script of accepting accountability for the bad, apologizing and promising to fix the “mess.”

Today, Hurd testified before the House Energy and Commerce committee and did a good job sticking to the script. He should count himself lucky to have supportive shareholders who like where the stock price has been going. It wouldn’t have be so easy to explain away his not paying attention to emails or being a willing participant in a sting against the media if people had lost money over the scandal.

Dunn, the board’s ex-chair, was convincing in her testimony as the out-of-touch airhead who you should feel sorry for because she thought anyone could just phone up a phone company and ask for someone else’s phone records. I believe her, but it doesn’t say very much of the caliber of people on America’s boards. But that’s another issue for another article.

Before the hearing, the company announced that Ann Baskins, HP’s top internal lawyer, had resigned. She also refused to testify at the hearing after earlier agreeing to attend. She got a $6 million payout from the company.

A lot of damage has been done to HP’s reputation. However, the company has regained control over the debate and can now set about the long road to restoring trust.

I doubt HP will ever be credible again on the topic of privacy protection. They should find a new gig.

If they have guts, they’d go on a major drive to open up the company to greater outside scrutiny like Sun Microsystems and Microsoft have done. But that requires a difficult change in culture.

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4. The SEC inquiry that made me shudder
5. Intel’s e-proxy is best so far

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