How do companies in reputationally challenged industries approach communications? Andrew Thomas investigates

It was a clear April evening in 2011 when the oil industry was ripped apart by an explosion on a drilling rig at the Macondo Prospect, 40 miles off the Louisiana coastline. The environmental fallout from the blast on the Deepwater Horizon rig, and the subsequent oil spill, is still felt today. However, the reputational fallout of that impact has not just been on the companies involved, but on the entire sector. Observers of those companies cannot focus on specific brands without distancing their perceptions from the sector first. The oil and gas industry, and other sectors such as defence, tobacco or mining are in the unenviable situation in which communicators need to start from the position of explaining their sector in order to get new stakeholders to look beyond the headlines.

While most companies will stand or fall by their own actions, there are some for whom the strength of the brand is determined by the strength of the sector. Most often, these sectors are those that tend to court controversy.

David Bickerton, director of communications at BP says the lessons from the Deepwater crisis were integrated into the company’s crisis preparation strategies. The experience in the Gulf of Mexico had allowed BP to develop clear roles for the leadership and comms teams during a crisis, which then helped when it was managing the Algerian hostage crisis. He says, “Our crisis management team runs regular response drills. What is really

important is to make sure the lessons are properly learned, embedded and integrated into the future”

The Deepwater Horizon rig was owned and run by Transocean and leased to BP to drill and explore a number of wells in the Gulf of Mexico, including the Macondo Prospect, which was jointly owned by BP, Anadarko and MOEX. From the outset it was clear that the bearer of the brunt of blows to its reputation would be BP. The American media and politicians, along with global pressure groups and NGOs, lined up to opprobriate the multinational oil firm. There was always the potential for BP and its partners – which included Halliburton, Schlumberger and others in addition to Anardarko, MOEX and Transocean – to incur fines, and to pay substantial damages and compensation. However, there was also the possibility that the rest of the industry might incur the punitive wrath of regulators who, as elected officials, would act to pacify their electorates. Instantly, a moratorium was placed on similar deepwater drilling of the same type as at Macondo. For the five months after the Deepwater Horizon explosion, the rest of the oil industry suffered.

But It wasn’t just the major integrated oil companies that were affected by the catastrophe. All of the sub-sectors within the oil industry – drilling, exploration and production, equipment services, refining and marketing and storage and transportation, in addition to the majors – saw a drop in their market capitalisation. According to a study produced by the University of Houston- Victoria, the overall market cost within the oil industry alone, ignoring the costs to environmental and local business, was $183.7 billion, about 4.5 times that of BP’s loss in market value.

Whilst the impact of the Deepwater Horizon incident was devastating, economically, environmentally and, of course, to the families of those who lost their lives, there are arguments that the reputational impact could have been averted through effective risk assessment. For any large company, preparations for crises such as these are planned and rehearsed. According to Jannick Lindbaek, head of media relations for Statoil, the company’s CEO had taken part in a hostage crisis simulation four days prior to the In Amenas siege in Algeria.

One of the key problems for any comms head is when the business journalists with whom they have developed a good relationship lose control of the story. Sector journalists for the nationals and specialist trade journalists understand industry- specific issues. However when a crisis arises and the story goes ‘front of paper,’ the news journalists take over.

“News reporters, by their very nature, will take a company issue and turn it into a public concern. It is often at this point, information gives way to misinformation” according to Chris Shaw, CEO of corporate analytics company Commetric. He says anyone from a reputationally challenged sector has to be prepared to put up with a constant buzz of negative comment. “The concern is if the stakeholders producing that buzz change. If one set of stakeholders is being drawn into the discussion by a journalist or if they are enlarging their position on the issue that will definitely be of interest. It’s even more important for these companies to find out who the real stakeholders are.”

One problem that arises is that most companies’ first instinct is to operate from within their own silo. Companies are reluctant to share information in case they lose their competitive differential or unique intellectual property. For this reason trade bodies will often act for the industry as a whole. This can be extremely useful when there is an audience that will remain hostile regardless of a sector’s initiatives.

This is acknowledged by Mark Oaten of the International Fur Trade Federation “There are people who will always be opposed to using fur and it is almost impossible to have a dialogue with them. There would be the same difficulty in other sectors with people, for instance, who are totally opposed to nuclear weapons or totally opposed to eating meat.” He acknowledges that it is a sectoral issue. “You have to realise that you can't just reach out and come round a table and discuss issues with certain groups.”

Similarly, the hostility toward to the hydraulic fracturing, better known as fracking, method of onshore gas extraction was certainly a catalyst for the creation of UKOOG, the United Kingdom Onshore Operators Group (UKOOG), the representative body for the UK onshore oil and gas industry. “The level of coverage that the sector was getting got to such a level it required a joined up approach – a sharing of data and so on from across the sector,” says Ken Cronin, UKOOG’s chief executive.

Often companies within an industry cannot take the risk of alienating the media, their local communities and other stakeholders. However, Cronin says that his organisation, and trade bodies in general, are in a much stronger position to have those conversations. “There isn’t anyone with whom we wouldn’t have a debate,” says Cronin. “It’s very important to have the debate, but companies will often face initial hostility, making it hard to move beyond that point.”

The fracking industry may find it useful to unify its message and have a single conversation, but this approach is not unilateral. The tobacco industry, for example, has long been under siege. Governments around the world have increasingly instituted their own restrictions. This year, new legislation was slated to introduce mandatory plain packaging for all cigarette manufacturers. Rather than attack the proposals with a coordinated campaign, the tobacco industry appeared to divide the arguments. The tobacco users lobbying group threw all its energies behind its “Hands off our packs” campaign in the attempt to create a galvanised group of supporters comprised of either smokers or civil liberty advocates. Japan Tobacco International, owners of Gallaher in the UK, and Imperial Tobacco focused on the benefits of plain and unbranded packaging to fraudsters and black-marketiers, already collectively the fourth largest distributor of tobacco products. British American Tobacco focused on the inefficacy of the proposals. This ‘divide and conquer’ strategy of individual campaigns combined with an effective lobbying programme led to the abandonment of the government’s plans to introduce plain packaging. While this may seem accidental, the strategy was deliberately stolen from those who oppose the tobacco industry. In 2006, perhaps encouraged by the success of their workplace smoking ban, anti-tobacco lobbying group Action on Smoking and Health (ASH) wrote an article in the Guardian hubristically describing the communications strategy that was responsible for ensuring the legislation was successful. Seven years later, Forest, and the smoking industry, adopted a near identical communications strategy.

“Similar, but not quite identical,” says Simon Clark, director of Forest. “Coordinating libertarians is a bit like herding cats. We encouraged them rather than told them what to do.” With some sectors facing such open hostility, a dialogue with the opposition is impossible and so alliances are often made with unlikely bedfellows. The International Fur Trade Federation has links with the International Union for the Conservation of Nature and a number of other conservations and endangered species charities. “We sponsor a number of conservation projects and many trappers throughout the world are leaders in the conservation of certain breeds” says Mark Oaten, adding “It is a hard industry to engage everyone because people do see it in very black and white terms. This is one of the reasons why our open farm days work so well”. The IFTF has seen a number of members open their gates to the members of the public. The results so far have been very encouraging (see breakout box below).

In reputationally challenged sectors like tobacco, so much time is spent on engaging hostile audiences, leaving communications’ professionals in an almost constant siege mode. For this reason, perhaps, there is a greater requirement to hone their communications skills. According to Claire Tuffin, managing director of recruitment specialist VMA, “The candidate pool for jobs in these sectors can be split into three groups – those who won’t work for certain sectors under any circumstance, those who are happy to work for any sector and the fence-sitters. Unless a company can attract the fence-sitters they’re not appealing to the majority of candidates. One way to attract them is to pay more than other sectors.”

The employee benefits, however, continue after they leave that company or sector because their career prospects are enhanced due to the skills they gain through that experience. “There’s very much a view that communications professionals in the oil industry or the defence industry have earned their spurs. They’ve had to cope with more shit thrown at them than most and that experience means they’re prepared for more crises when they change sector.” Experience of crises is something that comms directors get a good deal of, and social media has resulted in an expectation of quick reaction times. Ben Lloyd, of media evaluation firm

Ebiquity, says there will always be criticism if reaction time is too slow. “If there isn’t a quick response, whatever that response might be, it indicates that the company isn’t in control of the story” says Lloyd, adding however, that the response does not need to be full or complete. At the same time, he notes that social media has meant that companies often react too quickly and may say something they regret later. “Companies don’t want to be seen to do nothing, but at the same time are reluctant to say something that will impact down the road,” adds Lloyd.

That inability to foresee the future is, ultimately, the defining line, not only for those companies defined by hostile audience, but for companies operating in what have the potential to be the toxic sectors of tomorrow. A global crisis blamed on opportunistic derivatives, the misselling of PPI and the constant focus on ‘bankers bonuses’ has seen the financial services sector go from one of the most highly regarded sectors into a poisoned chalice for brand advisors.

Ultimately, behaviour, both positive and negative, accounts for so much in building an organisation’s reputation. Although commenting on tax avoidance issues David Carrol, of branding agency DC&Co, summed up the insecurity of so many organisations, “Most companies and sectors are only one wrong move away from being tainted as ‘reputationally challenged.’”