Updated: January 2008

It’s not a pleasant place for a company to be – in the public’s Bull’s Eye.  Not fun:  Being the poster child for real or perceived “bad” corporate governance; as Exhibit “A” for undesirable corporate behavior; to be named Flavor-of-Month for corporate scandal; or moving to the top of the list as the primary newsmaker for corporate ir-responsibility.

Ask anyone who has been there and they will tell you about the crisis atmosphere that creeps into every aspect of company life when a corporation moves from “Best Companies to Work For –“ and the Respectability A-list to “Scandal-du Jour” or “Pariah-of-the-Year” status.

Much of the commotion surrounding corporations, public agencies or not-for-profit institutions moving into the Bull’s Eye zone is typically created around specific issues and public opinion [on that issue or concern] shaped decisively by media coverage, thought-leadership of advocates and activists, and public sector response.  This three-pronged assault can quickly overwhelm the ability of the target organizations to respond.  And in the editors’ opinion, monitoring hundreds of these situations, the private sector response can often be weak and ineffective, leading to a crisis-of-confidence – in management, board, the organization, its products…and more.

In the post-Enron era, headline risk now makes insurance carriers, credit rating agencies, capital market players, shareowners, and banks and lenders very anxious.  It may take a while, but eroding share prices trending downward week-after-week can eventually weaken support for a company’s management and board.  Credit rating agencies Moody-Ratings-Fiasco Sep-07  -- themselves under fire in the subprime lending crisis -- are more atttuned now to “sniff” for headline problems just around the bend.  This is about PR, but it is about much, much more – and PR alone is usually inadequate to deal with rising criticism.

More than one major financial services organization has found that external critics can pile on, creating a journalism frenzy of negative coverage and causing sell-side analysts to begin communicating warning signs to investors or even dropping coverage.  Buy-side folks have quietly divested.  Some hedge fund managers are now becoming proactive agents-of-change. The "Wall Street Walk" -- news about eroding trust shows up months later in the listings of mutual fund holdings made public. But behind the scenes, there could be lots of action.  

Very often the management and board of the company in the Bull’s Eye is in the dark on what is going on.  Or senior management can vastly under-estimate the effects of constant criticism and the targeting of the enterprise by media, advocates and activists.  The giant retailer Wal-Mart seems to be in that position today – by the time management and board “got it” the critics were legion and the social and other issues linked, cross-linked, and neural-networked across the nation and even offshore. Bring in the spin doctors – but batten down the hatches while you wait for the turn-around…if it ever comes.  (For some firms, the spiral is ever-downward and there is no happy ending.)

Sometimes there are glaring disconnects in the rankings, ratings and characteristics profiling of a specific company:  Company “X” could be on the Diversity hall of honor list and at the same time be identified by a pension fund as a company badly in need of human resources reforms (among other concerns).

Of course, there are two sides to the story. The advocate story is usually more exciting, dramatic, enticing (especially to the media); the corporate response can range from ignoring the critics to tepid and tentative responses…ineffective communication with key stakeholders…or all-out PR warfare.

In this feature we publish “the stories” of that small handful of large companies quite prominently “in the Bull’s Eye,” and there are lessons in the stories for leaders in every walk of life.   These cases are intended to serve as lessons (good and bad) for leaders in the corporate, social, and public sectors.

Recently a corporate governance advocate shared this with the editors:  At any given time, there are between 3,000 and 7,000 US publicly-traded companies being looked at in various ways by investors, advocates, rating agencies, corpgov raters, and others – in the USA and around the globe.  We can rapidly reduce that list to 1,000, then 500, then 200, maybe down to 100 companies meriting closer examination. 

Eventually, said the company-watcher, we’ll get to the five, six, seven firms or perhaps a few more that – in any given period – will be in the crosshairs, in the Bull’s Eye for advocates, activists, journalists, public officials, regulators, legislators, prosecutors and a wide range of investors.  Every move is scrutinized – and often criticized.

This section focuses on those currently or recently in the Bull's Eye, and other enterprises that seem to the editors to be moving up to front-page headline status. Since we are scanning 3,000 or more potential news, commentary and research articles each day for Accountability Central publication, we see emerging issues as these build in intensity. 

We have archived past corporate targets in this section – those stories are also valuable lessons for today’s managers and their advisors.  Lessons good and bad are often in the tales told.

 

Section created February 2007 by the Editors

Update February 2008

 

The editors invite your comments at: editors@accountability-central.com.

Currently in Focus

• Altria / Phillip Morris
• Coca-Cola
• Exxon Mobil
• Nike
• Pfizer Company
• Shell
• Starbucks
• Wal-Mart

Archives - Case Histories

• British Petroleum (BP)
• Ford
• General Electric (GE)
• Hewlett Packard (HP)
• Home Depot
• JetBlue