To help directors fulfill their fiduciary and reputational obligations, eight leading attorneys offer perspectives on issues ranging from M&As and IPOs to data loss and theft. These attorney interviews provide insight and tips on how companies and directors can best communicate their steadfast commitment to compliance, value and responsible oversight. To that end, our own suggestions for best communications practices are appended to each interview. Additionally, William D. Anderson, a managing partner in Goldman Sachs’ M&A Group, explains what qualities make for a great director.

Civil and Criminal Litigation & Investigations

Gregory Little

Gregory Little
White & Case
Little is a trial lawyer who counsels clients on successfully avoiding, resolving and winning litigation. He has broad commercial litigation experience, with an emphasis on SEC enforcement actions, securities litigation, and product liability. In addition to leading high-stakes corporate litigation strategy and serving as national coordinating counsel for Fortune 10 companies, Little has been lead trial counsel in over 45 trials in state and federal courts nationwide.

How is the implementation of Dodd-Frank most dramatically affecting director liability?
There are many provisions in Dodd-Frank that impact director liability. The provision that has the most potential impact is the SEC whistleblower bounty program. This program authorizes the SEC to pay monetary awards to whistleblowers who provide information that relates to violation of the federal securities laws and results in sanctions exceeding $1 million. The monetary awards are significant and can range from ten to 30 percent of the total amount of sanctions recovered. The whistleblower bounty program has been described by the SEC as a “game changer.” That description could prove to be an understatement. At its peak, the SEC has announced it was receiving 7-9 tips per day. That number likely will increase dramatically once payments have actually been made and publicized.

What do directors need to know about SEC enforcement trends?
There are several trends that stand out in the area of SEC enforcement that could directly impact directors. In the past several years, the SEC has been involved in a number of high-profile insider trading cases. Many of the allegations involved evidence of directors of public companies providing material nonpublic information to friends and business associates. Insider trading cases, of course, have been around for years. However, recent cases have demonstrated that the SEC is working more closely with the Department of Justice and taking full advantage of the DOJ’s ability to bring criminal actions and seek enhanced investigatory powers like wiretaps and informants.

At the other end of the spectrum, the SEC has also announced a willingness to pursue civil cases in which defendants are accused of negligence only. Traditionally, the SEC pursued individuals engaged in intentional misconduct leading to investor losses. By pursuing negligence-based claims, the SEC will increase the number of potential targets to include those who had no intent to deceive investors but simply did not act in a reasonable manner. If a business decision results in significant shareholder loss, there may be a tendency to view all actions and disclosures surrounding that decision as unreasonable. The bottom line is the SEC will potentially be bringing more claims with a significantly reduced burden of proof. This new focus will reinforce the need for robust compliance programs.

How can boards best serve a company in the midst of a civil or criminal investigation?
In most investigations, there are three distinct phases that require three distinct approaches. In the beginning stages of the investigation, every effort should be made to demonstrate to investigators that the company intends to be part of the solution – not part of the problem. Whether it is the SEC, the DOJ, or a state attorney general, regulators and prosecutors are very quick to make a determination as to whether your company is truly committed to solving a perceived problem or perpetuating it.

If the investigation proceeds to the second stage where the regulators and/or prosecutors believe a problem exists, the company should make an objective assessment as to whether that is the case and, if so, demonstrate why that problem is an aberration in an otherwise strong compliance program. If the board concludes that the regulators and/or prosecutors are wrong about whether the problem exists, the company should work closely with them to explain why the conclusion is erroneous.

Finally, if the regulators/prosecutors are apparently committed to moving forward with an enforcement action, the company must be prepared to show it is committed to winning in court. Even if the company ultimately decides to resolve the dispute, the willingness and ability to pose a vigorous defense will enhance the negotiating posture of the company.

Best Communications Practices:

1. New whistleblower rules have changed the game. Boards must ensure that all employees know every channel by which they can report compliance issues internally, before they turn to the government.

2. Companies are naturally reticent to communicate aggressively on compliance. But the more they do, the more they condition the marketplace, investors and regulators to give them the benefit of the doubt should trouble arise.

3. When it becomes clear that an investigation will result in charges, boards must ensure that companies articulate their willingness to aggressively defend against dubious allegations. At the very least, they strengthen their position at the bargaining table by doing so.

Activist Investors

Marc Weingarten

Marc Weingarten
Schulte Roth & Zabel
Weingarten, a partner in the New York office of Schulte Roth & Zabel, is chair of the Business Transactions Group and a member of the Investment Management Group. His practice focuses on mergers & acquisitions, leveraged buyouts, corporate governance, securities law and investment partnerships.

Who are the activists and what do they want?
There are two worlds of activists operating in the corporate sector. The first are issue activists – mostly pension funds, academics, and other special interest groups. The pension funds and academics generally are interested in corporate governance issues, such as say-on-pay, proxy access, de-staggering boards, shareholder rights to call special meetings, and redeeming poison pills. The special interest groups tend to focus more on social responsibility issues, such as board diversity and socially responsible investment.

The more intimidating side of the coin is financial activism – generally carried out by hedge funds and others that push companies to “maximize” shareholder value. Their actions typically are targeted at the balance sheet, and look to stock buybacks or dividends, sale of the company, spin-off or sale of lines of business, and leveraged recaps. Fewer financial activists, but some of the largest, focus more on the income statement side, looking to improve operations, increase revenue, and reduce expenses. This sometimes includes pressing for board representation via a proxy fight.

What are the reasons behind increased incidents of shareholder activism?
The principal reason is the increased willingness of major shareholders, both institutional investors and pension funds, to support activists. Historically, they simply “voted with their feet” and sold out. But they’ve become so big that now they really own the market, and rather than selling and having to look to reinvest somewhere else, they join the activists in pressing for improvements.
When markets are down, investors are unhappy and will turn to activists for help. Several of the most successful financial activists now have several billion dollars in assets, and can target even the largest-cap companies. Given activists’ success rate in recent years, many more hedge funds that are not typically “activist” are now trying out the strategy on their poor-performing positions.

What are some of the most common mistakes that boards make when faced with pressure from activist investors?

The most common mistake is for a board to refuse to give the activist a hearing. It’s fine to evaluate your defenses, but stiff-arming or fighting the activist from the start and refusing to engage is generally not well-received by the other stockholders.

Another common mistake is to attack the activist as merely a short-term opportunist looking for a quick pop in the stock price at the expense of long-term value creation. Shareholders will be happy to take any gains they can get, even if short-term. As such, a company under attack needs to put itself in the mindset of its shareholders and come up with responses that explain prior performance and realistically support a more promising future.

To avoid becoming targets in the first place, boards should regularly evaluate their strategic alternatives. No idea that a financial activist proposes should come as a surprise. The board should already have considered and rejected it, and be fully prepared to justify the decision. It should also have a strategic plan that has been thoughtfully vetted and challenged; not just perfunctorily accepted as dictated by management.

Best Communications Practices:

1. In the age of transparency, boards need to direct their investor relations and communications team to focus on more than just the analysts. The democratization of the market is underway, investors are newly empowered, and companies need to think differently about how they engage potential activist threats.

2. Don’t let the shuttering of Moxy Vote fool you—the activists are online, and they use the Web to drum up support. Boards need to direct their teams to better understand how WikiInvest, Seeking Alpha, and other social and digital media have an impact on their value.

3. Companies that clearly and consistently articulate their value force activists to swim upstream against the dominant perception. There is no peacetime. Boards need to know what is being said about them beyond just their marketplace and ensure that companies communicate value aggressively, whether activists are currently looming or not.

Bankruptcy & Restructuring

Tyler Nurnberg

Tyler Nurnberg
Kaye Scholer
Nurnberg is a partner in Kaye Scholer’s bankruptcy & restructuring group and managing partner of the firm’s Chicago office. He represents troubled companies in restructurings throughout the U.S. He also advises lenders, funds, institutional investors, and private equity sponsors on restructuring matters.

How has the bankruptcy and restructuring landscape changed in the wake of the global financial crisis?
Europe is still very much in the midst of a financial crisis and the effects are multifaceted. Notably, we have seen an increase in the number of cross-border insolvency cases, which is a trend we fully expect to continue. In particular, there has been a rise in cases filed under Chapter 15 of the Bankruptcy Code, which provides a framework for multinational companies to have foreign insolvency proceedings recognized in the U.S. The laws governing these cases are still being developed, and courts are struggling with how much weight to give foreign insolvency laws when they conflict with U.S. law.

We have also witnessed growth in the number of foreign companies looking to file under Chapter 11 of the Bankruptcy Code. The rules on eligibility for a foreign company to file bankruptcy here are lenient, and our bankruptcy laws are biased towards rehabilitating a troubled company to preserve its “going concern” value — as opposed to most foreign insolvency regimes, where the focus is on liquidating a troubled company’s assets quickly and distributing the proceeds to creditors.

How can directors best serve a company during bankruptcy or restructuring?
A board will want practical outside advice early in the process on how to fulfill its fiduciary duties, and how those duties may change when the company is insolvent or approaches insolvency. The board will want to maintain a proper supervisory role and not exercise undue influence over day-to-day operations. Prior to filing bankruptcy, the board and its advisors should also assess the adequacy of the D&O insurance policies. Also, directors should be alerted to the discrete areas where they could potentially be liable personally for the bankrupt company’s debts. Every case is different, but these pitfalls can include personal liability for “responsible persons” when a company fails to pay wages or segregate certain taxes, or for knowingly permitting the company to incur debts beyond its ability to pay.

Once a company files bankruptcy, the board should appreciate that the decision-making process becomes much more transparent. In general, the company can operate as usual but will need prior court approval for “non-ordinary course” transactions such as sales, financings and the like.  A question that frequently gets asked is whether a director should resign once the company files bankruptcy — there are exceptions but in most cases, the answer is “no,” the director is better off staying on the board and guiding the company to conclusion of the bankruptcy process.

What can a company do to position itself for post-bankruptcy operations?
The company should determine its exit strategy before it files bankruptcy wherever possible, and view the process as an opportunity to fix both financial and operational problems. Get as much negotiated in advance of filing as possible. There has been an increase in the number of “prepackaged” or “pre-negotiated” cases in recent years and we see that trend continuing. Filing with an exit plan already negotiated enables the company to shorten the time it spends in bankruptcy, maintain control over the process and reduce restructuring costs.

Another piece of practical advice is for the company to get the right managers and financial advisors in place, and develop a plan to “right-size” the employees, before it files bankruptcy. The benefits of getting this done before filing can include greater flexibility in developing an incentive bonus plan for the company and avoiding potential liability for premature layoffs.

Lastly, the board needs to stay focused on the business plan during the bankruptcy. While external factors may have contributed to the need to file, larger underlying problems with the business model or the balance sheet likely drove the decision. Those issues need to be resolved for the company to emerge as a viable business and, while bankruptcy can be a powerful tool, it is not a panacea for the problems that led the company to file bankruptcy in the first place.

Best Communications Practices:

1. Boards must ensure that exit strategies and future growth are the hallmarks of communications during bankruptcy, beginning with the initial announcement. When companies control the “new day” narrative, internally and externally, they keep stakeholders focused on future success, not past mistakes.

2. Every ruling, decision, and development in the restructuring process is an opportunity to communicate the new day message. Adversaries will use these milestones to disseminate their own messages. Don’t let them operate in a vacuum.

3. Boards must understand the power of social and digital media to disclose. Teams need to be ready to respond publicly from the very moment a company begins to seriously consider restructuring—in other words, go on the offense so you don’t have to play defense.

Mergers & Acquisitions

William Wynne 

William Wynne
White & Case
Wynne represents principals in major corporate transactions and financings, mergers and acquisitions, international corporate debt restructurings, and public and private securities offerings. As lead counsel for principals in mergers and acquisitions transactions, Mr. Wynne is involved in all aspects of structuring, negotiating, and documenting deals.

How can boards best serve a company seeking to make itself attractive to potential buyers?

The fastest way to derail a sale process is to have a compliance problem “discovered” in the course of a buyer’s due diligence. Given the ever-increasing size of the penalties being extracted by governments, even routine compliance issues take on a disproportionate dimension. A board contemplating a sale process is well advised to update its compliance review and have well-prepared answers to any questions that may be uncovered.

What steps can boards take to convince shareholders that they got the best deal in the wake of a major transaction?

The board must be seen to have asserted itself to control the transaction process. If the board is seen to have been reactive, activist shareholders are more likely to question and challenge the transaction. Shareholders, and indeed the general public, are questioning management’s motives more aggressively. There is also growing malaise about corporate governance. Again, it is imperative that the board be seen to take charge. That means forming a committee of independent directors; participating in the retention of financial and legal advisors; and requiring periodic updates on the transaction process.

What should boards do to effectively prepare for inadequate hostile takeover bids?
Boards should periodically review their companies’ structural defenses to an unsolicited offer: a staggered board, ability of shareholders to act by written consent, poison pills, etc. Just as important, however, is being comfortable with the transaction process and not panicking upon receipt of a hostile offer. A team of advisors that has the board’s confidence should be immediately available. This team should not just include bankers and lawyers, but public relations professionals and proxy solicitors as well.

Boards should also review what similar companies in their space have done in response to hostile transactions. This will let directors know what to expect and allow them to learn from their competitors’ successful tactics and missteps.

Finally, maintaining good relationships with major shareholders is always good business; but it pays particular dividends once a hostile offer is made. A shareholder who is familiar with management’s strategy and aware of the board’s involvement in setting that strategy will be much more receptive and supportive than the shareholder who only hears from the board once the hostile offer has arrived.

What’s next with regard to M&A law? Are there issues or opportunities on the horizon of which all public companies need to be aware?
Merger-related litigation has reached epic proportions. In 2007, 53 percent of mergers valued at $500 million or greater attracted litigation. In 2011, 96 percent of those deals attracted litigation. The reality is that parties to a merger will get sued and need to be prepared.

Process is paramount. Boards should hold meetings to discuss and decide all material issues, and careful minutes should be taken. Courts will hesitate to overturn board decisions if there is a solid record. In particular, boards need to be acutely aware of conflicts of interest, and should record deliberations over the pros and cons of each potential conflict in the context of how the proposed relationship will bring value to the shareholders in spite of the conflict. Without evidence that the board has considered such conflicts, exposure to shareholder litigation increases significantly.

Best Communications Practices:
1. Boards need to ensure that every employee understands the confidential nature of M&A transactions – and that they know what can and cannot be said, especially in the social media (and then be certain aggressive monitoring is in place to detect even a hint of a leak).

2. Boards that are seen as in control of the transaction process are best positioned to deflect criticism and defend against the inevitable litigation.

3. Directors that demand strong investor relations in peacetime will build a trust bank among stakeholders that will serve the company well, especially if a hostile offer is made.

Initial Public Offerings

Alex Lynch 

Alex Lynch
Weil Gotshal
Lynch is a partner in Weil Gotshal’s Capital Markets practice. He focuses on the representation of companies, particularly technology, healthcare, financial services, and other growth enterprises, as well as leading investment banks and private equity firms. He has extensive experience in equity capital markets transactions, with a particular focus on initial public offerings.  He also advises boards on securities and corporate governance matters.

What is to be learned from the less than stellar IPOs issued by Groupon and Facebook in recent months? What are the lessons for companies outside the technology sector?
The primary lessons from the Groupon and Facebook IPOs are not only applicable to technology companies but are applicable to all companies looking to complete an IPO.

First, listen to your advisors. IPO companies should retain advisors who are experienced in the IPO process and can help it avoid the many pitfalls. One of the most common pitfalls is gun-jumping or marketing the IPO outside of the typical registration process. Gun-jumping can delay your offering, result in liability, and produce bad press during the roadshow. Many of the gun-jumping issues in the Groupon IPO could have been avoided if the standard advice regarding publicity had been followed.

Second, when setting the valuation of the IPO, leave some room for the stock to appreciate and be mindful of who is being allocated stock. Facebook priced its IPO at a rich valuation and increased the number of shares sold in the offering. IPO companies need to balance between trying to maximize the price and the size of the offering and selecting the right type of IPO investors and letting those new investors enjoy some success. A rich valuation and large deal size can reduce the demand for the stock in the market after an IPO. In addition, allocating IPO shares to hedge funds and individual investors rather than long-only mutual funds can result in increased selling pressure if things don’t go well. Remember, an IPO is not the last time to the market.

What are the responsibilities of boards of directors in the IPO process?
Directors have a number of unique responsibilities in the IPO process. First and foremost, directors have personal liability for material misstatements and omissions in the registration statement and prospectus. Directors also personally sign the registration statement. As a result, it is critical for directors to give themselves the time necessary to read and review the registration statement carefully in advance of the initial filing and throughout the process. They should then compare the disclosure to what they know about the business and alert the IPO company’s advisors of any disclosure issues.

Second, focus on accounting issues. Is the IPO company ready to report on a quarterly basis? Can it produce financial statements on a timely basis? Are there any accounting policies that need to be reconsidered? Do you have any material weaknesses or significant deficiencies? If so, how are they being remediated and will they be remediated in advance of the IPO?

And third, make sure the IPO company is ready to be public by asking the tough questions. Do you have the right management team in place? Why is the IPO company going public? Is the business model mature enough to withstand investor scrutiny? If you don’t have the right answers to these questions, the IPO company is likely not ready to be public.

How should boards of directors prepare themselves for the transition from private to public ownership?
Remember, IPOs are the beginning, not the end. An IPO will not be the last time the IPO company accesses the market. Preparation for life as a public company is critical for success. Also, a well-executed IPO provides a substantial amount of goodwill and positive publicity, while a poorly executed IPO can damage the company’s reputation for a long time. Accordingly, preparation by the board is critical.

Be honest in your assessment of the IPO company’s readiness to be a public company. Make sure you have the right management team in place. Confirm that you have the right accountants and attorneys. Assess the challenges faced by the IPO company and ensure that they are manageable. Make any necessary changes to the business, management or advisors before the IPO process to avoid having to make these changes during the IPO when public scrutiny is most intense.

In connection with considering an IPO, I advise boards and management teams to act like they run a public company before being public.

Best Communications Practices:

1. The price at which you set your IPO communicates a lot about your value proposition. What happens to that price after the offering communicates even more. Boards need to maintain investor confidence by allowing room for the share price to grow.

2. The IPO is the beginning, not the end. It is not only a financial event, but also a corporate branding opportunity. Boards need to ensure that newly public companies communicate their value just as aggressively post-IPO as they do in the critical months leading up to it.

3. Boards need to be ready for circumstances in which high IPO trading volume creates glitches in the system that cost investors’ money and has a negative impact on trust in the system. Companies need to be ready with statements that can forestall chaos and confusion under all anticipated contingencies.

Data Loss & Theft

Ted Kobus 

Ted Kobus
Baker Hostetler
Kobus is national co-leader of the privacy, security and social media team at Baker Hostetler. He focuses his practice in the areas of privacy, data breaches, social media and intellectual property, and advises clients, trade groups, and organizations regarding data security and privacy risk management.

What are the most common mistakes companies make in data loss situations?

Too many companies fail to understand that data security events are not your typical legal problem. While complying with legal requirements is critical, companies cannot forget the impact these events have on employees, customers, the public, and regulators. Appropriately protecting the people affected by the incident will protect the brand and the company’s most valued relationships.

Second, too many companies see data security as an IT issue rather than a C-Suite and board issue. Customers and regulators expect that the C-Suite will be involved in not only responding to these events, but helping to prevent them through education, a culture of compliance, and adherence to strict policies and procedures. The companies that are most successful in preventing data loss are those that condition the corporate culture by setting the right “tone at the top.”

And third, companies fail to understand that messaging is more important than the speed of notification. There are several laws that require notification within a certain time frame. At the same time, people who are impacted by a data security event expect that notification will take place immediately. Unfortunately, notification typically cannot, and should not, be made just to get the notice out the door. If a company isn’t ready to provide answers as to what happened, how it happened, what’s being done to protect impacted parties, and what’s being done to prevent future breaches, then it isn’t ready to notify its stakeholders.

How can boards best serve a company that is embroiled in a data loss situation?
The most important thing to remember is that each incident presents a different set of circumstances. As such, the board has to rely on the company’s incident response team, which hopefully knows the facts better than anyone. Directors should start to worry if they sense panic or disorganization. Some questions to ask of the team include:

• Is there any insurance to help offset the costs of the breach response? If not, how much is it going to cost the organization to respond?
• Is this event so large that our employees will be concerned? If so, what resources will be made available to answer their questions?
• Is a media release being issued? If so, is the timing of the call center establishment, website posting, notification letter mailing, and notice to any regulators all coordinated?
• Is the notification letter easy to read? Does it clearly explain what happened and what the organization is doing to help protect the affected parties?
• Have you considered where all of the affected people reside and have you complied with all state and local laws?

What’s next on the data loss landscape?
Notification laws will continue to evolve. Perhaps we will even see a federal breach notification law. However, the trend we see most is that the regulators, and particularly the attorneys general, increasingly want to know when these events occur and how organizations are responding.

Moreover, regulators are asking for information beyond what policies and procedures and education programs are in place. They are seeking information about whether the company has recognized its risks – and the evolution of those risks – through appropriate updating of policies, procedures, and data security technology.

Best Communications Practices:

1. Boards must understand that stakeholders want answers in data breach situations. If the company isn’t prepared to answer all of the questions, then it isn’t ready to disclose the breach publicly.

2. Data loss is a topic that thrives in the tech-savvy digital media. That means boards must ensure that any response strategy emphasizes bloggers and social media to truly control the narrative.

3. Boards need to understand that state and federal notification laws are subject to constant change. Just because the company was ready to communicate about yesterday’s breach doesn’t mean it is prepared to do so tomorrow.

Labor & Employment Issues

Paula Weber 

Paula Weber
Pillsbury
Weber is leader of Pillsbury’s Employment & Labor practice. She focuses on complex employment litigation, supplemented by compliance advice and counseling on employment issues for large institutional employers and smaller companies. She has trial experience in state and federal court, including being lead counsel for a wage and hour class action trial and trials in defamation, breach of contract, sex discrimination, race discrimination, and termination in violation of public policy cases.

What is your take on the Supreme Decision in Dukes v. Walmart? Was it the game changer that some attorneys believe it to be?
Not really. SCOTUS’s decision in Dukes brought the law back to where most of us thought it was before the Ninth Circuit’s decision made it easier to certify class actions by allowing certification of what was essentially a damages action under the certification standards applicable for cases primarily involving injunctive relief. Thus, the biggest impact of SCOTUS’s reversal of the Ninth Circuit is that judges will be more cautious when certifying future class actions – for the simple fact that Dukes lays the groundwork for the decision to be more easily overturned.

If you’re looking for a real game-changer, AT&T v. Concepcion is the more likely case. There, the Supreme Court struck down a law that invalidated mandatory arbitration agreements with class action waivers in commercial litigation cases. Given that the same theories apply, many the labor and employment practitioners saw that ruling as an affirmation of the legality of class action waivers that mandate employees resolve grievances through individual arbitration. A subsequent NLRB [National Labor Relations Board] decision refuted that view by ruling that mandatory pre-dispute arbitration constitutes an unfair labor practice under the National Labor Relations Act.

That matter remains unsettled, with some courts refusing to follow the NLRB’s ruling. Depending upon how it plays out, we could see far fewer labor and employment class actions in the future as employers adopt arbitration agreements with class action waivers.

How should boards deal with a discrimination scandal or union battle at their companies?
Once litigation or some other form of labor unrest arises, the board has a specific oversight role to ensure that management has the proper legal counsel and that the costs and risks are being appropriately weighed. The board also has a responsibility to see that any bad actors are held accountable for their misdeeds.

Of course, it’s always preferable that the board be involved long before labor and employment issues evolve into full-blown scandals. Directors need to ensure that employees are always treated fairly and with dignity and respect. They need to identify ways to ensure employee satisfaction, perhaps by tying management compensation to human resources-specific metrics, such as ensuring that diversity is an element of the selection process. When it comes to labor and employment matters, it is always better for the board to be proactive. If it isn’t, it’s too easy for adversaries to force the company into a defensive position.

What’s next when it comes to labor and employment issues?
We will continue to see a number of wage and hour matters and a lot of litigation pertaining to workers that are classified as independent contractors as opposed to employees.

One area where we are likely to see the biggest increase in labor and employment litigation is disability. Even though it is difficult to bring collective actions on disability discrimination claims because of the individualized nature of the cases, directors need to know that accommodation requirements of those with disabilities is a hot issue for the federal and state anti-discrimination agencies. Federal regulations underwent a major overhaul a few years ago, and this has resulted in many more workers being deemed disabled and protected by the Americans with Disabilities Act. As a result— and because the law remains quite ambiguous as to what accommodations are required for employees with disabilities—we can expect the government and the plaintiffs’ bar to be more aggressive in asserting claims.

Best Communications Practices:

1. With the prospect of more class action litigation looming, directors need to ensure open lines of communication between management and employees by which potential issues can be addressed before they become systemic problems.

2. The post-verdict or settlement phase of labor and employment litigation represents a critical opportunity for companies to share messages about fair and equitable labor practices with a captive audience of investors, regulators and employees.

3. With regulators focusing more attention on disability issues, boards need to ensure that companies articulate –internally and externally – the ways in which they go the extra mile to accommodate employees with special needs.

General Litigation

David Keyko 

David Keyko
Pillsbury
Keyko’s practice focuses on major complex litigation, often involving multiple parties. He has defended clients in matters involving securities allegations and various types of fraud, antitrust violations, ethics issues, trusts and estates issues, and government probes.

What are the hot issues in corporate litigation that most acutely impact directors?
It is commonplace for derivative litigation to be commenced against directors when a major lawsuit is filed against the company. Ensuring that the company has appropriate controls is important to limit claims and to establish that, if problems do arise, the board has engaged in proper oversight.

Audit committees, in particular, play an important role in overseeing corporations’ financial reporting. Accounting firms tend to be very skittish when any issues come up that might reflect negatively upon the accuracy of financial reports—and investigating such issues can be very expensive. The audit committee needs to ensure that financial reporting and projections are appropriately conservative. And the board needs to ensure that there is a proper “tone at the top.”

An issue that continues to plague companies operating in the international arena is foreign corrupt practices – in particular, allegations of bribery. This has been compounded by the whistleblower rules, which incentivize employees to disclose issues to the government rather than internally.

How can boards best serve a company embroiled in high-profile litigation?
It is usually the job of the company’s general counsel and senior management to oversee litigation involving the company. Unless the board lacks confidence in the management and general counsel, it is usually best to allow them to manage major cases on a day-to-day basis. However, the board should receive regular updates on major litigation, which include a description of the company’s strategy. If the board is not satisfied that the strategy makes sense, they should ask for more information and may suggest that the strategy be reconsidered.

What are the most common circumstances under which directors find themselves the targets of lawsuits?
Again, derivative claims against directors are now regularly made when a major lawsuit is filed against the company. The allegation in the derivative lawsuits is that the directors failed to take steps to ensure that the company’s actions were proper or that they approved improper activity.

To limit their exposure, directors should:

• Ensure that the company has appropriate financial controls in place, that the audit committee regularly meets, and that the directors receive regular reports about the company activities, in particular significant actions being taken by the company (this can be used to demonstrate that the directors have engaged in appropriate oversight);

• Ensure that the bylaws limit directors’ liability to intentional misconduct and fraud (this will require any shareholder filing a lawsuit to allege with particularity the intentional misconduct or fraud in which the director has purportedly engaged – a heavy burden);

• To the extent directors are asked to make decisions that are likely to be controversial, they should be sure that the issues are discussed in the manner required by the bylaws and that they receive the advice of an expert on the issues, as well as document that such actions and such advice have been taken in the board minutes (a director will want to rely on the business judgment rule, but to do so proper procedures must have been followed and due consideration given; furthermore, a director may rely on the advice of an expert); and

• Ensure that the company maintains an appropriate level of D&O insurance.

Best Communications Practices:

1. Social and digital media monitoring provides companies with early warning of issues that might drive future litigation. Boards need to see detailed analytics reports on what’s being said about their top risks or a developing issue—and who’s saying it— to ensure the company is ready for what lies ahead.

2. Companies need to own their risk terms on the search engines in order to ensure that their narratives and messages are the ones seen and heard first on the Web, rather than those disseminated by potential courtroom adversaries.

3. With the dramatic increases in director liability, boards need to think – not only about what the company communicates in crisis – but what the directors themselves are articulating about their responsible oversight.

Richard Levick, Esq., is president and CEO of Levick, which represents countries and companies in the highest-stakes global communications matters from the Wall Street crisis and the Gulf oil spill to Guantanamo Bay and the Catholic Church.

Consider what a formidable presence the oil industry has long maintained in Washington, D.C. It deploys an army of lobbyists and near-limitless resources. It has access and influence. Yet the battle over Keystone XL, the TransCanada pipeline intended to transport 800,000 barrels of oil daily from Alberta to refineries in Texas, confirms that such traditional exercise of power may not necessarily avail. Formerly disparate, disorganized adversaries have found the tools to trump the advantages that the inside track traditionally provided.

Richard S. Levick

As of this writing, we don’t know if the oil industry might eventually prevail on the Keystone issue. Yet strategists who shape corporate public affairs are well advised, whatever happens, to take a closer look at how the activists have successfully aroused anti–Keystone sentiment.

First, there is that most basic tool of Internet combat: search engine optimization, or SEO. On the Keystone issue, the activists have thus far dominated the search engines that serve as informational portals for so many millions of voters.

A February 15 Google search for the term “Keystone XL pipeline” tells the story. Of the 14 links returned on the all-important first page of results, only one— a post by the American Enterprise Institute— is supportive of the project. Surprisingly, we did not find the American Petroleum Institute (API) represented on this key page at that important juncture.

Seven—half the links—were from groups spearheading the opposition. (The rest were more or less neutral.) At a crucial moment in the Senate debate, Keystone advocates simply ceded control of the narrative. The voters who drive the legislators didn’t even need to open the Google links. Just by scanning those links they’d mainly see language from groups like the National Wildlife Federation vividly conveying threats to fragile ecosystems. Or they’d see an equally conspicuous prediction that Keystone could cause another BP-type spill.

Not surprisingly, the NGOs have shrewdly utilized social media as well, in order to ensure the viral dissemination of their messages. As such, their campaign is all about action, not just opinion. According to an National Resources Defense Council blog, for example, 800,000 email messages in opposition to the pipeline had been sent to members of Congress. What has the oil industry done to counter the onslaught at a point in time when the president and Democratic legislators may still be vulnerable on the jobs issue, and when audiences such as organized labor could still be won over by the argument that Keystone means more jobs?

API, through a coalition called Energy Tomorrow, is running Google AdWords campaigns that link to a blog post titled “Mr. President, What Are You Thinking?” The message may or may not be credible and powerful. But it offers no call to action— whereas, by contrast, the NGO’s grassroots campaign is all about action.

Keystone is just the latest compelling example of how the universe has changed even for—or, rather, especially for—some of its most powerful denizens. As the Internet democratizes the public affairs debate, companies need to be continually learning the new rules of engagement.

Richard S. Levick, Esq. is president and CEO of Levick Strategic Communications and the co-author of three books including The Communicators: Leadership in the Age of Crisis. He is a regular commentator in broadcast, print and on the most widely read business blogs. Follow him on Twitter @richardlevick.

Consider two recent studies.

Richard Levick

One report by the Havas Media Lab underscores this transformation with a list based on a survey of 50,000 consumers worldwide who identified the companies they feel have the most “meaningful” CSR. The 10 top names included Unilever and Bimbo, Ikea and Leroy Merlin, as well as consumer technology companies like Samsung and Sony. As the Lab’s director Umair Haque quips, they’re not “necessarily the do-gooding corporate entities you might expect.”

This article originally appeared on Richard Levick’s The Communicators Blog on the Forbes website.

In lieu of such “do-gooding,” Haque talks about CSR as a way to connect to the personal well-being of customers. Nike+ is a prime example. “Instead of putting up another campaign of billboards with celebrities saying, ‘Buy our shoes’…Nike+ actually helps makes you a better runner,” he says.

In other instances, companies underscore their commitment by taking substantive risks. Early last year, for example, Unilever CEO Paul Polman really spoke the language of CSR as value – not just donations – when he made an ambitious sustainability and anti-hunger plan an investment prerequisite. “If you don’t buy into this [program], I respect you as a human being, but don’t put your money in our company, he said.

It’s easy for consumers to read this resolve as a personal message to them: that we as a company are guided by the same determination to produce beneficial impacts for you – not just the direct beneficiaries of our CSR largesse – even at the cost of a few big shareholders.

Many of the highly ranked CSR programs on the Havas list predictably feature green initiatives, often, as with Leroy Merlin, highlighting how the company’s own employees personally volunteer in repair and recycling efforts around the world. Here too, with this volunteerism, we’re a long way from the passive check-writing that defined the old CSR.

The message to consumers is, again, personal. Since these Leroy Merlin people commit themselves, their own time and sweat, to these responsibility programs, it’s no reach to infer that they do the same when they manufacture the home improvement products that have a direct impact on our lives.

In another report, Pike Research found that “the closer the company’s business is related to consumer electronics, the higher its CSR score.” Companies like IBM, HP and Texas Instruments topped the charts for transparency and reported results. For starters, their sustainability initiatives have impressed consumers, the report suggests.

These sector-leading companies have pushed hard to highlight their greater focus on enhanced sustainable design, manufacturing, distribution, use, and end-of-use management. The message is, our products are socially responsible across a broad spectrum of consumer needs, beginning with the benign impact they have on the world in which they’re used.

Richard Levick

So far media attention and public reaction have naturally been driven by the vagaries of the news cycle and by a few predictable preoccupations. First, of course, there are the daily breaking events, from the termination of 1,066 MF Global employees to the role of examiners from CME Group Inc. who reportedly knew of the $900 million client fund shortfall just before the regulators learned of it.

This article is excerpted from Richard Levick’s Forbes blog.

The public’s interest remains personality-driven as well because MF Global is still very much a story about Jon Corzine. One plaintiffs’ law firm has even promoted its case online as the “Jon Corzine Lawsuit” and, in the process, successfully topped the Google news listings for MF Global. It’s worth noting that Corzine was a generally controversial politician long before this current debacle, arousing misgivings among many loyal New Jersey Democrats for campaign spending that was flagrant by any standards. His ambiguous public brand now shadows all perceptions of this latest financial services scandal.

At a more substantive level, there has already been intelligent commentary on what MF Global means in terms of the real role and efficacy of market regulation, and the purportedly uncoordinated roles of the various agencies. Early commentary also distinguishes this case from those involving larger institutions that cannot engage in proprietary trading as a result of Dodd-Frank. There is now speculation as to whether a post Dodd-Frank regulatory environment will include significantly greater purview over the practices of smaller firms, with closer attention to their leverage ratios (31-1 at MF Global) and more aggressive disclosure standards.

Strictly from a news perspective, MF Global has real legs because, importantly, the collapse occurred at a uniquely sensitive moment. First, there will be no government bailout, which means that people – some very sophisticated, powerful people – cannot rely on the taxpayer to recover their money. The JP Morgan flap is likely just a minor shot across the bow in terms of the highly public imbroglios ahead as the asset recovery saga goes forward. The story is all the more caliente as Corzine’s personal fortune is an alluring target for future lawsuits, especially if those who say his liability insurance won’t likely cover his exposure are correct.

News cycles aside, the enduring legacy of the MF Global collapse will play out on two larger fronts that speak to both public policy and investor perception.

First, MF Global revives old unresolved debates – not just on how effective the regulatory system is – but on the actual value of aggressive regulation as a response to financial crisis. Significantly, MF Global’s place in history is assured because it is the first post Dodd-Frank collapse. This dubious milestone begs the questions, what have we gained from the new law when behaviors still aren’t changed, when disclosure still appears insufficient, when risk-taking is still excessive, and when marketplace confidence is still abysmally low? Could effective enforcement have made any difference?

So we’re back to Square One in the great policy debate: “we must have new laws and tougher laws” versus “we must let the marketplace self-correct and be wary of the unintended consequences of legislating correctives that don’t even correct.” This fundamental ideological division will likely slip into next year’s election. (Corzine’s state, New Jersey, could be a prominent battlefield with Democratic senator Robert Menendez up for reelection.)

Second, MF Global is…well, global. Because its collapse is directly tied to the European economic crisis, MF Global is a direct reminder to already jittery investors that foreign entanglements expose all of us to unforeseeable, often instantaneous risk. There’s no longer a floor to that exposure for those who may not have a direct stake in MF Global but whose 401(k)s are loaded with assets that can go south in a single Athenian heartbeat.

For both financial services companies and for regulators, the takeaway in such a market can only be heightened disclosure based on communications policies that fully articulate risk as well as credibly provide safer alternatives. The regulators will have a voice in how such communications are made, but the funds and financial firms themselves must be equally committed to full transparency if only as a matter of their own survival.

These prescriptions are by no means new. The insistent demand – either via legislation or as a best business practice – for real accountability was a public discourse mantra well before the 2008 crisis. But it is a demand that must not abate, however old-hat it sounds, until the Jon Corzines of the world actually start complying.

Every economic crisis (in this case, Europe) will likely savage some brand-name financial firms and jolt world markets. In many ways, the debate on more versus less regulation in the aftermath of such panic is a healthy one. The best equilibrium of government action and inaction cannot be determined in a day or in a generation. Ongoing debate likewise assures that neither side will gain too much of an upper hand but maintain instead a salutary balance of power.

Yet the debate must be framed soberly. In an atmosphere of fear, where so many investors live in dread of imminent loss, shrill rhetoric on either side can only further diminish confidence whether we tilt toward or away from additional regulation.

Follow Richard Levick on Twitter @richardlevick.

Richard S. Levick, Esq., is the president and chief executive officer of Levick Strategic Communications, a crisis and public affairs communications firm. Mr. Levick is on the prestigious list of “The 100 Most Influential People in the Boardroom,” He is the co-author of The Communicators: Leadership in the Age of Crisis and Stop the Presses: The Crisis & Litigation PR Desk Reference, and writes for Bulletproofblog.  Reach him at rlevick@levick.com.

Richard S. Levick

Typically, the ins and outs of social and digital media strategy do not rise to the board level. But when internal and external actors and events intensify the communications burden on companies, directors’ insights and leadership are essential to success.

“Whether merely burnishing the corporate brand or doing the work of crisis management—and the making and breaking of corporate and personal reputations— viral social networking has fundamentally changed how companies communicate,” says Jack Quinn, chairman of Quinn Gillespie and a director at USTC Holdings, parent company of Xe Services, a leading defense services firm. “The gold standard today is the 24/7 instant message and the 140-character Twitter posting, not the morning paper or the evening news. Effective communications strategies understand this new reality, and they have at the ready a communications plan that can handle the inquiring reporter and the armies of the social media world.”

With that sage analysis in mind, the following commentary pairs numerous major business events with best social and digital media practices to help directors manage the communications challenges these events present. In most instances, these best practices are equally pertinent and applicable in other similarly exigent situations. In a few idiosyncratic instances, specific issues require very specific responses.

M&A
Keeping Conversations from Going Viral
In 2009, the last year for which data are available, one in every 10 U.S. companies reported that employee social media activity had done some damage to its operations or reputation. That ratio has almost certainly grown in 2011—and the M&A process is a window into just how damaging a trend it is.

Best practices surrounding mergers, acquisitions and other major transactions are necessarily unique. Disclosure rules loom so large that confidentiality and secrecy are top communications priorities. Dealmakers must therefore concern themselves not just with official corporate communications, but also with disclosures by internal parties privy to little else besides rumor and innuendo.

Marshall Sonenshine sees accidental leaks as one of the greatest liabilities in the Digital Age. “You have to worry about employees who hear something about a deal and then post what they heard to a blog, Facebook or Twitter, without even knowing they’ve done something wrong,” says Sonenshine, chairman and managing partner of Sonenshine Partners, who’s played integral roles in deals such as Disney’s acquisition of ABC and the Philadelphia Newspapers restructuring. “Directors need to understand that what used to be said around the water cooler is now being said on the Internet, and that there can be serious consequences.”

If you’re part of a transaction and you have not adequately protected against leaks, employee posts along the lines of “Looks like we’re being bought by Company X…better get my résumé in order” are increasingly probable. Given the expansive networks of friends, colleagues and even media members such a post can reach, the chances are good it will go viral, feeding news coverage online and off.

Formal internal policies on social media use are therefore essential. They should outline what can be said about the company on social media, who must approve content, the consequences of improper use and contact names for employees to approach with questions. Importantly, these policies should be front and center not just when confidentiality is a must, but in periods of relative calm as well, as consistent enforcement is key to building a leak-proof culture.

Shareholder Activism
Social Media as the New IR Imperative
In 2007, Eric Jackson didn’t consider himself an activist investor when he published a blog post critical of Yahoo CEO Terry Semel. His blog was generating about eight hits a day and he owned only 96 shares of the tech giant. But he struck a chord with a group of 100 like-minded shareholders who owned 2 million shares. The group pledged their shares to ousting Semel. Just months later, Semel stepped down.

Since then, the social and digital media revolution has further blurred the line between passive and activist investors. The force multiplier that is social media enable even the smallest shareholder to build a critical mass of supportive opinion. More important, social networks that cater only to activist investors are beginning to emerge. MoxyVote, for instance, is a social network of investors and advocates that aggregates shareholder proposals and urges support for “good causes” in the areas of governance, environment, human rights, animal welfare, labor, etc.

On such sites, disgruntled or socially conscious investors access proxy-voting recommendations and even cast their votes. All the while, IR professionals who remain dormant in the social media space are ceding a decisive digital advantage to increasingly powerful challengers.

What all of this means is that active social media engagement can and ought to be a powerful tool in the IR arsenal. According to Jeff Morgan, president and CEO of the National Investor Relations Institute, these tools “represent an additive solution to create an environment where the company can demonstrate that it truly values shareholders’ input and cares about their concerns.” Morgan encourages a three-step approach. “First, companies have to monitor social and digital media channels to ensure that they know what the investors that use these tools count as their chief concerns. Next, companies should begin to utilize social media as another messaging venue—keeping compliance with fair disclosure rules top of mind. Finally, they can begin a real dialogue with these shareholders.”

When taking Morgan’s third step into the social media waters, companies should consider using Twitter profiles, Facebook groups or any number of social networking platforms not only to share information that is already available for public consumption, but to solicit investor responses as well. While the prospect of transforming a routine press release into a pseudo annual meeting might be a bit scary, companies must understand that even the most scathing comment posted to a social media group or profile is just the beginning of a conversation. At the very least, social media engagement can serve as an early warning system that alerts the IR team to issues before they devolve into proxy fights—or worse.

Litigation
Early Warning Systems
Even before Google was a household word, the plaintiffs’ bar was digital light years ahead of the defense. Today, they still dominate the search engine rankings. They use Facebook and Twitter to raise awareness and win business. They blog about the ways industries are failing to fulfill consumer safety responsibilities.

Case in point: the digital strategy employed by Bill Marler, whose law firm, Marler Clark, is considered the nation’s foremost for representing victims of food-borne illness. Marler’s approach emphasizes more than mere client recruitment. He has utilized social and digital media to become a leading figure in U.S. food safety policy. In other words, he’s “high-authority.”

“We use Facebook, Twitter and blogs to let media and potential clients know that we know food safety litigation better than anyone else,” says Marler. “But we also use it to promote a larger food safety agenda—even when there is no direct business benefit to doing so. There have even been multiple occasions where we posted about an issue that wasn’t on companies’ or regulators’ radar screens.”

This first-mover advantage provides Marler and others like him with a head start over the companies their firms target in terms of search engine optimization (SEO). Consequently, their messages are what Web searchers find first when seeking information about a potential lawsuit. At the same time, however, these opening online salvos provide companies with valuable intelligence as to where their next legal and reputational problem might originate. Simply put, it’s an early warning system for those corporations paying attention.

On a regular basis, enterprise risk managers and crisis communications teams should be searching terms related to their pain points (e.g., “securities litigation,” “drug recall,” “E. coli,” etc.) to see what the plaintiffs’ bar is up to. The moment new plaintiff messaging is detected, companies have an opportunity to nip existing problems in the bud— before lawsuits are filed. If they find they’re being targeted without meritorious cause, companies can inundate the marketplace with corrective messaging before negative perceptions take hold.

Most important, companies don’t have to wait for plaintiffs’ attorneys to fire first. They can co-opt the digital advantage altogether by anticipating their most likely sources of litigation and publishing fully optimized Web content that highlights the steps they take to prevent those problems. When companies use peacetime to strengthen potential vulnerabilities in the digital space, plaintiffs find it harder to control the narrative when it’s time to go to war.

Reputation Management
A Barrel of Ink…and a Camera
Gone are the days when traditional media decided what news is and isn’t. Today, a single customer, employee, investor or activist can harness the viral power of social media to damage reputations on a global scale. “Everyone has a barrel of ink these days,” quips Chip Babcock, a partner at Jackson Walker LLP who has represented some of the biggest names in business, sports and entertainment. “And that’s a real problem.”

There is no longer any doubt that the digital revolution has fundamentally altered how companies must approach reputational risk. The problem, however, is that while most companies have mastered online brand promotion, their online brand protection skills remain woefully behind the times.

The work of brand marketers, risk managers and crisis communicators must be synchronized to anticipate crises and ensure preparedness should any of those crises occur. “When reputational issues emerge online,” says Babcock, “your response has to be lightning-fast and disseminated using the same venues and methods as your critics.” That’s sage advice, but it demands cooperation between brand and risk managers.

Whether problems arise on blogs, Facebook, Twitter, YouTube or any of the thousands of social networking platforms available today, there’s simply no way to match the speed with which modern reputational crises evolve, absent the kind of planning that requires input from both camps.

In terms of YouTube-driven crises specifically, your brand and crisis teams should have a response strategy in place long before any damaging video is shot and uploaded. Under ideal circumstances, they should also be identifying opportunities to proactively inundate YouTube with positive content that makes it more difficult for critics’ messages to break through the clutter.

While Google controls access to the written word, YouTube is the portal by which your stakeholders access the spoken one. With more and more people seeking the engaging experience that Web video makes possible, a strong presence on the site is fast becoming an essential element of communications strategy—both in crisis and in periods of relative calm.

Data Breaches
Bloggers’ Influence Revealed
Each year, the list of companies that experience a high-profile data breach reads like a Who’s Who of the corporate elite. In 2011, Sony, Lockheed Martin and Citibank were but a few of the companies forced to confront the issue and the fundamental communications challenge it raises: In a media environment salivating for bad news, how can a company ensure that its positive messaging will be heard?

The answer lies in the one media venue reporters look to when data security is front-page fodder—the blogs. While the traditional media focus on a particular data breach is usually limited to the initial announcement and major subsequent developments, tech-savvy bloggers give the story blow-by-blow treatment. They document each event. They examine the intricacies of the case. They delve into nuance. When the traditional media run follow-ups, their angles and information come largely from the online mavens who have lived and breathed the story.

Companies thus give themselves a fighting chance to break through the clutter when they reach out to bloggers with positive messages about what they’re doing to investigate the problem and protect those affected.

While the average consumer, investor or regulator may not be a daily reader of blogs such as TechCrunch or Security Watch, the traditional journalists who cover data security definitely are. So when stakeholders turn to CNN or The New York Times for information, they’re really getting a repackaging of what’s already been detailed online. By bringing bloggers into the fold with invitations to participate in press briefings or conference calls, or even by offering exclusive interviews, companies embroiled in data loss take control of the overarching narrative.

And it isn’t simply the bloggers who cover privacy or data security issues who matter. Don’t overlook powerful and distinct subgenres of consumers who also communicate via social media and need specific messages from specific messengers to help echo your points.

Whether you’re talking to mommy bloggers or online gamers, communities of common interest live and thrive online but frequently swim in isolated pools. To reach these audience segments most effectively, companies must cultivate thirdparty supporters from within these communities who already possess the trust and credibility needed to influence niche group perceptions.

According to Jody Westby, CEO of Global Cyber Risk, blogger outreach is essential to a successful public response. “You’ve got to know and influence what the IT security and privacy communities are saying online,” says Westby. “It’s prudent breach management that may help limit investigations and damaging exposure to your brand.”

Antitrust
Winning the Race to Be Found
Antitrust cases are contests for consumers’ hearts and minds. Competitors need them to feel as if they’re getting a raw deal in the marketplace. Targeted companies need to articulate the reasons that they’re actually getting a good deal. Whoever prevails in the court of public opinion wins powerful allies who can either seal a company’s fate or guarantee the case dies on the regulatory vine.

“When a competitor files a complaint with the Department of Justice, that’s one thing,” says Mark Ostrau, a member of Fenwick and West’s Technology Transactions Group. “But when that complaint is accompanied by hundreds of others filed by consumers, the government has reason to believe it has a solid case to make—and the zeal with which it will pursue the allegations rises significantly.” Communications surrounding alleged anticompetitive practice are thus reduced to a classic struggle to shape public perception. Since what people read first is often what they believe, the outcome naturally depends on whose voice is heard first—which, in turn, depends these days on who controls the digital tide.

To achieve such control, it is not enough for companies facing antitrust allegations to own positive or generic terms related to their brands and reputations. They must also own the negative terms that Web searchers use when they want to learn more about the issues at play.

For large companies in particular, there are terms like “monopoly,” “Hart-Scott-Rodino,” “price fixing,” etc. By buying related URLs and establishing SEO and SEM (search engine marketing) campaigns focused on those negative terms, consumers searching such phrases will find your messages atop all others, with your own clear articulation of what is and what is not in the best interests of a healthy marketplace.

Compliance
Keeping Messages Front and Center
Dodd-Frank’s whistleblower provisions are on the books, and boards of directors don’t need to be reminded about the importance of compliance or their responsibility to set a “tone at the top” that encourages ethical practices at every organizational level. Yet one leading expert also emphasizes an important additional dimension.

“You have to pay attention to the tone in the middle as well,” says Suzanne Folsom, senior vice president, chief regulatory and compliance officer and deputy general counsel for Xe Services. “Directors and the C-suite can’t be in front of their employees at all times. So a great deal of the burden falls on mid-level managers who have direct daily access to the workforce.”

Folsom’s comments raise two important questions. First, how can senior leadership gain some measure of the employee access available to their subordinates just a few floors below? Second, how can organizations ease the communications burden on mid-level managers who oversee multiple workers and who also have a finite amount of time for compliance efforts?

The answer lies in social and digital communications channels that multiply, amplify and personalize managers’ messages, even as they reduce the workload needed to build a culture of compliance.

Via internal blogs and other easily updated proprietary social networks, managers can ensure that their compliance messages stay front and center throughout the organization. Equally important, they can foster a sense of inclusivity around compliance by encouraging employees to take part in the conversation.

Senior leaders can speak to why the program is in place and invite useful feedback. Compliance officers can field questions in an open format that provides guidance for all employees. And, at a time when it’s increasingly important that whistleblowers be encouraged to first disclose their concerns internally, digital channels provide employees with confidential reporting mechanisms for doing so.

When corporate leaders utilize social and digital media to reinforce their commitment to ethical behavior, they not only ease the compliance burden; they also ensure that their tone rings loudly and consistently enough to make a real and lasting impact—no matter what management tiers they occupy.

Anticorruption
Placating the Enforcement Gods
Some executives have faced jail time for offenses they never knew were committed. Meanwhile, anticorruption enforcement by the U.S. government (i.e., the Foreign Corrupt Practices Act) and overseas (i.e., the U.K. Bribery Act) has grown so aggressive that companies are coming under fire for ambiguous infractions as well as wholesale bribery. Social and digital media stir the pot with viral misinformation that negatively affects public opinion and may even inspire further governmental “interest.”

There are solutions. Importantly, companies that go the extra compliance mile via training and internal communications earn the trust of the very enforcers who’ve set the bar so high. “Even where misconduct has occurred, that trust can translate into a willingness to allow a company time to respond and remediate,” says Kathryn Cameron Atkinson, a member of Miller & Chevalier who specializes in international corporate compliance.

For all their perils, social and digital media are also the best venues to propagate news of the company’s good intentions and remedial initiatives. “These media create opportunity and pressure in all directions as awareness of corruption continues to rise, certainly among corporate stakeholders,” says Atkinson. As watchdogs and NGOs disseminate potentially devastating reports, the digital ante is upped even further.

The corporate strategy must seed all digital venues with a fundamental “integrity message” that is directly applicable to the challenges companies face in countries where corruption is a way of life. But regulators and NGOs won’t necessarily accept that message at face value. It must be backed up with specific examples of how it’s inculcated at every operational level.

Repurpose website materials, segments of online training materials and short videos for use on social media—a video from the CEO, for example, averring that the company’s values will not be compromised under any business circumstances. Such video lives forever on YouTube or elsewhere as evidence of corporate good citizenship. As Atkinson puts it, “Nothing beats real-life, real-time examples of integrity in action.”

Regulatory Engagements
Bad News Lives Forever Online
“If the government believes it has a case to make, it’s going to pursue it regardless of the messages the company is putting out there,” says Neil Eggleston, a partner at Debevoise & Plimpton who has counseled companies through many regulatory inquiries.

Yet Eggleston is quick to note one problem that the digital revolution has created and that companies can address to manage the reputational burden on those embroiled in high-profile enforcement actions. “The real problem is that the headlines related to the case live forever on the Internet,” he says. “Years after a company has remediated the situation, the bad news still pops up on the search engines and continues to tarnish the company’s reputation.”

Too often, companies that survive a run-in with regulators grow complacent in terms of follow-up communications and reputational prophylaxis. They are content to just let the story die. But in the Digital Age, it doesn’t work that way. In fact, an opportunity is squandered to use the return to peacetime to ameliorate past damages and prepare for future problems, as well as to drown out old negatives with fresh positives.

When companies flood the zone across multiple digital media channels, the old news gets buried and forgotten sooner rather than later. The underlying goal is for stakeholders searching the Internet for information on your company to see the 2011 headline, “Smith Jones Corp. Hires New Compliance Officer”—not the 2009 headline, “Smith Jones Corp. Officer Named in Insider Trading Probe.”

Companies can’t change the fact that bad news lives forever on the Internet, but they can effectively relegate it to a life of dim isolation.

Public Affairs
Know Your Digital Allies
“Know them before you need them.” It’s a truism that has long applied to effective public affairs strategy.

Before the advent of social and digital media, it meant you didn’t want your first meeting with a legislator to be one where you ask for something. Before arriving hat in hand, you want to have already fostered relationships that make it harder for policymakers to say no. Or, it meant you didn’t want to ask for someone’s advocacy without being sure there was actual support or concern for your cause.

Today, the term has additional meaning. Now it relates as well to the denizens of the social media depths who can flood congressional email inboxes with supportive statements when they’re needed most. Companies that amass fans, followers and friends in the social media during peacetime later find ready-made, receptive audiences when issues arise. Simply put, they have cultivated the grassroots months or even years before these supporters are needed to help influence the grass tops. Conversely, companies that plan less providently often find themselves speaking to the digital equivalent of an empty auditorium when seeking to drum up grassroots support.

Andrew Zausner, a member of the Public Policy and Law Practice at Dickstein Shapiro, sees social media engagement as an important additive element to most public affairs campaigns today. “Social media engagement makes it easier to show that your issue is something voters actually care about,” says Zausner. “You can reach out to and mobilize supporters across the country more easily and inexpensively than ever before, and you can do so with the speed required to manage ever-shrinking news cycles.”

Zausner’s observation presupposes the kind of supporters we’re talking about: human voices amassed ahead of need and human relationships cultivated with future needs in mind. Legions of Twitter followers, Facebook fans and blog readers serve your causes at multiple levels, not just as a demonstration of brand affinity, but as a reserve corps that can be deployed at a moment’s notice to lobby your policy positions and preferences locally, nationally and globally.

Bankruptcy and Restructuring
Transparency Keeps Speculation at Bay
Kelley Cornish has seen significant changes in her practice since the advent of digital communications, but one stands out.

“Companies that would benefit from hiring restructuring professionals to assist them in the early stages of a distress situation are more reluctant to do so than they’ve been in the past,” says Cornish, a partner in the Bankruptcy and Corporate Reorganization Department at Paul, Weiss, Rifkind, Wharton & Garrison, LLP. “They are concerned that shortly after they reach out to an outside financial advisor or restructuring counsel, information will show up on the online news services watched closely by corporate credit officers, investors and distress traders. It is inevitable that these key stakeholders will draw their own conclusions about what’s going on. As a result, trade credit can begin to dry up, and negotiations with key constituents can become more difficult. Before you know it, the hiring of restructuring professionals can become a self-fulfilling prophecy.”

Given the pace with which information travels online, it’s understandable that such a scenario would raise deepseated anxieties. However, companies are not without options. “I’ve seen companies become more proactive with their communications in this digital age,” says Cornish. “Nowadays, companies often get out ahead of speculation by sending out press releases announcing the hiring of restructuring professionals and the reasons behind the move.”

Companies can benefit from explaining why a restructuring is occurring, what they expect to achieve and how it will support future growth. Ideally, they can go a step further, engaging would-be antagonists among the wire service reporters. If those reporters are brought into the fold, they permeate key media venues with positive messaging, further shaping the message in the marketplace and limiting misinformation.

Disaster Response
Controlling the Narrative
Oil spills. Train derailments. Chemical plant explosions. Plane crashes. Accidents test corporate mettle to the utmost. Companies must communicate calmly, coolly and collectedly when conditions are anything but. They must provide credible information when concrete answers have yet to be found. They must convey empathy without seeming culpable. They must come across as responsible stewards of the public welfare even when preliminary public reaction suggests otherwise.

What’s worse, they must do so through a media filter that is often less than sympathetic. Or, at least they used to.

With the Digital Age has come the opportunity for companies to actually assume the role of the media in the wake of disaster. They themselves can be the fastest, most reliable sources of information. They can speak directly to stakeholders and affected populations. They can build an enviable audience.

“In a disaster or emergency situation, all eyes are on you,” says Tom Campbell, the leader of the Crisis Management multidisciplinary team at Pillsbury Winthrop Shaw Pittman. “The more companies can take advantage of having a truly captive audience, the more effective their communications will be.”

To assert such a measure of control, microsites (offshoots of a company’s primary website that are housed under the same parent URL) can be dedicated to providing vital information. Real-time Twitter updates can share developments as they happen. YouTube video of the recovery effort and messages of concern can be disseminated across all social and digital media channels. With all of these tools, companies can reach stakeholders without sensationalism or bias.

Of course, the company must have cultivated followers in the social media space long before the incident so that it is adding to an already burgeoning and supportive audience, rather than assembling one from scratch.

Companies can temper instinctively intemperate media venues by making the jobs of reporters and editors as easy as possible, and with as much transparency as journalists expect. Yet the less reliant companies are on the commercial media to disseminate their disaster response messages, the better.

Recalls
Keeping Consumers Informed
Recalls are nothing new, but the accompanying burdens on corporations are. With enactment of the Consumer Product Safety Improvement Act, companies are now being held to higher standards, not just for product safety, but also for the effectiveness of a recall itself. At the same time, the social media explosion has increased the probability that misinformation can permeate the marketplace— leading consumers to make dangerously unpredictable decisions, regulators to take notice and plaintiffs’ attorneys to exploit perceived missteps.

“Whether the problem is with a baby toy, a car part or a food item, there are now social networking communities devoted to your product that will be discussing your recall,” says Mike Rozembajgier, vice president of recalls at Stericycle ExpertRECALL. “All it takes is for one of the thousands of people posting to get one detail wrong. That post spreads virally and consumers are soon in a state of confusion. It’s the last thing you want or need in the midst of a recall crisis.”

Social and digital media monitoring, therefore, play a significant role in any recall communications plan. “If you’re not aware of misinformation, you can’t correct it—and you certainly can’t do so with the speed required to have real impact,” says Rozembajgier.

At a minimum, Rozembajgier emphasizes Twitter, Facebook and blog monitoring for recall-related information dissemination. Once they observe discussions in the social media space, companies are well advised to post links that direct consumers to official online recall announcements with assurances that these sites are the only totally reliable sources.

While monitoring and responding to social media commentary is essential, it’s equally important to avoid overreacting to misinformation or criticism that may appear online. Threatening legal action or filing a lawsuit as a first response is far more likely to inflame a situation than it is to quell it. It’s far better, especially at the outset of a recall, to engage the social media with the facts and your own version of the story, so that customers and clients can see that you remain in control and are managing the incident effectively.

The bottom line is that companies that engage the social media space during a recall don’t just reduce chances that misinformation could lead to disaster. They also demonstrate a concern for their consumers that may be remembered far longer than the recall itself.

Richard S. Levick, Esq., is president and CEO of Levick Strategic Communications. He is co-author of The Communicators: Leadership in the Age of Crisis and Stop the Presses: The Crisis & Litigation PR Desk Reference and writes for Bulletproof Blog. Reach him at rlevick@levick.com.

A recent Moody’s report on the same issue disclosed that Microsoft had $42 billion abroad (more than 80 percent of its cash). Cisco Systems had $38.8 billion abroad (almost 90 percent). Google held more than 43 percent of its $40 billion outside the U.S. (prior to Google’s offer to buy Motorola Mobility for $12.5 billion in mid-August).

Richard S. Levick

A May 2010 analyst report from JPMorgan Chase estimated that 519 American multinationals held $1.375 trillion outside the U.S.

Many companies are willing to repatriate overseas cash, but their tax liability can be as much as 35 percent. As a result, companies wind up holding the cash overseas or reinvesting it in foreign markets rather than in the United States—at a time when such private sector stimulus is so obviously and sorely needed in the U.S.

The stage is thus set for yet the latest iteration of a very old debate about how to best manage an economy. For business, it seems a simpler matter and a more effective strategy to focus on showing the tangible impact of how the repatriated funds can have an immediately positive economic impact in a way that will be irresistible to the public and its decision makers, irrespective of political persuasion.

The opportunity to articulate the most helpful messages on this issue has already presented itself as elected officials and lobbyists are now talking about a new tax holiday, not unlike the one mandated by the American Jobs Creation Act in 2004, which reduced the dividend tax rate to 5.25 percent for companies that brought funds back into the country.

The proviso was that the cash would be used for U.S. investment and not for dividend payments or stock repurchases.

The results of that tax holiday are generally viewed as mixed. Repatriation grew from $69 billion to $299 billion in the year following passage of the Act. However, $88 billion of the total amount was repatriated by only five companies (Hewlett-Packard, IBM, Johnson & Johnson, Merck and Pfizer).

Worse, companies found a loophole by using their U.S. cash for dividends and repurchases, and then simply replenished that capital with the repatriated cash. The result was a virtual wash that did not substantially increase domestic investment.

Not surprisingly, that experience fuels arguments against another tax holiday as just one more unconscionable big-government giveaway. Skeptics likewise enumerate the many reasons why foreign growth opportunities would encourage corporations to still keep significant cash overseas.

Countering such skepticism, initiatives such as the WinAmerica campaign (or “Working to Invest Now,” a dozen or so companies and several trade and industry groups) are not just arguing the value proposition, but reaching beyond the predictable lines of partisanship. In so doing, they’ve been offering a clinic on how even-handedly persuasive communications can have real impact on public affairs and issues management.

While corporate boards have many issues on their plates, the potential for a tax holiday that enjoys bipartisan support should be a priority for them—especially since it’s not just corporations with considerable overseas wealth that stand to benefit. A stimulus is a stimulus, and even a smaller-than-hoped-for repatriation can help push the economic needle in the right direction.

For directors, there are at least three practical considerations:

• Has your company joined the chorus of voices advocating for the tax holiday, irrespective of its own overseas cash position? If nothing more, is there a reason it has not or should not publicly add its name to a campaign like WinAmerica?
• How can the company contribute to the discussion in terms of practical commitment? Can the company support the communications effort of business leaders and politicians by describing specifically how it will increase the beneficial impact— in terms of jobs, growth, infrastructure— if a tax holiday were proclaimed?
• Does your company have a plan in place to communicate and justify the balance of its overseas and U.S.-based investments?

To be sure, the impact of such a communications program goes far beyond the issue of tax repatriation. Corporations that are perceived to support this economy while it slumbers will reap concrete rewards among their domestic stakeholders once it finally wakes up.

Richard S. Levick, Esq., is the president and chief executive officer of Levick Strategic Communications, a crisis and public affairs communications firm. Reach him at rlevick@levick .com.

Toyota is a particularly telling example as much for the company’s deficiencies during the recalls of 2010 as for its evolving proficiencies in their aftermath.

Let’s take a look at a few particulars. In May 2010, a Google search for “Toyota class action” confirmed a decisive edge for the plaintiffs, as numerous paid ads suggested reasons to sue and offered free consultations if you were interested. For organic (or non-paid) searches, Toyota was bested by Parker Waichman and Alonso—additionally unfortunate, as sophisticated Web searchers (like reporters) turn straight to sites highlighted as a result of concerted search engine optimization.

Parker Waichman likewise dominated YouTube. On Twitter, plaintiffs’ firm Arias Ozzello & Gignac was talking to more than 800 followers on Toyota-related topics. Toyota’s account, TweetMeme, was perceived to be highly censored, so its impact was curtailed.

Lessons Learned
Of all the moves Toyota made to answer these online challenges, none was shrewder than its choice of what keywords to buy and control. In its dedicated Google adwords campaigns, Toyota thought like its adversaries by seizing on “Toyota recall,” “Toyota problems” and “Toyota issues.” The company was buying up negative terms about itself, not just positive or generic ones.

Such foresight suggests strategic assets beyond the obvious opportunity to own something before your opponents have a chance to use it against you. It suggests that Toyota’s communications advisors have been working with enterprise risk management officers and lawyers, as well as with brand managers. Ideally, all act as one to identify risks and to deploy digital strategies specifically around those risks.

Had Toyota bought these negative terms before its product liabilities arose—as with most risks, partially predictable through enterprise risk management—the public discourse would likely have been quite different, with so much of the shrill, negative content and tone simply overwhelmed by the ready corporate resources.

The impact for Toyota on the paid and organic fronts has been tangible. A July 25, 2011, search of Google News for “Toyota recall” showed—despite a recall of 82,200 SUVs in late June—no plaintiffs’ lawyers listed among the top 10 rankings. Yet there is prominently featured news of a Toyota safety campaign as well as the dismissal of claims against the company.

Critically, Toyota supports its branded online content with a strong social media presence. You can find the CEO in the social media; you can hear Toyota supervisors frankly address recall issues on Facebook. At the same time, Toyota enthusiasts are posting positive content— some even started a Facebook page called “Defend Toyota.”

For directors, there are at least three practical lessons in this saga:

• Understand that the Toyota example is not merely valid for manufacturers or for companies selling in mass markets. Quite to the contrary, the more targeted an audience, the greater the stakes online.
• Look for evidence that your company’s Internet team is multidisciplinary and well integrated; that its work is informed by expertise from both the “positive” side (marketing, brand development, etc.) and the “negative” (crisis management, litigation- related communications, etc.).
• Is your company waiting for a disaster to build state-of-the-art digital and social media fortifications? It must not. Yes, Toyota’s enhancements were inspired by massive recall litigation, and the company’s actions are additionally impressive because they were taken under such duress. Yet Toyota’s accomplishments can be surpassed by companies that strengthen Internet strategies and resources ahead of need.

The benefits will be palpable in every area of traditional boardroom concern— and that includes share price. By the summer of 2010, at the height of the crisis, Toyota’s shares had plummeted from a high of $91 to the high $60s. By January 2011, the stock was back into the mid- $80s, with occasional jumps over $90.

Of course, this recovery cannot be totally attributed to search engine optimization and search engine marketing. Yet there’s every reason to believe the recovery would have been proportionately more tepid and uncertain absent the company’s canny, resolute digital programming.

Richard S. Levick, Esq., is president and CEO of Levick Strategic Communications, a crisis and public affairs communications firm. Please contact him at rlevick@levick.com.

Richard S. Levick

• Activists have used social media to compel CEOs to resign, as we saw a few years ago when Eric Jackson—a blogger with 96 shares and about eight readers a day—struck a chord with a high-authority blog he created to air grievances about Yahoo’s business performance. Small investors, representing around 2.6 million shares, responded warmly. Six days after a contentious board meeting, Chief Executive Terry Semel stepped down.
• Activists are using social media to influence mergers and acquisitions, as we saw when shareholders in On2 Technologies used a venue called Moxy Vote to consolidate their ranks and expedite voting, ultimately forcing Google to increase its bid for the company by 25 percent.
• Carl Icahn used Web-based resources to attempt to overthrow the board of Lionsgate in an acquisition bid. The bid failed, but Icahn proved that social media isn’t just for the little guy, and that a proxy fight once requiring months of preparation and shareholder outreach could be waged in a matter of days and at minimal expense.
• Facebook and Twitter are reliably potent rallying tools, but other sites now provide sundry investors with effective forums. Seeking Alpha, StockTwits and Wikinvest allow investors to discuss valuation and investment potential. Family Bhive calls itself the “Facebook for the Fortunate” and provides proprietary social networks catering only to the wealthiest investors.

Not surprisingly, activist shareholders with social and political agendas take quite comfortably to social media. Here too, new sites offer tailored venues for such agendas. For example, the aforementioned Moxy Vote provides investors with proxy recommendations from a variety of interested groups, including the Humane Society of the United States and the International Brotherhood of Teamsters.

The additionally compelling significance of such campaigns is that they don’t just organize activist shareholders; they create activist shareholders on multiple fronts.

Directors of public companies must ensure that a response strategy is in place or risk ceding control of their destinies. Social media must be comprehensively monitored. Appropriate responses and possibly proactive communications must occur in the same space where their potential adversaries now live.

Yet, as recently as 2009, studies found that only three percent of U.S. large companies use social media as part of their IR communications. To be sure, corporations tread a minefield here that the activists don’t. Mistakes in the social media can damage brands. They can generate lawsuits. The wrong message on Twitter can reverberate throughout the world—an expensive if not fateful 140 characters. And disclosure issues loom large over all facets of outreach. That said, corporations are doing enough positive things in social media to encourage similarly innovative thinking.

For example, Alcoa’s Facebook page has nearly 14,000 followers and a Twitter account linked to earnings releases and investor webcasts. eBay tweets updates on earnings calls and analyst meetings. Amgen uses the Web to survey shareholders about executive pay. Intel has interactive Q&As that allow shareholders to vote online during its annual meeting.

Officers and directors have an opportunity to do more than simply think up creative, catchy social media deliverables. More than such one-offs are needed. Their companies must attack this field with vision and strategy. They must recruit and deploy teams of digital communicators. They must develop formal policies and procedures that define what can and cannot be done in every social media venue. They must think of financial communications, with all its requirements and regulations, as brand communications and engage the web appropriately.

In the final analysis, it will only reassure shareholders when they see the directors of the companies they own living in the same world they do.

Richard S. Levick, Esq., is the president and chief executive officer of Levick Strategic Communications. Reach him at rlevick@levick.com.

Richard S. Levick

That was the lesson learned by one company, a recognized leader in the business of rating how well companies in a specific industry group (we’ve masked the details) perform. Not long ago, this ratings company undertook a massive overhaul of its system in order to provide more scientific, accurate and reliable results. In other words, they strove for excellence. Justly proud, the company expected the revamped system to be uniformly greeted as a landmark advance in the science of rating performance.

This commentary is excerpted from the book, The Communicators: Leadership in the Age of Crisis, by Richard S. Levick and Charles Slack (Watershed Press, 2010).

No sooner was the new system unveiled than howls of protest erupted from some minority-owned companies because their performance ratings had suddenly dropped. The new system must be racially biased, they claimed. The charges shocked the ratings company. After all, the whole point of the revisions, the months and months of hard work and effort and expense, had been to make the ratings less subjective, less prone to racial or any other type of bias. The ratings company stood firm, offering to show any and all interested parties exactly how it had arrived at the new system.

The numbers obviously revealed some inherent weaknesses in the offended companies’ operations, they suggested. But the offended companies had no interest in such hows, whens and whys. Politically well-connected, they began making phone calls. In no time at all, the ratings firm heard from the state attorney general.

Once again, the company explained its metrics. Look at our research! Look at our numbers! Look at our results! Unfortunately, the AG was no more interested in the science behind the ratings than were the companies that were complaining. “Just let me know what you’re going to do about this,” he said. The AG wanted positive publicity for himself, but he also wanted the problem resolved before it became a sensitive political event.

A crisis management consultant convinced the ratings firm to play ball. The firm would offer to work directly with the minority companies on strategies to bring up their numbers while providing the attorney general with nine steps to help do so. The firm would also make a donation to a nonprofit organization providing educational opportunities for disadvantaged students interested in joining the industry.

Perhaps all this conciliatory action seemed unfair to the managers of the ratings company. But they were pragmatic withal, enough so to smooth out ruffled feathers and keep a dustup from developing into a real crisis. Politicians are the ultimate pragmatists. Choose your battles carefully.

Richard S. Levick, Esq., is the president and CEO of Levick Strategic Communications, a crisis and public affairs communications firm. He is the co-author of The Communicators: Leadership in the Age of Crisis and Stop the Presses: The Crisis & Litigation PR Desk Reference, and writes for Bulletproofblog. Levick is on the prestigious list of “The 100 Most Influential People in the Boardroom,” which is compiled by NACD Directorship magazine. Reach him at rlevick@levick.com.

The boys darted around the ball in a shapeless, formless scrum, a furious mass of energy going nowhere. Then a father removed a soccer goal from the trunk of his car. Without saying a word, he placed the goal at the far end of the field.

Richard S. Levick

“Suddenly one little boy said, ‘Look!’ They all pointed,” recalls Kangas, whose own son was on the field that day. “The next thing you know, that herd of boys was moving right down the field toward the goal.”

For Kangas, this simple anecdote dramatizes a vital distinction that leaders need bear in mind: the difference between authority and the power of consensus. A coach with a whistle around his neck might have had the authority to tell the boys what to do and where on the field to go, but the placement of a goal generated the consensus to get them all moving together as though it was their idea. “When a group of people agree upon a goal, there’s almost nothing that will stop them,” he says.

Over the years, Kangas has had innumerable opportunities as a corporate leader and board member to put this idea into practice. A highly sought-after corporate director, Kangas now serves as chairman of the board of directors of Tenet Healthcare, one of the nation’s largest private hospital companies, as well on the board of United Technologies, Intuit and several other companies. Never was the concept of goal-oriented leadership more important to Kangas than during the 1990s when, as CEO of the global accounting enterprise Deloitte Touche Tohmatsu, he was faced with transforming the firm. Deloitte needed to become a truly global firm instead of a collection of accounting practices.

Because accounting laws vary widely from country to country, the individual country practices of an international firm traditionally operate with significant independence. When dealing with the audits of a major international client, each Deloitte office would supply its own audit of operations in the separate countries.

“You might have 25 separate audits coming in from around the world,” Kangas says. That system worked fine until major client companies began integrating their overseas operations, placing less emphasis on national borders and more on flexibility and the ability to respond quickly to global markets.

“As our clients globalized and started operating in global computer, accounting, purchasing and manufacturing platforms, they were expecting their auditors to behave as a global organization as well,” says Kangas. Global business demanded truly global accounting firms. To Kangas and other top leaders, the challenge was clear: operate globally across borders or lose major clients.

Despite the clarity of that challenge, the company faced a delicate and difficult internal process of convincing proud, traditional partners around the world to give up autonomy in the interests of greater effectiveness for the entire firm.

The most direct and obvious move might have been a straightforward mandate. After all, the United States was the company’s largest practice and generated 40 percent of its revenues. Just as surely, though, Kangas believed that dictating the answer could never generate the sort of team effort required to reinvent the firm. Such a move might even destroy it. Back then, “Partners were very protective of their national rights. You couldn’t tell them what to do,” Kangas says.

Instead, Kangas embarked on a long, slow process over the next several years that involved almost constant travel (120 visits to Japan alone, by his estimate) to every Deloitte practice, visiting overseas offices on their own territory, to understand their concerns and, just as important, to communicate his own belief in their importance to the company.

“Authority may flow from the top down, but real power flows from the bottom up,” says Kangas. “Leaders are empowered by the people they lead. A CEO gets his authority from the board of directors, but his power will be based on his ability to influence those in his company based on his competence, the trust they place in him, and on respect. If a CEO uses this power to influence, he’ll be much more effective than using authority.”

Instead of having the audits of the branches of individual clients controlled by the various offices in every country, Kangas championed a model in which the partner leading each major international client would take the global lead in managing that client. So if a client was based in France, a partner in Deloitte’s Paris office would have the authority to lead Deloitte teams in New York, Tokyo or anywhere else doing work for the same client.

This move effectively neutralized objections that the global strategy was simply a U.S. power grab. Further, the American operation, though representing 40 percent of Deloitte’s revenue, voluntarily reduced its voting power on the board of directors to 20 percent. A global management team, made up of partners from many countries, was developed.

As Deloitte’s representatives began to trust the motives and vision of Kangas and his colleagues in the leadership, they began to buy into the mission without being told to do so. This trust allowed the global leadership to gain important objectives. For example, world leaders agreed to empower the global CEO to remove country CEOs – a crucial step if Deloitte was to become a truly global company.

The process of transforming Deloitte lasted through most of the 1990s but ultimately paid off as the company positioned to meet the needs of 21^st century clients. “As CEO, I found that taking time to build consensus around the goal was very important. It may have taken longer to make decisions that way, but it shortened implementation time dramatically,” says Kangas, who is now retired from Deloitte and serves on a number of corporate boards.

“If you give me the choice of influence or authority, I’ll take influence any time. If you have the authority, they will probably do what you tell them to do. If you have great influence, based on respect, trust, competence and loyalty, you can build the emotional and intellectual consensus to do almost anything.”

Richard S. Levick, Esq., is the president and CEO of Levick Strategic Communications, a crisis and public affairs communications firm. He is the co-author of The Communicators: Leadership in the Age of Crisis and Stop the Presses: The Crisis & Litigation PR Desk Reference, and writes for Bulletproofblog. Levick is on the prestigious list of “The 100 Most Influential People in the Boardroom,” which is compiled by NACD Directorship magazine. Reach him at rlevick@levick.com.

Formally known as Section 404 and informally as Sarbox, the 2002 legislation, enacted on the heels of Enron and other corporate accounting scandals, is the contemporary bête noir of free market philosophers.

Richard S. Levick

As the swift prosecutions of the late Enron CEO Ken Lay and other leaders engaged in malfeasance make clear, there were already laws on the books to deal with the out-and-out fraud that Enron and others perpetrated. From a free marketer’s perspective, Sarbanes-Oxley has succeeded mainly in saddling thousands of honest, publicly traded companies with onerous, complex, even serpentine requirements for internal accounting. The largest companies now pay millions of dollars each year just to comply with Sarbox and a whole cottage industry of consultants has arisen, specialized in helping businesses try to understand and comply with the rules.

This commentary is excerpted from the book, The Communicators: Leadership in the Age of Crisis, by Richard S. Levick and Charles Slack (Watershed Press, 2010).

There’s little doubt that well-meaning legislation places enormous burdens on companies. A 2009 article in Policy Review magazine noted that, in the years since President Reagan made regulation reduction a top priority for his administration, regulation has only grown under Democrat and Republican administrations alike. In fact, according to Policy Review, Washington’s regulatory staffers grew by 38 percent between 2000 and 2004 to nearly 240,000 full-time equivalent employees.

Some companies do better than others in recognizing political realities and in managing the inevitable, unwanted circumstances to their own benefit. A 2006 study by Lord & Benoit (one of those consulting firms that help companies deal with the legislation) compared nearly 2,500 publicly traded companies according to two criteria: how well they had implemented accounting controls to deal with Sarbox and how their stock price has fared. The study found that the stocks of companies with effective controls during the first two years of the law rose nearly 28 percent, compared with the Russell Index average of 18 percent. By contrast, those that failed to implement such controls saw their stock price drop by 5.75 percent.

The lesson is clear. Love or hate the legislation, it is here and it is not going away any time soon. Get on board and deal with it and your company can prosper. Ignore or fight or delay dealing with the unavoidable huge headache and your company will likely suffer.

Legislators pass laws. By definition, that’s what they do; that’s how they respond to crises, perceived crises, and public outcries to “do something” about a problem. Often, they simply cannot afford to consider the longer-term consequences of their legislation, especially when their own survival requires a show of action.

“Many politicians don’t even understand the legislation they’re enacting and the ramifications of it,” says Thomas C. Green, a partner in the Washington law firm of Sidley Austin LLP and a nationally recognized trial lawyer who frequently works with corporate executives in criminal and civil white collar cases. “The penalties attached to corporate crime have been ratcheted up and up over the last few years. I’m not here to engage in social commentary and address the wisdom of that,” he adds. “Suffice it to say that, rather than finding ways to interface with the corporate community and ensure that regulation is efficient and working, we just kind of ratchet up penalties.”

If Enron provided a catalyst for new laws, the financial meltdown in 2008 and early 2009 created a perfect storm of regulatory opportunity. “From the public’s perception, there were a lot of corporations that misbehaved, and that translates into the political objective,” he adds. “Obviously, there’s a lot more regulation across the board…. The SEC’s already reorganized in the aftermath of the Bernie Madoff debacle and Congress certainly has an appetite for new and additional regulation in the financial community.” (Subsequent to Mr. Green’s comments, legislation fundamentally overhauling regulation of the nation’s financial markets was approved by the U.S. Senate in a 60-39 vote.)

As a CEO, you may want to marginalize the effects of Washington on your business. However, working with the Power nearly always trumps fighting against the Power. General Electric is a primary example. By serving on President Obama’s Economic Recovery Advisory Board, Chief Executive Jeffrey Immelt put himself in a position not just to share his business expertise with the President but, presumably, to diplomatically highlight initiatives or new regulations that might unduly strap GE or business in general.

“Any prudent corporate executive needs to take account of the atmosphere that exists now, and which is likely to continue,” Green says. “That means committing considerable effort to compliance and oversight.”

One may rightly ask, if the legislators themselves don’t understand the intricacies of the laws they themselves pass, how are large corporations supposed to avoid violations? Put simply, you can’t. Not all the time, anyway.

“Corporations are huge organizations. No chief executive can police every employee and subordinate,” Green says. “The truth is that, notwithstanding the best and most attentive commitment to doing things right, there will be people [in a company] who do things wrong.”

Nowhere more than in Washington, D.C. does perception spell the difference between whether investigators give you the benefit of the doubt or use any violation as a pretext for a full-scale inquiry into your company and operations. “The way out of that dilemma, always, is to be able to demonstrate to any investigating authority that you were diligent, you were vigilant. You did have all your compliance programs and activities in place, and this particular incident was one that simply could not have been detected or foreseen,” advises Green. “If that’s the case, the corporation typically gets a pass.”

As the leader, it’s your job to set the tone, Green says. “It takes a lot of leadership at the top of the corporation because much of the moral and ethical tone of a corporation is set by its leaders. Employees take their cues from management.”

However, being realistic about compliance and Beltway oversight does not mean that you must simply sit back and wait for the legislative juggernauts to drive your own corporate destiny. You can have impact. Senators and representatives and their staffs are not experts on your industry-specific issues. They rely on experts to help them craft laws, and you can be one of those experts.

“There’s still a fair amount of access to committees [that are] considering enhanced regulations or changes in the regulatory scheme. And there is still access to their staffs,” Green says.

“What you communicate has to be sensible. It’s a waste of time to spend resources saying, ‘No, you shouldn’t regulate and change things,’ because that [strategy] gets you nowhere,” Green says. Instead, “pay attention to the intricacies of what legislators are proposing and react to that with specificity.”

It’s your job to find that seemingly innocuous three-sentence clause that could actually derail your corporate growth plans – but not because the lawmakers want to derail your corporate growth plans. As definitive practitioners of the Law of Unintended Consequences, the bill’s drafters may have no idea the wording could hurt you. They may be only too happy to make changes to specific passages on your behalf.

Before you can hope to wield such influence, however, you must be willing to accept legislation as a fact of life rather than an obstacle to be overcome. As Thomas Green says, coming to grips with that reality “is probably the most self-protective thing a company can do.”

Richard S. Levick, Esq., is the president and CEO of Levick Strategic Communications, a crisis and public affairs communications firm. He is the co-author of The Communicators: Leadership in the Age of Crisis and Stop the Presses: The Crisis & Litigation PR Desk Reference, and writes for Bulletproofblog. Levick is on the prestigious list of “The 100 Most Influential People in the Boardroom,” which is compiled by NACD Directorship magazine. Reach him at rlevick@levick.com.

Richard S. Levick

There’s not much point in trying to fight these forces in an age when regulation is intensifying on all fronts, with the strong support of the American people. As Charles Firlotte advises, you’ll do your company a lot more good by accepting the reality of government intervention, making friends, and seeking a strong voice in how laws and regulations are handed down. “The world belongs to those who show up,” he says. “You need to be part of the action.”

This commentary is excerpted from the book, The Communicators: Leadership in the Age of Crisis, by Richard S. Levick and Charles Slack (Watershed Press, 2010).

Firlotte knows whereof he speaks. As chief executive officer of Aquarion Water Company in Connecticut, he operates one of the most heavily regulated private companies in the United States.

With $180 million in annual revenue and assets in excess of $1 billion in assets, Aquarion supplies drinking water to residents of three states in the Northeast. The company performs some 150,000 government-mandated tests of the water supply each year and checks for more than 100 possible contaminants mandated for testing by local, state, and federal governments. That, by the way, is a 500 percent increase over the 20 or so contaminants they checked for just two decades ago.

In addition to the health and safety issues, Aquarion, as a utility, is also closely regulated on the financial front. In other words, every important step the company takes has political or regulatory overtones.

While Firlotte understands the inevitable, and even beneficial, role that regulation plays in the water system (“It’s the only utility product that people actually ingest”), prospering in such an environment requires an almost preternatural sensitivity to the needs and agendas of bureaucrats and politicians.

Most of the regulators he deals with sincerely believe in their underlying mission to ensure public safety. At the same time, they operate under enormous pressure not to approve new procedures or policy changes that could backfire. They are extremely cautious as a result. “They’re highly sensitive to public perception and criticism. And they live in a fairly nasty political world where politicians will take shots at them,” says Firlotte.

Politicians, of course, have their own agendas. “You really have to be alert as to who the legislators are who have an interest in your industry,” Firlotte says. “You have to know who the guys are that count. For me it’s who’s on the environmental committee? Who’s on the health committee?”

Firlotte and Aquarion walked that fine line a couple of years ago when pushing for a regulatory change. Instead of seeking a rate increase every time the company needed to replace pipes or other infrastructure, Aquarion wanted the ability to add small surcharges directly to customers’ bills.

The plan made perfect sense from a business and consumer perspective. Formally raising rates is a “long, bureaucratic, and very costly process” involving multiple aspects of state government. The surcharge would add flexibility, reduce costs, and encourage companies to replace aging infrastructure. A classic win-win. Yet there were political risks.

First, Firlotte approached the financial regulators and pointed out that a half dozen other states had implemented similar changes. The regulators said the plan was good, but they wanted to know that legislators were on board.

Next, Firlotte spoke with some key legislators in Hartford. They, too, liked the idea. Not surprisingly, they too wanted cover. What the politicians obviously feared most was a backlash from angry customers. Firlotte stressed that the surcharges would be small and that newer pipes and other equipment would minimize leaks, thereby improving water safety and the environment at the same time. Moreover, the small surcharges would mean fewer trips to Hartford for rate increases, which inevitably draw close scrutiny from the media.

By delicately pushing the agenda with both regulators and politicians, the company was able to encourage legislation that passed in 2008.

Firlotte knows as well as anyone how challenging the government can be as a business partner. “Every year you get legislation and you wonder how it ever got airborne. Wacky stuff that could do significant harm to your business,” Firlotte says. Having a voice requires patience and care. “If you’re sensitive to the needs of the legislator, you have that discourse with the regulator, you’re among those who show up. Part of that world can belong to you.”

Richard S. Levick, Esq., is the president and chief executive officer of Levick Strategic Communications, a crisis and public affairs communications firm. He is the co-author of The Communicators: Leadership in the Age of Crisis and Stop the Presses: The Crisis & Litigation PR Desk Reference, and writes for Bulletproofblog. Levick is on the prestigious list of “The 100 Most Influential People in the Boardroom,” which is compiled by NACD Directorship magazine. Reach him at rlevick@levick.com.

In fact, flattery and knee-jerk agreeability from staffers, senior or otherwise, minimize opportunities for corporate improvement at every level. Worse, in a crisis, when the integrity and future of the company are on the line, it’s death to stifle honest feedback from everyone around you. Creating an environment of candor – however difficult it may be to do so in the short term – is the ideal alternative that can provide the early warning systems needed to master every variety of crisis under the sun.

Richard S. Levick

In recent years, the importance of candor within an organization has escalated as work becomes less rote and more creative. Indeed, as a salutary and emerging force in corporate life, candor needs to be seen in a larger socio-economic context.

This commentary is excerpted from the book, The Communicators: Leadership in the Age of Crisis, by Richard S. Levick and Charles Slack (Watershed Press, 2010).

In past decades, when employees were seen as more or less interchangeable, popular wisdom held that the best corporate managers were those with the best systems. Because machines could manufacture products and process information faster and more accurately than any human, the primary challenge was to organize and regiment the fallible and largely interchangeable humans needed to keep the machines running.

“It was all about getting people within hierarchies to do relatively simple things more efficiently because of great systems,” says Stratford Sherman, a partner with Accompli, a change advisory group serving senior corporate leaders, and co-author of the best-selling Control Your Destiny or Someone Else Will.

But a funny thing happened on the way to the Orwellian future. Technology has not enshrined hierarchical, impersonal management systems as the holy grail of corporate process. It has destroyed them.

“Companies don’t need so many workers and managers performing rote tasks,” Sherman says. “What’s left are leaner, flatter organizations with fewer people in them. As the number of players is reduced, the work they do becomes less mechanistic. Here’s what we’ve learned: people are able to add value only to the degree that they can actually think and speak openly.”

Companies that insist on strict hierarchies and prefabricated approaches to problems are just like the British commanders who sent exposed and rigidly deployed lines of Redcoats into battle against flexible and well-hidden Colonials. They are fighting the last war instead of the current one.

To migrate from the old industrial and pre-industrial systems to leadership models that can succeed in the 21^st century, managers must transform their relationships with those they manage. And the key to that is fostering cultures that encourage or even mandate candor. “Great decisions require great information,” Sherman says, “If you don’t have candor and teams working together, you can’t have great decisions. It’s just not possible. Getting better decisions requires developing a culture of candor.”

Sherman spent years studying the management methods and philosophies of Jack Welch, the legendary GE chief executive. What impressed him most was the sincere value Welch placed on the opinions of others – the more directly and freely expressed, the better.

Once per quarter, Welch would gather managers from GE’s far-flung business operations for meetings of the company’s corporate executive council. Specific discussions of budgets and revenues were off the table. Instead, Welch wanted to hear candid thoughts on where the future was headed and what GE needed to do, even (especially!) if those thoughts ran counter to his personal preconceptions.

“Because of the scope of GE’s businesses, the folks in that room were unbelievably well informed about a lot of stuff,” says Sherman. “The effect of getting them all in one room was that they made the CEO a hell of a lot smarter, but only because they were free to be candid. Welch had a very powerful and ultimately humble recognition that the brilliance that was attributed to him was due in very large part to being part of a community where candor was intensely valued.”

To that end the CEO must overcome the infallibility complex – the idea that being the leader means you must by definition know more than everyone and necessarily be correct.

“Mature leaders over time become more rather than less open to the idea that they might be wrong and could improve,” Sherman says. “The really great leaders aren’t threatened by their own imperfections. On the contrary, they are hungry for improvement. Those are the really strong, grounded, inspiring people that other people love to follow. They’re the ones who are comfortable saying, ‘I was wrong’ or ‘I don’t know.’”

Communicate impatience or sensitivity about views contradicting your own and every subordinate, from the receptionist in the lobby downstairs to your CFO, will clam up. Only you can guarantee candor.

Give people in your organization a useful glimpse into your decision making and thought processes. Sherman cites one company where the managers were becoming extremely frustrated because the CEO seemed to reverse course without warning. As a result, they were reluctant to stick their necks out with new ideas or suggestions that might be approved one minute, then summarily rejected the next.

“It turned out that this executive was getting important financial updates every two weeks,” Sherman says. “So, he might say something in Week One, then make a course correction in Week Three when revised data came out.” But he hadn’t advised his staff accordingly, so his people thought he was simply capricious. Once they knew what was going on, they were more willing to change course with him.

To see how lack of candor makes bad situations far worse, look no farther than Merrill Lynch in 2007 under then-CEO Stan O’Neal, Sherman suggests. In October of that year, when Merrill announced a record quarterly loss of $8.4 billion related to the subprime meltdown, nobody seemed more surprised than the company itself. As the website MoneyMorning.com reported when O’Neal was fired later that month, “What really stunned Wall Street…was the fact that Merrill clearly didn’t have a clue about the depth of its problems.”

O’Neal, as CEO, had a reputation not just as a risk-taker, but as an aloof executive who surrounded himself with a small number of hand-picked advisors. It’s hard to say to what extent, if any, these people insulated O’Neal from bad news, but, clearly, if anyone had the nerve or foresight to warn O’Neal about the dangers of the company’s exposure to massive amounts of shaky mortgage securities, the message never got through. According to news coverage, O’Neal had his own problems with candor, discussing a possible merger with Wachovia without first informing the board. The Wachovia deal fell through, O’Neal was out, and a legendary company, unable to recover on its own, is now a Bank of America vassal.

Sherman contrasts Merrill and Stan O’Neal with JP Morgan and its fiery, blunt leader, Jamie Dimon, proclaimed “The Toughest Guy on Wall Street” by Fortune magazine. Crucially, that toughness does not entail browbeating underlings who happen to disagree with him. On the contrary, Sherman points out that Dimon intentionally surrounds himself with people tough enough to tell him when he’s wrong. That internal heat helped Dimon and JP Morgan navigate the financial crisis with their finances and reputation intact.

One way to foster open environments is to simply come right out and affirm that candor is important. “Declare that it’s something you are going to demand,” Sherman suggests. “Move off the agenda at your next meeting and say, ‘Let’s spend the next hour talking about candor; what’s promoting it and what’s inhibiting it.’”

Note that authentic discussion does not require CEOs to be anything less than human and fallible. You will have emotional reactions and you may even get angry. The key is in being able to differentiate emotion from fact and to draw a distinct line between the two. “What usually happens is a leader gets totally frustrated and, out of that emotional state, they make some angry statement and they throw some facts in and they think they are making a factual statement. But all they’re really doing is expressing anger,” Sherman says.

When facts are abused to support anger, subordinates have no choice but to go along with you or face the consequences. Openness is destroyed. But getting angry shows you’re only human, Sherman says. Tell your staff what made you angry. Then return to the factual discussions after everyone has calmed down. In that way, people can accommodate the human factor – they can forgive the chief executive’s outburst – without ever having to sacrifice the right to openly share their thoughts and expertise.

As Sherman puts it, “Now that you’ve faced, not just business reality, but human reality, your company is a place where value is created by people and not by machines.”

Richard S. Levick, Esq., is the president and chief executive officer of Levick Strategic Communications, a crisis and public affairs communications firm. He is the co-author of The Communicators: Leadership in the Age of Crisis and Stop the Presses: The Crisis & Litigation PR Desk Reference, and writes for Bulletproofblog. Levick is on the prestigious list of “The 100 Most Influential People in the Boardroom,” which is compiled by NACD Directorship Magazine. Reach him at rlevick@levick.com.

But when Catherine A. Allen uses blunt words for the industry, it’s time to take notice. “Financial services companies have lost the trust of their customers,” she says. “It didn’t just happen with this crisis, but the crisis exacerbated it. If you look at statistics on consumer trust, the latest polls say that bankers are at the bottom of the pile.”

Richard S. Levick

Allen doesn’t hate the banking industry; she’s an integral part of it. In 2007, the year that U.S. Banker magazine honored her with a lifetime achievement award, she stepped down as founding CEO of BITS, a financial services industry consortium. Today, she’s head of the Santa Fe Group, a consultancy serving leaders in the industry.

This commentary is excerpted from the book, The Communicators: Leadership in the Age of Crisis, by Richard S. Levick and Charles Slack (Watershed Press, 2010).

“The trouble isn’t just the impact they’ve had on the economy, but also the fees and the usurious interest rates and the way they have treated customers over the past two to three decades,” she says. “It starts at the top. CEOs must lead by example. I’ve even encouraged them to apologize to their customers and say, ‘Look, we’re sorry we got you into this mess or contributed to it, and we’re going to help you out of it by giving you the best advice we can.’”

Allen, who descends from generations of bankers, can’t help contrasting the current situation with the way her father carried himself as a small town bank president in the farming community of Perry, Mo., during the 1950s and 1960s.

A banker in a place like Perry (population 800) was an integral part of the community. He had to be acutely aware of its rhythms and the needs of its residents. “The banks would loan to the farmers, and the farmers would buy the grain from the grain store. When the crops came, [we] would help the farmers find markets for them, and the farmers would pay off the bank loans, and shop in the local stores. It was a community relationship. You had to have trust with your customers.”

Allen’s father understood implicitly that the financial well-being of his depositors wasn’t just good for his own business but his implicit social responsibility. “He gave financial advice and trained people about how to use credit or not use credit. He would tell people when they were overextending themselves.”

On Sundays, farmers would often gather in the Allen family living room. “They’d talk about loans for feed or what land they might buy. He was very accessible, very involved in the community,” Allen recalls. “I grew up thinking that that’s what banks were about. They were there to help people, help their customers and help the community grow. All that, in turn, helped the bank to make its profit.”

Allen is too wise to try and resurrect a Norman Rockwell idyll in 21^st century America. She’s the first to point out that the CEO of a multinational bank can hardly invite a million depositors over for lemonade or to get to know more than a handful of customers.

But the same principles apply then, as now, she believes. “Technology…can enable you to reestablish that kind of a relationship,” she says. “By that, I mean the ability to email or respond to email; the ability to use video or webinars to reach larger groups.” The profusion of data available can help banks understand their clients better than ever before, not just as profit generators, but as people working hard to get by in challenging times.

“There’s no reason you couldn’t Twitter people to let them know they’re in danger of an overdraft. Not only do banks not alert their customers, but they want them to go over to be able to charge fees,” Allen says. “Banks, for the most part, are doing the exact wrong thing right now by raising fees and making customers angry at a time when they’re stretched.”

The correct course lies in a future informed by the past. “They need to say, not in a false way, ‘Here’s what we want to do to help you manage your finances and keep your home. Here’s what we’re going to do to build a relationship.’”

As a member of such organizations as the National Foundation for Credit Counseling and the Financial Regulatory Reform Collaborative, Allen will likely provide an important voice in whatever regulatory reforms emerge from the current crisis. What she’s really hoping, though, is that the banking industry reforms itself by voluntarily changing course.

That process can only commence with the recognition that a new golden age of customer satisfaction will serve everyone’s interest.

Richard S. Levick, Esq., is the president and chief executive officer of Levick Strategic Communications, a crisis and public affairs communications firm. He is the co-author of The Communicators: Leadership in the Age of Crisis and Stop the Presses: The Crisis & Litigation PR Desk Reference, and writes for Bulletproofblog. Levick is on the prestigious list of “The 100 Most Influential People in the Boardroom,” which is compiled by NACD Directorship Magazine. Reach him at rlevick@levick.com.

Richard S. Levick

Moore’s high spirits lasted just a few seconds after takeoff from the deck of the USS Constellation. It was then that the engine of his A-7 Corsair jet failed, transforming in a split-second his mission from one of attack to a struggle to survive.

“The best way I can describe it is as peaks of agony and ecstasy,” Moore says now. “There’s stark, raving, gut-grinding agony when you realize that the airplane is going to crash into the ocean and you’ve got to get out. The big unknown is, will my ejection seat work? If it doesn’t, I’m a dead man.

This commentary is excerpted from the book, The Communicators: Leadership in the Age of Crisis, by Richard S. Levick and Charles Slack (Watershed Press, 2010).

“You pull the ejection and it is sheer ecstasy when you realize that the seat is firing and you’re going to get out. But then you have the agony of, is my parachute going to open? When it does, there is ecstasy again. Then, is my flotation gear going to work or am I going to drown? And the flotation gear works and you’re as happy as you can be. All of this takes place in nanoseconds. But your mind speeds up and you see every detail.”

Before reaching the safety of a helicopter, he had to use a pair of handguns to ward off Chinese fishermen – known for abducting downed American pilots – and then jump into water just after a shark had brushed past his raft. The entire ordeal took less than half an hour and left him uninjured but physically and emotionally exhausted. Flight surgeons prescribed a little brandy and a good night’s rest. The next day he suited up, climbed in a cockpit and flew again.

It’s a little glib to refer to such an experience as another day at the office for a carrier pilot. Yet hazardous missions, engine failures and landings on ink-black nights were so common that Moore and his fellow pilots had a special name for those times when the margin between life and death narrowed to a razor’s edge: on government time.

“It was the euphemism for, ‘My life’s on the line…I’m willing to do it…this is what’s expected of me…if I buy the farm, so be it,’” says Moore. In other words, mission success required setting aside very real and natural fears of mortality in order to accomplish something you had decided was bigger than yourself.

“That is a very liberating feeling, by the way,” he adds. “If you can overcome the fear of dying, you can perform at a level that you otherwise couldn’t get close to.”

In fact, Moore performed at that level through 40 years in the U.S. Navy, rising to the rank of Vice Admiral before retiring at 58 in 2004 to enter private business. In the end, he chalked up 220 combat missions in Vietnam and 1,001 total carrier landings, placing him in the select rank of a few dozen legendary carrier pilots with a thousand or more missions.

Assuming such stratospheric risk has as much to do with passion as profession. Moore traces his own passion for flying back to his father, Charles Moore Sr., who flew B-17 bombers during World War II. “As with a lot of the old World War II guys, you’d never know it if you walked into our house or talked to him,” Moore recalls. “It wasn’t something he talked about.” But Charles Sr. had a way of communicating a whole lot in a very few words.

When his father made clear that Moore would have to find a way to finance college on his own, Moore, an excellent high school student and athlete in Missouri, gravitated to the military academies. Accepted by each one of them, he was leaning towards the Air Force and asked his father’s advice. “I’ll never lose my appreciation of this one comment he made that shaped my life,” Moore recalls. “He said, ‘I always admired those Navy guys that flew off aircraft carriers. In my opinion, that’s the pinnacle of flying.’ That’s all it took.”

The U.S. Naval Academy proved to be a supremely demanding environment. “We started out with 1,500 guys, but by the time the first summer ended we’d lost 300 or 400 of them. It was a tough place. In those days, they didn’t care if they graduated only one guy. They were going to know that one guy was pretty tough,” Moore says. “But I took to it. I loved it. It was a great place to go to school…They immerse you into this Navy culture and it gets into your blood.”

History placed Moore and his fellow fliers in harm’s way right from the start. He graduated from the academy in 1968, at the zenith of the air war in Vietnam. For a young pilot eager to test his mettle in combat, he could not have chosen a more propitious time.

Like many men of exceptional courage, Moore tends to downplay personal heroics. “Once you’re into it and you begin this very methodical training process, it becomes very technical and it becomes part of your personal capability,” he says.

But there was one aspect of the job that no amount of training or experience could make routine – the night landing.

Richard S. Levick

Between spring 2008 and spring 2009, Southwest logged more than two million unique visitors to its blog, “Nuts about Southwest” (a play on the airline’s no-frills, peanuts-only policy). Note that the blog is completely distinct from the airline’s sales-oriented website. You can link to that site if you want fares or tickets, but that’s not the purpose of the blog.

This commentary is excerpted from the book, The Communicators: Leadership in the Age of Crisis, by Richard S. Levick and Charles Slack (Watershed Press, 2010).

“People have made it known very clearly that they don’t go into these social media tools to be sold products and services,” says Linda Rutherford, Southwest’s Vice President of Communications and Strategic Outreach. In other words, social media platforms are about protecting and enhancing your brand, not marketing. The idea is to start a dialogue with customers, manage the brand, develop a well of goodwill, and, when necessary, deal effectively with crises.

Southwest didn’t just leap into the social media space with a top-down approach. They started by listening. “We identified 75 or 80 sites that were talking about Southwest,” Rutherford says. “After monitoring them, we were able to determine who the aviation nuts were, who the airplane geeks were, who the people were who closely watch our business. We could tell where our employees were spending their time putting up blog posts. We knew what kinds of conversations were happening, and where.”

First launched in 2006, Nuts about Southwest was completely upgraded in early 2008. Today the site includes video blogs, a Flickr feed, a news section, instant polling and a weekly podcast, among other features. The blog features regular posts from about 40 employees, including top managers. But any member of the public who wants to contribute need only register.

Passengers post their own photos of Southwest planes, stories about fun trips they’ve taken, or trivia about operations or aircraft. Inevitably, too, some use the space to vent. “Sometimes, executives see things on the blog that have a lot of passion and the passion isn’t, ‘I love you, Southwest.’ It’s more like, ‘I’m angry at you. Why did you do this?’

“And, they wonder, how’s this a good thing?” Rutherford continues. “Why do we have this type of criticism? What they don’t understand is that people would be saying those things anyway. But they’re saying them on our forum with an opportunity for us weigh in.”

While Southwest does set certain guidelines about language and civility, posters who respect the rules are free to share the good, the bad, and the ugly. It helps that, since its founding in 1971, Southwest has developed a corporate identity of plain talk and direct outreach to customers. “We’ve always had a reputation for telling it exactly like it is. We’re known as a brand that, when the industry zigs, we zag,” says Rutherford. “We do things a little differently.”

Still, the natural desire to control the message is a strong one. “Every now and then we have to remind [executives] that we no longer live in a command and control world,” Rutherford says. When one asked her recently to delete a derogatory post, Rutherford declined, explaining, “We would lose all credibility.” More often than not, angry posts “self-correct,” she says, as loyal customers leap to the airline’s defense. “We can sit back and let people have that conversation. That’s exactly what it’s meant to be.”

Users also become a valuable resource in helping guide customer service decisions. In 2007, when Southwest considered dropping its trademark choice-based seating as a way to woo business travelers, CEO Gary Kelly asked bloggers how they’d feel about assigned seats. In no time, 700 impassioned responses told Kelly in no uncertain terms that they hated the idea. Choosing your seat on Southwest was something passengers could still control, they said, and it was one of the reasons they selected Southwest over other airlines.

“We were able to get some great insights that matched what we were getting [when] we talked to passengers at the airport,” Rutherford says. “It was an inexpensive way to validate what we were hearing, which was, ‘don’t assign seats but do come up with a new way to board the aircraft.’ And that’s what we did.”

As such, paying attention to social media voices helped the airline avoid a decision that could have seriously impaired its brand.

All airlines must plan for the unthinkable, and Southwest has fully incorporated the social media into its plans in the event of a crash. As of this writing, Southwest has had no such incident since 2005, before the airline became involved in the social media. Today, Southwest has incorporated a “dark site” onto its blog. In the event of an accident, people entering the blog would automatically be sent to the dark site, confirming the accident and any other verified details, such as the number of passengers, and where the plane crashed.

“At the same time that we post to employees and news medias, we would post the exact same information, once it’s been approved by our emergency director, to our blog, and to Twitter and Facebook,” Rutherford says. “It’s written into the plan so that all the channels have the communications to be fully transparent. That’s why you plan for these things.”

Richard S. Levick, Esq., is the president and chief executive officer of Levick Strategic Communications, a crisis and public affairs communications firm. He is the co-author of The Communicators: Leadership in the Age of Crisis and Stop the Presses: The Crisis & Litigation PR Desk Reference, and writes for Bulletproofblog. Levick is on the prestigious list of “The 100 Most Influential People in the Boardroom,” which is compiled by the NACD and Directorship Magazine. Reach him at rlevick@levick.com.

Richard S. Levick

“What do they mean I ‘squelch communication!’” he snapped. “I was captain of the debate team at Cambridge! Nobody loves a good debate more than I do!”

This commentary is excerpted from the book, The Communicators: Leadership in the Age of Crisis, by Richard S. Levick and Charles Slack (Watershed Press, 2010).

Of course, he was making Goldsmith’s point. “He was a CEO and entrepreneur worth hundreds of millions of dollars,” Goldsmith says. “Imagine that I’m three levels below you. I express an opinion, and you go into debate mode. What chance do I have? In your mind, this may be a debate. In my mind I’m just getting stepped on.”

That’s just one example of what Goldsmith, author of What Got You Here Won’t Get You There, refers to as CEO blind spots, areas that, left unattended, erode rather than enhance leadership. Ironically, these blind spots are often directly related to the hard-charging, competitive qualities that helped a person rise in the first place.

Leadership, once attained, requires a subtler touch, Goldsmith explains. The process starts with identifying some of the essential blind spots, including:

Winning too much. You don’t get to be CEO of a company of any size (or C-suite resident or director, for that matter) unless you are a winner. “CEOs are great competitors, and their desire to compete and win has helped them become successful,” Goldsmith says. “They want to win if the situation is meaningful, critical, or even if it’s not important. They just want to win.” While that drive continues to be an asset in battling external competitors for market share, it can become a serious liability within your own ranks, especially in a crisis, Goldsmith advises.

“During a crisis, people tend to react more emotionally. When we become emotional under stress, we’re more likely to kick back into what worked in the past. In other words, we’re more likely to be in the mode of, ‘I’m going to win, I’m going to carry this ball.’” Yet this is the very time when you need your staff to be winners, and that can’t happen unless you hand them the ball.

Because you are the leader, and the boss, you will prevail during just about any internal conflict or battle that’s important enough to you. Yet that guarantee, with the tacit self-confidence it reinforces, should liberate you from the need to win. When necessary, defer, and hold back your power for another day. “It’s very important to let go of this incredible drive toward achievement,” Goldsmith says. “You don’t have to be the champion all the time.”

Adding too much value. Chief executives naturally feel compelled to add value to any conversation. “Instead of saying, ‘That’s a great idea,’ your natural tendency is to say, ‘That’s a nice idea, why don’t you add this to it,’” Goldsmith says.

You may intend your words as a suggestion to be used if helpful or else discarded. Unfortunately, in the real world, there is no such thing as a CEO’s “suggestion.”

As the retired CEO of a major pharmaceutical company lamented to Goldsmith, “My suggestions all become orders, even if I didn’t want them to be.” Every comment you make regarding an idea or an initiative imposes an implicitly automatic burden on the person implementing the project to rethink and re-plan based on your input. “Effectiveness of execution is a function of A, the quality of the idea, times B, the commitment required to make it work,” Goldsmith says. “If we get too wrapped up in improving the quality of the idea by just a little, we may damage the commitment by a whole lot.”

Of course, there are times when your suggestions are vital. You cannot be endorsing half-baked ideas just to spare people’s feelings. But the key, Goldsmith says, is not to “add value” reflexively. “Stop and breathe. Look in the other person’s eyes and ask yourself, ‘What is my comment going to do to their commitment?’ If your comment is going to decrease their commitment, ask, ‘Is it worth it?’ Sometimes it is worth it. If you stop and think for a few seconds you generally get the right answer.”

The Andersen story simply did not have the sensationalistic elements that riveted public attention on Enron. No one suggested that Andersen was actively engaged in the kind of criminal behavior that made Enron a synonym for corruption, dishonesty, and greed.

Richard S. Levick

In the end, what brought the nearly century-old accountancy to its knees was the shredding of documents after the crisis began to unfold.

This commentary is excerpted from the book, The Communicators: Leadership in the Age of Crisis, by Richard S. Levick and Charles Slack (Watershed Press, 2010).

“Enron got what it deserved, but most of Andersen’s problems were probably manageable,” says Ty Cobb, a Washington lawyer specializing in white collar criminal defense cases. “Had they not destroyed documents, not assisted Enron in destroying documents, they probably would still be flourishing…. What Enron did was highly irregular. What Anderson did was, for the most part, routine until the moment they decided that it was okay to purge.”

All of which suggests that Andersen’s problems were not related to endemic corruption and venality, but to a serious communications and leadership gap. Somewhere along the line, managers inadequately trained in crisis response found themselves in the position of making split-second decisions with lasting consequences for themselves and the entire company. Years later Andersen is still one of the most famous, but certainly not the only case that dramatically underscores what leaders must do to prevent carelessness in situations where it matters most.

Legions of high-profile politicians and their aides have learned the meaning of the adage, “It’s not the crime, it’s the cover-up.” Indeed, they’ve learned it the hard way. Consider White House advisor Scooter Libby, convicted in 2007 for lying and obstructing justice in what ultimately proved to be a nonexistent criminal case. Cobb, partner at the D.C. law firm Hogan Lovells and a veteran counselor to some of the highest-profile figures in the political and corporate worlds, advises that the lesson is every bit as relevant for corporations as it is for public figures.

The ways in which your managers and employees respond in the early hours of a crisis can spell the difference between a manageable event and one that could send employees to prison and irrevocably damage the corporate brand. As such, your crisis response system needs to be finely honed and adapted for communications at every level of management and in every branch and location.

“Frankly, half of [corporate] investigations, give or take 20 percent, don’t go anywhere, other than a false statement charge or obstruction of justice charge based on statements that are made or documents that are destroyed in the first 24 hours,” Cobb says.

In most investigations of corporate crime, first impressions are impossible to shake off. Afterwards, you and your company must live with the fallout, good or bad. All the high-priced lawyers and sophisticated public relations campaigns in the world won’t be able to buy back those first 24 hours.

According to Cobb, there are two primary danger areas: lying or misleading investigators and destroying documents. Crisis preparation and crisis management demand ongoing practical training for employees at every level who might someday be in a position to talk to law enforcers or handle sensitive materials.

Say you run a manufacturing firm with factories scattered across the country. Investigators, learning of a possible crime or major infraction at one of the plants, arrive at the door bearing search warrants or subpoenas and asking questions. Meanwhile, back at headquarters, you’re still trying to sort out what’s going on and who the “relevant” employees actually are. At that moment, those very employees may well be making split-second decisions with lasting consequences.

Richard S. Levick

Hiring an employee is the same thing as saying, “We trust you.” After all, they will be handling your products, interacting with your customers or providing critical support. They will help tell your company’s story to the world every day for as long as they work for you. You believe they have integrity or you wouldn’t have made them a part of the family.

This commentary is excerpted from the book, The Communicators: Leadership in the Age of Crisis, by Richard S. Levick and Charles Slack (Watershed Press, 2010).

Unfortunately, many companies begin undermining that trust on the new employee’s first day. Someone hands them a ream of legal forms to sign along with a fat wad of rules and regulations governing everything from how much money they can spend on lunch while traveling to how many days per year they are allowed to get sick.

Now the message is precisely the opposite of the one you sent when you hired them: “We don’t trust you.”

There’s no question that companies need strong rules for the safety of customers and employees, to protect the brand and to conform to an ever-growing list of government regulations. But, as the founder and CEO of Flight Options and several other successful aviation companies, Kenn Ricci has spent much of his career drawing distinctions between necessary rules and others he believes generate unhealthy suspicion and mistrust, ultimately doing a company far more harm than good.

“We have been ingrained not to trust anything or anybody,” says Ricci, who is author of the book Management by Trust. “We’re told to be tough, to be enforcers. But the best employees, the ones who really understand your mission and can help your company be great, want to be respected, appreciated and trusted. Creating that sort of environment requires removing barriers to trust.

“Managers set the expectations,” he adds. “If you put me in an environment where you don’t trust me to go to the bathroom without permission, I won’t feel trusted to do anything…I won’t be a productive employee.”

Take the pre-set meal allowance, a standard feature at companies trying to hold the line on expenses. In Ricci’s industry, pilots are always traveling, so meals are an especially significant cost. But Ricci, himself an experienced pilot, chafed at being entrusted with a multimillion-dollar jet – not to mention the lives of everyone on board – only to be told that he wasn’t responsible enough to order dinner unsupervised.

In Ricci’s experience, such rules:

• Create a climate of suspicion by assuming all employees are dishonest.
• Challenge your smartest workers to figure ways to get around the rules (instead of using that creativity to help make the company better).
• Focus on your marginal employees instead of your best.

When he eliminated the meal allowance at Flight Options, did pilots suddenly order twin lobster tails at every stop? Precisely the opposite occurred. “Most pilots at the end of a long day just want a good, hot meal that reminds them of where they really want to be: home,” Ricci says. With no incentive to “game the system,” most pilots became custodians of this trust and self-limited their meal expenses. In other words, they answered trust with trust.

Encouraged, Ricci did away with other practices such as monitoring access to office supplies by clerical workers and limiting personal use of company phones. In each case, employees rose to the trust that was offered. Now that they essentially “owned” the items in the supply closet, they became protective. Stealing a box of pens from your fellow employees is suddenly different from filching from a hostile employer.

Acts of faith will inevitably be abused by some employees. That’s part of the cost of trust, Ricci says. It’s a cost of doing business – better business.

Even abuse itself can be cost-effective in the long-run. Say a pilot has a truly lousy day: challenging weather, flight delays and a bum assignment. “He’s unhappy with the company and with life. So he goes to the best restaurant he can find and orders the most expensive thing on the menu. And two desserts,” Ricci says.

“By the time he’s back at the hotel, he’s no longer mad at the company. If anything, he’s feeling a little contrite,” says Ricci. A meal limit would have been just one more insult to add to this employee’s frustration and resentment. “Instead, he’s worked out his anger, solved the problem himself and it cost you, what? An extra $20?”

An employee who consistently abuses trust is actually communicating deeper problems, Ricci says. “He’s telling you he doesn’t like his job.” So you don’t have to spend all kinds of time and money on performance reviews because he’s already telling you what you need to know. It is then all the easier to identify and remove employees who are working against your mission.

Ricci, who now heads an aviation investment firm called Directional Aviation Capital, makes it clear in his book that creating a trusting environment is no easy task. “It can’t just be one [little fix] in one little area,” he says. “It has to start with who you hire.” And, it requires your total commitment, including an acceptance of the reality that you may be abused from time to time.

Make that commitment and you will find that, in place of a workforce just doing what it’s told, you’ve created a dynamic staff of individuals grateful for your trust and ready to sacrifice to make your company great. They will serve as ambassadors for your brand when times are good. And, when a crisis strikes, their loyalty can help give you the time you need to recover. They will stand by you because you have earned their trust.

Richard S. Levick, Esq., is the president and chief executive officer of Levick Strategic Communications, a crisis and public affairs communications firm. He is the co-author of The Communicators: Leadership in the Age of Crisis and Stop the Presses: The Crisis & Litigation PR Desk Reference, and writes for Bulletproofblog. Mr. Levick is on the prestigious list of “The 100 Most Influential People in the Boardroom,” which is compiled by the NACD and Directorship Magazine. Reach him at rlevick@levick.com.

As a young editor with Fortune magazine, Sherman had been assigned to interview General Electric’s legendarily hard-nosed CEO at a time (1986) when GE was embroiled in an embarrassing crisis. The investment firm Kidder Peabody, which GE had recently purchased, was implicated in insider trading. Although the suspect trades took place prior to the acquisition, the scandal threatened GE’s (and Welch’s) reputation for competence and integrity.

Richard S. Levick

Based on nearly a decade interviewing CEOs in similar circumstances, Sherman thought he knew what to expect from Welch, whom he’d never met: Welch would evade the tough questions, try to spin the story in his favor and, when pressed, become defensive.

This commentary is excerpted from the book, The Communicators: Leadership in the Age of Crisis, by Richard S. Levick and Charles Slack (Watershed Press, 2010).

Imagine Sherman’s surprise when Welch started the interview by saying, “We screwed up. We didn’t do our due diligence. That’s totally our fault.”

Welch frankly acknowledged Kidder’s guilt, detailed what GE knew about the situation, and talked about how the company planned to cooperate with New York’s then-District Attorney Rudy Giuliani.

“He said all of this within the first seven minutes of our initial conversation,” Sherman recalls. “I had never, ever had a chief executive open a conversation by saying he was wrong. Those words just never passed the lips of most CEOs.”

What Sherman didn’t realize at the time but would later fully appreciate was that Welch had expertly employed one of the most valuable and under-utilized tools of leadership: giving the other guy your gun.

Clint Eastwood may have become the stuff of legend when he cocked a .44 magnum and hissed, “Go ahead, make my day!” Alas, such fantasies express the constant seething emotions just under the surface of polite society. But they do not define true strength and leadership, especially under duress.

Quite to the contrary, the real test of leaders is in their capacity to actually un-cock their weapons when it is strategically wise to do so.

To be sure, we are not talking about surrendering out of fear or compromising personal and institutional values or interests. We are talking instead about important concessions to potential adversaries that disarm their arsenals, build trust and set the stage for mutual gain. To be effective, however, strategic concessions should be made at the outset of the relationship, before the other person demands them.

“This is not about weakness or giving in. It’s about a different method for reaching a better outcome,” says Sherman, now a best-selling business author and partner in Accompli, an advisory firm that serves senior leaders of large-scale change.

By freely offering Sherman a story that the journalist wanted to pry loose (in other words, by giving Sherman his gun), Welch yielded a little but gained much more by winning the trust and admiration of a professional who, over time, would become an important ally. In 1993, Sherman co-authored the bestselling Control Your Destiny or Someone Else Will, a positive analysis of the Welch years at GE. The book, now in its fourth edition, has become a standard business text.

“In a moment, in a flash, he completely won me over,” Sherman recalls. “He won my sympathy and affection. I have a lifelong affection for this guy, and it began with that revelation of honesty, that vulnerability.”

He adds, “Welch knew GE had much greater interests at stake than Kidder Peabody. If he had to write off all of Kidder Peabody, that was better than letting it sink GE’s reputation for integrity. There was very clear-minded thinking underlying all of this. It wasn’t in any way weak.”

Sherman has found the same approach highly useful in his own career. As a journalist, he learned to begin interviews with top executives by volunteering to use any information as background knowledge, without quoting them. Most CEOs are leery of interviews precisely because anything they say is bound to appear in print, especially if it is sensitive, provocative, or embarrassing. “My willingness to go off the record, in effect, handed them my gun. It eliminated my power over them and maximized their power over me, which made them comfortable. Feeling comfortable, they were very much inclined to talk freely.

“It enabled a relationship of trust,” he adds. “Even though I couldn’t use anything they said without getting their permission, what they told me was now [a part of] my awareness. That knowledge could quite ethically inform my subsequent reporting, [determining whom] I would subsequently interview and what questions to ask.” And, during the course of an interview, if a comment seemed particularly pertinent, Sherman would politely ask if it they would mind going on the record for that one comment. With the ground rules thus tilted in their favor, the CEOs usually agreed, and Sherman came away with a solid quote for his story, enhanced understanding of the crucial issues, and the basis for a productive, ongoing relationship with the executive.

Even in the context of a normal business relationship, there is the potential for both sides to brandish loaded weapons at the first hint of discord. Today, as a consultant, Sherman’s approach is to minimize that likelihood, offering clients success-fee arrangements that give them significant latitude in determining whether they’ve been sufficiently satisfied with the results to pay the bill.

“In our experience we haven’t had a situation where success wasn’t achieved and where the client didn’t pay. I think our putting so much trust in them makes them more concerned about seeing that our interests are met, as well as theirs. They no longer see us as an adversary. We enter into a form of partnership together.”

In each instance, giving the other guy your gun results in greater gain. Says Sherman, “If you do it right, you fundamentally change the nature of the relationship.”

Richard S. Levick, Esq., is the president and chief executive officer of Levick Strategic Communications, a crisis and public affairs communications firm. He is the co-author of The Communicators: Leadership in the Age of Crisis and Stop the Presses: The Crisis & Litigation PR Desk Reference, and writes for Bulletproofblog. Mr. Levick is on the prestigious list of “The 100 Most Influential People in the Boardroom,” which is compiled by the NACD and Directorship Magazine. Reach him at rlevick@levick.com.