Facebook was dealing with one of the biggest crises in its history last week after admitting last Friday that it had known since 2015 that Cambridge Analytica, a consulting firm that worked on Donald Trump’s presidential campaign in the United States, improperly accessed data on 50 million of its users. Last Monday, the company’s stock experienced its largest decline in four years; the social media giant lost a staggering $37 billion (Dh136 billion) in market value in one day. The incident intensified on Tuesday, with Democratic and Republican senators calling on Facebook CEO Mark Zuckerberg to testify before Congress, and Bloomberg News reporting that the Federal Trade Commission was investigating whether the company had breached a consent decree. The European Union is also investigating. The founder of WhatsApp called on users to delete Facebook.
The company’s executives are reportedly worried about how all of this will affect their personal reputations — and they should be. Much of this damage has been self-inflicted.
The poor judgement Facebook exercised in handling this matter is mind-boggling. As anyone with even a small amount of experience managing crises could have told the company, the worst decision an organisation can make in such a situation is to stay silent. If Facebook had disclosed what it knew as soon as the problem occurred and then followed up with steps to protect user privacy, it could have resolved the issue without outside interference and the financial and reputational losses it’s now experiencing. Instead, the incident has spiralled out of Facebook’s control.
There’s a simple reason why disclosure is the most effective strategy in a crisis: The truth always emerges. In the US, even classified government documents are regularly leaked. So a company facing a problem has two choices: To admit what happened immediately and ideally get some points for being transparent, or to try to cover things up and later be blamed for both the initial problem and the subsequent deceit. That’s why any good crisis expert will tell an organization to fess up about everything as soon as possible. It will face an initial round of negative media coverage. But if the company has truly come clean and then works to fix the underlying problem, the media will be left with nothing more to report. It’s the fastest and easiest way to make a problem go away.
By contrast, Facebook waited three years to disclose this incident. That’s what has led to so much outrage and so many investigations. If the company had immediately announced the breach, lawmakers and the public would still have had a lot of questions about how it protects user data. But it would have avoided the charges of secrecy that have now led so many people to question its underlying values.
One reason Facebook may have decided to withhold the information for so long is that it was trying to figure out how to prevent such episodes from happening again. But companies don’t need to resolve a problem fully before they disclose it. Helio Fred Garcia, president of the Logos Consulting Group and author of The Agony of Decision: Mental Readiness and Leadership in a Crisis, says that a company determining how to address a crisis should ask itself, “What would reasonable people appropriately expect a responsible organisation or leader to do when facing this kind of situation?”
Reasonable people wouldn’t expect a company that just learned that its data has been improperly shared to have developed a full plan within minutes to prevent such a situation from recurring. They would, however, expect the company to be transparent, express remorse, pledge to take action to prevent the problem from happening again, and follow up with an announcement about what it was doing to solve the underlying issue. If Facebook had done this, it wouldn’t be dealing with the mess it’s in today.
What’s more, such a strategy would likely have allowed the company to determine how to solve the problem itself. If Facebook had quickly implemented measures to better protect the privacy of its users, it would have been unnecessary for lawmakers to step in and mandate them. Self-designed solutions would almost certainly have been more palatable to the company than the kinds of changes now likely to be imposed from the outside.
That strategy is still the company’s best bet now — even though it will continue to suffer massive reputational damage for its delay. The fact that Zuckerberg and chief operating officer Sheryl Sandberg have stayed silent until now suggests, astonishingly, that they still haven’t learned this rudimentary lesson. According to Axios, the delay has been because “he wanted to say something meaningful rather than just rushing out.” But of course, it’s been deeply damaging for him to let others speculate about his thoughts for the past five days, rather than making a statement himself about this problem he has apparently known about for three years.
It’s no surprise that Facebook stock plummeted. Leslie Gaines-Ross, chief reputation strategist of the global communications agency Weber Shandwick and author of Corporate Reputation: 12 Steps to Safeguarding and Recovering Reputation, says 63 per cent of a company’s market value is attributable to its reputation. If Facebook had been following basic, well-established principles of crisis communications, it wouldn’t now be dealing with a full-fledged catastrophe that is mostly of its own making.
— Bloomberg
Kara Alaimo is an assistant professor of Public Relations at Hofstra University and author of Pitch, Tweet, or Engage on the Street: How to Practice Global Public Relations and Strategic Communication. She had previously served in the administration of former US president Barack Obama.
