Amy Newman 9/18/11 Amy Newman 9/18/11

UBS CEO Memo Following $2.3B Loss: "The buck stops with me"

A 31-year-old rouge trader has caused close to $2.3 billion in losses for Swiss bank UBS. Unauthorized, speculative trades over three months apparently went unnoticed until the trader's recent arrest. UBS is expected to be able to absorb the hit, but Moody's is investigating the firm for a potential downgrade.

In a memo to staff, UBS CEO Oswald J. Grübel acknowledges that people are "shocked and disappointed" and tells employees "our fundamental strengths as a firm remain intact." Grübel also encourages employees to report wrongdoing:

"Ultimately, the buck stops with me. I and the rest of senior management are responsible for dealing with wrongdoing. I only wish to remind everyone that all of us have a part to play in identifying and reporting wrongful behavior and conduct in the workplace. If you feel uncomfortable about informing your line manager, I urge you to use one of the other available channels for doing so." Download memo from UBS CEO

Discussion Starters:

How could a loss of this magnitude have happened at a company like UBS?
How do you assess Grübel's memo to staff? How well does he handle the bad news? What arguments do you find most and least convincing in the message?

Amy Newman 9/12/11 Amy Newman 9/12/11

Bank of America Will Cut 30,000 Jobs -- The Largest Number This Year

Bank of America is cutting more jobs. Following the 6,000 jobs lost earlier this year, a $5 million investment by Warren Buffett's Berkshire Hathaway Inc., and a management-team shake-up, the company will lose 30,000 jobs in attempt to scale down the largest bank in the country.

CEO Brian Moynihan has some explaining to do. The stock is down 48% this year, and the Bank is still paying for what some believe were poor acquisitions of Merrill Lynch and, particularly, Countrywide. BofA wins the dubious honor of having the largest number of cuts this year. (The U.S. Postal Service announced 30,000 last year and has cut more than 100,000 jobs in the past five years.)

As part of its communication strategy, Bank of America issued a press release to provide an update on "Project New BAC." (BAC is the stock symbol.) And in a conference call, Moynihan described four points that support Bank of America's future success.

Discussion Starters:

Read Bank of America's recent press release. If you were an investor, would you find this reassuring? Why or why not?
Listen to the introduction to Moynihan's conference call. Based on this introduction, which of his four points do you find most convincing? Least convincing?

Amy Newman 9/7/11 Amy Newman 9/7/11

Yahoo CEO: "I've just been fired over the phone..."

Carol A. Bartz leaves Yahoo in the same style in which she ran the company. Known for her abrasiveness, Bartz sent this email to employees:

Hired in January 2009 at Yahoo, Bartz has a history of writing strong emails, such as this one, in which she tells her staff, "...people seem like they're waiting for something. I'm not sure if it's a sugar-low or what, but we need to stop waiting and get moving. Good things do not come to those who wait, they come to those who make things happen." She is also known for her liberal use of the "F-bomb," as on this quarterly earnings call.

Following Bartz's email to staff, the board chair and Yahoo founders sent an email of their own, announcing the decision and explaining other changes at the company.

Discussion Starters:

In Chapter 1 of the text, you read about communication media choices. What is your assessment of the chair of Yahoo's board firing Bartz over the phone? What could be the rationale for terminating her over the phone rather than in person?
What is your assessment of Bartz's email to Yahoo employees? Do you consider this appropriate, inappropriate, or something in between?

Amy Newman 9/2/11 Amy Newman 9/2/11

Should the NYC Mayor's Office Have Disclosed Domestic Violence Arrest?

When Bloomberg's deputy mayor Stephen Goldsmith resigned, the administration said that he was leaving "to pursue private-sector opportunities in infrastructure finance." In a statement, Goldsmith said, "The change will provide me, at age 64, with more flexibility for me and my family and a secure foundation for our future."

But the story has changed. Prior to his resignation, Goldsmith was arrested following an altercation with his wife and spent two days in jail. Critics say that the arrest should have been disclosed as soon as the administration knew. This is significant partly because of Goldsmith's role, which was to oversee major city agencies: police, fire, transportation, sanitation, and buildings.

Discussion Starters:

Did the administration have a responsibility to disclose Goldsmith's arrest?
Evaluate the decision: what are the arguments supporting and against disclosure? How might the administration's view differed from Goldsmith's perspective?
Goldsmith's wife seems to have changed her story from what was reported in the arrest record. The original record describes quite a physical scene, and yet Mrs. Goldsmith later denied that physical violence occurred. What role, if any, do you think she played in the decision not to disclose the incident?

Amy Newman 8/24/11 Amy Newman 8/24/11

Steve Jobs Submits His Resignation Letter

Steve Jobs has resigned as CEO of Apple and will continue as Chairman of the Board. He will be replaced by Tim Cook, who has filled in for him during his most recent medical leave. Jobs' resignation letter does not explain the reason, but his resignation is believed to be related to pancreatic cancer that has plagued Jobs in the past.

While speculation about the impact of Jobs' departure runs rampant, investors are "undaunted," according to Reuters. The stock dropped a mere 1.7% on the news.

Discussion Starters:

Compare Jobs' resignation letter to previous emails to employees: Janaury 2011 and January 2009. What differences do you notice?
Watch Jobs' Stanford University commencement address from 2005. What lessons do you take away from this speech?

Amy Newman 7/26/11 Amy Newman 7/26/11

Layoffs to Begin This Week at RIM, Maker of BlackBerry

Research in Motion will begin laying off 10% of its workforce this week. This comes as no surprise to people watching the company: the BlackBerry has been losing smartphone market share and has dropped to second place after Google's Android. Also, RIM warned of lower revenues and announced layoffs (their "cost optimization program") last month.

Skeptics doubt that the layoffs will be an effective long-term solution for RIM:

Video source.

In a press release dated July 25, 2011, this is how the company explained the decision:

Cost Optimization Program
In addition to the management changes outlined above, RIM today provided further details on its cost optimization program, which is focused on eliminating redundancies and reallocating resources to focus on areas that offer the highest growth opportunities and alignment with RIM's strategic objectives. The workforce reduction is believed to be a prudent and necessary step for the long term success of the company and it follows an extended period of rapid growth within the company whereby the workforce had nearly quadrupled in the last five years alone.

As part of this broad effort, RIM is reducing its global workforce across all functions by approximately 2,000 employees. RIM intends to notify impacted employees in North America and certain other countries this week. The remainder of the global workforce reductions will occur at a later date subject to local laws and regulations. All impacted employees will receive severance packages and outplacement support.

The size of this workforce reduction is in line with the preliminary estimate that was factored into RIM's full year financial guidance on June 16, 2011. Following the completion of the workforce reduction, RIM's global workforce is expected to be approximately 17,000 people. Additional information about the financial impact of this workforce reduction and other operating expense reductions will be communicated when the company reports Q2 results on September 15, 2011. As explained on June 16, 2011, any one-time charges associated with the cost optimization program are not included in RIM's Q2 and full year outlook, but will be identified and disclosed on September 15, 2011.

Discussion Starter and Assignment Idea:

According to Chapter 1 of the text, what type of language is used in RIM's press release? What examples can you find of different barriers to communication?
Rewrite this segment of the press release for employees. What would you say differently to internal staff who may be affected by the decision? When you're finished, exchange drafts with a partner. Which version do you prefer and why?

Amy Newman 7/21/11 Amy Newman 7/21/11

Bad News at Borders: All Stores Will Close

After filing for bankruptcy and failing to find a buyer, Borders will start liquidation. Currently the second-largest bookstore, employing 10,700 people, the company will close its remaining 399 stores. At its peak, Borders operated 1,000 stores and employed nearly 20,000 people. In the company's press release, Borders Group president Mike Edwards explained the decision: "We were all working hard towards a different outcome, but the headwinds we have been facing for quite some time, including the rapidly changing book industry, eReader revolution, and turbulent economy, have brought us to where we are now."

Discussion Starters:

Read Borders' full press release. How do you assess the company's statement? Is this an effective bad-news message?
On an open blog for Borders employees, we can read about employees' frustrations. If you were the VP of communication for Borders, what if anything, would you do in response to these comments?

Amy Newman 7/12/11 Amy Newman 7/12/11

Dr Pepper Sues Its Bottler

A family-owned company in Dublin, TX, has been bottling Dr Pepper since 1891 but is now being sued by Dr Pepper Snapple Group Inc., which owns the brand. The parent company wants the bottler to stop using "Dublin" on its label and to stop selling its bottles via the Internet. The Dublin bottler uses cane sugar rather than high fructose corn syrup.

Discussion Starter and Assignment Idea:

How do you think this news reflects on the Dr Pepper brand? Could this damage its reputation, or will this blow over quickly?
Write a bad-news message from the parent company's management team to its employees. How will you explain the lawsuit internally?

Amy Newman 5/20/11 Amy Newman 5/20/11

Apple and Foxconn Respond to Explosion at Foxconn Plant

More bad news today at Foxconn, the Taiwanese manufacturer of electrical components and maker of Apple's iPod, iPhone, and iPad. An explosion at an assembly plant in China caused the death of two employees and left 16 more injured.

Video source.

Apple was quick to offer condolences: "We are deeply saddened by the tragedy at Foxconn's plant in Chengdu, and our hearts go out to the victims and their families."

Foxconn also offered this statement to All Things Digital:

"We can confirm that at approximately 7 pm on May 20, there was an explosion at our Chengdu campus. At this point, we can also confirm that there were two fatalities with injuries to 16 other employees. We are working with medical officials to provide treatment to the injured employees and we are working with government and law enforcement officials to contact the families of all employees affected by this tragedy.

"The situation has been brought under control by the fire department and the cause of this explosion is being investigated by local police officials. Foxconn is cooperating fully with that investigation. Production has been suspended at the site of the explosion until the completion of the investigation. The safety of our employees is our highest priority and we will do whatever is required to determine and address the cause of this tragic accident."

Foxconn was in the news in late 2010 when employee suicides called the company's labor practices into question. In June 2010, Apple's Steve Jobs defended working conditions, saying, "Foxconn is not a sweatshop." With this latest incident, Foxconn and Apple have had more than their share of communication challenges.

Amy Newman 3/25/11 Amy Newman 3/25/11

Wal-Mart Manages the Company Crisis in Japan

The Story

The life of a CEO is particularly challenging during a crisis such as the earthquake and tsunami in Japan. The Wall Street Journal has published the experience of Toru Noda, the chief executive officer of Wal-Mart Japan Holdings. Below is a timeline of the company's activities.

Discussion Starters

What are Wal-Mart's major business challenges at this time?
What are the company's major communication challenges?
Looking at Wal-Mart's reaction (the timeline above), what surprises you?

Assignment Ideas

Imagine that you are Toru Noda, the chief executive officer of Wal-Mart Japan Holdings, and need to prepare for your first meeting with the two dozen team leaders mentioned in the article. Write an outline for your meeting.
In groups of 3 or 4, have one person, playing the role of Noda, practice the opening to this meeting.
Write an open letter from Noda to the public about the lack of product on Wal-Mart shelves. How will you address this bad news and inspire consumers' confidence for the future?

Amy Newman 3/20/11 Amy Newman 3/20/11

Toyota Addresses Effects of Japanese Earthquake and Tsunami

The Story

Production at Toyota Motor Company has been affected by the devastating Japanese earthquake and tsunami. The video, below, shows the toll, and the company has posted updates about the situation.

Video source.

Discussion Starters

What content is most important for Toyota when addressing the effects of the Japanese earthquake and tsunami on car production?
What is at risk for the company's communication about the situation? What should executives emphasize and avoid in their messages?
Assess Toyota's press statement. In what ways is the company's statement effective, and in what ways is it ineffective?

Assignment Ideas

Complete an audience analysis for internal and external Toyota audiences. Imagine that you are the VP, marketing, for Toyota and plan to write messages about halting car production for four different audiences: employees, dealers, customers, and the media. Complete an audience analysis for each group.
Adapt Toyota's press statement for employees. Write an email to employees to provide the most up-to-date information.

Amy Newman 1/17/11 Amy Newman 1/17/11

Steve Jobs Announces Another Medical Leave from Apple

The Story

After pancreatic-cancer surgery and a liver transplant, Steve Jobs is again battling his health. In a short email to employees, Jobs confirmed that he'll take another medical leave, while continuing as CEO to make "major strategic decisions for the company."

Discussion Starters

What is your assessment of Jobs' email to employees? Some analysts thought the email sounded negative, as if Jobs were unsure about when -- or whether -- he would return to the company. Do you agree? Why or why not?
Compare this email to a previous email sent by Jobs. What, if any, differences do you see? What could account for these differences?

Assignment Ideas

Evaluate how Jobs' announcement affected Apple stock in the short-term. The news came on a federal holiday (Martin Luther King, Jr. Day), so the U.S. markets were closed, but how did the rest of the world respond? And what, if any, impact did the stock see the next day, when the U.S. markets opened? From this example, what conclusions can you draw about communicating bad news?
Rewrite Jobs' email to thwart criticism that it sounded too negative.

Amy Newman 12/21/10 Amy Newman 12/21/10

1700 Holiday Layoffs, via Conference Call

The Story

Companies make many difficult decisions, but they don't always communicate them well. To share the "news quickly and consistently," Sanofi-Aventis pharmaceutical company announced 1700 employee layoffs via two conference calls: one for those staying and one for those leaving. The company's holiday season timing didn't win them any new friends.

Discussion Starters

Conference calls may not have been the best choice, but was the company's unethical? Where do you see the lines in this situation between unprofessional, insensitive, and unethical?
Jack Cox, senior director of media relations, explained the decision to The Huffington Post: " 'Rather than cascade these announcements and stretch the notifications over the course of days, we decided to address these colleagues at one time, to explain the rationale for the reductions and express appreciation for the contributions they've made to the organization,' he said. 'We acknowledged in the call that delivering this news on a teleconference wasn't ideal, but given the scope and scale of the reductions, there was no other way to share this news quickly and consistently.' "

Although the medium caused Sanofi-Aventis bad publicity, can you see Cox's point? What might be a good compromise solution? You might want to revisit Communication Media Choices from Chapter 1.

Assignment Ideas

If an employee who reports to you complained about the conference call, what would you say? How would you balance explaining the decision and empathizing with the employee about the bad news? Role play with a partner in class.
Write an apology email to employees. Be honest and empathetic, and be careful about getting yourself in legal trouble.

Amy Newman 10/14/10 Amy Newman 10/14/10

Green = You Have a Job; Red = You're Fired?

The Story

The Daily Telegraph reported that employees at Everything Everywhere, a UK telecommunications company, communicated layoffs to employees publicly -- at a team meeting -- using a system of color coding. The article describes the communication process: "Up to 1,200 middle managers and back office staff who could lose their jobs by the end of the Christmas holidays were shown a red light and told they were 'at risk.' Other staff saw the light go yellow, which meant they must re-apply for their existing job. Some 30 [percent] of these roles face the axe under current proposals. A blue light indicated their job had been 'mapped' into the new business plan and were being kept on. A green light showed the creation of a limited number of new roles."

An Everything Everywhere company representative called the report "sensationalist and insensitive" and describes a much more humane process. According to the company, one color-coded slide was used as part of "a range of tools to ensure that our people know exactly what is proposed for their teams and others across the business." The company also claims that affected employees "should have been seen on a one-on-one basis."

Discussion Starters

How could two versions of this story differ so much? What do you believe is the truth?
How does the process as reported by the Daily Telegraph match the principles for communicating bad news discussed in Chapter 8? How does Everything Everywhere's version of the process match up?

Assignment Ideas

Imagine that you're a consultant working with Everything Everywhere. Write a report to the senior management team to explain an ideal process for communicating layoffs. Draw on principles and examples discussed in Chapter 8 to identify steps a company should take to communicate this bad news.
Write an email to employees about the Daily Telegraph article. This is challenging! You'll need to present the facts of the article and, of course, dispute them, while being sensitive to employees who may believe the article was justified. (Hint: You will probably want to provide an internal avenue for employees to provide feedback. This is much better than finding comments on the Internet.)

Amy Newman 9/8/10 Amy Newman 9/8/10

Craigslist De-lists Adult Services Ads

The Story

Big news this week about Craigslist's decision to censor its adult services ads. Craigslist has been under fire for allowing not-so-subtle ads for prostitution -- ads that people claim have facilitated human trafficking and assaults against women. Before this decision, a CNN reporter asked Craig Newmark, the company founder, blunt questions about the ads. Newmark didn't handle the situation very well, and the company has been criticized for its lack of communication around the censorship decision.

Egg Recall Scares Some, Brings Opportunities to Others

The Story

Millions of eggs have been recalled since a salmonella outbreak sickened over 1,000 people. The egg industry is on the defensive, but some local farmers have seen increased interest in their eggs. Both groups can use communication to their advantage.

GM Issues Recall for Safety Belts

The Story

Right on the heels of communicating good news (profits for a second quarter) and a big management change, General Motors gives us the bad news: 243,000 crossover vehicles are being recalled for a safety belt inspection.