The news that insurance giant AIG will pay $165 million in bonuses to employees has not been warmly received. At a time when millions have lost their jobs and the recession worsens, the nation is outraged that taxpayer money is being spent on multi-million dollar bonuses for the very people who some believe largely contributed the recession.
While there is no shortage of articles weighing in on the news with opinions as to whether the executives should be paid, one aspect of the story that has received considerably less ink is that of PR.
President Obama’s public condemnation of AIG’s actions certainly tops the list of the worst possible PR scenarios for a public company like AIG (although Obama’s condemnation was a smart PR move for his administration). But has the company done a good job responding to the backlash?
At the very least, AIG should be commended for being upfront and transparent about the situation. The company has not tried to hide the fact that it is paying bonuses and has issued public statements. But we believe AIG has made a grave mistake in being too defensive and not proactively acknowledging the concerns of the public.
As a general rule, the best course of action during a crisis such as this is to:
Organize a crisis communication team
Be as transparent as possible
Acknowledge the situation and learn from mistakes
AIG already appears to have organized a communication team, but the defensive messaging they chose has proven to be ineffective and does not reinforce their commitment to solving the problem. By taking a defensive position from the get-go, AIG has branded itself as morally reprehensible in the eyes of many Americans, an identity that could take years to shake.
Edward M. Liddy, AIG’s chief executive officer, recently said the bonuses are necessary to attract and retain the best talent. And in a separate statement, AIG spokesperson Mark Harr said that, “We understand the Attorney General’s concerns.” While both of these statements may be true, they do not thoroughly address the concerns of the American taxpayers.
Most importantly, AIG should learn from their mistake by developing a plan to respond to crises and avoid escalation like this. Now that 80 percent of the company is owned by the government, it has a responsibility to both its employees and the American taxpayers that pay its salaries. For the sake of its business, we believe now is the time for AIG to acknowledge and respond to the concerns of American people.
So while the company can take steps to remedy the situation now by apologizing and increasing transparency, it must come to terms with the fact that in the context of rising unemployment and a global recession, the negative press will probably continue for months to come.
For more information about how to plan for and handle a PR crisis, see our blog here.