Paul Argenti is a professor of corporate communication at the Tuck School of Business at Dartmouth College.
Rebekah Brooks, the former chief executive of News International, was arrested earlier this week on obstruction of justice charges along with her husband, a former chum of U.K. Prime Minister David Cameron, and four others. This event marks the beginning of the end of a very long, hard fall for the once mighty Rupert Murdoch and his media empire. Ostensibly, Brooks got nailed for doing something we all do many times a day: eliminating E-mail messages. Yes, what NewsCorp did--hacking into private voicemails to retrieve damaging information for salacious news stories--was deplorable, but does the punishment fit the crime?
As a contrast, consider Apple, which was recently attacked by the Fair Labor Association, an organization that monitors working conditions, for what was described as "tons of issues" at a plant in Shenzhen, China. Apple responded very well, and the incident passed, after a couple of New York Times articles, rather quickly. The same thing happened when Steve Jobs wasn't forthright about his health issues. Somehow, Apple always seems to get away with more than most companies do, in terms of media attention.
Why is it that some companies seem to get away with bad behavior, while others are excoriated for the same thing? Because the rules that apply to corporations are the same ones that apply to people.
If you like someone and think highly of them, it takes a lot more than a few bad incidents to believe something bad about them. But, if you do not like someone or know very little about them, you can instantly be convinced that they are evil doers.
What are the lessons for companies trying to understand how justice is doled out by the media and a public hungry for corporate scandals?
First, understand that the business world has never had a more negative hue than it does today. Public trust is at an all-time low, according to several studies that I track regularly. This means that most corporations start communicating from a disadvantaged position. The exceptions to that rule are companies with very strong reputations like Apple or Johnson & Johnson.
Second, if you think you can get away with ignoring the way the world works for very long, you are wrong. The Earth is round and companies that play fast and loose with the rules end up getting slammed when something bad happens. NewsCorp is being punished for a decade of perceived bad deeds rather than a single incident in the same way that some actors might get an Academy Award for a lesser work because we owe them one.
Third, in today's environment there are only two options available for companies to follow: either become a more transparent, responsible company or try to differentiate yourself by fixing problems before they happen. JP Morgan Chase did the former during the financial crisis; Coca-Cola has done the latter in terms of its policy toward water and sustainability; and McDonalds seems to do both every chance it gets.
Finally, take a look at Rebekah Brooks as she got arrested this week. Arrogance doesn't pay whether you are in the media or investment banking. Companies and the executives who work for them need to understand that society demands more of them than ever before.
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