Business

When CEO Scandals Go Viral

CNBC’s Jon Fortt looks at how companies survive CEO scandals and avoid a public relations crisis in the age of digital technology.

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CEO Scandals
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From Papa John’s to Uber: When CEO Scandals Go Viral

Welcome to Fortt Knox I'm John 4 to 5 at the Nasdaq market site in Times Square. We are on Facebook periscope Twitter YouTube. Over the top on Apple TV Amazon Fire TV talk reputation. Today CEOs in hot water. Whether it has to do with race gender more there's never been a time where there's more scrutiny on what top people say and what they do particularly driven by technology. I've got Kara Lemo here at the Nasdaq she is assistant professor at Hofstra reputation management expert going to help us sort through all of this. Also got Mike Jackson CEO of event Solutions International joining us from out in Los Angeles and Julian Mannus in San Francisco General Partner with structure capital. So taking a look at this from the marketing and PR perspective from the investment perspective from a cultural perspective. Kara I'll start with you. What has happened to the way companies have to think about managing their reputations. We had this Papa John's news about the founder and chairman using the n word in a way that he claims wasn't directed at a particular person but he is shown the door pushing back he looks like he's done with that company. How has technology changed the game here. Well in a word what's happened is social media because now all of this right here is a CEO screw. People talk back and so now we talked about the golden hour of crisis response. And when someone screws up it's kind of like when someone has a heart attack everyone knows that if you get a patient to the hospital within the first hour they're much more likely to survive.

Wow. When a CEO screws up they have about an hour to get ahead of the story on social media where the board has about an hour to react because if they don't respond quickly and fix the situation others will interpret their motives for them. Is this an issue of speed. I think it's I think of Starbucks and the bathroom incident in Philly I think it was. And that was one where the view was they had to act quickly with this Papa John's incident it seemed like it wasn't an issue of time. It was just once it was verified that this had happened. Yeah he apologized quickly said there's no room for racism in society etc.. Didn't matter. Was it because this was seen by some people as a second offense is it because for some reason society reacts more quickly or at least boards of directors fear that we're acting more quickly against a company's reputation. I think it's an issue of speed and it's an issue of severity. And I think it's really important for organizations to make clear when someone screws up that it's not what the organization stands for. If you look at Fox News. Look at how long it took them to fire Bill O'Reilly when they finally got around to it. Everyone thought that Fox actually condoned his behavior and only got rid of him because they were hemorrhaging advertisers and because they couldn't afford to keep him anymore. Whereas if they fired him immediately it would have been clear that you can't get away with this kind of behavior at Fox News. Mike I wonder what your take on this.

You've worked across multiple industries you see this time and how it differs from maybe 10 years ago and the ways that companies need to respond and manage their reputation. What do you make of what's happened with Papa Johns and others. Well you know it's it's really interesting because when I started my career in corporate America you were kind of you know given a mentor and a mentor gave you can a very very simple advice right. You don't violate company policy don't obviously break the law or do anything illegal. Last but not least don't but don't violate your Perth personal ethics no matter what they are.