Putting Lipstick on the Pig: Reputation Management (RM)

Introduction

When something looks really bad or doesn't smell quite right, some corporations resort to denial, stonewalling, or not recognizing that the event really happened. In cases of corporate disasters the president or CEO will appear on the news stating that he has no knowledge of the disaster, that the disaster was not a disaster but a minor fluke, or saying nothing at all. It has been reported that the oil giant allegedly responsible for the recent Louisiana oil spill spent 60 million dollars on public relations advertising immediately after the calamity. The pillorization of the company head, that seemed clueless regarding the disaster, quickly led to turning around the bad and ugly into a refocusing on the good of the company which always preached going green. This public relations approach of "putting lipstick on the pig" is known as Reputation Management (RM). This pertains to managing and maintaining the appropriate corporate image or identity through new content, social involvement, and pushing of existing positive content to prevent revenue loss resulting from reputation damage.(1) In essence, reputation management attempts to control the spreading of negative information about a corporation by covering up the bad with positive presentations of the good things about the company. It attempts to turn around or reengineer bad content into good content by applying lipstick on the pig.

The Questionable Lucky Break

Presently there exists a battle between an online art consumer advocacy organization and a company which has been reported by major newspapers and organizations to be selling bogus art at sea. Please note here that NO governmental organization has participated in protecting American consumers in the investigation of these issues. Madoff anyone?! The battle has raged for three years resulting in a unanimous jury outcome indicating that the argument by the seller that the consumer organization has defamed the seller's product is unwarranted. As the result of a recent appeal by the seller's attorneys the presiding trial judge voided the decision of the jury. (The decision by the judge was somewhat unprecedented since the judge was presiding over the trial and if any trail violations took place he should have called for a mistrial.) Almost immediately the seller went into a RM mode in an attempt to turn the decision of the people represented by the jury into a repositioning of its corporate image. This image was soiled not only by 500+consumers who purchased the art at sea but 6 pending class action suits, the jury who spoke for the US citizens, and those who worked for the seller in almost every capacity including but not limited to attorneys and experts.

A Case Study of Too Much Lipstick⁽²⁾

The new pig with lipstick seller image starts out with a linked website to the consumer advocacy website to the seller attorney who labeled the seller's art as crap, continues with an government investigator who is not a questioned document examiner, stating that various seller works are authentic because documentation indicates that they are (apparently this psychology science grad thinks that the documents are all that are necessary to prove the work a work is authentic. I would suggest that the investigator please read Provenance, Thomas Hoving's works and read some works from the FAR® website. The investigator is not an authenticator, scholar, or expert. He is a government worker involved in art theft not art fraud). The web site continues by noting that the seller dismissed the class action suits against the seller. Please note that the seller cannot dismiss the suits only a court can. The tag along web site goes on to say that 3 complainants settled. Statistically it would not be unusual that out of 500 plus complainants not including class action suits, 3 would settle. One should expect even higher numbers of settlements. Please note that settlements are not one sided. Both plaintiff and defendant settle. The statement that complainants settle is not correct. Further, the web site recounts the tales of an appraiser who has provided authentication of various works of art for the seller. Any legitimate appraiser recognizes that appraisers do not authenticate. They provide opinions of value. A further issue is that in the settlement, the seller agreed to return payments. Here the seller agreed that the works sold were problematic. At this point, the pig has so much lipstick on that it not only looks ugly but stupid.

Summary

This step or structure of RM is a last ditch effort to perform damage control when the damage is insurmountable. It is almost comical to entertain the thought that this pig will ultimately win the Miss Universe contest. In point:

1. There are so many complaints, and class action suits against the seller, even in New Jersey, that many complaints would warrant the Attorney General to respond.
2. The fact that a tremendous amount of art is of question both in authenticity and value would incline the most simplistic of buyers to "pass by this pig" except under the influence of very large amounts of alcohol.
3. Appraisers authenticating is an absolute violation of appraising standards. Appraisers provide opinions of value.
4. The fact that RM is being used leads one to question whether this is an attempt to reposition a tarnished image or to cover up a bad operation.
5. The use of celebrity undereducated personae to transform the image driven by the complainants, and press, reminds the reader of using celebrity golfers to promote breakfast cereals or sneakers. Expert golfers are not health or nutrition experts. Argumentum ad Verecundiam, or appeal to an authority, is a logical fallacy. Expertise in one field does not infer or confer expertise in another field. Expert investigators are not necessarily experts in questioned documents or art authentication.
6. The throwing out of the jury verdict left those watching this historic art case wondering what reasoning would dominate the thinking process of the presiding judge issuing the ruling. Everyone had their best shot and even with overwhelming constraints on the defendant the jury in the state where the plaintiff resides ruled for the defendant unanimously. If the jury verdict based on all evidence provided during the trial is unacceptable what is the sense of having a jury?

Reputation Management and its Unintended Consequences

In an earlier article it was noted that there is a new paradigm present in the arena of corporate malfeasance. Those who control corporate processes have systemically developed structures to maintain revenue flow in the area of bad products, via no returns, stonewalling, SLAPP suits, and offshore operations serving to protect the company from prosecutorial interference. Using RM is just another step in the process to protect revenue flow. The one issue that no amount of lipstick can cover is a simple one: if a corporation expects its consumers to buy its products and then systematically attempts to prevent returns of the product it will not be long before consumers stop buying the product. The web spreads the word so quickly that reputation management may not be effective and may even cause further damage unintentionally.

1. Wiki definition,2010. Please note that RM refers to a concept not an entity.
2. This case study represents information points. Any resembling information is fortuitous.

— by John Daab Ph.D.  |  September 29, 2010

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