Partners’ Blog
Directorship
We wrote the following article which appeared in Directorship magazine, a publication that circulates among the 11,000 directors of U.S. public companies:
Corporate Reputation in the Age of Media Chaos
About This Blog
Because we've had extensive experience in major national newsrooms we view news developments in a somewhat different manner than many communications consultants; we see the news through the same lens as working journalists.
Our blog provides analysis of how recent news developments were handled or mishandled by the principal actors and their advisers. Who handled the press attention well? Who did not? How might they have fared better?
We will bestow the M.E. Communications Partners WMD (Worst Media Debacle) award in timely fashion to those we regard as the worst performers.
Our WMD: Halliburton's Dubai Debacle
The nominee for our Worst Media Debacle award this week goes to Halliburton, the big oil field services contractor, that announced it will be moving its CEO to a new headquarters in Dubai. This looks like an excellent example of what happens when a company as big a target as Halliburton fails to notice what's really going on in the world around it.
In announcing the move by CEO David J. Lesar to a new office closer to its customers, the company called the new locale "a corporate headquarters office." It was left to public relations manager Melissa Norcross to explain that Halliburton would remain a U.S. company with its principal office in Houston. But she was too little and too late in the hyper-fast, politically-charged media world we live in. The headline “Halliburton Moves to Dubai” was quickly in print and on the air and that was enough to trigger a barrage of negative comments fired by leading Democratic politicians who accused the company of fleeing ongoing investigations by both the Department of Justice and the Securities and Exchange Commission. The commentators:
Ms. Norcross explained that no tax benefits were expected to stem from the move and KBR is being spun off. "Halliburton and KBR are complying with numerous requests for information...regarding KBR's work as Congress fulfills their important oversight responsibilities," she said lamely.
With revenues flat in the American oil patch, it probably made sense to the CFO and the other financial minds around the Halliburton conference table for the company to ramp up its presence in the booming Middle East. Oil companies there are said to have their coffers filled to overflowing thanks to current high energy prices, so they are ready to invest some of their profits in exploring new fields. And that’s where Halliburton comes in. As The Wall Street Journal pointed out, the best new prospects for production are in the Middle East and Africa and the biggest growth in demand for energy is in Asia. So with net income down 40% in the fourth quarter, Halliburton made what looks to be a largely symbolic move by announcing Mr. Lesar's new office address. But it didn't come out that way.
The way this announcement was fumbled makes it safe to assume that neither Ms. Norcross nor anyone else who reads the newspapers was in the room when the relocation decision was made. If she had she might have told all those smart guys in suits to consider that
The move probably makes sense financially. After all Schlumberger Ltd., Halliburton's biggest competitor, earned two thirds of its net income last year outside North America, according to the Journal. But sometimes financial reasons don't outweigh public policy concerns when it comes time to make major corporate decisions like where the company's boss is going to hang his hat.
Bloggers have had a wonderful time making fun of Halliburton’s announcement, even more than headline hungry politicos. Once an announcement like this is out on the web there’s no taking it back.
Communications strategy was always important for corporations but the arrival of bloggers and the long reach of Google makes it even more important that companies get top notch strategic advice on their communications issues before they float an idea out into the ether. That’s why we think the experience we offer at ME Communications Partners is worth considering before you commit to a course of action that might merit our next WMD award.
In announcing the move by CEO David J. Lesar to a new office closer to its customers, the company called the new locale "a corporate headquarters office." It was left to public relations manager Melissa Norcross to explain that Halliburton would remain a U.S. company with its principal office in Houston. But she was too little and too late in the hyper-fast, politically-charged media world we live in. The headline “Halliburton Moves to Dubai” was quickly in print and on the air and that was enough to trigger a barrage of negative comments fired by leading Democratic politicians who accused the company of fleeing ongoing investigations by both the Department of Justice and the Securities and Exchange Commission. The commentators:
- Ubiquitous California Congressman Henry Waxman, described by an aide as thinking about holding hearings on the tax implications of the move.
- Sen. Byron Dorgan, the North Dakota Democrat, in The New York Times, "I want to know, is Halliburton trying to run away from bad publicity on their contracts?" He may have been referring to KBR, Haliburton's military contracts subsidiary, whose logistical support deals in Iraq has landed it in hot water with the Army.
- Senator Hillary Rodham Clinton, "I think it's disgraceful that American companies are more than happy to try to get no-bid contracts, like Halliburton has, and then turn around and say, 'But, you know, we're not going to stay with our chief executive officer, the president of our company in the United States anymore.' "
Ms. Norcross explained that no tax benefits were expected to stem from the move and KBR is being spun off. "Halliburton and KBR are complying with numerous requests for information...regarding KBR's work as Congress fulfills their important oversight responsibilities," she said lamely.
With revenues flat in the American oil patch, it probably made sense to the CFO and the other financial minds around the Halliburton conference table for the company to ramp up its presence in the booming Middle East. Oil companies there are said to have their coffers filled to overflowing thanks to current high energy prices, so they are ready to invest some of their profits in exploring new fields. And that’s where Halliburton comes in. As The Wall Street Journal pointed out, the best new prospects for production are in the Middle East and Africa and the biggest growth in demand for energy is in Asia. So with net income down 40% in the fourth quarter, Halliburton made what looks to be a largely symbolic move by announcing Mr. Lesar's new office address. But it didn't come out that way.
The way this announcement was fumbled makes it safe to assume that neither Ms. Norcross nor anyone else who reads the newspapers was in the room when the relocation decision was made. If she had she might have told all those smart guys in suits to consider that
- Halliburton is in deep trouble in Washington already
- with the presidential election campaign underway, Halliburton has a big 'Kick Me' sign on its back and
- Dick Cheney, who was Halliburton's CEO from 1995-2000, doesn't scare anyone anymore.
The move probably makes sense financially. After all Schlumberger Ltd., Halliburton's biggest competitor, earned two thirds of its net income last year outside North America, according to the Journal. But sometimes financial reasons don't outweigh public policy concerns when it comes time to make major corporate decisions like where the company's boss is going to hang his hat.
Bloggers have had a wonderful time making fun of Halliburton’s announcement, even more than headline hungry politicos. Once an announcement like this is out on the web there’s no taking it back.
Communications strategy was always important for corporations but the arrival of bloggers and the long reach of Google makes it even more important that companies get top notch strategic advice on their communications issues before they float an idea out into the ether. That’s why we think the experience we offer at ME Communications Partners is worth considering before you commit to a course of action that might merit our next WMD award.
posted by EdFouhy at
3/20/2007 12:26:00 PM
1 Comments:
Ed,
Good blog. If Freddo hadn't been too busy taking down the DOJ, this would have gotten wider comment. My informed opinion is that HBR and Hal did what they did to avoid investigations by Grand Juries.
Cheers,
Joe Cowart
PS Real good site.
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