There is an old saw in marketing and public relations that if you don't quickly brand your company's products and services the public will brand them for you. Whether that brand ends up being good or bad becomes secondary to the fact that you are not likely to ever get out from under the image the marketplace has provided.
The new adage we are likely to see adopted will say something along the lines of, "When the president of the United States starts bad mouthing your brand, it's not going to survive."
AIG's predicament will be studied for years to come in marketing and communications classes. When the company decided to pay out millions of dollars in retention bonuses after seeking billions in bailouts from taxpayers, there was probably nothing the greatest crisis communications expert in history might have ever done to manage the situation. AIG's first step was to insist that it had contractual obligations to pay and this is factually correct. The company had signed deals to keep critical employees in the competitive financial products division. However, the people getting these bonuses are precisely the same individuals who created the nonsensical derivatives that turned America's economy into a stick of butter in a microwave.
If you were consulting the company and were sitting in some of those meetings after the public had learned of the bonuses, what might have been your advice? According to most reports, the checks have all been delivered, even to several people who had already left AIG. The source of the company's money, even though it came from taxpayers, seems to be irrelevant to the legal obligation to pay the derivatives traders. AIG executives had a choice to violate a contract and not pay or to anger the taxpayers who had just given the company a hand. Had they refused to pay they were almost certain to have lost every court case filed against them for contract violations.
The morally correct decision would have been to not pay and then consult with legal advisors for the company and immediately begin discussions with Washington. There may have been job performance language that would have enabled a refusal to pay based upon the failed derivatives markets. Unfortunately, no one had the foresight to make those choices and now the company is faced with a firing squad on the left and a gallows on the right. There is nowhere to turn that does not suggest an ugly fate. There's no spin to be spun.
There is talk in Washington of designing a tax that speaks directly to the bonus structures of these traders in an attempt to return the money to taxpayers through a circuitous route. In one of the bailout bills coming out of the capitol, there was also an amendment that would have prohibited the paying of these bonuses or at least would have taxed them at a level that net profits to the failed derivative traders would have been minimized. The amendment was mysteriously stripped from the bill so nothing has happened preventively, and AIG is doomed.
There is, quite frankly, nothing a crisis communications expert can do to mitigate AIG's situation, which is why you have seen the company and its executives remain decidedly silent. First, they run what amounts to one of the world's greatest financial scams and help send the U.S. economy into a state of collapse and then they ask taxpayers to save their company because it is so important to America and the world that it can't be allowed to die and then they use that bailout money to provide bonuses to the precise individuals who drove the company and the country off a cliff. How can that be fixed, either in reality or perception?
It can't. No matter what a communications expert advises an AIG executive to say, it is too late; actions have outstripped any ability to undo harm. Anything anyone says will be a bit like what Texans describe as "puttin' earrings on a hawg; there's some ugliness there ya just can't hide." Consequently, AIG is dead. The company may continue to exist in some form but the brand must disappear. AIG is a brand that will forever belong to the company that screwed up the economy and then used taxpayer money to give bonuses to the screw-ups. That is their brand through eternity. They will never get out from under that nor will they recover from a president saying bad things about their decisions.
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