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LONDON — The world’s leading crisis communications expert Alan Hilburg believes the scandal emanating from South Africa which hit multinationals The world’s leading crisis communications expert Alan Hilburg believes the scandal emanating from South Africa which hit multinationals McKinsey, KPMG and SAP is an aberration. The fundi referred to by marketing academics as “the Tylenol man” believes the SA operations enmeshed in the Zupta net of corruption are outliers, not the norm. But he also believes the scandal offers a great opportunity for the multinationals to use tools they possess to expose whatever corrupt practices their satellites engaged in – thereby turning a negative into something very positive for SA. Hilburg is at his absolute best here, and retains a huge optimism about a part of the world he describes as “an idea – as much as a country.” Brilliant. – Alec Hogg
Well, it’s a warm welcome to Alan Hilburg who’s the Founder and President of Hilburg Malan and the leading crisis communications advisor in the world. Alan, you know South Africa well. You’ve done a lot of business there. You have an operation in this country. You must be watching the way that SAP, McKinsey, KMPG, and Bell Pottinger are mishandling their crisis communications. Just to take a step backwards, have you been following it closely?
I have. Every day, I read everything that I can find on the internet and there’s a huge cloud of shame around this recent news. I think that respected brands have really corroded the public trust and the trust of their global clients.
The one that really fascinates me – and we’ll talk about the others in a moment – is SAP/ The day before yesterday, its management team completely denied any responsibility, any association, or any obligation from the association with an obvious Gupta company. The next day, SAP Germany suspended the whole team and said there would be an investigation into what was going on. How does something like that (or something as crude as that) happen?
I would say that crisis management Rule 101 is that you’ll rarely be judged by what caused the crisis. You’ll always be judged by how you respond to it. Making a business decision is one thing, but hiding or covering up a bad decision is something much more egregious.
So, what the SAP office in South Africa did, seems to have been ‘off the charts’ stupid, apart from anything else.
Good people sometimes make bad decisions. Everybody is a mix of good and bad decisions that they’ve made. As I tell my kids, we make our decisions in our family in a very simple way. Good decisions = good consequences. Bad decisions = bad consequences. I think they made a bad decision.
So, something happened in Germany where a better decision has now been made.
Well, what I admire about the decision made in Germany was the recognition that you can’t go on defending your values and have outliers act in a way that violates your core principles. The folks in Germany clearly realised that.
What about McKinsey? They moved very much more quickly in suspending their country manager in South Africa after a similar type of malfeasance arose.
You have to applaud any company that responds that quickly because they clearly recognise that the decisions that were made by their country managers were inconsistent with their values.
Again, it always comes down to quality control. Where, within a continental structure, let alone a global structure or a country-by-country structure; who’s managing quality control? It’s very possible for an outlier to make a bad decision and the folks involved not know about it. What really determines a company’s character is once they understand a decision has been made that’s inconsistent with their values; how quickly do they act upon it?
Let’s take all three of them, beginning with KPMG. If you were advising them today, what would your suggestions be?
I think that there are three points. 1. Your character matters. If someone in the organisation made decisions that were inconsistent with values, there’s no excuse for keeping that person around. 2. I think it’s a good time to re-examine their crisis plan. Their crisis plan really responds to the scope and scale of the crisis. 3. Most importantly, it’s essential that when your company goes through this, we always advise our global clients to do a cultural audit. Make sure that everyone in every office everywhere in the world, understands what the values are, how to behaviourise those values, and the penalty for not doing that. I think that sometimes we get too comfortable. We think that culture is nothing more than an environment and how you make decisions, and how you make decisions is nothing more than based on your values. I think it demonstrates that there’s a real need to remind everyone what they stand for.
Everyone knows what business KPMG is in but it’s not what they do. It’s who they are and the same is true for SAP and McKinsey. It’s not what you do. It’s who you are, and values and character matter. I think that for the senior leadership, this is an ideal time to remind the entire global population this is how they feel and this is how they act.
We’ve been getting a lot of feedback from people who say that in all three cases, this kind of action/activity has been going on for a long, long time. It’s been exposed now with the Guptas but in fact, it’s not just reflected in what’s gone on at Transnet, Eskom, SABC, and so on. Would you think that there’s any credence in those kinds of allegations?
It’s a great question but there’s not an easy answer. I’m certainly not one to judge whether it’s been going on. If that in fact, is an allegation and I was in senior leadership in those companies, I would get an independent auditor to quickly go in and determine who has done what and for how long we’ve known about it. Nothing undermines trust quicker than competitors taking that kind of knowledge and using it against you in the marketplace.
Alan, so the approach that we’ve now seen from both SAP and McKinsey (because they seem to be much more involved from an international perspective): how does it go from here?
Well, the good news is that I think they are in a position where this story can be told as an aberration. This is not reflective of who these brands are. I know them and we worked with some of them in the past, and I can tell you that this is not who they are. Again, this is an ideal time to do a real deep dive into a mixture that is in alignment between culture and behaviour.
Not just for them but no doubt, for their competitors as well.
For the competitors, as well. You’re absolutely right because what assurance do the competitors have that this is not going on somewhere in their world? It’s something that KPMG can jump all over. This kind of behaviour is like watching a slow-motion slide off a mountain cliff. This kind of behaviour can be fatal. Look at Arthur Andersen if you want an example of a company whose business practices were inconsistent with the values that they talked about online. I think this is a wonderful opportunity to step back and say, “Okay, someone in this organisation may have made a decision inconsistent with our values, but we’re not going to allow that to happen again.”
Knowing South Africa as well as you do… You visit regularly. You engage with lots of thought leaders and very senior people in the country. You must surely have picked up that there’s been disquiet amongst corporates and people in civil society about the corruption that has been becoming endemic in the country. Is there an upside to what we’ve seen so far? In other words, that it could be used to attack this?
Well, I think that in every society and particularly in a democracy like South Africa… South Africa is not broken. I think we could say South Africa is stuck but I clearly believe that South Africa is not broken. When you have a democracy that in fact, has rule of law, has universal free education, and the free press, there’s a lot of what the South African reality is that is truly what everyone hopes and wants. When we look at South Africa and we say, “Okay, it may be broken”, I think we have to look at it in a different context. The reality of it is that it’s stuck in a rut that pits race against race, religion against religion, and prejudice against prejudice. We just can’t let this happen in South Africa because South Africa is much more than a country. South Africa is an idea and it’s always a nation that envisioned and embraced diversity and inclusion and [inaudible 0:11:38.7] human world. I think that what’s going on in South Africa right now is a chapter. I think we can do better. We must do better. We will do better.
But Alan, a lot of what you’ve spoken about now is alleged to have been undermined by Bell Pottinger. Does it get worse – you’ve been in this field for a long time – or are those allegations excessive?
Let’s put this way. As an advisor, we’ve been involved in over 200 crises, over 100 trials and I really do believe that the work we’ve done over 35 years… For some folks whom society has deemed morally, socially, and politically obnoxious we always start a relationship by asking a simple question. “What are your values?” Then we go into it and we say, “Okay, do our values align?” I don’t care how much money’s involved. If our values don’t align, we turn down the business. I think that as advisors, we only advise. It’s the client who implements. If a client takes our advice and implements it, our experience is that since our advice is based on our values, the outcome is going to be something that they’re looking for. Right now, the news that we’re reading is scary because it really violates and it goes right to the heart of the most fundamental issue in South Africa right now, which is distrust.
When people tell me the most endangered species in South Africa is the rhino or the elephant, my response is always, “No, it’s not. The most endangered species in South Africa right now, is indifference and trust”. I think that we can’t afford to be indifferent and we have to understand that trust is a right. People have to earn it and they have to protect it.
I’m very optimistic. I’m not only a believer in South Africa. I’m a vocal advocate and ambassador for South Africa. I really believe that South Africans are not only standing up and speaking up, but I believe they’re beginning to act up. At the end of the story, none of us have the moral right to be indifferent and I think that the morality of the South African culture is showing ‘we’re not going to be indifferent and we do understand that trust – not only in ourselves, our communities and our leaders but the trust we want to earn across the climate – is essential. Right now, the greatest crisis South Africa’s facing is distrust and I think we addressed that. Whomever is leading the country recognises that is the priority. I think South Africa is going to be the beacon for the next 50 years in Africa, and in the world.
From a global perspective, a very significant development today where the former Brazilian President (Lula) was sentenced to 9½ years in prison for taking a $1.1m bribe. The estimates or the pundits tell us that Brazil could be the first country on earth where you have three presidents in jail at the same time. The first of them – the biggest icon of them – is gone. From a South African perspective, the law enforcement agencies have been conspicuous in their absence of the scandal that has erupted in the most recent past. Do you think that’s a temporary thing or is a Brazilian moment possible?
When you look at the rule of law and you look at the different actors in the rule of law, someone has to be the prosecutor. Someone has to be the detective. I don’t think you can rush to judgement and say, “Well, they haven’t been doing their jobs.” I would say that those who have responsibility… Just today, the Public Protector talked about the importance of a full-scale investigation. I think that despite what everyone reads in the media, it’s no different than what Robert Mueller in Washington – investigating the allegations of the Trump administration being involved in some kind of nefarious way with Russia. At the end of the day, everyone is innocent until proven guilty and I think that the law enforcement in South Africa has a responsibility to contribute their role in whatever the Public Protector or the judicial system asks them to do.
But Lula is in jail and South Africa has a president with 783 criminal charges pending.
And it’s someone’s responsibility to take those 783 charges to court or not. The thing about Brazil is that it will be interesting to see who serves how much time. I’ve been around long enough Alec, to know… We were involved in a case in the Dominican Republic. In 2003, there was a banking crisis. Two of the executives of the leading bank stole $6.6bn and they never went to jail.
Well, I don’t want to leave on such a cynical note, Alan. You have said though, that you feel that South Africa is a beacon for the future and that it’s stuck – not broken – and that it can get through this.
I strongly believe this and I’ve written about this. I think that as investors look at South Africa, they should see the South Africa that works, and not the South Africa that’s broken. If more investors focused less on extractive investments and more on contributive investment (where they invest not only in South Africa but invest in South Africans), I really do believe… I guess the best way to summarise it Alec, is I believe in South Africa’s destiny and I believe that destiny is not a matter of chance. It’s a matter of choice. I believe that South Africa has made the choice and they see their destiny. There’s always a transition from stumbling blocks to stepping stones and I think the next two years are going to be an opportunity to bypass the stumbling blocks and create some new stepping stones of democracy.
And to see that opportunity more clearly than ever… Thank you, to Alan Hilburg who’s the leading communication specialist in crisis communications and the President and Founder of Hilburg Malan.