ABC Newsâ?? Bianna Golodryga reports: Mad Men, the AMC drama set at a fictitious ad agency in the 1960s, may be a hit with television critics. But a real-life gaffe from a real-life ad agency is not.
On Wednesday afternoon, a senior human resources executive at The Carat agency -- Europe's largest media network, which does both advertising and public relations work -- accidentally sent out an e-mail meant for a few, but seen by many.
The details of that memo have created a wave of embarrassing, negative press. In one fatal stroke of a key, Carat's chief "people officer," Rose Zory, exposed staff to a private e-mail sent to her by senior vice president Rob Hollander. The e-mail confirmed what had been rumored for a few weeks by parent company Aegis Group: layoffs were imminent.
Of course, none of Carat's 14,000 worldwide employees were aware of the dire decision. And if management had its way, they wouldnâ??t have been for a while. Over the years, Carat had become one of the world's top ad agencies, with more than 100 offices in 60 countries around the world. With a clientele of more than 4,000 top global companies, the sky seemed to be the limit for the extremely competitive firm. The sky and a slowing economy, that is.
Having lost major accounts like Hyundai and New Line Cinema, it quickly became clear that the company could not stay profitable given its current financial status. And this is where things turned ugly. For it's no surprise that a slowing economy has opened the door for job cuts. Particularly among advertisers, who are typically the first industry to pull their business when times get tough.
So what makes the Carat story so interesting? As is usually the case, the problem lies not with the dilemma, but rather with the way it was handled. Here's how the story unfolds. Hollander sent what he believed to be a confidential e-mail to Zory. The message was laid out in Microsoft PowerPoint and Word documents full of "message" points on how to advise U.S. employees that they would be out of a job.
While no specific number was given, it's clear that the cuts would affect a number of employees across various divisions within the company. Careful attention was given to word choice, for example. The company was not "downsizing" but rather "right-sizing." Those who would be given pink slips were to be advised that they could "go home today and come back tomorrow to clean out your desk or office, you are free to do so. We would like you to meet with your manager following our meeting to transition your work. We will be communicating to your team today. Your manager will be contacting clients. We ask that you do not contact your clients to discuss this situation."
But more delicate care and consideration was aimed at the "critical talent" employees who would keep their jobs. "Let them know we are building for the future," it read. "The actions we had to take, although unfortunate, were necessary to right-size the company and â?¦ bring in the skill sets we need to effectively service our business and future client needs."
As for how the news would be spun to clients, many of whom would lose their Carat contacts, Hollander came up with the following explanation: "Mary Smith will be moving off your business. Now that we understand your business better, we are replacing her with someone whom we feel will be a better partner for you." In other words, spinning the changes in order to appear more in touch with their client's needs, as opposed to admitting their own financial setbacks.
One source within the company said that IT attempted to recall the e-mails as soon as the blunder was noticed, but it was too late.
Sarah Fay, CEO of Aegis Media North America, the parent company of Carat Agency, told me that obviously what happened was a mistake.
"??It was an example of human error and I don'??t think it's a reflection of the company's integrity or professionalism. It wasn'??t meant for eyes outside of the agency, and it was in draft form and wasn'??t considered for final print," Fay said.
"Everyone in the world has had some sort of experience of a mortifying e-mail situation. This is one of those stories. It happens to be a really big one,"� Fay added. "??It's taken on a life of its own and has become very sensationalist. And what people are laughing about is someone's mistake."
As for what steps the company took in response to the blunder:
"We have messaged to the organization in the form of an apology. Management feels bad that people found out about this actions this way,"?� Fay said. "??The people should have found out first, on a one to one basis and clients second."
And will anyone lose their job over this?
"??There might be some companies. Where a mistake like this happens, heads would roll. But this was not an intended occurrence. So that would be throwing the baby out with the bathwater,"?� Fay said.All in all, the handling of the situation showed undeniable creative thinking from a company in business to help with, well "creative thinking." But was it an ethically acceptable way to handle a difficult situation?
Most experts say: "No way."
Crisis management expert Eric Dezenhall, founder of Dezenhall Resources, has heard dozens of similar stories about "rogue e-mails" causing major legal headaches for corporations, many of which are his own clients. "E-mail gives people a lobotomy. I cannot believe what people put in e-mail and the scary thing is, there is nothing you can do about it. The only people who understand how dangerous the outcome can be are those who have seen some of their e-mails end up on the cover of The New York Times."
Dezenhall reiterates that the ultimate crisis in many instances isn't the initial crisis at all but rather the spin of the crisis. "Anything that looks premeditated and says 'here is our spin' strikes people as just flat-out dishonest. The act of planning what you're going to say is very distressing to people and causes them to overestimate the effectiveness of the spin."
Michael Kempner, CEO and Founder of MWW Group, a Top-10 PR and communications firm with a specialty in counseling clients through crisis situations, calls the gaffe a "Horrible situation." "It goes right to the credibility of management, both internally and externally," he said. "A situation like this is extraordinarily difficult to recover from. Not impossible but difficult.â?� Kempner says that he would advise Carat's management to immediately deal with the issue. "That means coming forward with the full set of facts. Itâ??s critical that they are aggressively forthcoming with core internal and external audiences like clients, employees, vendors, partners and the parent company.
In a sign that Hollander understood the ramifications of what he was about to do, his goes on to tell Zory that "This is a tough one. Since we're not opting to get out in front of the press, we will be left to defend. I think we may need to prepare for different contingencies depending on how they may hit us -- because they will hit us. RISK assessment." Ironic given the risk assessment Hollander clearly didnâ??t think of before considering what could happen if the e-mail got into the wrong hands. His ultimate failure, like so many others before him, was not what he had initially feared most. Laying staff off would most likely have been accepted as part of an overall weakening economy. But the way in which he proposed handling it made the story a personal one. As Dezenhall says, "There's no good way of delivering bad news, there's just a less bad way." Sage advice Mr. Hollander may want to consider before he sends another e-mail.