When going early on news can hurt your reputation more than holding back..

When George Calombaris came out with a media statement admitting he had underpaid staff at his Melbourne restaurants by $7.8 million, he thought he was getting ahead of a disastrous news story. It was a story that had been rumbling along at a medium level for a while, but he had self-reported to the Fair Work Ombudsman and delivered the statement voluntarily before the story was released by the Commission, or other sources. The theory goes that if you provide information to the media before it is unearthed, you can help set the news agenda rather than struggling to react and keep up. In my view, from a reputational perspective, it didn’t work and if anything both this, and subsequent public displays of contrition have helped make Calombaris the poster boy for underpayment of staff and he is only just starting to pay the price for this. I am in no way suggesting that Calombaris is not contrite, nor that he is not attempting to make amends to the staff he underpaid. However, rightly or wrongly, he is taking the reputational hit for what appears to be a widespread industry practice and some others who took a different approach seem to be getting away with less damage. Another high profile chef and entrepreneur, Neil Perry, is arguably in the same boat, being sued by one of his chefs for six years of underpayment, is also being investigated by the Fair Work Ombudsman, and has already made a voluntary back payment to staff of $1.6 million (a similar amount to that first made by Calombaris). However, far from putting himself forward, Perry has taken a reactive approach. He’s pushed back on media and legal inquiries, volunteered only what is absolutely required and generally kept his head down. So far he’s not attracted the same attention and while Calombaris has lost his MasterChef and WA Tourism gigs, Perry still seems to be engaged at Qantas. So, from a reputational perspective, when should you try to lead a crisis and when is a reactive strategy best. A few questions you may want to consider;

Is this an industry wide issue and is yours likely to be the first head over the trenches?

The first voice often becomes the one that owns an issue and once labelled that way it is very difficult to live that down.

Will the media and the public demand a sacrifice for the sins of the many?

The media and the public are often black and white. The demand that ‘heads must roll’ rarely does much to address an issue, but the most visible head pays the price.

What actions have you taken to address the matter and will they appease the mob?

In some cases there are no actions short of public disembowelment that will be deemed adequate. All attempts to manage public perception – especially efforts to control the news agenda by going early – will fall flat. There is always a way back, but it can take a long time. It starts with actions in the interest of your customers and stakeholders, even if you can’t talk about them straight away. Everything is easy in retrospect, but principle questions might help when the future looks bleak. What questions help you decide a direction when all looks bleak?