When the face of the company damages its reputation, brand and market share

A company is more than the public face of it. It’s the people who count on it from shareholders, employees and their families, collaborations, vendors and consumers.

So when a scandal and crisis hits hard, the stress and pain can be felt widespread and deeply.

Papa John’s has experienced some financial disappointments as all businesses do yet added to that last year when founder and spokesperson John Schnatter embarrassed and harmed the company with his racially-oriented speech that created shock and offense, then compounded that misery with his failed follow-up behavior. The company decided to air its family dirty laundry and keep that fight public. 

Where was the strong leader in that chaos?

It’s debatable which was more foolish and worse corporate behavior: if the initial damage wasn’t serious enough, if Schnatter’s response wasn’t worse, the very public company leadership in-fighting certainly was an embarrassment of missing professionalism and decorum. It could easily be labeled a soap opera, making one wonder if the adults could be trusted with the Papa John’s reputation.

The company appears now to be learning from its mistakes and is slowly regaining its balance and reputation. Expect profit growth to follow.

What can we learn from Papa John’s crisis?

Simply put, the critical need for poise within adversity. We all need this to effectively manage crisis. Papa John’s received a poor grade for the negative emotions fueling a public feud after Schnatter’s weakness in exhibiting maturity after hurting the company he started and built.

The company was hit with a steady stream of negative attention from the media, aggrieved parties and social media and didn’t respond in a skilled way, which would have been the aforementioned poise, plus maturity in publicly and privately owning its missteps, clearly showing remorse and speaking of a detailed plan to specifically resolve the problems and not repeat them.

Rationalization and defensiveness is rarely, if ever an effective response. Yet corporations, leaders and well-known people will regularly choose that approach. Don’t be them.

Papa John’s and especially, Schnatter decided against a best practice by not choosing expediency in more skilled crisis communications (mentioned above), improved dispute resolution methods with upset parties, apologizing well enough to its customer base and market for what should have been felt as embarrassing, unprofessional corporate behavior. This was not just Schnatter.

“After Schnatter’s use of the racial slur became public, same-store sales in North America plummeted 9.8%, year-over-year, in the third quarter of 2018.”

Pow.

Yet the company has persevered, Schnatter took his lumps in the media and with his ego in different ways and was moved out of the company that was once his vision, obsession and success story.

Papa John’s seems likely to bounce back. Its prognosis is good.

Schnatter has resources to rebound too yet his reputation is still in need of repair because he has yet to see his reality, learn from it and invest in problem solving it. Progress, rehabilitation, forgiveness and reputation rebuild is all blocked, not by the media or public, but by ego. Another lesson for companies, leaders and well, any of us.

Ego, denial, blame, resentment and even fear keeps us stuck in the pieces of a once influential or persuasive reputation, and the multiple benefits that accompany it.

Michael Toebe is a communications leadership practice for reputation management, risk, crisis communications and crisis management for companies and individuals.

He has written for and contributed to Chief Executive, Corporate Board Member, New York Law Journal and American City Business Journals. On LinkedIn, Twitter and Instagram.