Allies are essential during a crisis for deploying your messages and digital media has created a wealth of resources for enacting this process. Companies that develop a social media strategy in advance will already know the best platforms available for reaching target audiences when the crisis strikes.

This week’s list of articles emphasizes the need to enlist your employees as brand ambassadors. In many cases, this group of individuals can be your biggest champions on the Web – offering an authentic, reliable and insider voice to discussions. When a company has a defined social media use policy, encouraging employees to participate in online discussions about your company will help your presence grow positively in the digital space.

Fox Business: Social Media Tools, Online Search Key for business Journalists, According to Survey

Forbes: A Corporate Guide to Social Media

AdAge: How to Make Your Employees the Voice of Your Brand Online

Search Engine Journal: Social Media Profiles for Online Reputation Management

Mashable: How to: Use Social Media for Enterprise Business

Dallas Lawrence is Vice President of Digital Media at Levick Strategic Communications and a contributing author to Bulletproof Blog.

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In its June, 2009, decision in Wade Tucker v Richard Scrushy et al., an Alabama court awarded plaintiffs $2.876 billion, reportedly the biggest judgment ever against an executive. It was, in any event, the largest shareholder derivative lawsuit in history, climaxing a series of successes that, in 2006, included summary judgment forcing Scrushy to pay back $53 million in incentive bonuses, recoveries in settlement of $100 million from outside directors, and $133 million from an investment bank advisor. Mr. DiPrima and his co-counsel, the Birmingham, Alabama firms of Hare Wynn Newell & Newton, and Galloway & Somerville, prosecuted these cases from their inception.

Where are the lessons for business in this extraordinary saga, and what does the entire HealthSouth case portend for the future?

Frank DiPrima: First, outside directors cannot co-invest or set up separate entities with the executives whom they are supposed to oversee. That’s what happened at HealthSouth until 2003 – Scrushy created third party, self-dealing entities with HealthSouth assets and cut in a few of the “independent” board members. That may be why Scrushy thought his board would overlook his activities rather than oversee them. 

Second, Scrushy and his management were driven by a vicious cycle of giving “guidance” that creates Wall Street earnings expectations, feeling pressure to meet those expectations, and then creating higher “guidance.” Scrushy responded by committing fraud. Whatever the gap was between real earnings and those the Street expected, he fabricated. Weaker people in his management went along. 

There is an endemic problem here. I have no answer, but this case exposes “giving guidance” as really giving pressure and temptation. Boards of newly public companies not already giving “guidance” should think long and hard before authorizing such practice. It has consequences.

Third, successful entrepreneurs who take their companies public are journeying into a strange new world. Scrushy always thought of HealthSouth as his company, because he founded it.  Many honorable founders of public companies instinctively think the same way. The directors must remember not to yield to an overwhelming personality and to take their oversight duties seriously. The entrepreneur must encourage real oversight.

What does Scrushy’s earlier bonus disgorgement suggest for the future, in terms of executive compensation and clawbacks?

Frank DiPrima: Plaintiffs lawyers watch for compensation based on questionable accounting. We look for compensation awarded on the basis of an earnings statement that has since been invalidated.

Two points grow from that. First, companies need effective audit committees, comp committees, and governance structure. Absent that, shareholders have every reason to look back and question why they awarded incentives when events prove that the predicate on which incentive compensation was awarded is invalid.

Second, companies should rethink single-year bonuses. If we pay people to achieve single-year results, and pay them as soon as the year is over, they are not going to think about the following year. 

What do you see as the future of derivative suits?

Frank DiPrima: I doubt Mr. Scrushy has $2.8 billion to fork over to HealthSouth but the financial redress for the company has been quite significant since all this started. Vindication for HealthSouth and its constituencies has been perhaps even more important. I hope corporations will respond collaboratively to shareholders’ counsel in future derivative lawsuits. There’s an obvious mutuality of interest. 

Remember too, shareholders’ derivative recoveries in this case were possible only because the company avoided bankruptcy. Successful post-disaster restructurings will inspire more shareholders to take a closer look at what happened, assess responsibility, and seek their day in court.

Finally, as securities case precedents have made it more difficult to hold third-party advisors, such as bankers, accountable to shareholders, derivative suits will become a more important vehicle for seeking redress from outside firms that allegedly aided fiduciary wrongdoing.

Larry Smith is Senior Vice President of Levick Strategic Communications and a contributing author to Bulletproof Blog.

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In this case, New York Attorney General Andrew Cuomo and his predecessor Eliot Spitzer sought to enforce state consumer protection laws against national banks that state regulators felt were engaging in various forms of predatory lending. The banks, and their regulators at the Treasury Department, argued that because national banks operate under federal charters they are exempt from state and local regulations.

Over the years, most big banks have dropped their state charters, choosing instead to be regulated by the federal Comptroller of the Currency. State regulators have loudly criticized the Comptroller for encouraging banks to obtain federal charters by offering less stringent regulation than what they faced at the state level.

Without getting into the merits of those arguments, it is clear that this latest Supreme Court ruling will have a profound impact on bank regulation nationwide and, more important, on the steadily growing power of state attorneys general.

In recent years, attorneys general, individually and collectively, have amassed unprecedented regulatory authority and have shown themselves to be increasingly eager to use it. In many cases, merely the threat of coordinated legal action by groups of attorneys general has been more than sufficient to force companies into expensive settlements in order to avoid protracted battles in court.

Among state politicians, there is a popular joke that “AG” now stands for “aspiring governor.” And it is indeed common for state AGs to use the power and prominence of their offices to advance their political careers. Florida Governor Charlie Crist, Washington State Governor Christine Gregoire, former Arizona Governor (now Homeland Security Secretary) Janet Napolitano, and, of course, disgraced former New York Governor Sptizer are but a few recent examples.

In light of all this, and especially after this week’s Supreme Court ruling, any regulated business – and that’s just about every business these days – needs to be on the alert for what state AGs are saying and doing. With the blessing of the Supreme Court, state attorneys general are likely to be looking for all sorts of new regulatory fields to plow. Anyone could find themselves the next target. Unfortunately, thanks to a close vote by the Supreme Court, falling back on federal preemption in order to moderate and rationalize the nationwide regulatory environment is no longer a reliable option.

David Bartlett is a Senior Vice President at Levick Strategic Communications, an expert communications strategist and crisis manager, and a contributing author to Bulletproof Blog.

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During her tenure at NRF, Ms. Davis has been responsible for evaluating NRF positions on a variety of retail topics including e-commerce, consumer spending, the economy, and loss prevention. A nationally-recognized expert on retail crisis communications, she shared her insights with Bulletproof™:

What are the most common crises that retailers face? Why is it so vital to the bottom line that they are publically addressed?

Ellen Davis: The only thing common about retail crises is that they’re all unique. At any moment, retailers everywhere could be facing a number of issues in stores around the country: store closings, robberies, injuries, theft, customer service issues, product tampering…The list goes on and on.

Many of those situations are local in nature but the retail industry has seen its share of national crises in the news over the past year as well. At our session at NRF’s Loss Prevention Conference earlier this month, I spoke about several of those major national incidents: a situation at a major retailer on Black Friday, where a worker was trampled by an out-of-control crowd; a tragic active shooter incident where five women were killed; and a situation where a store manager showed incredibly bad judgment, which gave the retailer a huge reputational black eye.

When I think about retail crises, I’m reminded of a quote from Warren Buffett, who said “It takes 20 years to build a reputation and five minutes to ruin it.” In actuality, with the prevalence of social media coupled with a 24/7 television news cycle, it can take a lot less than five minutes to ruin a great brand. Retailers and other businesses are great at preparing for the logistical elements of a disaster or crisis – spending hours on meticulous evacuation plans, what-if scenarios, law enforcement partnerships and alliances, and drills. What can easily get lost, though, is the role that communications should play, both before and during a crisis.

I’ve been fortunate during my tenure at NRF to develop a very close working relationship with our loss prevention experts. When a crisis develops in the retail industry, we handle it together. I encourage other groups to do everything possible to get that communication started sooner rather than later so that, in the midst of any crisis, there is already a level of trust established. Then, when something unexpected occurs – and it inevitably will – it will be easier to make decisions, pull the trigger, and protect the brand.

What are the most important audiences for a retailer to reach in order to protect against reputational losses in crisis?

Ellen Davis: In retail, almost everything boils down to how customers perceive a situation. If not handled quickly or correctly, crises in retail stores can result in a permanent shift in consumers’ shopping habits – and retailers are nothing without their customers.

One of the most difficult balances in retail, compared with other industries, is that everyone shops, so rumors can spread quickly. For example, when an absolutely inaccurate e-mail was circulating last holiday season about retailers going out of business and no longer accepting gift cards, NRF worked furiously with many companies to quash these rumors. Unfortunately, though, it just took that e-mail, distributed to millions and millions of people to change customers’ shopping habits. One consequence was that gift card sales during the holiday season were much lower than anticipated.

Of course, I don’t want to minimize the other important groups that retailers need to consider during a crisis. Depending upon the situation, other audiences, specifically the media, policymakers, manufacturers, employees, and industry analysts, cannot be ignored.

What’s next in retail? Are there issues emerging on the horizon that retailers need to be aware of?

Ellen Davis: Retail’s biggest crisis over the last year has been the economy, and it’s often been difficult to focus on anything else. As the economy bounces back – and it will, though “when” is still anybody’s guess – retailers will start to focus again on both national and global expansion. At this point, though, retailers are very focused on their core business operations, trying to do more with less while still trying to provide customers with a seamless shopping experience. It’s been an incredibly difficult journey for the millions of people who work in retail, but companies that survive this recession will be stronger for it.

From a loss prevention standpoint, retailers will likely continue to battle the growth of organized retail crime and increased active shooter incidents at stores and malls around the country. While retailers continue planning for future company crises, giving communications executives a seat at the table in the planning stages is imperative.

Larry Smith is Senior Vice President of Levick Strategic Communications and a contributing author to Bulletproof Blog.

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This week’s list of top five digital media articles highlights companies tapping into online resources to condition the marketplace. These executives understand the two-way discourse the Web provides for testing and refining messages with key audiences in advance.

When used correctly, social media can be more than a marketing platform. It can be the corporate communications team crystal ball. This insight will ensure your message resonates and reverberates - key for crisis preparation.

Financial Times Tech Blog: Corporate Social Media Gets Proactive

BusinessWeek: Fortune 100 CEOs are Social Media Laggards

MediaPost: Pro Twitterers Share Their Secrets

SmartBlog on Social Media: Lessons from IBM: Your Community Can Be Your Copywriter

Mashable: The Top 10 Twitter SEO Tips

Dallas Lawrence is Vice President of Digital Media at Levick Strategic Communications and a contributing author to Bulletproof Blog.

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These political scandals are usually so caliente that it’s easy to overlook the germane lessons they provide for the rest of us, including lessons for business leaders who may be embroiled in not-so-salacious problems like FTC probes or financial restatements.

But lessons there are, and fundamental ones. Let’s return to the fabled sage we quoted previously, Niccolo Machiavelli, who once said, “Bad news all at once; good news over time.” If Governor Sanford is a veritable Machiavelli in reverse – dragging out the saga to ensure maximum public titillation over a protracted period of time – business leaders can do better by compressing all the bad news they have (and can legally disclose) in a single acknowledgement.

That bad news then becomes old news, creating too the opportunity for business leaders to inseminate positive messages about their companies in multiple venues over time. The new stories can then focus on all the productive steps being taken to ensure the problem is resolved or that, if there was wrongdoing, it will never happen again.

It’s never pleasant to rip off a Band-Aid but once it’s over, it’s over. In today’s culture, attention spans shrink and new issues replace old ones. It’s a given that some of those new issues will unfortunately involve new crises and new adversities. Yet the full transparency/speedy disclosure strategy that businesses master today will serve as equally effective models tomorrow.

Courage and speed are the crisis management bywords here, as much for corporate executives as for politicians and athletes.

Oh, there’s one final lesson business leaders can draw from the Sanford scandal. For goodness sakes, keep your composure. Blubbering gets you nowhere.

Richard Levick is President and CEO of Levick Strategic Communicaitons and a contributing author to Bulletproof Blog.

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During my session with NRF Communications Vice President Ellen Davis, and in the conversations I had with conference participants throughout the week, I was reminded of the kinds of challenges that businesses – especially those that directly serve consumers – face every day. From slumping sales to shoplifters to accidents in the parking lot and beyond, there’s a lot to keep a retailer up at night.

Based on what I saw at the conference, many are starting to sleep a little easier for the simple reason that they are beginning to understand the importance of anticipating and planning for the days when issues and problems erupt into crises.

Today’s retailers know that when crises arise, they must be seen as actors in their own drama. They’ve got come across as leaders in managing and addressing the issues that adversely affect their businesses and responsible stewards of the communities they call home. That means being prepared to disseminate and follow up on public messages of concern, commitment, and action when crises arise.

A crisis plan, while essential, is just the start. Corporate managers and executives must know how and when to communicate with consumers, employees, and public officials in a crisis – even as it’s happening.

Looking back and trying to “fix” misperceptions is not an option.

Gene Grabowski is a Senior Vice President and head of Crisis and Litigation at Levick Strategic Communications, as well as a contributing author to Bulletproof Blog.

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How do you get a sense of what’s next? How do you conceptualize the issues and industries that will be important to you in coming months and years?

Steve Susman: To monitor what’s coming next in litigation, you need to monitor pending legislation. And, you need to pay particular attention to whether that pending legislation includes provisions for private causes of action.

A case in point is the Financial Product Safety Commission Act of 2009, which does contain such provisions. And, while that law will provide consumers with stronger protections and better information on consumer financial products, it creates a centralized entity that will prevent businesses from forum-shopping for the most favorable regulatory treatment

For financial service businesses, the message is pretty clear. Yes, you have faced significant exposure and significantly greater compliance responsibilities since the meltdown. But the next chapter is only just beginning now. The scrutiny will only intensify in the months and years ahead.

Susman Godfrey has a fairly broad practice. What other areas of your work are likely to be directly affected by the new political environment?

Steve Susman: We’re going to see a lot more environmental litigation. Right now, the Waxman-Markey climate legislation is a work in progress. I don’t believe that private causes of action are now addressed in the current version, but influential environmentalists are lobbying hard, and there’s every possibility that the final version will be even stronger. At the very least, for the first time, the U.S. government will cap and regulate emissions of carbon dioxide.

Any business that emits carbon dioxide – electric companies, oil and gas companies, and so forth – needs to be aware that, if there are specified caps on emissions, there is ongoing potential for exceeding those restrictions. The clearer the law becomes, the more do violations become concretely demonstrable in a court of law.

I would also put a particular focus on antitrust. There’s usually a shift to greater regulation and more antitrust-related litigation whenever an administration like Bush’s is replaced by an administration like Obama’s. But today you can multiple that tendency tenfold because of the downturn.

When times are good, companies are less motivated to collude. Why should they run the risk of fines and prison terms when they’re doing so well? But when times are bad, the instinct is to run the risk, and to work out illegal arrangements simply to survive in the marketplace.

For some businesses that’s a double whammy: more motivation to collude, more likelihood that the government will come after them for doing so.

The Bush administration simply ignored Section 2 of the Sherman Antitrust Act [which provides corporate penalties up to $10 million and prison terms up to three years]. Don’t expect the Obama administration to be so congenial.

The American public has decided that thirty years of Reaganomics are now over.

Your firm recently won a $45 million dollar settlement on behalf of Milwaukee County and the Milwaukee County Employee’s Retirement System for negligence against a consulting firm. I’m wondering if we’ll see more such actions brought by public entities in this economic environment.

Steve Susman: There’s nothing all that new about that case, as public entities have brought many similar ones in past years. That said, there’s no doubt that, as more law firms of all sorts are now offering contingency fee and fixed fee arrangements, public entities that do not have inexhaustible pockets are in a better position to pursue meritorious claims.

Larry Smith is Senior Vice President of Levick Strategic Communications and a contributing author to Bulletproof Blog.

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At a time when oil and gas companies, renewable technologies, nuclear power, and non-nuclear utilities need to address the economic, environmental, and national security concerns held by a wide array of stakeholders, this month’s issue of High Stakes™ offers the strategic guidance and tactical advice needed to reach multiple audiences.

I invite each of you to check it out.

Larry Smith is Senior Vice President of Levick Strategic Communications and a contributing author to Bulletproof Blog.

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Mr. Levy’s blog, Running A Hospital, is one of the most popular CEO blogs on the Web. As a corporate leader who has been sharing messages in the social media space for nearly three years now, he shared his insights on what CEOs stand to gain.

Based on your experience, why should CEOs consider blogging as a primary communications function?

Paul Levy: A CEO not having a blog today is like a CEO 20 years ago not using a telephone. If part of your job as CEO is to represent your organization in the public eye in a way that is consistent with your strategic objectives, why wouldn’t you consider new methods like blogs, Facebook, and Twitter – which are just as, if not more, effective than radio, television, printed press, and speeches?

Blogs are unedited, so you can share exactly the message you want when you want. They are available in real time. The recipient can read your messages asynchronously. And blogging is free. All of these aspects are what corporate leadership looks for in communications. This wasn’t apparent to me when I first got the idea to launch Running A Hospital after reading a story about how few Fortune 500 presidents write a blog – but after some time at it, the value of sharing messages via blogging has really sunk in for me.

What have you found most surprising about your blogging experience?

Paul Levy: When I started writing posts about some of our quality and safety improvements at Beth Israel Deaconess Media Center and publishing the clinical outcomes, I discovered that the blog is really a management tool as well. As I published stories about the positive things people were doing at the hospital, they would feel proud and motivated. Also, because the employees knew I was watching and would be writing about what they were doing, it made them more attentive and gave them a greater impetus to do better.

Do you have any cautionary notes to share with CEOs who may be considering their own blog?

Paul Levy: Once what you write is out there, it’s out there. But there’s an antidote to that because you can correct what you’ve written in real time – and most important, within the same news cycle. Unlike a newspaper story, if I print something on the blog that’s in error and someone writes to me, and tells me about how badly I messed it up, I can fix it.

For example, back in 2007, I learned about a fascinating clinical trial that could have major implications for people with asthma, so I wrote about it. Not long after, somebody from an NGO advocacy group wrote me saying that I really shouldn’t be writing about the treatment because our hospital had a commercial relationship with the company doing the trials. I didn’t know that when I wrote the post – so I added an addendum saying that “It has come to my attention that we have a commercial relationship with the company engaged in the trials. I was not aware of this before today and I apologize for not mentioning it in my original post.”

In a different venue, such as a newspaper, it could have been an embarrassing, long-lived story. So I guess this isn’t as much of a cautionary tale as it is another case study on why blogging is something that all CEOs should consider.

Larry Smith is Senior Vice President of Levick Strategic Communications and a contributing author to Bulletproof Blog..

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