Friday, August 26, 2016

Crisis Management Perspective ... Ryan Lochte

If you doubt the importance of good communications during a crisis, the Ryan Lochte Rio Olympic incident is more proof that it can hurt your bottom-line. In the wake of the scandal, Ryan Lochte has reportedly lost all his major sponsors including Speedo USA and Ralph Lauren Corp.
 
This is because sponsorship and endorsement deals usually include a "morals clause" that will allow a sponsor to terminate the deal if the athlete's behavior conflicts with the values of the sponsors.
 
Although some may argue that Lochte would have lost his sponsorship deals even if he had not subsequently lied about the incident, we believe there is a significant difference. The former could have been managed as a "moment of weakness" under the influence of alcohol, while the latter cannot be easily dismissed. This is because lying goes to the character of a person and while people can easily forgive a person for making a mistake, they will not easily forgive one who has an integrity issue.
 
Thus, if Lochte had come clean and admitted his mistake in the first instance, we believe that he would have been able to keep most of his major sponsors. Additionally, the task to rebuilding of his personal brand would be quicker and easier.
 
At CW Fong & Associates, we advocate that in instances where the organization is directly responsible, it is always best to accept responsibility, apologize and offer contrition. Attempting a cover-up will usually fail and will turn what is a forgivable mistake, into a crisis of integrity.

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