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Repairing Your Reputation When a Merger Collapses
Arthur Wiese, Jr., vice president of corporate communications at Entergy Corp.
Entergy Corp.'s vice president of corporate communications told a cautionary tale of a corporate romance gone bad: the planned marriage of equals — Entergy, a $9 billion-a-year energy company, and FPL Group in 2000. The divorce reminds us that:
- A positive business reputation is built over years, but it can be destroyed overnight.
- Once that reputation has been damaged, it can be harder to repair than it originally was to build.
- The most powerful tools for making that rehabilitation work are truth and openness.
What seemed like a "match made in heaven" moved from matrimony to acrimony overnight as the CEOs' personalities clashed immediately after the papers were signed. The planned merger broke off in April 2000, nine months after its announcement. The challenge: How to save Entergy's reputation. CEO Wayne Leonard felt he had made mistakes, was naïve and he didn't mind confessing that. Over the objections of lawyers and financial consultants, he said everyone was going to be candid to a fault, including corporate communicators.
Entergy issued its own news release and held its own briefing with regulators and investors. The company did its own call with analysts and sought to get as much media attention as possible to get its story out. Employee messages were critical because they had been shocked by the failed marriage. Getting to them was critical so they could be spokespeople in their communities to explain what happened. "We let it all hang out," he said.
The moral of the story: Being forthright and open and honest is the best way to deliver bad news because you can turn bad news into good news. And one other realization, says Arthur: "A marriage of equals is a non sequitur. It just can't happen."