Select PR professionals contacted by the Kyiv Post tell why, how and how much it costs to help companies or public figures to manage crises.
In addition to helping companies or public figures create or maintain their brands and messages, public relations firms are sometimes confronted with crises. As a country in seemingly perennial crisis – not to mention the garden-variety image problems, Ukraine is a challenging environment for flaks.
Select PR professionals contacted by the Kyiv Post tell why, how and how much. What’s so bad about a Ukrainian crisis?
Yaroslav Khobta, president of communication group PRT says the crisis management tactics used by PR companies in Ukraine are on par with current business practices in the country.
“You can’t say the tactics used are dirty. Like everything that one has to do in extreme situations, crisis PR consists of firm and unpopular actions but also actions that are quick and appropriate to the situation. You cannot do this kind of work in white gloves,” he said.
According to Myron Wasylyk, senior vice president of The PBN Company, crisis management doesn’t have to be a crisis. It is often planned and anticipated. “Or, it can be a sudden situation that has the potential to hurt the reputation of a company, its shareholders, brands, market share and stock prices,” he added.
Nataliya Popovych, president of PRP Group, says that crises are a risk for both the client and the agency that he hires. “The market is so small that reputation is vital, and top agencies are careful to safeguard their reputation,” she told the Post.
Examples please!
Wasylyk’s firm has been in the trenches, fighting both with and against the world’s corporate monsters. Often the monster is the Ukrainian state.
“PBN has been involved in several high-level crisis situations such as shareholder disputes, as was the case between Telenor and Alfa, as well as BP and Alfa. In Ukraine, we’ve been brought in to work with companies who have disputes with the government or a particular government agency. This was the case with Vanco Energy, as well as a number of other large foreign investors who were jilted by a state agency.”
The cancellation of a company’s license, collusion between the government and prosecutors to take away legally purchased land, and a dual interpretation of a share purchase agreement for one of Ukraine’s largest privatizations are just some of the tasks PBN has had to tackle in Ukraine.
But they don’t fight alone. “In all of these situations, developing the strategy and tactics in communicating the position of the client to stakeholder groups is very important and usually involves work with PR agencies, investment bankers, lawyers and other specialists. So, rarely are we working alone with a client,” Wasylyk said.
So how far does a PR agency in Ukraine go in tackling a crisis for its client? We’ve all heard of the country’s infamous corporate raiders, who seize lucrative production facilities on the basis of a shady lawsuit filed by a shareholder with a single voucher to his name. Do PR people go “Rambo?”
Wasylyk says PBN gets tough, but apparently not physical.
“I can think of two crises in Ukraine where we were able to gain public support for a new construction site that was wanted by the local population but opposed by the local political warlords, who did everything in their power to derail a multimillion euro investment, only because they were not given the bribe they asked for. In all corruption cases, publicity is the main tool used against corrupt officials who like to hide behind their positions and immunity,” he recalled.
“In a second case, we were able to break a collusive deal between local prosecutors and a local regional ‘political/criminal’ authority who were blackmailing the client for payoffs or seizing property and expropriation. In this case, we had the local governor, the general prosecutor and, in the end, the president himself on the side of justice, which helped the client prevail in the courts. In all these cases, there is close collaboration between the PR agency, lawyers, bankers and in some cases foreign embassies and international organizations,” Wasylyk added.
Popovych said her firm has handled everything from environment, product recall, corporate transitions, distribution network issues, etc., to sectors such as aviation, fast-moving consumer goods, information technologies and telecom to financial services and development industries.
How much does all this cost?
Everything depends on the individual situation, how quickly it must be resolved and its urgency for the client, according to PRT’s Khobta.
“Of course it [crisis PR] costs more,” he told the Kyiv Post. Speed is of the essence in assessment and management of the situation, setting responsibility for who does what and then coordinating between members of the team, he explained.
“To put it simply, a crisis PR campaign is a traditional PR campaign squeezed into a tight time frame.” And that costs more!
Popovych attributes pricing to staffing as well as timing: “The price range is generally higher due to the most likely involvement of senior consultants and timing. Price can also be impacted by the geography of the project.”
“Since both financial and reputational risks are higher, crisis management situations require more senior staff involvement and consultations with major government and business stakeholders. Also, timing of communication is often critical for success in communications, hence messaging, Q&As, media trainings, executive plans need to be devised under very tight deadlines. Due to the above mentioned, pricing is higher with crisis management situations than it is for ongoing consulting,” she added.
Wasylyk agrees: “These services cost more because they involve specialists who have an intricate understanding of the way things work in Ukraine, as well as those who make things work. So, obviously this costs more than the costs of a press conference or product launch.”
The clients
Khobta characterizes them as “people and companies who have something to lose and fight for.”
He said they typically wait until the crisis strikes before asking for help. “Rarely does anyone realize the importance of precautionary measures.”
Popovych has had a different experience. “Fortunately most of the clients understand the great power of [laying the] groundwork for crisis situations. So, if we can predict the issue, we think of communications beforehand. At the same time, of course, there are many situations when we are approached with a request to consult on an issue that [has] already turned into a crisis. As a rule, after the crisis is resolved, the attitude of the company to the strategic function of communications changes for the better.”
Wasylyk said his clients try to keep things above-board, in a country where one would expect a cloak-and-dagger solution.
“Most clients are usually businesses, so business wants a level playing field and a fair chance. So, doing things legally and within the spirit and letter of the law are very important. The foreign corrupt practices regulations in many Western countries prevent business and PR agencies from engaging in so-called ‘briefcase’ lobbying. Plus, once you’re on the hook of paying bribes you are always vulnerable to the next hit. So, businesses are mostly fighting on the side of the law and challenging the court system or administrative regulators for a just opinion and/or decision. Media campaigns can sometimes be effective, but one needs to take a case by case approach to using that tool.”
And the trend?
Popovych says sector growth for crisis management is connected to the overall development of the PR market in Ukraine.
“Current research on the most relevant recession and post-crisis disciplines reveals that PR is one of the most demanded functions. Apparently, companies in Ukraine have realized that those who had this function at the strategic level before the crisis are doing much better one year after and most likely will emerge out of the crisis in a better position than the rest of the competition. The reality is very simple: systematic communications and a strategic approach to PR can safeguard companies from crisis and save them a lot of costs,” she said.
In addition, with the economic recession forcing many companies into painful debt restructuring talks, for example, the need for crisis management is being brought to the forefront.
Khobta sees growth in the need for crisis PR as a seasonal phenomenon. “When life is stable, meaning primarily the economy and politics, crisis situations are insignificant, and the other way around,” he said.
