Sometimes an audience can be your worst enemy. It happened to the president of Exxon when he tried to explain, or perhaps apologize, for the oil spill in the Gulf of Ortiz. Certainly, some of the Enron executives experienced real hostility when facing congressional inquiries. Martha Stewart discovered audiences could quickly turn from being merely fickle to being truly hostile when insider trading accusations caused her world to turn sour. President Clinton felt the pressure during the Monica Lewinsky investigation.
It's hard to generalize on how you should prepare for big-time hostility. Each crisis has its own characteristics. Each has to be handled in the context of those characteristics. If it ever happens to you, remember that you will have time to prepare—because the rest of your world will come to a dead stop. Nothing else will matter, and you will have nothing else to do. You can either resolve the issue and reestablish your credibility, or you get your comeuppance and then fade from public view.
But let's be realistic. Most of us will never be in that kind of "us-against-the-world" situation, though we may, on occasion, have to speak to a somewhat unfriendly audience.
Let's examine this situation in a business context. Recently I was working with the chairman and CEO of a financial investment firm (let's call him Frank Jones, and we'll say the company's name is Investex) to help him prepare for his annual meeting. The meeting was to be held in St. Paul, Minnesota—not at the Investex headquarters in New York. Frank talked to me about the problem he would face and what he wanted to accomplish.
"The news I will be conveying is not good. The market has been volatile. We have maneuvered to try to stay in the ‘black' and haven't succeeded. Our fund came in at minus 4 percent for the year. I will be standing up there in front of a highly sophisticated audience giving them that report.
"They, in turn, will be thinking, ‘I pay a significant fee for Investex to manage my money in a way that creates growth. If Investex can't accomplish that, I'm paying for nothing; I've wasted my money.'" And, he added with a shake of his head, "I don't blame our investors for feeling that way."
As a first step, I asked Frank to imagine himself as a member of that audience. This was part of his apprehension—worrying about "what people would think" at the end of his talk instead of analyzing what their expectations would be as they walked into the room.
Analyzing this did not take Frank long.
"As a member of the audience I would know about the minus 4 percent before coming to the meeting," he reasoned. "As a matter of fact, that is the very reason investors would be attending. Their confidence is shaken, and they want to see if ours is too. They are not panicked yet, but they're very unhappy and annoyed."
Frank decided that most of those who would attend would be looking for reassurance that Investex was on top of the problem and in control. If the meeting didn't accomplish that, he realized, they would retaliate by moving their accounts to another firm.
Frank wanted to do something with this audience that he had never done in the past. He was always one of those straight-from-the-shoulder speakers. He gave the facts, told the business story, never said anything personal, never any humanity. He felt there was no place for that in a business talk.
But he was bothered by the fact that people seemed to shy away from him after an event. They seldom came up to him to chat or ask questions. The other speakers—the president, the portfolio manager, and the chief investment officer—didn't suffer that fate. But, for some reason, Frank had created an aura of formality. Audiences felt he held them at arm's length, that he was not approachable.
That's not a plus when you're delivering bad news.
For this speech, he wanted—in fact, badly needed—to change that. He wanted to do something that would enable him to create an emotional connection with the audience. He knew it was possible because St. Paul was his hometown, and most of the attendees would be local people.
He also wanted to put the results in their most favorable light and, in the process, break down the hostility.
We talked over the situation and agreed that Frank should personally greet attendees as they entered the meeting room. The rationale was a simple one. If you shake a hand, it is far less likely that person will turn against you. The same principle applies in politics, which professes this golden rule, "Shake a person's hand and you have his vote." The rule doesn't hold absolutely, of course, but the percentages are in your favor, and it's a good way to start on a positive note.
With that in mind, Frank decided he would stand at the front entrance beginning a half hour before the scheduled start time, introduce himself, and shake hands with each person who came in. He wouldn't leave his post until he had to go to the podium to start the meeting.
Good morning ladies and gentlemen. We are here today to talk about the performance of your portfolio, the management of your money. Money management seems so impersonal. But, as with any business, it's run by people. And I'm one of those people. So if you'll allow me, I'd like to tell you something about myself and why I'm so happy to be in St. Paul, Minnesota, with you today.
To me, being here in St. Paul is returning to my roots. I was born here, not far from East Sixth Street. I graduated from St. Joseph High School, which is only a stone's throw from where we are right now.
Please forgive me for the nostalgia, but I have in my hand a 1966 photo of four boys in football uniforms with "St. Joseph High School" across their chests. One of them is me. The photo was taken after we won the city championship that year. I was a linebacker, and my goal in life was to eventually play for the Vikings. I never wanted to leave this part of the country.
Frank had never spoken about himself in a talk before. But one of his goals was the emotional connection. There is no other way to do it than to talk personally. We had discussed how much he should share. He didn't want to say that he came home to bury his mother. He thought that was too personal. We agreed that anything short of that would be okay.
But I did leave. I went to an Ivy League college for four years, coming home to see my mother and father at every opportunity. Then, at the age of twenty-two, I left for good. I went to business school and from there to New York City to make a career in the financial services industry.
I wanted to come back here often. But I didn't visit much. My mother would call me every week and say, "I only see you once or twice a year. Come home. Let me baby you again. Have some home cooking. See your cousins, your aunts, your uncles, your old friends."
The audience loved the fact that he was a native son. They identified with him being torn between career and home. They loved the sharing; audiences always do. They could feel his humanity. Sure, he was the chairman of this big financial investment firm, and some of them were angry with him for this year's poor performance, but they could feel his humanity, and they liked it.
I consider St. Paul to be my hometown. I learned to drive on this city's streets. I played hockey on Steven's Pond. I rented a tuxedo to go to my high school prom here.
Why do I tell you all this? Because what I'm doing now is revisiting my roots. Being in St. Paul again is being home for me. I know it's also home for most of you, and I wanted to share ourcommon heritage.
Having united himself somewhat with the audience, Frank could then move on to his statement of purpose:
But we have other matters to discuss. First, I want to speak about our performance this past year. Then I want you to hear from our president, two of our portfolio managers, and our chief investment officer. Each will present for fifteen minutes. Then we'll spend forty-five minutes or so answering your questions.
Our performance—overall, we were down 4 percent on the year. It pains me to tell you that, and I'm sure you are even more pained to hear it. The market has been volatile. We have made many adjustments and corrections in an effort to stay one jump ahead. Some have worked and some have not.
It's important to state the agenda for the audience so that they know what to expect. This is especially true when the news is bad and they know it.
Once Frank had stated the obvious—that nasty minus 4 percent—the audience could be satisfied that he wasn't going to excuse or dance around the poor performance of the fund. He didn't back away from it or gloss over it. He didn't obfuscate. Asserting the problem up front and making himself responsible for it made it easier for him to move forward and share a more positive side of the same bad news:
The minus 4 percent is an absolute measurement. If we look at relative indices, we look much better. The Standard and Poor's index was down 12 percent in that time period, versus our 4, so we outperformed the market.
And when we look at the Morningstar measurements, we outperformed eight of the twelve funds in our category. When we talk to other professionals in our industry, they pat us on the back and say, "Nice going. You outpaced the market in an incredibly difficult year." What they are saying is that on a relative basis we did very well.
But that's not what we are in business for. We are in business to invest our client's money wisely, to increase the value of each client's portfolio.
By adding the perspective of a favorable relative performance versus the market and versus other funds, Frank was able to end his "bad news talk" by actually putting the year's results in a more favorable light:
As I stand before you today, I am pleased that we are outperforming most of our competitors, and I know that we invested your money wisely, but I am decidedly displeased that our fund is minus 4 percent for the year.
At that point Frank introduced the first of the three other speakers, and the meeting progressed according to the agenda. The storyline was consistent. Then came the question-and-answer (Q&A) period—another potential minefield for any bearer of bad news.