The New Scandalmongers
When an 11 person Ohio labor activist attacked Amazon with a list of bogus claims about wages, it went so viral the company shifted its minimum wage policy to $15 per hour. That experience turned me into a scandalologist, which is the study of how crony activists and the political elite are attacking business for fun and profit.
Amazon wasn’t even in the bull’s eye. The target of Ohio Matters, a labor activist funded by union money, was none other than Governor John Kasich who advocates for ‘right to work’ laws. Most of the country is a right to work state, meaning one in which ‘no person can be compelled, as a condition of employment, to join a union and pay dues,’ according to the National Right To Work Foundation. The opposite is true of non-right to work states which include key political battlegrounds like California, New York, and Ohio.
In Amazon’s case, the labor activist’s publicity stunt claimed that Amazon’s employees relied on food stamps. Although Amazon’s employees enjoy the highest wages of their kind and are better paid than the labor activist’s hourly workers, the media ate it up. A google search for Amazon + food stamps results in 18 million hits, which merely recited the false facts in multiple articles from CNBC to Salon.com.
Walmart Feels The Bern
The issue was raised again recently when Bernie Sanders flew to Walmart’s annual meeting to claim the company is paying workers ‘starvation wages.’ Not surprisingly, the accusation is false, as Walmart has increased wages to nearly $15 per hour, nearly double the federal minimum, far higher than Sanders’ state of Vermont pays.
But the fact patterns, as I’ll discuss below, are not an answer to a brewing scandal. The social media news cycle moves too fast and is too ideologically motivated for the truth to win over bias. Politicians have a great incentive to make these accusations. In an era of small donor bases, a headline that shows the Senator as a giant killer is just the kind of volley designed to move people to send a small check. In Sanders’ case, total fundraising of $280 million is nearly 99% from small donors, according to Open Secrets.
These findings compelled me to look further into when and how a publicity crisis turns into a scandal because it is likely to be the weapon of choice for activist and political fundraising in our post-truth world. It is particularly relevant in the age of digital media as politicians are thought of as gatekeepers by their constituents, and this is why people like Senator Sanders enjoy over 1mm Twitter followers, a veritable army of protestors ready to mount an online attack. Walmart and Amazon may have large followings, but they are not tied together by a shared (if bogus) ideology and, in the digital battlefield, big companies are the small fry.
This diagram represents a set of scandal risk factors (SRF) to consider whenever a crisis occurs so that the potential for scandal is better understood.
1. Causal factors are the actions leading to a crisis.
2. Digital factors are how the activity will translate into social media.
3. Impairment factors are the heart of who was injured or insulted.
4. Profile factors refer to the company’s position (or the CEO’s) in the public mind.
5. Finally, mitigation factors help resolve or eliminate the scandal.
The dark red portions of the diagram are the most potent scandal risks. These are abundantly evident in all the major scandals of the past dozen years from the financial crisis to United Airlines and Dr. Dao or Starbucks in Philadelphia.
Determining the right course of action at the earliest sign of a disaster is the only single effective antidote to preventing a multi-billion dollar scandal. In terms of the P&L, figuring out the science of scandal may well be the best performing product in the portfolio.