FedEx and why combative PR tactics don't work

Sean Murphy & Adam Boesen

FedEx founder and CEO Frederick Smith touched off a firestorm recently when he challenged New York Times publisher, A.G. Sulzberger, to a public debate about U.S. tax policy. At issue was a New York Times story that said FedEx’s 2018-tax bill was $0—a direct benefit of Mr. Smith’s highly public lobbying for the 2017 corporate tax cut. Unfortunately for FedEx, Mr. Smith’s public challenge had only one real effect: amplifying the Times story and giving it a much larger platform.

If you Google “FedEx New York Times story,” you’ll find a long list of related articles from other highly credible news sources that simply repeat the basis of the original story—over and again. Sure, FedEx’s challenge is included in the news coverage, but comes across more as an overreaction or attempt to deflect from the company’s larger issues.

FedEx’s mistake was applying a tactic popularized by politicians, namely, to demonize the media, when it could have just stated its case and let the story pass. This tactic was a misstep because the standards and stakes for companies in these situations are so much higher than they are for politicians.

That’s because companies are accountable in ways politicians simply aren’t. While politicians have the luxury of two- to four-year election cycles, a company’s customers, investors and employees can vote with their feet at any time. And while our two-party system presents us with binary election choices, most companies have multiple competitors. So, for a corporation, the loss of reputation can have an immediate and measurable impact in terms of stock value, customer retention and employee motivation.

A company’s stakeholders also are better informed than typical voters because they have skin in the game every day. By contrast, voters tend not to engage on the issues until an election is near. Consider FedEx’s sophisticated institutional investors. The New York Times article made it clear that FedEx leveraged the new tax law to bolster its pension plan and enhance shareholder value through stock buybacks. Why would institutional investors have a problem with that—especially when those moves could help buffer their larger concerns about the company, including the impact of the U.S. - China trade war on its overall business? The tone of the article may have displeased FedEx, but was its actual content all that alarming—especially in a deluged social media world where issues can come and go with a click?

Because of today’s political climate, there’s a fallacy that a company can simply cry some version of “fake news” and create doubt about a story they don’t like. That approach might work with some segments of a broad electorate, but a company’s reputation management program requires much more sophistication. In its simplest form, you can be certain FedEx has sought positive news coverage in the New York Times and other high-profile publications for its achievements. Why start a grudge match with someone you’ll likely need to have a relationship with in the future?

A strategic corporate reputation program is based on understanding the needs of important stakeholder groups and communicating consistently about how the company is working hard to meet those needs. Having that type of centerpiece positioning platform means moderating the urge to engage in petty skirmishes, and rather focusing on building a positive corporate reputation over time while being prepared to defend it if a crisis occurs.