For most organizations, a crisis involving misconduct by managers, what we commonly call a scandal, is a problematic situation. A scandal is the worst type of crisis from a management perspective because it causes the most damage to important organizational assets such as reputation and stock prices. Scandals are so damaging because it is clear that people in the organization are responsible for the crisis occurring—there are strong perceptions of crisis responsibility. Crisis communication is a valuable resource in efforts to recover from a scandal. In a scandal, managers are recommended to take corrective action and apologize for the inappropriate actions in an effort to repair the damage inflicted by the crisis. When a scandal indicates the problem is a part of the organizational structure, the corrective action includes removing top management and creating new policies and procedures designed to prevent a repeat of the problem—the system needs change.
In May of 2015, Fédération Internationale de Football Association (FIFA) was rocked by yet another scandal tied to bribery. This time 14 officials were arrested on charges of racketeering, wire fraud, and money laundering conspiracies. Sepp Blatter, the President of FIFA, said little that could be taken as corrective action. Instead, Blatter was re-elected as President shortly after the scandal when many in his own organization were calling for his resignation. The expectation was that he would continue his reign for four more years. In a surprise move, Blatter resigned on June 2, 2015.
Does the resignation of leader during a crisis matter? The simple answer is yes when the scandal seems to reflect a systemic problem with an organization. If the problem is systemic, new leadership is needed to demonstrate that the old ways will be changed and that the organization is serious about reform. The resignation has symbolic and practical value. Symbolically the organization shows it is committed to change. As Blatter noted in his resignation announcement: “For years, we have worked hard to put in place administrative reforms, but it is plain to me that while these must continue, they are not enough. We need deep-rooted structural change.” Practically the organization is removing leadership that allowed the problem to fester and to spread.
So why had FIFA waited so long for the much needed resignation? The key answer is a lack of accountability. Will media companies still pay millions of dollars for television contracts with FIFA? Yes. Will countries still desperately seek to host the World Cup? Yes. There is no true accountability for FIFA if the organization misbehaves. It has a product with massive demand that no scandal seems to diminish. FIFA seems immune from the pressure of public opinion and media scrutiny. Blatter could choose not to resign and allow the reputational damage to accumulate.
There are two potential change agents for FIFA, its sponsors and its membership. Companies that spend millions of dollars to link their brands to the FIFA brand have the economic power to pressure FIFA into change. A subplot in the recent scandal involved sponsors. Following the arrests, VISA stated, “Our disappointment and concern with FIFA in light of today’s developments is profound. As a sponsor, we expect FIFA to take swift and immediate steps to address these issues within its organization. This starts with rebuilding a culture with strong ethical practices in order to restore the reputation of the games for fans everywhere.” Adidas and Coca-Cola have expressed mild concern and other sponsors are said to be upset. The damage from FIFA’s crisis runs the risk of tainting the reputations of its sponsors. Marketing research has clearly documents an organization’s crisis can spillover to sponsors. There was some pressure from sponsors. However, unless the sponsors make a concerted effort to withdraw support from FIFA, there remains little motivation for change. Moreover, if FIFA can find other sponsors to take their place, the financial pressure fails. If a crisis inflicts no real damage on an organization, there is no incentive for management to engage in what would be considered effective crisis communication. The resignation must have created a great sense of relief for sponsors.
Even though Blatter was re-elected, not all the membership supported him. The Union of European Football Associations (UEFA), composed of 54 national associations, openly opposed Blatter’s re-election with 44 of its members voting against him. UEFA continued to oppose Blatter after his re-election with rumors it might hold a major tournament that was not connected to FIFA. Though a minority voice, the UEFA opposition, a powerful group in its own right, demonstrated the membership were displeased and would like to see Blatter resign. Ultimately perhaps there was enough pressure from these stakeholders to help push FIFA to be accountable and to choose the correct course for crisis communication.
W. Timothy Coombs, Ph.D., is a crisis communication specialist for the Institute for Public Relations and a professor at Texas A&M University.
I agree that by the old standards for a crisis would not be a crisis. But FIFA does reflect what is called a reputational crisis. Again, you do not assemble the crisis team and are not reacting to a specific event but you do need to carefully consider how you will communicate to address the growing reputational concern. I see the arrests as a turning point in an extended reputational crisis that FIFA has been facing. A turning points marks a change in the situation that requires some form of response. I agree FIFA has long had problems and this case shows how change is sometimes forced upon an organization through “crisis” (in the broad sense of a reputational crisis). Of course it is hard to say how much FIFA will really change and the nature of those changes. This is clearly not an operational crisis that would fit into more traditional definition of a crisis. But it does fit into the idea of reputational crises and crises that are driven by stakeholder perceptions. I am working on something goes into more details about the differences between operational and reputational crises. This is just the preview.
I tend to agree with Jon. Though long in coming, it was just a matter of time – which may point more to the type of organization FIFA is (say compared to a private sector corporation or a government) and how this type of organization can ‘fester’ a crisis longer than other types of organizations.
One group of change agents I’d add, Tim, is the ardent football fan. This scandal is ultimately linked to the other scandal prevalent in football and that’s match fixing, a scandal closer to the average fan’s interest. It will be interesting to see if these two get linked going forward.
Otherwise, I agree with your detailed analysis. FIFA’s troubles aside, there is still the Women’s World Cup coming up the next few weeks from that football nation: CANADA!
I’m not sure that you can characterise the situation facing FIFA as a crisis. It has been known for some time that FIFA is at the very least seriously dysfunctional — see for example:
http://foreignpolicy.com/2014/11/16/can-fifas-corruption-be-stopped/
“Since October 2010, when the Sunday Times successfully pulled off a sting of FIFA Executive Committee members accepting bribes in exchange for their votes in the World Cup bidding process, it has been fairly obvious to even casual observers that something was very wrong inside international soccer’s governing body.”
Crises are unexpected, highly threatening and impose exceptional demands on those responsible for dealing with them. The situation FIFA now finds itself in is hardly unexpected, it’s certainly threatening to the organisation, but its leaders may well have known for some years that their actions, if fully understood, would lead to the consequences we are now seeing.