Netflix and the N-word

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Firestorm encourages thought leadership across a variety of industries. We are pleased to share insights from guest author, Dr. Kathie Fleck, APR. Dr. Fleck is the Assistant Professor in Communication and Media Studies at Ohio Northern University. With a career spanning various sectors, she provides a unique perspective backed by experience in business, politics, government, non-profit, and higher education. Read Dr. Fleck’s previous article, Is your Oxytocin showing? How trust matters in a crisis

To many, Netflix isn’t just a brand – it’s a lifestyle – synonymous with hanging out, binge-watching, and procrastination. With more than 125 million subscribers, the company led us into the world of online movie streaming and helped usher in the era of cable cord cutting. Netflix has been lauded as an industry leader for its presentation of racial, ethnic and gender diversity in its programming. Which is why the recent firing of its CCO, Jonathan Friedland, for repeatedly using the N-word was a direct threat to the company’s brand and reputation.

In a memo to employees that predictably found its way to the media, Netflix CEO Reed Hastings announced the action saying: “Jonathan contributed greatly in many areas, but his descriptive use of the N-word on at least two occasions at work showed unacceptably low racial awareness and sensitivity and is not in line with our values as a company.” The firing wasn’t simply a media issue, it also lost more than 6.5% in stock price immediately after the news broke. While the firing wasn’t likely the only issue, it certainly contributed. Additionally, the firing precipitated a planned ad launch showcasing black artists responsible for more than 20 Netflix original offerings during the BET Awards and came on the heels of an announcement of a multiyear production deal with former president Barack and Michelle Obama to produce shows and films. Bad timing is an understatement.

When an executive is fired, it sends crisis communicators into immediate crisis management mode. But what does a company do when their lead communicator causes the crisis and threatens the very brand they were hired to protect? Netflix provides an example.

Internal audience first and foremost

Organizations often forget the number one rule of successful communication – employees are the most important audience. If your employees understand or even better, agree with an action, they are your best and most credible buffer against negativity. To this end, Netflix CEO Hastings sent a direct and transparent memo to all employees about the firing. The company did not post the memo on its website, nor did it make any direct comments on social channels, nonetheless the information made its way in total to the media. The internal memo was the only tactic the company used to address the event. Was it enough? The answer is a qualified yes.

Qualified success

Netflix’s strategy to only comment internally seems to have worked. A quick search about the issue on the social sentiment tool, Social Mention shows an 8:1 ratio of positive to negative comments and an overall highly neutral impression of social discussions. An informal analysis of news articles appears to be neutral with an occasional positive analysis of Hasting’s response. While this would suggest a successful strategy, I consider it to be qualified for a few reasons.

Personnel Actions are Sticky

First, Hastings addresses the issue in detail, taking personal responsibility, promising further action and apologizing to the injured parties. This is both appropriate and protective. But, most companies would shy away from such a statement internally or otherwise, out of fear of legal or reputational reprisals. Netflix took the risk either with sufficient legal protection or with the cost-benefit analysis coming out in favor of one legal suit against potential reputational damage that had much greater impact. Not every company can take this same risk.

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Dr. Kathie Fleck, APR, Ohio Northern University Assistant Professor of Public Relations

Second, Netflix’s bank of goodwill within the broader community of potentially injured parties is substantial. While goodwill can evaporate overnight, a timely step to address an offensive act weighs more heavily than does the fact that an individual with Friedland’s proclivity was on staff in the first place.

Finally, Netflix’s overall corporate reputation isn’t average. The company is ranked 19th on the 2018 World Value Index, which measures “the extent to which Americans are inspired by brands’ missions — and the extent to which that inspiration drives active support and purchase.” In 2018, Netflix also ranked 24th in brand popularity on the Global RepTrak™ 100, a global survey with more than 100,000 participants; and 11th on the World’s Most Admired Companies ranking by Fortune. These rankings depict very healthy brand equity that Netflix could draw on in the course of a crisis. Organizations with low or no brand equity might find themselves in a much different and more risky position.

Netflix and other global companies are not above reputational risk when high profile executives misstep. Neither, of course, are high profile local or regional organizations. But the balance isn’t equitable. Smart crisis managers need to asses a variety of options and tactics when addressing a crisis like the one Netflix faced. Further, it’s imperative that communicators are in the room and highly involved in strategizing the announcement of personnel decisions before they are announced. And, crisis communication plans need to include plans for any departure at the executive level well in advance.

Good strategy before and after an unfortunate event is the best hedge against unnecessary reputation risk. Is your company covered? Now is the time to find out!

About the Author: Dr. Kathie Fleck, APR

Dr. Kathie Fleck, APR is an assistant professor in communication and media studies at Ohio Northern University. She has more than 25 years experience in private business, politics, government, non-profit and higher education. In addition to teaching, she is the principal of KRF Consulting working with clients in a wide range of industries. Her research interests include crisis communication and political communication.

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