Paul Deegan is the CEO of Deegan Public Strategies and a former public relations executive at Bank of Montreal and CN. He previously served as deputy executive director of the National Economic Council in the Clinton White House.
The education and international-aid group WE Charity has built a strong brand and reputation over the past 25 years. Most importantly, it’s had a positive impact on countless children in Canada and abroad.
Yet today WE finds itself under intense public scrutiny, putting its hard-earned brand and reputation at risk. While questions surrounding the circumstances that led to Ottawa tapping WE to administer a $912-million student volunteer program are the federal government’s to answer, WE faces fundamental issues, too. It needs to reckon in a transparent manner with that relationship and with the flow of moneys between the not-for-profit WE Charity and the for-profit ME to WE, which defines itself as a “social enterprise.” Instead, WE appears to have been caught flat-footed in its handling thus far of what is a full-blown reputational crisis.
If WE is to come out of this crisis with its reputation intact, it needs to simplify the way it is organized, strengthen the way it is governed and demonstrate that it is accountable to stakeholders. In short, it needs to split up and open up.
The decision to ask Korn Ferry, a respected organizational consulting firm, to conduct a formal review to streamline WE’s organizational structure – including an evaluation of the future of ME to WE – is a welcome first step. Korn Ferry will also conduct a full review of WE’s board of directors, and will “assist in the development of best-in-class systems of governance,” according to a WE statement. WE will also hire a chief risk and compliance officer, who will be independent from management, with direct accountability to the board of directors. Again, these are welcome measures.
But in its announcement, WE tellingly said this review would be done “with the goal of a clearer separation of the social enterprise from the charitable entities.” The choice of the word “clearer,” rather than “clear,” may indicate that WE has not yet fully grasped the root of its problem: the need for a complete, clean and, yes, clear separation of church and state. On this point, there can be no ambiguity.
Accountability, after all, starts with transparency. In the spirit of transparency, my family’s only association with WE, its founders or any related parties is that our son has attended three WE Day events. (The Globe and Mail is a media partner of WE Charity.)
In any crisis, there are three approaches: refuse to engage with the news media in the hope that other events will overtake the news cycle; double down and defend what may be perceived as indefensible; or be transparent and accountable.
For WE, the first option is not an option – this is the biggest political story in Canada right now, and it’s not going away any time soon. To WE’s credit, by engaging an independent third party to conduct an organizational review, it has rejected the second option, too. This leaves WE only one option: accountability. That was the approach taken by Michael McCain, who, as the president of Maple Leaf Foods, managed a deadly listeriosis outbreak in 2008 by being as open about the company’s processes as possible.
Recently, WE has taken out full-page ads in major Canadian dailies (including The Globe) to explain its position. While this is good for newspaper advertising coffers, it is not good enough in the era of stakeholder capitalism. WE needs to do more – and it needs to do it quickly.
A crisis of confidence is not a time to retrench; it is a time to re-engage with stakeholders, actively and directly. In WE’s case, both an independent member of the board and the founders should speak openly with the news media. They will need to have their stories straight; after backpedalling on a couple of issues in recent weeks, their responses must be bulletproof in order to maintain credibility with the news media and confidence among stakeholders.
Fundamentally, WE needs to pivot quickly. It needs to be clear about the core mission of WE’s various entities. WE Charity and ME to WE need to open up about their respective financials, including any moneys or equivalents that have flowed between the charity and ME to WE.
The organization can demonstrate that it is accountable by embracing Korn Ferry’s recommendations. By simplifying its structure, separating entities, strengthening its corporate and financial governance, focusing on its core mission and being transparent, WE can demonstrate that it is deserving of stakeholder trust and support. If it does so, it should be able to make a positive impact for decades to come.
Keep your Opinions sharp and informed. Get the Opinion newsletter. Sign up today.