Those who cannot remember the past are condemned to repeat it

-George Santayana

Nowhere is that more true than in corporate reputation management.

Penn State learned a painful lesson from failing to heed allegations of serious misconduct by one of its football coaches. And, as we now know, certain Penn State officials chose to hide the situation to protect the integrity of one of the nation’s most revered college football programs-and coaches-rather than protect the children involved.

Instead, the truth surfaced and everyone involved paid a heavy price. It destroyed the reputations of legendary football coach Joe Paterno and athletic director Tim Curley (both were fired), as well as Penn State football; it forced the resignation Graham Spanier, Penn State’s president. The NCAA imposed heavy sanctions on Penn State and its football program; and the cost to the university in terms of legal fees and damages is now in excess of $40 million.

In the last two months Subway has found itself in a similar situation. Jared Fogle, longtime spokesperson and the “face” of Subway, has confessed to and been arrested for a variety of criminal misconduct. Subway has been quick to distance itself from Fogle. However, USA Today and other sources have reported that a former franchisee claims executives in Subway’s advertising unit knew about their spokesperson’s transgressions as far back as 2008. And a second news source reports that Subway received one “serious” complaint in 2011 but did nothing at the time. In 2008 the CEO of the Subway Franchisee Advertising Fund Trust, a legally separate entity which (at that time) handled the company’s marketing and employed Fogle, received first-hand information about Fogle’s criminal activities. Subway has implied the CEO didn’t convey this information to top Subway executives, and Subway says it didn’t learn of them because the operations are separate.

At present, it would seem Subway was aware of possible misconduct on Fogle’s part in 2011 and perhaps as early as 2008. And it appears Subway ignored the warnings. This is where the Penn State lesson should have come into play. Given the similarities, Why didn’t Subway take heed?

Aside from the very real legal and ethical obligations, at a time when tweets and news leaks can go viral in seconds, corporations simply can’t afford to be complacent about such situations. A communications disaster plan should already be in place and tested via dry runs and mock scenarios. When a potentially damaging situation surfaces, that plan should be activated immediately. Delay simply postpones the inevitable and increases the damages and costs dramatically. Reputation management is not something to be reactively dealt with after such a crisis presents itself. As Penn State and now Subway are teaching us, George Santayana was right. By waiting, both paid a heavy price. Others should take heed.

-Michael Kassin

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