How Organizations Can Learn From Ethical Challenges – Matt Kucharski

Joining me on this week’s episode is Matt Kucharski, the President of Padilla, a public relations agency that builds, grows, and protects brands worldwide through public relations, advertising, digital and social marketing, investor relations, and brand strategy.

In this interview, Matt discusses:

Why don’t you tell us a little bit more about yourself, and your job, and your career?

I’m really proud to be leading Padilla. I’m the third generation of senior leadership at the agency. We’re a firm of six offices across the US, very diverse in terms of the industries we serve. We are heavily focused on health, food, manufacturing, technology, agriculture, and I’m sure some practice leader’s going to be mad that I left one off. But we are also diverse in terms of the capability, research and insight, brand strategy, thought leadership, and crisis support. Last year, we had a fantastic opportunity to join up with a really wonderful organization called AVENIR GLOBAL that had some other super agencies in its mix and we have some great members of the family now. We’ve been really enjoying tapping into those resources and collaborating with them.

It’s working very well. The AVENIR GLOBAL mantra is “Independently operated global resourced”, and that is absolutely what we see here. There is some great opportunity to share best practices. We share resources. But we had a really good strategy at Padilla and AVENIR GLOBAL believed in that strategy and is helping us execute that.

Why don’t you tell me about the most difficult ethical challenge you ever confronted at work?

There are multiple ethical challenges that I’ve run across in 30 years and our agency has run across in 30 years and they fall into a number of different categories:

  • Clients that are in conflict with each other
  • Client behavior
  • Controversial clients or categories
  • Employee/partner behavior

Any one of those can really create ethical dilemmas. My philosophy is that running into an ethical dilemma is not, in and of itself a bad thing. It means that you’re exploring all the different possibilities and permutations within the field. It’s really how you approach, and address, and resolve that ethical dilemma that determines whether or not it’s positive or negative. If we avoid ethical dilemmas, we won’t actually move anything forward.

You make mistakes, and you act appropriately. To do that you need to have the self-awareness to know when you have an ethical dilemma. And then you follow some process to actually address it.

Every great organization runs into conflict and has bad things happen to it, or does things that are not great. But good organizations show their mettle in terms of making amends for that. The really, really good ones investigate those things beforehand and make decisions in a way that allows them to go in with both eyes open. To me, that is the sign of a really self-aware company – when you see the ethical dilemma in front of you and you address it versus, “Oh damn. I got stuck in this, and now I’ve got to figure out how to get out of it”.

Let’s go back to that first point you brought up, how do you handle conflicting clients or conflicting client prospects?

The conflicting client or prospect – Coke versus Pepsi or Ford versus GM – those are kind of easy to me. You really can’t represent two direct competitors. But where the conflicts are coming in these days, particularly as there’s more and more diversity among organizations, might be conflict around ideas, approaches or points of view. For example, what if two security technology companies support different industry standards.

Does that mean you can’t represent both companies? I guess you could. What you can’t do is you can’t try and push both industry standards at the same time. But saying you can’t represent company A because it’s on this standard or company B because it’s on that standard, we would run out of clients pretty quickly. And those are definitely situations that I personally have run into. In that, we have to know that we’re actually helping propagate an idea or a point of view that might be in conflict with another client.

How do you work through that type of situation?

There are really three things that guide us. One is an industry code of ethics. PR codes of ethics are really great starting points. We are going to let the clients know that, “We represent this interest, and we represent that interest.” We want there to be awareness, because we certainly don’t want a client to find out in the media that we’re representing an interest that might be counter to their point of view. So, there’s disclosure and there certainly has to be agreement among those two clients that it’s okay to represent the two interests. Just as important, we as an agency has to feel comfortable representing those both interests as well.

We could do this through compartmentalization of teams or representation by different brands. Or maybe we see the opportunity for these things to coexist. That’s certainly one part of the code of ethics.

Beyond the code of ethics, we have a couple of other things that we have in place that we have needed to use to really address those issues.  We have a worksheet that provides guidance for controversial clients, where if we are in a situation where we’re really not sure if this client is one that we should be representing, we use a score sheet (similar to an RFP score sheet) with some criteria on it. Some of the criteria include: does the company reflect our values? Are their claims based on solid evidence? We use four or five other criteria as well. It’s really helpful in making sure that we’re not making the decision based purely on emotion or not making them just on the almighty dollar, which is the worst thing to do.

The third element that really drives us are the values and beliefs that Padilla has put into place and is continuing to cultivate throughout the organization. Those values absolutely play into any sort of ethical dilemma. We have six core values:

  • Walk in their world
  • Wonder and wander
  • Think as many
  • Work brave
  • Build trust
  • Own it and act upon it

Those values collectively, really help us think through, “Are we doing the right thing here?”. It’s not always easy. Sometimes, the emotional reaction, the very first reaction, is the wrong one. And you have to step back and think, “Okay, what’s really driving my reaction here?”. And, “Is it just me, or do I need to think about bringing my colleagues into this and evaluating it from that perspective as well?”.

For example, let’s take a company that’s come to us, that maybe ten years ago did some really, really awful stuff. And they’re still dealing with the halo effect of that awful stuff. We know what they did was awful, but we also have had dialogue with them that says they are working very hard to try and make amends and have done things since then that demonstrate that they are on a different path. Well, we could say, “We’re not taking that company. We’re not going to work for that company because they did something awful back in 2010.” Or we could say, “You know what? Our job is to help rebuild reputations. We should be helping this company.” But we need to consider if other clients, employees, or entities could say, “Why are you working with that awful company? Look what they did back then.” Well, you have to decide, has the company turned a corner? Are they doing things differently, or are we just working for an awful company that’s still an awful company?

We might have some people who are very principled and assert that we shouldn’t work for this company based on what they did in the past. Then you may have some people on our Crisis and Critical Issues team say, “Wait a minute. Our job is to help companies like this right themselves and move forward. That, in and of itself, some people go, “Oh my gosh, that’s conflict. That’s awful.” To me, that’s a healthy debate. That’s the sign to me of an evolved and mature organization that is really thinking things through.

I feel like we have to resist the urge of falling into the trap that has been created in this media environment that we’re in now – “There’s only one right and wrong and if you disagree with me, you’re my enemy”. Because if we do that, there’s really no way for any organization to evolve or transform and that’s a shame. Because every organization’s going to run into adversity. How it responds and rights itself after that determines whether it’s a good company or not.

It is certainly is an ethical dilemma as you take on the client, but it’s also one where, if you look at your values, if you have criteria and if you follow a code of ethics, you can work your way through it.

It is important to note that we never force an employee to work on a client that they don’t feel comfortable with, and have on several occasions had employees opt out of work that may not have fit with their own personal beliefs or experiences. 

What are some of your techniques for working through a situation when you have an existing client that may be doing something that is what you consider morally wrong or unethical?

From a client behavior standpoint, there’s macro client behavior and a micro client behavior. An example of macro client behavior is the company itself is operating today in a way that we just simply don’t agree with. In that situation, we have to do what we’re supposed to do, which is be advisors and say, “We don’t think you’re operating in the right way.” If they follow that advice, okay. If they say, “Nope. Nope, we disagree with it.” That might end up resulting in a resignation. Because we’re certainly not going to be able to do a very good job of communicating or helping an organization be understood, believed and appreciated, if we don’t believe and appreciate what they’re doing.

That has not happened very often where we’ve had a client where it’s like, “Wait a minute. We just absolutely think you are being unethical”. I can remember once instance way back in my career, I remember sitting in front of a reporter with the executive of a startup technology company and he was saying stuff and I was like, “Wait a minute. That’s not actually true”. He was literally lying. Way over inflating what his experience was, and we didn’t know it before the interview. Well, after the interview, I talked to the reporter and said, “I’m very sorry. We shouldn’t have been in front of you with this.” And we went back and I told the client, I said, “I’m sorry. We can’t work with you anymore if you’re going to represent yourself that way”.

To me that’s really easy. Where it gets a little bit more difficult is on the micro behavior level. When you have individual client contacts with an organization, who maybe are people behaving ethically, but might be behaving in a way that really, really is poor treatment of your staff. Then, you’re sitting there with a huge client that you’re trying to do really great work for and meanwhile, you’ve got a client contact, who for whatever reason, is just borderline abusive to the team. This creates a bit of an ethical dilemma. Obviously, you want to try and resolve that with that person and that person’s supervisor. But if you can’t, then it’s really, really damaging the morale of your team. Do you resign the client? In which case, you actually alleviate some of that pressure for that staff, which is, I think what I would like to do.

At the same time, if that client is a huge client, you put the organization and you put those people’s jobs at risk. So, which do you choose? Do you want to have the benefit of not having that awful client contact, or do you want to risk not having a job? That’s an ethical dilemma. I think the key is to have a dialogue with the people who are involved and talk through it. And determine other ways to work around this. Sometimes you’re able to resolve it. Other times, it becomes unsustainable and you either have to make a hard decision and say, “I’m sorry. A client is going to go away.” Or, “We’re going to tough it out and hope we outlast a bad client contact”.

Who do you get involved in that discussion? How do you work through that?

That’s a good question. It depends a little bit on the type of behavioral issue. If it’s a behavior issue that involves sexual harassment, or discrimination, or anything like that, that’s immediately going to HR and that is going to be super, super accelerated. We’re going to try and address that as quickly as possible because we just can’t have that. We have to have a zero-tolerance perspective on that.

The other ones are a little bit more insidious. Where the snide comments, constant sniping, the lack of appreciation, the name calling, or the disrespect builds over time.

That gets weary. And that one is a little bit tougher in that you have to deal with it, but you need to ask: Was this a client with a bad day? Is this a client contact that’s had some difficult times? Then we need to ask how do we make that address? Obviously the best way to do it is to be brave and back to our values and initiate dialogue and make that client contact first and say, “Hey the way you’re approaching this is not getting the best results from the team. And if we can resolve that, great. If not, we may have to escalate it.

Let’s get to the final point you brought up in terms of ethical challenges you face – employee and partner behavior.

They’re super, super rare. But while they’re rare we’re going to have HR involved. We’re going to make sure that we file all the due process for grievance, gather information, evaluate the severity of the issue, determine whether our corrective action is, “Don’t do it again.”, or whether it’s an actual terminable offense. We’ve had very few of those, but they have come up on occasion.

Some of those aren’t necessarily ethical dilemmas as much as it is a breach of ethics by an employee, in which case, we would have to deal with that. That could be something like, and not saying this has happened, but it could be something like plagiarism, copying and pasting from some public domain source and using it as your own. Those kinds of things obviously have to be dealt with.

If it’s a partner, we’re going to ask the right questions. We’re going to find out what happened. We’re going to give that partner an opportunity to explain themselves. As far as I’m concerned, your partner’s problems are your problems. So you’ve got to deal with that.

What type of training do you give your employees to help them develop their ethical frameworks?

We do ethics training through AVENIR GLOBAL. We’re about ready to tee off another round of that. But it goes beyond ethics. It’s training on our values. If you take those values, and you take that ethics training, you’re probably 90 percent of the way there. We talk a lot about values to our employees and how to create a great work culture and create employee engagement and believe me, that’s incredibly important. It’s also a risk mitigation strategy. You make sure people are acting the way you want them to act. And if they aren’t, you have a reference point to be able to say, “You know what? That behavior does not follow these values and it’s clear that these values are important to us.

So those two things, making sure they have regular training, but you need to making sure that it’s part of a professional development curriculum and not, “Okay everybody. You need to go to our annual, once a year ethics training”. That’s a little bit like, “Take your vitamins”.

It should be incorporated into an overall professional development curriculum. Learning about the ethical dilemmas I believe makes you a stronger practitioner because it allows you to see around corners. It allows you to be more strategic. I’m headquartered in Minneapolis here and I’m responsible for the whole firm. There’s a local university here that, every year does an ethics bowl. If I had time, I would want to be a judge of that ethics bowl because, man you learn a lot.

Are there any other kind of key PR ethics challenges you’re seeing face the communications profession right now?

I think there’s certainly some ethical challenges around particular industry categories. For instance, we are going to see more and more discussion on cannabis. We have the benefit of having our sister agency National up in Canada, where cannabis is now legal both for medicinal and recreational. We’re one of the largest cannabis practices in Canada. So we get to learn from their experiences, but if you go state by state, there’s going to be people who react immediately and say, “Absolutely not”. We’re not going to represent a Cannabis client. At the same time, I can tell you based on feedback from many of our health clients, it’s a pretty important tool in the pain therapy toolbox.

It’s some of the same things with gambling and alcohol. There’s certainly alcohol from the standpoint of fine wine, but there is alcohol that’s promoting a different kind of consumption.

It’s happening in food now. There are different kinds of proteins and discussion about where you get your food from. It’s frustrating to us particularly as a firm that’s got such great experience in food, to see an either-or kind of mentality. “You should only get proteins from this source”. Or, “You should only eat vegetables from that source”. We very rarely support that. Those kinds of things are certainly a challenge.

Then I think you have to look at channel challenges. Some of this is not so much our industry itself creating it, but it’s our industry having to deal with it. We’re seeing a lot.

I remember one of the mantras used to be the separation of public relations and advertising. You’d never worry about whether or not you are advertising but now it’s all merging together. You’ve got social and sponsored content. But not only do we have sponsored content; we have reporters and their organizations developing that sponsored content. That would’ve been absolutely verboten 20 years ago. And so, like every other agency we are asking how do you have an impartial and fair and balanced media that’s also developing sponsored content? There has to be guidelines in place for that. And we have to make sure we’re following those guidelines.

So how do you develop those guidelines and share them with your employees?

Just like in PRSA and Arthur Page, you have industry standards in social media, journalism and advertising. We have teams who are responsible for making sure they are following and cultivating our capabilities there. Their job, in addition to making sure they’re staying on top of propagating best practices across our firm, is to share ethical practices across our firm. The same holds true by the way for our practice groups because there are definitely rules of the road for food, consumer, marketing to children and healthcare. It’s more important than ever for both functional experts, as well as industry experts, to not just understand the industry trends, but to also understand the ethical issues in those industries as well.

What is the best piece of ethical advice you were ever given?

I’ve always been a pretty big fan of the mom-rule. If you can explain it to your mom, even if your mom maybe initially had a negative reaction – if you can explain it to your mom and justify it to your mom, you’re probably on pretty good ethical ground. If, however, after you explain it to your mom she says, “You know, that just doesn’t feel right”, you probably ought to go back and look at if the decision you made was a good one.

If I was only allowed to use one ethical milestone, or one ethical reference point, it would be hard to go wrong with the mom-rule. If anybody has an ethical dilemma, let me know. I’ll introduce you to my mom.

Do you have any other advice?

We absolutely have to honor diversity and embrace different points of view. We have to be careful about lumping everything about ethics or you might have different points of view. If you’re trying to represent or trying to say that you can equally represent those points of view as an organization, you need to be diverse. We have people of different religions. We have people of different economic backgrounds. We have people of different political backgrounds. We have people with different priorities in their personal and professional lives. If we don’t have that diversity, we create a strange culture and we aren’t valuable to anybody. Although, with that diversity is definitely going to come conflict. Thinking about how to address that conflict and how to resolve it is really important.

Absence of conflict is not healthy either.

How do you work to encourage that diversity of thought and discussion at your firm?

Well, I would never say that we’ve got it all figured out. We have some challenges with diversity, not just at our firm, but in the industry as well. That diversity certainly has to do with race, ethnic, gender, economic background. We’re trying. We’re trying like everybody else. The way we’re trying is recognizing what that brings to the table. I mentioned one of our values is Walk in their world. And another one is Think as many. Trying to put ourselves into the position of thinking about other perspectives and how our behavior is impacting other perspectives is pretty important. Because you don’t necessarily have to change what you’re doing, but you better be cognizant of what the impact will be. I will not say that we have it figured out. We are very interested in trying to grow it forward and we all know it’s an extremely challenging environment in which to do that. Because the availability of those diverse employees is thin, but we have to keep trying. We need to open our eyes and open our minds.

Listen to the full interview, with bonus content here:

Mark McClennan, APR, Fellow PRSA
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Mark W. McClennan, APR, Fellow PRSA, is the general manager of C+C's Boston office. C+C is a communications agency all about the good and purpose-driven brands. He has more than 20 years of tech and fintech agency experience, served as the 2016 National Chair of PRSA, drove the creation of the PRSA Ethics App and is the host of