Increasing Transparency During Investigations

PRWeek's blog The Cycle today noted the unusual decision by Siemens to publish an in-depth summary of its recent corruption investigations alongside reporting its first quarterly loss since 2001. Most of the time, a company's communications strategy in this situation would be to simply release the earnings report and make a statement available that says the company is "continuing to cooperate with authorities" and move the investigation forward. Siemens chose to take a good, transparent step beyond the typical response which I hope will resonate with other companies facing similar issues.

The move underscores the increased need for companies to communicate honestly and openly when faced with a major issue or crisis. Transparency is critical when responding to something as serious as an investigation. It also highlights the importance of decisive action when responding to crises. BusinessWeek reports that Siemens' new CEO, Peter Loescher, has made transparency and action a key business strategy since taking the reigns about five months ago. Nearly 500 employees have had to leave the company thus far due to the investigation. The magazine says:

"[Loescher] has moved to improve transparency at the company, helping oversee an internal investigation and cooperating with investigators from several countries, including the U.S. Department of Justice and the Securities and Exchange Commission.

From now on, Loescher said, the company will report the number of workers who leave the company for disciplinary reasons every year. He also said that he and supervisory board Chairman Gerhard Cromme planned to meet with SEC officials in the coming weeks."

In an encouraging response, shares of Siemens closed up today 8.3%. Hopefully, as Loescher does even more to increase transparency and realign the company, investors will continue to reward Siemens with an increased share price. In addition, the rise in stock price today also may signal a well-needed move to focus more on long-term success (which includes a keen emphasis on corporate reputation efforts) rather than short-term profits.