I was a Penn State management professor for 38 years, retiring in December 2012. I watched as the trustees and then-president Rodney Erickson struggled to respond to the Sandusky crisis and, in their words, get the university “moving forward.” Sadly, their handling of the crisis was abysmal and cost the university dearly.
The Sandusky case offers a perfect example of how an organization’s top executives can turn a crisis into a disaster. It will now be President Eric Barron’s challenge to restore Penn State’s reputation and convince the world our organizational culture is not all about sports and pedophilia.
Then and now, university leaders seem to be unaware of — or unwilling to embrace — processes and procedures recommended in the crisis management literature. Here’s what they did wrong:
Lack of preparation Crisis management’s purpose is to control a situation before the media begin to promulgate its version, including rumors and stories, interpretations, conspiracies, etc. The organization should acknowledge the problem’s severity, announce plans for investigation, state actions it will take and keep everyone aware of developments.
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Starting off on the wrong foot, the trustees couldn’t even determine who should be spokesperson. The chairman didn’t take on the role; that fell to a business CEO, presumably because he had faced the press before. President Graham Spanier, before being fired, said that Tim Curley and Gary Schultz were men of honesty and integrity, and he fully supported them. It was some time before the university began expressing sympathy for the victims in its press releases. Nor was there any indication the university had procedures in place for handling a crisis. Subsequently, the university went through three or four public relations firms to get a fix on how to “move forward.” By then, the media were in control of the narrative, and Penn State was on the defensive. Certainly, no one would expect Penn State to have a specific plan for handling criminal charges against one of its high-profile former employees, but the university appeared to have no generic crisis management plans whatsoever.
Rush to judgment When an employee of an organization is suspected of wrongdoing or charged with a crime, he or she usually is suspended because the employee should not perform duties on behalf of the organization until an investigation has been conducted. A suspension is preferred over dismissal because the former provides the employee with due process. When Curley was indicted, he was immediately placed on (paid) leave. Schultz, who had been called out of retirement to temporarily perform his previous job, simply went back into retirement. Both actions are consistent with standard management practice.
The media firestorm that followed was unprecedented in Happy Valley. The national media had a news story every day and night, and reporters were everywhere in State College. Pressure on the university built rapidly, and the atmosphere was at a fever pitch.
The trustees were not ready for pressure and scrutiny. Two days after suspending Curley and accepting Schultz’s second retirement, the board fired Joe Paterno, by phone, and Spanier. Although the board apparently had a reason for firing Spanier, it was never publicly disclosed. (He remains a tenured faculty member at the university.) Paterno was fired for his “moral failure” to do more when, in 2001, he was given information about Sandusky showering with a young boy in the football building. No investigation of Spanier and Paterno was conducted, and both were fired in a hastily called board meeting.
Why Paterno and Spanier were fired remains a mystery. To be denied due process is not only bad management, it is unethical and perhaps illegal. The university faces lawsuits because of its decisions, and the trustees’ rush to judgment can only be explained as caving to media pressure.
Ignore fiduciary responsibility The board of directors of a public company has the fiduciary responsibility of protecting the interests of the company’s owners, specifically its shareholders. The owners of a state university such as Penn State are the citizens and taxpayers. Trustees, therefore, are responsible for ensuring taxpayers’ interests are being properly served. The board also should protect the interests of employees, students, alumni and relevant institutions and partners.
Penn State’s 32-member board is a mix of individuals from various sectors. Most are appointed while nine alumni are elected. The board has never faced a truly difficult situation. Before recent reforms, there were no term limits for appointed members, and some appointed and elected members have served for 20 years or more.
That the board is so dysfunctional was unknown to most people. Only when the Sandusky crisis hit was it apparent these people didn’t know what to do. The board mishandled the crisis, and it lacked the leadership to accomplish its goal of moving the university forward. Less than two weeks after the board fired Spanier and Paterno, it hired former FBI chief Louis Freeh to investigate the abuse allegations and to make recommendations for improving the university’s management. Even here the university stumbled deeper.
Hiring Freeh to conduct an independent investigation is like a company retaining a consulting firm to do a study and make recommendations. Freeh’s firm had no subpoena power, and although it conducted more than 400 interviews to determine what happened, it did not interview key players such as Curley, Schultz and Spanier, all of whom were awaiting trial; key witness Mike McQueary; and Paterno.
The board did nothing when Freeh chose to play a starring role by announcing his findings in a news conference before the board had seen his report. Crisis management expert Steven Fink said, “The generally accepted method for this procedure would have called for Freeh to conduct an independent investigation and then submit to the board, or a special subcommittee of the board, a draft of his report before it was finalized and released to the public. This would have given the board a chance to review the draft findings and ask questions for clarification, so as to avoid being blindsided. It would also have given the board a chance to flag or correct any perceived inaccuracies in the report. This is a common courtesy. None of this was done, which was a huge flaw in the board’s competence level to not insist on it.”
Within hours after Freeh’s conference, Penn State issued a statement saying the board accepted Freeh’s report unconditionally, including all allegations and the more than 120 recommendations it proposed. One has to wonder whose interests are being protected by the board when it accepts such a report without reading it.
Lack of courage When Spanier was fired, the board appointed Erickson as interim president, then president. This was a logical managerial move, as any qualified outsider wouldn’t have considered taking the presidency during such turmoil, and Erickson was a long-time faculty member and administrator who was well respected. Erickson quickly began doing the sorts of things one would expect at this point such as issuing a statement of his goals, conducting town-hall meetings with alumni and the public around the state, etc. But the next big development in the Sandusky affair revealed Erickson wasn’t ready to make strategic decisions in a pressurized environment.
Having acknowledged Penn State’s failure by accepting the Freeh report, Erickson compounded problems by signing a consent decree that resulted in the the harshest sanctions the NCAA ever placed, including a $60 million fine, loss of athletic scholarships and revenue from bowl games, and vacating 111 wins from Paterno’s record. Although Erickson promised increased transparency, he didn’t explain why he signed the decree. Many observers wondered why Penn State did not stand up to the NCAA. After all, that organization exists to deal with problems in intercollegiate athletics, not criminal matters. Penn State has never been sanctioned by the NCAA for any violation of sports rules.
Erickson’s decision to sign the consent decree was wrong, and it had a devastating effect because the NCAA had no jurisdiction over Sandusky’s criminal behavior, and it did not cite any rules violations as the basis for sanctions. Erickson lacked courage to stand up to the NCAA and demand it demonstrate its jurisdiction over the case. His irresponsible behavior wasted university resources, now and in the future. Perhaps the most egregious result of his decision, however, is that the Penn State culture has come under attack. The university is now viewed by many outsiders as being dominated by a “jock” culture, which is far from the truth.
The responsibility for restoring Penn State’s reputation now falls to President Barron. He faces a long and difficult task. Hopefully he will exercise the strong and principled leadership the university needs. If so, Penn Staters will truly be able to move forward at last.