Negative publicity has plagued prominent companies and individuals involved with horse racing in the weeks leading up to the Triple Crown.  Reaction was swift and intense after Churchill Downs raised its takeout rate on wagering, Keeneland announced its intention to abandon its synthetic racetrack surface, and PETA made allegations about misconduct in a leading trainer’s barn.

Churchill Downs Inc. was also hit with criticism from owners about how they had been treated during Kentucky Derby week.

Every public and private business must determine how transparent to be in dealing with the public, not just in responding to adversity and controversies, but in all matters.

Jack Welch, the legendary former chairman of the General Electric Corporation, recently recommended (in Business Week and on LinkedIn) four rules for achieving a level of transparency that balances the need for forthright public relations with legitimate concerns about strategic privacy.

Welch’s first rule applies to public companies like several racetracks and casinos.  Financial information provided to the media, investors, and analysts, “can’t be transparent enough” in order to build trust.  By contrast, the second rule is that a company “can’t be too secretive” about strategic information that allows it to gain a competitive advantage in the marketplace.

The third rule mandates that employees should be the first to learn of “life-altering events” like the sale of the company or layoffs.  News that takes them by surprise is “just awful leadership,” Welch said.

The fourth rule is the most difficult to follow and one that is routinely violated.  When bad news strikes, the company should react with “full-bore openness” and let the world know that management is energetically “focused on fixing what went wrong,”  Welch said.  This requires people to “do something unnatural, which is to go public when they most want to hide in a cave” and issue “evasive statements.”

In 2014, CNBC named Welch number 12 on its list of “rebels, icons, and leaders” who most impacted business in the past 25 years.

Copyright © 2014 Blood-Horse Publications.  Used with permission.