Shawn Warmstein|Jul 12, 2012

Another chapter in the Penn State story has been revealed today as former FBI head Louis Freeh released his independent report on the handling of the Jerry Sandusky scandal by university administration.

However, I am not here to discuss this latest development or delve too deeply in to how Penn State has handled this crisis (the word horrible comes to mind).  Instead an interesting conversation to consider is how this crisis — and more importantly its potential effect on Penn State University — will differ from some other recent PR nightmares.

Many times in a crisis, the key is to restore confidence in a product, service or management as soon as possible, mitigating any long-term economic and reputational harm.  When thinking of companies such as BP or Toyota, we still think of oil spills and car crashes as a result of these corporations’ inadequate responses to problems.

But with Penn State, while media and the general public have bashed the school’s handling of the situation as each new gruesome detail of abuse or cover-up is exposed, those closest to Penn State have remained ardent in their support of the school.  The reputation of the university has been severely wounded on a national level, but statewide and among alumni, the crisis has served to unite these individuals under the battle cry of “We Are Penn State!”

So what will be the long-term economic damage, if we are to assume the reputational damage is done?

What’s known thus far is alumni have united in the face of this crisis, with the university reporting the second largest collection of donations in school history in the past year.  Though state legislators will carefully negotiate this political mine field, the bottom line is nobody wants to be labeled as the elected official who denies students access to the best state-funded education possible.  And what about out-of-state students who might be inclined to reconsider not applying to Penn State?  A study by the College Board and Art & Science Group said 41 percent of high school seniors are more strongly considering in-state schools because of cost.  So while Sandusky certainly didn’t help, out-of-state tuition fees are already an eroding base.

It appears that Penn State will be able to economically survive.   So, does that mean crisis averted?


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