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CORPORATE COMMUNICATION
[SLIDE 1 – Crisis management]
Lecture 6
Crisis management and the role of communications
Key ideas
A crisis can severely affect the productivity and profitability of an organisation.
Crises happen quickly and unexpectedly, and must be contained as soon as
possible
Introduction
A crisis is any incident that may seriously threaten the personal safety, the
reputation, the assets, the goodwill, the market share or the revenue earning
capacity of an individual, organisation or business.
[SLIDE 4 – Characteristics]
Characteristics of a crisis
1. Crises have a habit of unfolding quickly and unexpectedly - so speed is
a characteristic.
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2. Frequently they can happen so quickly that the company loses control
of events, and has difficulty regaining the initiative.
4. The loss of control leads to confusion, with everyone trying to find out
what has happened, where the crisis is going and who has been
affected. One danger is that decisions and statements may be made
based on incomplete information.
6. This creates stress and panic for everyone else, as they look for
leadership and answers.
7. It also creates a good deal of uncertainty. No-one can predict what will
happen in a crisis, and what the outcomes are.
[SLIDE 5 – Escalation]
Escalation
As we noted last week, issues that are not well managed can often
escalate into a crisis. The tipping point could well be an incident or event
which propels the crisis. For example, a toy for children made with unsafe,
breakable parts presents an issue that the company should address but it
becomes a crisis when a child swallows a broken piece and dies. That
incident turns the issue into a crisis.
In China recently, milk from some producers was found to have excessive
levels of melamine- a substance harmful to humans – in it. That was a major
issue, but then several children died, thousands of others fell ill, and the
tainted milk products were found in many other countries.
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Types of crises
Crises can be divided into three main types:
[SLIDE 7 – Examples]
I am sure you will be able to add quite a number of crises to this long list of
well-known examples:
Product fault - Mattel, the world’s largest toymaker, who makes Barbie
dolls and many others, had a worldwide recall of faulty toys
Issues - Nike, the sportswear company came under fire for using child
labour to make their products in under-developed countries.
Catastrophic events - like the Exxon Valdez oil spill, which we will talk
about soon
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1. Natural (tsunami)
They immediately recalled every single bottle throughout America, said that
their priority was their customer’s health and well-being, and then created a
bottle which could not be tampered with.
In other words, they not only saved their reputation from a potentially
disastrous incident but they also earned the increased admiration and respect
of everyone, especially their customers and the media. To this day Johnson
and Johnson, one of the world’s largest pharmaceutical and health producers,
is listed as one of the world’s most reputable companies.
Eventually the chairman went on television but was woefully unprepared and
could not tell the public much about their plans for a clean-up. He said it was
not the chairman’s job to read such reports and placed the blame for the crisis
at the feet of the world’s media. People watching thought he showed no regret
and were angry at his perceived arrogance and shifting blame.
Millions of birds died, as well as fish and plants, and the local community’s
livelihood was threatened. This was the kind of image that flashed around the
world in newspapers and on television when the media heard what had
happened. But what made it worse was the company’s refusal to be open and
discuss any aspect of their clean-up plans with the local community, with
activist environmental groups who were quick to become media opinion-
leaders, and with the media itself. They made enemies of the very target
publics they needed on their side.
[SLIDE 12 – Consequences]
Consequences
Eventually, the company was forced to admit fault, and contributed a large
amount of staff and money to the massive clean-up required. However, it was
too little, too late.
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The spill cost them around $7 billion US dollars - $2 billion for the clean-up,
and $5 billion in court fines. This was the largest fine ever handed out to a
company for corporate irresponsibility.
However, they lost more than just money - their reputation suffered severe
damage, their share price and market value slipped, and they dropped from
being the largest oil company in the world to being the 3 rd largest.
It is now over 20 years since that disaster happened, but the Exxon Valdez is
still considered one of the worst PR disasters to face any modern company
and has entered the language as a synonym for corporate arrogance and
social irresponsibility.
[SLIDE 13 – Lessons]
Lessons to be learned
The lessons to be learned from the Exxon Valdez disaster are that:
● There’s less public anger if the company is seen to be doing the best
they can
The size of the team varies depending on the size of the company but there
should be a team to go through all the ‘What if’ scenarios.
They prioritise issues and draw up the crisis plan, which should be
updated regularly. Staff should all know what to do if there is a malfunction in
their area or in the building. They should also know who to turn to immediately
in case of the unexpected. They will be expecting leadership.
Before the crisis, it’s wise to have a full stakeholder database, a copy of
which is saved somewhere outside the building. When the World Trade
towers collapsed in New York, not only were thousands killed, but many
companies lost all their business records, employees’ addresses, customers’
details and accounts.
And finally, before a crisis is the time to develop good relations with the
media, local opinion leaders and other key publics. This is called building up a
‘trust bank’ of goodwill, so that when disaster strikes, key publics will be much
more likely to think well of you and support you.
• Be flexible
• COMMUNICATE
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The way a company communicates with the media is all-important. It can set
the tone for the way in which the crisis is reported and perceived.
Recognise that they have a job to do. They want information to tell the
public. Use the media as an important messenger to get your side of the story
across before rumour and inaccuracies fill the void.
You can say 'I don't know' but always follow it up with 'but I will contact you
the moment we have details'. Be sure to do so.
Never say 'no comment' as that will immediately sound as though you have
something to hide.
Make sure your priorities are right. The safety of people should always
come first, followed by safety of the environment, of property, then of money.
And finally, make sure you tell the truth, the whole truth and nothing but
the truth! You will always be found out eventually, and the media and the
public will never trust you again.
What not to do
Don't assume
Don't evade
Don't cover up
Don't blame
Don't speculate
Behind the Scenes with American Airlines' Top PR Exec .PR News;
Potomac; Nov 19, 2001;
[SLIDE 21 – Summary]
Summary
There should be robust plans and procedures which provide clarity of
authority, responsibilities and actions during a crisis
Conclusion
Crises can be exciting for public relations people because they require
immediate and intense communication plans. Crises can test PR practitioners
full professional competence in many different areas, from media
management, organisation, strategic planning and advice to senior
management, to communication with the wider family of publics.
With the many crises that can happen at any moment, from corporate
scandals to natural disasters, a PR person can never be too prepared to face
them when they happen.
References
More on the Exxon Valdez
http://www.mallenbaker.net/csr/CSRfiles/crisis03.html
Cutlip, S.M., Center, A.H. & Broom, G.M (2006). Effective public
relations. (9th Ed.) Englewood Cliffs: Prentice Hall.
Wilcox, D.L. & Cameron, G.T. (2009). Public relations: strategies and
tactics (9th international edition). Boston: Pearson Education.