Crisis Management. Two words that strike fear into the hearts of bosses all over the world when events spin out of control and begin to devour reputations, people and the corporate bottom line.
by Allan Hall
The business world is littered with such disasters, many of them very recent. Just a year ago the global conglomerate BP became the poster boy for how NOT to respond to a natural catastrophe when one of its rigs blew up in the Gulf of Mexico and began spewing oil at a phenomenal rate into the pristine seawater.
The floundering response of BP, caught as it was between unpreparedness both for the disaster and the media spotlight which shone on it, was to costs CEO Tony Hayward his job. It almost cost him more than that; he and his family needed round-the-clock police protection at the height of the disaster following death threats. Another more recent scandal is that which has engulfed the British newspaper arm of global media giant News Corporation. While the endgame still has to be played out, with charges pending against many senior executives and police officers who took bribes from a newspaper, the handling of the crisis has been nothing short of atrocious.
EVEN “EXPERTS” CAN BE WRONG
One might think that a newspaper company, skilled in the arts of communications, might have been better able to control information and how to portray its best side. But ever since accusations were leveled against the News of the World newspaper that its journalists had hacked into the mobile telephones of celebrities, the parents of child murder victims and the relatives of soldiers killed in Afghanistan and Iraq, the organization went into denial mode. First it said that only one “rogue reporter” was involved. Then it could not explain away cash payments totaling hundreds of thousands of dollars paid to celebrities to keep quiet. Then, as advertisers began pulling away from the “toxic” brand, the boss Rupert Murdoch took the drastic decision in July 2011 to axe the thing altogether – this despite revenue streams of close to 300 million dollars a year!
HOW CAN WE PUT “A PATCH” ON THE ERRORS?
So if we accept the premise that managers make mistakes, the next question must surely be: how do we minimize them and begin once again to restore public trust in a company and its products? Mike Leidig, the British owner of the Central European News Media agency in Vienna, is a man well versed in trying to clean up the image of clients who range from banks to computer websites and charities. “I remember a few years back,” he said, “when a well-known Austrian bank was having enormous image difficulties following a scandal involving board bonuses at a time when it was calling in loans from charities and putting the squeeze on small business who couldn’t get credit.” I had performed some PR training sessions for the bank and they came to me and my specialists to try to turn public opinion around. They wanted some airy-fairy stuff about corporate charities they supported, about how hard working their managers had been – and they wanted an attack on the media, blaming it for unfair reporting. “I said go ahead: tell a news organization how bad they are…and then watch as the press REALLY gears up to rip into your organization and the people who run it. “My advice was the advice I give all clients; be proactive. Go on the offensive. In this case it meant a review of certain bonuses promised, a reduction of the biggest ones with payments made to charity of the difference and the pledge that in future, all bonuses would only be linked to productivity. “Within a week the negative headlines dried up. Within two months a stock price that had fallen by seven percent at the start of the crisis was back to its normal level. And the bank is thriving to this day. “You know, this is not rocket science. But so much of business management technique in the world is to be aggressive, bullish, take-no-prisoners, that the suits in charge of corporate images often forget that sugar is so much more palatable than vinegar!”
WHEN DOES A SIMPLE ERROR BECOME A CRISIS?
Jonathan Bernstein of Bernstein Crisis Management Inc. in America defines a crisis as “any situation that is threatening or could threaten to harm people or property, seriously interrupt business, damage reputation and/or negatively impact share value.” The author of several books on crisis management, said; “All organizations are vulnerable to crises. You can’t serve any population without being subjected to situations involving lawsuits, accusations of impropriety, sudden changes in ownership or management, and other volatile situations on which your stakeholders — and the media that serves them — often focus. “The cheapest way to turn experience into future profits is to learn from others’ mistakes. In an era of 24-hour TV and Web coverage, damage to a reputation can occur almost instantaneously. For years after a debacle takes place, it can remain etched in public memory thanks to poor crisis public relations, while a successful effort can make the scandal soon forgotten. When time is limited and every move by a corporation or an individual faces close scrutiny, crisis PR specialists come to the rescue to restore faith in a brand or name.”
WHAT REALLY WORKS WHEN A CEO IS HIT BY A CRISIS?
Kathy Cripps, president of the Council of Public Relations Firms in New York City, said, “CEOs have come to understand the importance of crises and protecting their reputation. I think with that understanding companies can act more quickly when problems or potential problems arise.” So what works in putting wrong right?
PROBLEMS DO NOT RESOLVE THEMSELVES?
David Brown is a crisis management expert at Lewis PR, a London based company with offices around the world including San Francisco and Singapore. Winner of the Small Agency of the Year award in 2009 and a finalist in the SC Magazine Europe PR Company of the Year awards the same year, David said the day of “hiding in the sand and hoping trouble will go away will no longer work.” He says that companies in trouble could do a lot worse than to emulate the actions of Sir Richard Branson, the high-profile, high-energy boss of the Virgin empire which encompasses music, media and transport. In 2007 an elderly woman died and five other passengers were seriously hurt in a Virgin train derailment in Cumbria. Several carriages were left on their side after a Virgin London to Glasgow service crashed at Grayrigg, near Kendal. Within minutes the train, the Virgin logo and the scene of carnage was rolling out on news channels around the world as the walking wounded staggered around the wreckage. “Branson was staring at a potential PR nightmare,” said David, a former national newspaper journalist in Britain. But what he did next defused much of the potential for disaster. “Many executives would have hidden in their boardrooms.” They would have wheeled out an army of highly-paid PRs, which he could clearly afford. But Richard Branson, who is more closely identified with his brand than perhaps any other executive with any other global company, took a different track. Donning an anorak and Wellington boots he turned up at the scene of the disaster. He hailed the courage of the train driver and conveyed his sadness to the family of the deceased victim, Margaret “Peggy” Masson, 84, from Glasgow, Scotland. He offered support to the family of Mrs. Masson and made sure carers and Virgin company employees were at her funeral. His concern prompted praise from the clergyman who led her funeral service. In the days following the crash he refused no media interview, he dodged no difficult questions. Coming at a time when the British Ministry of Defense was under fire for its PR concerning plane crashes in Iraq and Afghanistan, he earned exemplary praise. Mr. Brown said, “In contrast to the near-hysterical paranoid secrecy of our chain of command whenever a military aircraft is involved in a crash, Sir Richard Branson was on the scene, and the manner in which he fielded the questions from the press was nothing short of exemplary. Key actors were named less than 12 hours after the fact, and the whole mood of the coverage on the TV news was supportive, sympathetic and informative. “This is the lesson that corporations must learn; to be human, not faceless, to be humble, not arrogant, to be bold, not scared. We are all human, even tycoons, and it is a lesson that Rupert Murdoch, for example, may have learned too little, too late, to save his global empire.”
Published in the hard-copy of Work Style Magazine, Winter 2011
Don’t be afraid: react!
Following are several examples of where PR went into overdrive to perform near-miracles in brand protection.
In 1982 crisis management was born with the Tylenol-tampering case, when seven people died in American from ingesting poisoned tablets. PR firm Burson-Marsteller was hired by pharmaceutical giant Johnson & Johnson to repair its reputation. Burson-Marsteller advised recalling the medication and halting all advertising. An immediate press campaign by Johnson & Johnson followed informing the public about the poisoned capsules and warning them not to use any Tylenol product. Company executives were instructed to not obfuscate or deny the scope of the problem but instead cooperate with the media in getting the story out so as to ensure everyone heard about the poisoning. An immediate recall of all Tylenol capsule products on store shelves (at a cost of more than $100 million to Johnson & Johnson) was instigated. An offer to immediately swap out all Tylenol capsules with Tylenol tablets was made, a series of forthright statements by Tylenol upper management expressing their shock and pain over the deaths was issued and an extensive PR announcement of the introduction of new Tylenol products in tamper-proof packaging, coupled with an extensive series of promotional programs offering the new products at reduced prices via price discounts, coupons, and so on, began. The result of Johnson & Johnson’s classic campaign rescued the product from the marketing grave. During the crisis Tylenol had seen its share of the market drop from 37 percent to 0 percent. A few months after the poisonings, Tylenol was back up to 24 percent market share and today still reigns as the leading brand of this popular painkiller.
Moral: Be proactive.
In 1995 the Four Weddings and a Funeral star Hugh Grant – then, as now, one of the most bankable celebrities in Hollywood – got caught using the services of a street prostitute in Los Angeles. His face as a felon shot around the world and he risked being consigned to the celluloid dustbin forever. But Grant fought back. Instead of hiding, he went on to a series of chat shows. He spoke about his shame openly. He portrayed himself as a man in a weak moment instead of hiding. True, he had to put up with the nudges and the winks, the paparazzi outside his door for weeks on end, but the openness strategy worked. As Bernstein says in his guide about how to make a crisis worse, “Make the press your enemy and you are finished.” And as the Business Insider website said; “Grant did not refuse interviews, nor did he defiantly cancel appearances… Instead, he apologized on shows like Live with Regis and Kathie Lee, The Tonight Show with Jay Leno and CNN’s Larry King Live. The gist? ‘I’m very sorry,’ Hugh simply said. “The result? The public forgave him. He went on to develop his incredibly successful acting career, and few people even mention the incident anymore.”
Moral: Be brave.
British Airways was at the sharp end of some of the most stinging criticism in its history when it boasted high-tech Terminal Five as the future of painless international air travel. But when it opened in March 2008 there were chaotic scenes. Instead of being met with a high-tech, hassle-free travel experience, passengers were faced with overcrowding, delays, cancellations, ill-trained staff and baggage chaos. British Airways – which has exclusive use of the terminal – was forced to warn passengers that one in five flights from Heathrow’s Terminal 5 were likely to be cancelled the day following the opening after it struggled to rectify the operational nightmare. It was a major embarrassment for BA, airport operator BAA, and the government, which all hailed the Lord Rogers-designed building as state-of-the-art. CEO of BA, Willie Walsh, decided to blame no-one but himself. “I apologize to everyone and anyone.” The frank approach worked. Within a matter of weeks the faults had been ironed out, the tourists were moving swiftly, BA’s share price stabilized and everyone had virtually forgotten about the initial problems.
Moral: Be humble.