“A crisis is a business challenge that has the likelihood of impairing an organization’s ability to conduct its affairs.”
Danielle Riposati, Partner, NATIONAL Public RelationsA company is more likely to survive a crisis and thrive in the
marketplace if they have positive corporate values and that their best
practices are based on demonstrated responsible behaviour. Their
brand’s strength and the confidence of their employees are bound to a
company’s corporate reputation.
It is key, states Harris Interactive a global US-based market research company, that a company establishes a relationship between itself and the public as a hedge against negative perceptions that may occur in the future. A strong brand and company identity, established before a crisis, will keep employee morale and stakeholder confidence after a crisis situation ends.The Conference Board of Canada notes that sources of corporate reputation loss are found in the producing or selling of socially controversial products, unethical procurement, in addition to crises and scandals. Industry Canada finds that a good corporate reputation is based on “compliance with legislation and regulations” and going beyond the law in terms of: governance, ethics, health and safety, the environment, and human resources management.
Two approaches
In 2007 the pet food produced by a major Canadian pet food manufacturer, based in Ontario was discovered to include wheat gluten containing melamine, a substance poisonous to pets. The gluten was supplied by a company in China. Thousands of pets were made ill or died in Canada and abroad, due to the contamination. The situation received media attention for months. According to Riposati the company responded with three crucial actions to deal with the situation; it:
1) acted quickly and pro-actively;
2) communicated in an open and transparent manner; and
3) the CEO/President was visibly involved.
The company voluntarily recalled 60 million containers of pet food representing 150 brands. A 24/7 telephone call centre, that fielded 18,000 international calls, was set up to answer consumer concerns and a web site was also set up. Press conferences were held often. The CEO stated, Riposati notes, that he was a pet owner himself and that he understood what the affected pet owners were going through. By doing so the CEO established that he was sympathetic to the feelings of the individuals affected by the crisis and he was visibly involved in dealing with the crisis. According to a recent Toronto Star article (April 2, 2008) the company, Menu Foods, lost $54 million and is still settling lawsuits filed by various stakeholders.
In contrast, Exxon Mobile’s handling of an oil spill in Alaska in 1989 by one of its freighters, the Exxon Valdez, is an infamous example of how not to handle a crisis situation.
The company’s chair did not meet with the media until a week after the event during which time scenes of million of barrels of oil covering a pristine Alaska coastline and dying wildlife were viewed worldwide. When the chair finally did appear at a media conference he was uniformed about the company’s clean-up plan and blamed the world media for the crisis. Neither he nor the company were perceived as taking responsibility. He was also perceived as uncaring about the environmental devastation that occurred. The financial cost of the oil spill was estimated to be $7 billion. The punitive fine levied against Exxon Mobile is now set at $507.5 million. The cost to the company’s reputation and its relationship with various stakeholders remains inestimable.
Assemble your experts and train your people prior to a crisis
“Reputation management is now more important than ever,” states Carolyn Gardner, director of e-Marketing Services, Sitebrand.com Inc., a national software-based, interactive-marketing company. Blogs, chatrooms, and online reviews are ways your company’s reputation, positively or negatively, are communicated daily. Use web-communication savvy experts to monitor your company’s reputation online.
Ensure your CEO or key spokesperson receives media training. Community colleges, management consultant firms, and public relations provide media, crisis, and corporate reputation communications training.
Crisis management planning
“We spend time with clients looking at possible issues before they become a crisis. You must: anticipate, plan for the worst, and be prepared,” notes Danielle Riposati, whose clients at NATIONAL Public Relations have included the Transportation Safety Board of Canada and Pepsi-Cola Canada Ltd.
According to an IBM study of 1,200 CFOs and senior financial executives from 79 countries found that 62 per cent of these companies had been exposed to a “major risk event” and 42 per cent were not “well prepared” to deal the event.
1) Audit your company. “Take a good hard look at your vulnerabilities,” notes Riposati. Be aware of your company’s vulnerabilities both internally and externally.
2) Create a communications plan that addresses each possible crisis and your organization’s response, Riposati advises. Prepare templates for statements to your stakeholders ahead of time. Randy Burgess, a communication consultant, advises “the bottom line for effective communications with specific audiences in times of crisis is to be truthful and to put a positive message into their context.” Establish a company policy of designating a single company spokesperson during a crisis.
3) Outline the role of the CEO, CFO, the HR manager and Communications manager, and operations’ role. The team should include individuals who work well under stress.
4) Decide ahead of time: who do we tell, how do we tell them, when do we tell them? “Stakeholder mapping,” according to Riposati, is important. Your stakeholders include: staff and employees; suppliers; customers; business partners; investors. Depending on the situation, stakeholders may also include the authorities; government, and the media.
5) Update the plan regularly. Ensure key staff members really “understand how it actually works,” stresses Riposati. Use company intranet sites to communicate with employees during and after the crisis.
6) Run simulations. Imperial Oil, according to Riposati, runs realistic simulations in real time. With persons playing the roles of journalists, activists, and using actual employees. Use the responses of your staff as a guide to what works, or doesn’t, in your crisis management plan.
The first hour of a crisis
“The first hour of a crisis sets the tone for how the rest of the crisis will be managed,” notes Riposati. Your management team must ask:
- what are we dealing with;
- what is the extent of the crisis;
- what is the appropriate first response;
- who are the stakeholders affected; and
- what does each stakeholder group need to know.
“You must communicate early and you must communicate often with your stakeholders,” stresses Riposati. “Don’t allow a vacuum [of information] to form because “people will fill in their own blanks.” The spokesperson for the firm, preferably the CEO, must demonstrate that he or she “can take control and can be decisive.”
After the crisis
Evaluate the responses of your key people immediately after a crisis. Consider if practices, products, policies or people need to be changed.
Tell your stakeholders what you have learned and what you will do differently. Thank your stakeholders. Employees, as well, must always be acknowledged for their support.
If there is criticism, Gardner advises being pro-active. Acknowledge the public’s and your stakeholders’ concerns. Invite them to contribute ideas to rectify the problem. Provide them with a forum for doing so, she advises.
Corporate reputation management is an ongoing process that involves self awareness on the part of the company. Best practices must involve an open and ongoing commitment to the community and stakeholders, such as employees, is key.
Resources for Corporate Reputation Management
Examples of web clipping services:
· Netpinions™ (http://www.cyberalert.com/netpinions.html)
· RushClips™ (www.cyberalert.com/rushclips.html)
· Web Clipping (http://www.webclipping.com/)
Web monitoring:
· Google Alerts: www.google.com/alerts
Examples of internal communication strategies providers:
· Strategic Connections Inc. http://www.strategicconnections.com/
· The Centre for Excellence in Communications: www.comcec.com
Examples of corporate communications and corporate reputation workshop providers:
· Canadian Management Centre: www.cmctraining.org
· NATIONAL Public Relations: www.national.ca
· Trillium Corporate Communications: www.trilliumpr.com/services/advanced.asp
· The Canadian Institute: www.canadianinstitute.com
J. Lynn Fraser is a Toronto-based freelance writer.
