CRISIS 'PR' MANAGEMENT

"Success does not happen overnight but failure does."

Among other functions, public relations is a fundamental process to mitigating harm, responding to stakeholder needs and repairing image following an organisational crisis. Crisis Management is vital component of (and perhaps the second half to positive) public relations. Responding to a crisis is an important part of public relations professional's job duties.

Before delving deep into this domain of 'crisis management' let us try and define 'crisis'.A crisis is a major, unpredictable event that threatens to harm an organisation and its stakeholders. While I do not propose a formal definition of the word crisis in this blog, I intend to treat any event that can, within a short period of time, harm an institution's constituents, its facilities, its finances or its reputation as a crisis.

Crisis events are unpredictable but not unexpected. It affects all segments of society. Three basic elements in a crisis can be summed up as follows :

1. Threat to company/organisation.
2. Element of surprise
3. Short-decision time

The various types of Crises can be listed as:

• Economic
• Physical
• Personnel
• Criminal
• Information
• Reputation-al
• Natural disasters

Crisis management is the new buzz word for the society, firm, businesses, etc. Everyone from celebrities, politicians, auto-mobile companies to theme parks in dire need to salvage their reputation from getting tarnished online. No organisation / person / firm / business wants to be in a situation that would earn them a bad name, image or reputation.

Crisis management is the art of making decisions to head off or mitigate the effects of such an event, often while the event itself is unfolding. This often means making decisions about your institution’s (organisation, firm, client,etc) future while you are under stress and while you lack key pieces of information. It is the systematic attempt to avoid organisational crisis or to manage those crisis events that do occur. It involves skills and techniques required to assess, understand and cope with any serious situation from the very moment it occurs to the point the recovery

procedure starts.

PROCESS OF CRISIS MANAGEMENT: FINK's MODEL

In 1986, Steven Fink was amongst the first to examine crisis occurring in stages. According to his model, a crisis consists of four stages:

1. PRODROMAL (PRE-CRISIS): This is the warning stage. If this stage is not recognized or does not actually occur, the second stage (acute crisis) can rush in, requiring damage control. Clues in the prodromal stage must be carefully observed.
2. ACUTE CRISIS: In this stage, the damage has been done. The point here is to control as much of the damage as possible. This is often the shortest of the stages.
3. CHRONIC CRISIS: This is the clean-up phase. It is a period of recovery, self-analysis, self-doubt and healing. A survey of Fortune 500 CEO's reported that companies that did not have a crisis management plan stayed in this stage two and half times longer than those who had plans.
4. CRISIS RESOLUTION: This is the crisis management goal. The key question here is: What can and should an organisation's leaders do to speed up this phase and resolve a crisis once and for all?

Managing a crisis is the second thing one can ever do for a successful business or organisation. Dealing with crisis needs accurate and decisive action. Here is an interesting example to show how a rapid and precise action saved the company from getting a bad name.

' A gun manufacturing company loses a gun while on transit and before the public or the media ever comes to know about this, the company is able to find it and put it back into the inventory.'

Such should be the approach of managing a crisis. Let us, in brief, look at the various steps of handling a crisis:

1. ASSESS: Reasonable amount of time should be devoted to actually assess the whole situation. It is important, for a moment, to step backwards, gather facts, objects and develop a clear picture of the situation / crisis.
2. ENGAGE: It is important to engage all stakeholders. Trust insiders who will have the knowledge and will help in analysing the crisis or planning effectively to manage it.
3. PLAN: Once all data has been put in place, develop the best, typical plans. This helps to act quickly, confidently and effectively.
4. ACT: Be pro-active, not re-active. It's about execution.
5. COMMUNICATE: It is of utmost importance that communication should take place transparently and honestly. Consider and respect your audience.

A Crisis should follow the simple principle of :

• Be First- Get message out first to control content and accuracy
• Be Right-Say and do the right thing
• Be Credible-Be open, honest and speak with one consistent voice

The other guidelines of Crisis Management are :

1. Communicate accurately and openly about the crisis and maintain openness with stakeholders.
2. Communicate quickly to maintain a proactive response to the crisis.
3. Maintain flexibility consistent with the relative levels of uncertainty and ambiguity.
4. Closely monitor reactions in the media and from various stakeholder groups.
5. Maintain consistency of message with a credible designated spokesperson, usually the CEO.
6. Use a crisis management team to co-ordinate and assess the crisis response.
7. Engage in crisis planning to create and maintain a crisis response capability.
8. Work to establish positive stakeholder relations and corporate image prior to the crisis.

ISSUES vs CRISIS

Whenever we talk about Crises, we often tend to invade borders of Issues and Issue Management. But the fact remains that there are differences between Issues and Crises.

"An Issue Ignored Is A Crisis Invited"- Henry Kissinger

In the quest to achieve strategic objectives, an entity to ensure that it has sound issue management practices in place to meet the expectations of its stakeholders, externally and internally. The need for a strategic 'common sense' approach to managing business issues has never been more important for any entity, specially when radical changes are taking place at national and international levels.

An Issue can be defined as "an emerging or unresolved matter which can impact the business and affect reputation; or the 'gap' between what an entity and does, and what stakeholders expect it to say or do." Issue management is the process used to close that gap. Issue management involves many parts of an organisation. That is why it is unique from traditional strategic planning, or corporate governance or public relations.

CRISIS: DANGER OR OPPORTUNITY ?

In the very context of crisis management, we often end up asking ourselves whether Crisis happens for good of for bad. In other words, is Crisis a Danger or an Opportunity. In the Chinese language, the meaning of crisis is actually made up of two word signs. The first one is pronounced wei, which means danger while the second symbol which means jei, indicates opportunity. When combined together, it has the meaning of crisis. It is interesting to see how a symbol, which denotes a message of distress, combines in itself a symbol for opportunity.

WHAT TO DO WHEN IT ALL GOES WRONG?

Let us know browse through a couple of case studies that will help us to learn and know more about this subject of crisis management. While one talks about 'How Best To' handle a crisis, the other shows 'How Not To.'

JOHNSON & JOHNSON AND TYLENOL- 'HOW BEST TO' HANDLE A CRISIS

Crisis need not strike a company purely as a result of its own negligence or misadventure. Often, a situation is created which cannot be blamed on the company- but the company finds out pretty quickly that it takes a huge amount of blame if it fumbles the ball in its response. One of the classic example of how a company can get it right is that of Johnson & Johnson, and the company's response to the Tylenol poisoning.

What Happened

In 1982, Johnson & Johnson's Tylenol medication commanded 35 per cent of the US over-the-counter analgesic market-representing something like 15 per cent of the company's profits. Unfortunately, at that point one individual succeeded in lacing the drug with cyanide. Seven people died as a result and a widespread panic ensured about how widespread the contamination might be. By the end of the episode, everyone knew that Tylenol was associated with the scare. The company's market value fell by $1bn as a result.When the same situation happened in 1986, the company had learned its lessons well. It acted quickly- ordering that Tylenol should be recalled from every outlet -not just those in the state where it had been tampered with. Not only that, but the company decided the product would not be re-established on the shelves until something had been done to provide better product protection. As a result, Johnson & Johnson developed the tamper proof packaging that would make it much more difficult for a similar incident to occur in future.

Danger & Opportunity

• The cost was a high one. In addition to the impact on the company's share price when the crisis first hit, the lost production and destroyed goods as a result of the recall were considerable.
• However, the company won praise for its quick and appropriate action. Having sidestepped the position others have found themselves in- of having been slow to act in the face of consumer concern- they achieved the status of consumer champion.
• Within five months of the disaster, the company had recovered 70% of its market share for the drug-and the fact this went went on to improve over time showed that the company had succeeded in preserving the long term value of the brand.
• In fact, there is some evidence that it was rewarded by consumers who were so reassured by the steps taken that they switched from other painkillers to Tylenol.

Conclusion

The features that made Johnson & Johnson's handling of the crisis a success story can be enumerated as follows:

• They acted quickly, with complete openness about what had happened and immediately sought to remove any source of danger based on the worst case scenario- not waiting for evidence to see whether the contamination might be more widespread.
• having acted quickly, they then sought to ensure that measures were taken which would prevent as far as possible a recurrence of the problem.
• They showed themselves to be prepared to bear the short term cost in the name of consumer safety. that more than anything else established a basis for trust with their customers.

'HOW NOT TO HANDLE A CRISIS':TOYOTA

In Japan, there is a proverb, "If it stinks, put a lid on it." Alas, this seemed to have been Toyota's approach to its crisis (2009-2010), initially denying, minimizing and mitigating the problems involving brakes that don't brake and accelerators that have a mind of their own. President Akio Toyoda, grandson of the founder appeared less than forthcoming about critical safety issues, risking the trust of its customers world-wide. The following is a bulleted time-line of the major events from a public relations standpoint :

• Lexus ES350 fatal crash
• 3.8 million Toyota/Lexus floor mat recall
• 4.2 million brake override amended recall
• 2.3 million accelerator recall
• Sales halt for eight models
• Televised Congressional hearings

Toyota is synonymous with Japan so when trouble hit the world's leading auto-maker, it was easy to conclude that a cloud has fallen over the Land of the Rising Sun. Toyota's troubles started in 2008 when its global sales started shrinking due to the financial crisis that hit the US, its biggest market. It had hoped to recover its sales figures last year through cost-cutting measures.

This has been a public-relations nightmare for Toyota, as its brand name has been synonymous with quality and reliability. Crisis management does not get any more woeful than this and the cost of this bungling was- the initial $2 billion recall and the loss of 17% of share value when the gas-pedal recall was announced. For some people, it was not surprising that Toyota's response was dilatory and inept, because crisis management in Japan is grossly undeveloped. Over the past two decades there has been not one instance where a Japanese company has done a good job managing a crisis. The pattern has been the same ever- typically involving slow initial response, minimizing the problem and too little compassion and concern for consumers adversely affected by the product. The absence of a structure to quickly get accurate information to top management hampered an accurate and adequate response. that left the management unprepared to deal with media questioning and conveyed an image of stonewalling and indifference. Perhaps, there was a cultural element to this penchant for mismanaging crisis. the shame and embarrassment of owning up to product defects in a nation obsessed with craftsmanship and quality raises the bar on disclosure and assuming responsibility. The shame of producing defective cars is supposed to be other firm's problems not Toyota's and PR disaster that was in place during the crisis clearly showed how unprepared the company was for crisis management and how embarrassed it was.

Another reason why this was a poor crisis management, was the fact that Toyota did not actively p utilize social media platforms such as Facebook, Twitter or YouTube. Toyota had that opportunity to manage its own branding crisis but was not pro-active. The consequences of poor crisis management severely damaged its reputation as the number auto-mobile brand with $30.5 million brand earnings (according to Interband).

The crisis, though, offered an opportunity to reform Toyota's corporate culture and improve quality assurance by becoming more focussed on the customer, using two-way flow of information and feedback' improving corporate governance by appointing independent outside directors and making risk management more than an after-thought.

Successful crisis management requires timing, response and sincerity that Toyota unfortunately did not show.

Social Media and Crisis Management

In this digital age, crisis management, crisis management is not just about contacting news outlets or writing an apologetic press release. Today, crisis management requires swift, sweeping action on all digital fronts: social media, blogs and company websites. Digital crisis communications is a new aspect that needs to be management plan in times of crises. Social media, blogging and tweeting have proven to viable, usable communications tools with far reaching uses- some of which are still being defined or refined. One such use just now emerging is to incorporate social media resources with traditional media to communicate in a crisis. Some experts are referring it to as 'digital crisis communications.'

As with all aspects of PR, marketing and advertising the internet is changing things up, making them easier and also at the same time, more difficult. As a result, consumers/buyers are able to contribute to the PR surrounding a company through W-O-M (word-of-mouth), reviews, etc, making crisis PR more difficult for companies than ever. This particular characteristic of PR today means one important thing for companies: a crisis can grow and fast. There are things that a company can do to help prevent a crisis from growing too out of hand in the first place, though. For example, creating and maintaining relationships with consumers, so that when a crisis does arise buyers know and are perhaps advocates for a company. Companies can also try to diffuse the damage of a crisis as it is taking place. With correspondence, action and taking responsibility, a company can help to halt the spread of negative W-O-M a crisis can generate.

Toyota, during its crisis, had a great opportunity to utilize social media channels, such as Facebook and Twitter, but showed half-hearted effort. Facebook was not utilized by Toyota to reach out to its nearly 70,000 fans. The Japanese company also under-utilized its Twitter account to get the news to its 14,000 followers. They had posted a mere six tweets regarding the recall- not as much as one might expect a brand in crisis management mode.

An interesting case study in the domain of social media-crisis management and digital crisis communications is the Domino's Pizza fiasco that damaged the reputation of a 50-year old brand. let us look at the presentation below to get an in-depth picture of the crisis.

The role of PR practitioners in crisis communication, is expanding to match this broadened notion of crisis. Public relations, from this perspective, is a crisis and risk management function responsible for understanding the role of communication in crisis incubation, the development and maintenance of crisis management plans and response capacities and the contingent elements of effective post-crisis communication.

Source of Pictures: Google

Presentation: Slideshare