9. Crisis Communication

A) Summary from Textbook

Today, because of changes in technology and the makeup of the media, any corporate crisis is covered in a matter of hours by the national and internal media, and Webcast over the Internet-further hastened by an ever growing population of online “loggers” who document and critique companies’ every move. Thus, a more sophisticated media environment, as well as a new emphasis on technology in business, has created the need for a more sophisticated response to crises.

◎ What Is a Crisis?

Natural disasters cannot be avoided, but there are many crises- those caused by human error, negligence, or in some cases, malicious intent- planning could have prevented in the first place. In fact, most of the crises were human-induced crises rather than natural disasters. Such crises can be more devastating than natural disasters in terms of the costs they entail for companies in terms of both dollars and reputation.
All human-induced crises cannot be lumped together. One type includes cases in which the company is clearly at fault, for instance cases of negligence. In these cases, a falling stock price and rising legal tab are not the only aftereffects a company must weather; often the most serious impact is to the company’s reputation and the subsequent loss of trust with key stakeholders.
The second type of crisis includes cases in which the company becomes a victim, such as Barclays, Citibank, eBay, and other major corporations targeted by online information theft attempts. In all situations, however, constituencies will look to the organization’s response to the crisis before making a final judgment. Thus, to define crisis for organizations today is a bit more complicated than simply saying that it is an unpredictable, horrible event.

A crisis will be defined as follows:
A crisis is a major catastrophe that may occur either naturally or as a result of human error, intervention or even malicious intent. It can include tangible devastation, such as the destruction of lives or assets, or intangible devastation, such as the loss of an organization’s credibility or other reputation damage. The latter outcomes may be the result of management’s response to tangible devastation or the result of human error.

◎ Crisis Characteristics

While all crises are unique, they do share some common characteristics. These include (1) the element of surprise ; (2) insufficient information; (3) the quick pace of events; (4) intense scrutiny.
What makes this difficult for executives is that the element of surprise leads to a loss of control. It’s hard to think strategically when overwhelmed by unexpected outside events. In addition, the media frenzy that typically surrounds a crisis can prompt a siege mentality to ensue, causing management to adopt a short-term focus.
Part of the problem in dealing with crises is that organizations have tended not to understand or acknowledge how vulnerable they are until after a major crisis occurs. Lack of preparation can make crises even more severe and prolonged when they do happen.

◎ Crises from the Past 25 Years

These events such as the assassination of President John F. Kennedy, the explosion of the space shuttle Challenger in January of 1986 and the terror attacks of September 11, 2001 have become etched in the public consciousness for a variety of reasons. First, people tend to remember and be moved by negative news more than positive news. Second, the human tragedy associated with a crisis strikes a psychological chord with most everyone. Finally, crises associated with major corporations stick in the public’s mind because many large organizations lack credibility in the first place.

● 1982: Johnson & Johnson’s Tylenol Recall
In late September and early October of 1982, seven people died after taking Tylenol capsules that had been laced with cyanide. However, many experts on crisis communication, marketing, and psychology have conjectured that it was Johnson & Johnson’s swift and caring response that was primarily responsible for turning this disaster into a triumph for the company. Despite losses exceeding $100million, Tylenol came back from the crisis stronger than ever within a matter of years.
What did Johnson & Johnson do? First, it did not simply react to what was happening. Instead, it took the offensive and removed the potentially deadly product from selves. Second, it leveraged the goodwill it had built up over the years with constituencies ranging from doctors to the media, and decided to try save the brand rather than come out with a new identity for the product. Third, the company reacted in a caring and humane way, rather than simply looking at the incident from a purely legal or financial perspective. What is most amazing is not that J&J handled this crisis so formidably, but that the perception of the company was actually strengthened by what happened.

● 1990: The Perrier Benzene Scare
Perrier Sparkling Water faced a contamination crisis of its own nearly 10 years after the Tylenol episode. Perrier’s actions during the 1990 benzene scare provide as many lessons in how not to handle a crisis as J&J’s did of how to handle one effectively. Without an official crisis plan of its own, Perrier relied on the media to communicate its story during the crisis, which proved to be a fatal decision. The press only served to expose the lack of internal communication and the lack of global coordination within the company.
The Perrier benzene crisis illustrates not only the consequences of having a reactive strategy to deal with crises, but also the problems of not having a coordinated and fact-based approach to crisis communication.

● 1993: Pepsi-Cola Syringe Crisis
In June 1993, a man reported that, after drinking half a can of Diet Pepsi the night before, he had discovered a syringe in the can the following morning when he shook out the rest of the contents into the sink. The CEO, Crgig E. Weatherup, did not let the surprise of the crisis overwhelm him when he was contracted at home by FDA Commissioner David Kessler and informed of the situation. Unlike Johnson & Johnson’s immediate recall of Tylenol from the selves, by the next morning Weatherup had decided not to recall the product- despite a flood of new reports to the FDA of dangerous objects found in Pepsi cans.
Pepsi’s highly visible work with the FDA in investing the crisis boosted its credibility in the public eye. Additionally, without an investigative reporting team of its own, Pepsi found that the government agency was invaluable to the company during the crisis. Pepsi-Cola did not stop there, however. To ensure that consumers knew that the tampering claims were false, Weatherup took out an ad to address the concerns of employees and customers.

● The New Millennium : The Online Face of Crises – Data Theft and Beyond
With personal computers and the Internet now integral parts of the fabric of business, organizations face new challenges and the potential for crises that they have not dealt with before. The “I Love You” virus unleashed in 2000 cost businesses across a range of industries an estimated total of $10 billion in damages. Companies of all kinds are also grappling with information security issues involving the theft or attempted theft of company and customer data.

◉ Hacking into Reputations
Today, the majority of online thieves are opting for more surreptitious tactics to steal confidential information. Viruses are now more commonly used to plant “Trojans” in personal or office computers-malicious software that steals sensitive information stored in a computer and relay it back to the criminal.
The proliferation of such online security threats has resulted in crisis situations for myriad companies worldwide that now must redouble their customers.
The most effective reactions have focused on clear, consistent communications disseminated to customers prior to and in the immediate wake of an online attack. Most importantly, communications should concentrate on consumer education.
Demonstrating genuine efforts to educate consumers and safeguard against threats is an important first step for a company to rebuild the trust many customers have lost in resent years, troubled by the potential threats of online transactions.
In the “new economy,” these phenomena, coupled with widespread public concern over information security, now have the power to affect a company’s bottom line substantially. Companies must recognize the increasing influence of the Internet on a growing number of its constituencies and must keep this dimension in mind planning for and handling crises.

◎ How to Prepare Crises

The first step in preparing for a crisis is understanding that any organization, no matter what industry of location it is in, can find itself involved in the kinds of crises discussed in the previous section. Obviously, some industries-the chemical industry; pharmaceuticals; mining; forest products; energy-related industries such as oil and gas and electric utilities; and online retailers- are more crisis-prone than others, but today, every organization is at risk.
Communications managers must follow these examples and prepare company management for the worst by using anecdotal information about what has happened to unprepared organizations in earlier crises. There are so many to choose from that managers should not be hard pressed to find crisis examples in virtually every industry from experiences over the last 25 years. Once the groundwork is laid for management to accept the notion that a crisis is a possibility, real preparation should take the following form.

● Assess the Risk for Your Organization
Publicly traded companies are at risk because of the nature of their relationship with a key constituency-shareholders. If a major catastrophe hits a company that trades on one of the stock exchanges, the likelihood of a sell-off in the stock is enormous. Such immediate financial consequences can threaten the organization’s image as a stable ongoing operation in addition to the damage the crisis itself inflicts.
While privately held companies do not have to worry about shareholders, they do have to worry about the loss of goodwill-which can affect sales-when a crisis hits. Often the owners of privately held companies become involved in communication during a crisis to lend their own credibility to the organization. So all organizations-public, private, and not-for-profit – are at some risk if a crisis actually occurs.

◉ Plan for Crisis
The person in charge of corporate communication should call a brainstorming session that includes the most senior managers in the organization as well as representatives from the areas that are most likely to be affected by a crisis. During the brainstorming session, participants should work together to develop ideas about potential crises. They should be encouraged to be as creative as possible during this stage.

◉ Determine Effect on Constituencies
Once the probability of risk has been assigned to potential crises, organizations need to determine which constituencies would be most affected by the crisis. Crisis communication experts spend too little time thinking about this question. Determining how to rank constituencies when a crisis actually happens is more difficult because so many other things are going on. But thinking about risk in terms of effect on constituencies in advance help the organization further refine which potential crises it should spend the most time and money preparing for.

● Set Communication Objectives for Potential Crises
Setting communication objectives for potential crises is difficult than figuring out how to deal with the crisis itself. Clearly, organizations must do both, but typically managers are more likely to focus on what kinds of things they will do during a crisis rather than action when the crisis involves more intangible things such as the loss of reputation rather than the loss of lives.

● Analyze Channel Choice
Once the ranking of constituencies is complete, the participants in a planning session should begin to think about what their communication objective will be for each constituency. Whether objective will be achieved often depends on the effectiveness of the communication channel the company selects to convey the message.
Perhaps the mass distribution of a memo would be too impersonal for a message to employees in a time of crisis. The company might consider personal or group meetings or a “town hall” gathering instead. The choice of communication channel often can reflect how sensitive a company is to its constituencies’ needs and emotions.

● Assign a Different Team to Each Crisis
Another important part of planning for communicating in a crisis is determining in advance who will be on what team for each crisis. Different problems require different kinds of expertise, and planners should consider who is best suited to deal with one type of crisis versus another.
But managers should avoid putting senior-level executives in charge of communications for all crises. Sometimes the person closet to the crisis is the one people want to hear from. Assigning different teams to handle different crises helps the organization put the best people in charge of handling the crisis and communications. It also allows the organization to get a cross-section of employees involved. The more involved managers are in planning and participating on a team in a crisis, the better equipped the organization will be as a whole.

● Plan for Centralization
Although organizations can employ either a centralized or decentralized approach to corporate communication for general purposes when it comes to crisis, the approach must be completely centralized. Planning for centralization can help strip away layers of bureaucracy, keep lines of communication open throughout the organization, and dissipate conflict, all of which are especially critical in a crisis.

● What to Include in a Formal Plan
Every communications consultant will suggest that you develop a detailed plan for use in a crisis. These are formal in the sense that they are typically printed up and passed around to the appropriate managers, who may have to sign a statement swearing that they have read and agree to the plan. This allows the organization to ensure that the plan has been acknowledged by the recipients, and permits questions and clarifications to be discussed in a noncrisis environment.

◉ A List of Whom to Notify in an Emergency
This list should contain the names and numbers of everyone on the crisis team as well as numbers to call externally such as the fire and police department. The list should be kept updated as people leave the company or change responsibilities.

◉ An Approach to Media Relations
Frank Corrado, the president of a firm that deals with crisis communications, suggests that the cardinal rule for communicating with all constituencies in a crisis should be “Tell It All, Tell It Fast!” Perhaps a friendly amendment to Corrado’s rule might be “Tell as much as you can, as soon as you can,” so that you do not jeopardize the credibility of the organization.
Generally, the person who has the best relationships with individual reporters is probably the right person to get involved with them during a crisis.

◉ A Strategy for Notifying Employees
Employees should be seen as analogous to families in a personal crisis. Employees finding out from the media about something that affects the organization can be likened to a family member hearing about a personal problem from an outsider.

◉ A Location to Serve as Crisis Headquarters
Gathering the appropriate technology(e.g., computers, fax machines, cell phones) as quickly as possible when a crisis hits is also important. This headquarters location should be shared ahead of time with all key internal and external constituencies. All information ideally should be centralized through this office. Other lines of communication should then flow through the headquarters for the duration of the crisis.

◉ A Description of the Plan.
Companies should have their crisis plans documented in writing. In addition to communication strategy, a crisis plan should address logical details as well, for example, how and where the families of victims should be accommodated in the case of an airline crash.
Following the development of an overall plan, all managers should receive training about what to do if and when a crisis strikes. Beyond managers, all employees should be versed in and trained regularly on the company’s emergency procedures and plans.

◎ Communicating during the Crisis

All the planning that an organization can muster will only partially prepare it for an actual crisis. The true measure of success is how it deals with a problem when it occurs.

Step 1: Get Control of the Situation
The first step is for the appropriate manager to get control of the situation as soon as possible. This involves defining the real problem with the use of reliable information and then setting measurable communication objectives for handling it.
When a crisis erupts, everyone in the organization should know who needs to be contacted, but in large organizations this is often unrealistic. Therefore, the corporate communication department can initially serve as a clearinghouse.

Step 2: Gather as Much Information as Possible
Understanding the problem at hand is the right place for communicators to begin dealing with a crisis. This often involves managing information coming from many sources.
Many corporations have been criticized for reacting too slowly during a crisis because they were trying desperately to gather information about the incident. If it is going to take longer than a couple of hours to get the right information, a company spokesperson should communicate this to the media and other key constituencies right away to make it clear that the company is not stonewalling.

Step 3: Set Up a Centralized Crisis Management Center
At the same time managers are getting in touch with the right people and gathering information, they also should be making arrangements for creating a crisis center. Organization also should provide a comfortable location for media to use during the crisis, including adequate computers or Internet hookups, phones, fax machines, and so on.

Step 4: Communicate Early and Often
The organization’s spokesperson needs to say whatever he or she can as soon as possible. Particularly if the crisis involves threat to lives and property, communicators should try shield constituencies from panic by allaying some of the probable fears that people will have about the situation.

Step 5: Understand the Media’s Mission in a Crisis
Members of the media work in an extremely competitive environment, which explains why they all want to get the story first. They are also more accustomed to a crisis environment in their work.

Step 6: Communicate Directly with Affected Constituents
Using the media to get information out is good, but it’s more important to communication with your employees, sales staff, organized leadership, site security, operators, and receptionists, as these will be the media’s best sources of information in the crisis. External constituencies need to be contacted as well. These include the other three key constituencies besides employees-customers, shareholders, and communities- as well as suppliers, emergency services, experts, and officials. All available technologies should be employed to communicate with them, including e-mail, voice mail, faxes, direct satellite broadcasts, and online services.

Step 7: Remember That Business Must Continue
To the managers involved, the crisis will most certainly be uppermost in their minds for the duration, but to others, the business must go on despite the crisis. In addition to finding suitable replacements ahead of time for those who are on the crisis on other parts of the business.

Step 8: Make Plans to Avoid Another Crisis Immediately
Postcrisis, corporate communications executives should work with other managers to ensure the organization will be even better prepared the next time it is faced with a crisis. Companies that have experienced crises are more likely to believe that such occurrences will happen again, and also will recognize that preparation is key to handling crises successfully.

◎ Conclusion

Today we know crises as pivotal times of instability where leadership and decision making can determine the ultimate outcome of the situation-for better or for worse. As we’ve seen, sometimes companies can emerge even more respected in the wake of a well-handled crisis.

B) My opinion

Crises always exist around individuals and organizations regardless place and time. However, the ability to handle crises is different from each person or organization. In this sense, it seems that developed countries usually have well-defined plan to handle crisis management. By contrast, developing countries do not have those plans. In addition, those countries also do not have consciousness of crises or disasters. Thus, once when crisis happens, the volume of damage is tremendously large and is difficult to overcome it because of the lack of crisis management plans.
Another important problem is a consistent concern of top management team within an organization. In fact, employees follow the direction of rules and order of supervisors rather than creative behaviors. Even though good crisis management exists, if it is not repeatedly practiced in periodically, unpredicted crisis makes the organization embarrassed. Therefore, when the crisis happens, in order to rapidly overcome the crisis situations, repeating practices and interest of top managers are indispensable.

Reference : http://www.e911.com/monos/A001.html