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Protecting your corporate reputation during a crisis

20 mins Peter Bartlett, Beverley Newbold, David O'Brien
Picture this: you are just about to grab a coffee during a busy day when your phone rings. You answer the call. A reporter is on the line and you are about to be tomorrow's front page news for all the wrong reasons. A crisis is breaking ... how do you respond? This article gives guidance on how you should handle the media during a crisis and rebuild your reputation after a crisis.

Introduction

Your company is one of the corporate success stories of the last 20 years. The brand is worth millions.

You have attracted executives and staff of the highest level. The CV's are impressive. Again the stellar career of any of those executives or staff can change very quickly.

Your success and your brand attracts attention. It can be trashed very quickly. Any scandal or other crisis linked to your business will be like a magnet to the Media.

This article considers three main areas:

  • preparing for a crisis
  • crisis management
  • rebuilding your reputation after a crisis

The article also covers the PR implications of litigation.

Preparing for a crisis

Introduction

Journalists and corporates often see themselves as having diametrically opposed interests where news is concerned. The journalist is keen to tell as much of the story as possible while the corporates take the view that the less said the better. However, corporates and journalists can become allies in the quest for clear and accurate communication.

It is important to establish and maintain a good working relationship with the media.

Corporate reputations are becoming increasingly fragile as a result of:

  • bad news stories
  • overreacting to minor issues or being too defensive about inquiries from reporters
  • the pervasive and viral nature of social media
  • investigations by regulatory bodies
  • product liability issues
  • whistleblowers
  • leaks
  • litigation (including class actions)
  • projects that create environmental or social hazards
  • community activism.

In preparing for a potential crisis, an important first step is to assess risks which might impact your reputation. Examine your policies in key areas for reputation such as privacy, corporate governance, insider trading, equal opportunities, and ethics. Consider where a crisis may originate, both within your company and with the projects and companies you deal with.

Preparation

The most likely scenario is that your first contact with the media will be the phone call when 'the proverbial hits the fan'. You will have little time to react; the journalist will have been working on the story for a while. They will probably have been leaked documents. They will know a lot more than they let on. They may give you a few hours to respond.

So, be prepared:

  • have a crisis management plan
  • establish a chain of command within your organisation
  • appoint a central contact to whom media queries can be directed
  • appoint a media trained spokesperson – the 'public face' of the company
  • potentially appoint an external media adviser/spokesperson who can be well briefed on the impact of the issues in question and appears to gel well with your brand and core values
  • respond quickly to rapidly unfolding events
  • don’t muddle the message - understand the key points to be conveyed
  • centralise information – try to avoid decisions by committee. Many mid-level managers, unfamiliar with the media, may take a too slow, cautious, conservative approach and miss the opportunity to minimise the damage. You have your risk management and communications experts in-house and externally. Accept their advice. They are the experts in the crisis situation.

The role of the CEO or spokesperson.

Determine what role the CEO will have in responding to the media; a CEO can prove highly effective or hugely damaging in the battle against brand reputation.

'CEOs are important but not sufficient voices for their companies, as engagement is created by mid-level employees, with serious knowledge of products and less perceived bias to exaggeration' – Richard Edelman, The CEO's Dilemma; A Year After Lehman's Demise, 9 September, 2009.

An early assessment needs to be made about the seriousness of the reputational risk. On many occasions it will be appropriate for your Communications

Director to be the point of media contact and response. In other cases another appropriate spokesperson will be selected. There will be other occasions, where the issues are so central to the corporate reputation of the business that the CEO is the appropriate spokesperson.
There will be little time to train the spokesperson once the crisis has started. That training should take place long before. Be prepared. A few examples:

Tony Hayward, BP Oil Spill 2010 – The New Exxon Valdez of 'How not to manage a crisis'.

Any sense of self pity by a leader in a time of crisis will be met with significant backlash, as Tony Hayward discovered during the Gulf of Mexico Oil spill, the new archetype in crisis 'mis'management.

On 29 April 2010, The New York Times reported that Hayward said to BP executives 'what the hell did we do to deserve this?'

Hayward did little to correct this perception a month later, when issuing his infamous 'apology': 'the first thing to say is I'm sorry…we're sorry for the massive disruption it's caused their lives. There's no one who wants this over more than I do. I would like my life back'.

Hayward also made the mistake of attempting to downplay the oil spill at various stages. On 14 May 2010 he told The Guardian 'The Gulf of Mexico is a very big ocean. The amount of volume of oil and dispersant we are putting into it is tiny in relation to the total water volume'.

This perception was aggravated by perceived attempts to shift the blame to the US owner of the sunken rig, Transocean. On 3 May 2010, he told the BBC, "This was not our accident…this was not our drilling rig…this was Transocean's rig. Their systems. Their people. Their equipment". Despite later being quite candid on the success prospects of various attempts to plug the leak, the public remained sceptical of Hayward based on their initial impressions of his sincerity.
Hayward also appeared to miss the mark in response to a question about the negative press on his leadership, 'I'm a Brit, I can take it' (4 June 2010, The Telegraph). This did little to endear him to Americans already incensed at the British Petroleum in their waters. It could be said to be a classic case of forgetting one's audience.

The BP chairman did not help things when he said at the White House, 'We care about the small people'.

Alan Joyce, A380 Engine Scares, 2010

In contrast to Hayward, Qantas CEO Alan Joyce immediately got onto the front foot following the engine scare with the Qantas A380s airliners.
Joyce appeared publically several times and engaged in a lengthy interview on Four Corners. Instead of downplaying the situation, Joyce made it clear that Qantas was taking an ultra conservative approach to the situation to ensure the safety of passengers. He was impressive.

"We will suspend those A380 services until we are completely confident that Qantas safety requirements have been met". (4 November 2010, Qantas Press Conference, Sydney)

This stood in clear contrast to Rolls Royce, who manufactured the engines in question. They refused to issue a statement for a week after the engine scare.

Interestingly, Joyce had this to say about Rolls Royce, "We're not happy with the way they handled public relations around this…they honestly believed BP made a mistake by saying the wrong things in the public and our view was that we had to be continuously out there with the facts and information". (Transcript from 'Four Corners', 28 March 2011)

Joyce's decision to fly aboard the first A380 flight once repaired, can be seen as an excellent example of leading from the front with a CEO who believes in their product.

Monitoring

Monitoring what is being said about your company and the areas where it is active, online, is integral to crisis prevention. As Brian Solis, Principal of the digital and social media agency Future Works says 'rumour management is becoming the biggest and most important job in crisis communication'. (As cited in Jordan-Meier, Jane, The Four Stages of Highly Effective Crisis Management, CRC Press, Florida 2011)

'Google Alerts' are free and send email updates every 24 hours regarding chosen areas of interest. More sophisticated monitoring software is available for purchase and will help detect a PR crisis brewing, before it breaks or goes viral.

Education

Given that every employee in an organisation will probably have access to the likes of Twitter, Youtube and Facebook, it is important that employees understand the rules of engagement when discussing work matters or commercially sensitive information. You need clear terms of use of social media in the workplace.

Suppression of use of social media is generally not advisable as it tends to disenfranchise staff (and in reality, people tend to tweet and post as they choose anyway). However, education as to the implications of online publication can positively shape the way you are perceived.

Many still take the view their posts on Twitter and Facebook or txts, are like saying something on the telephone. Not so.

Case Study: Fort Hood

When Major Nidal Malik Hasan opened fire on American soldiers in Fort Hood in November 2009, an American soldier, Tearah Moore, broke the news to the world via Twitter, despite significant restrictions on the flow of information imposed by the US military. She even photographed a wounded soldier and uploaded it to her Twitpic.

Unfortunately, Ms Moore's information in fact proved inaccurate and misleading, which exacerbated a media crisis for the US Army.

Worse still, she was unaware that her comments could be viewed by the whole world; she thought she was just broadcasting the news to her friends.

Better in-house training as to implications of online micro-blogging may well have caused Ms Moore to act differently.

'Data-Breaches'

Case Study: Vodafone

As 'data-breaches' increase, it is important that you are aware of your obligations in respect of data protection and privacy. A breach of privacy (data) can severely damage the trust the public has in any organisation.

Following media reports claiming that the billing and call records of up to four million Vodafone customers had been made publically available on a website, the Privacy Commissioner launched an own-motion investigation.

Contrary to the media reports, the Privacy Commissioner found that personal information had not been made publicly available via Vodafone's website or the internet and accordingly there had been no disclosure of personal information contrary to the Privacy Act 1988 (Cth)

However, the Privacy Commissioner found Vodafone did not have adequate security measures in place to protect its customers' personal information at that time. Vodafone was found to have breached its data protection obligations as it had not taken reasonable steps to protect the personal information it held from misuse, loss or unauthorised access.

Case Study: Sony

On 4 May 2011, Sony Online Entertainment advised the Privacy Commissioner that it had discovered that hackers may have obtained customer information.

Sony said that the information was held in an outdated database from 2007 that contained about 12,700 non-US customer credit or debit card numbers and expiration dates. It is unclear how many of these customers were Australian citizens or recipients.

Sony took seven days to reveal that the breach had occurred, which invoked significant public censure, and drew criticism from the Privacy Commissioner.

Sony offered users whose accounts had been breached, free Sony membership, 1 year identity theft protection software, and two free Playstation games.

The Privacy Commissioner has said that this case reinforces the view that organisations need to limit the amount of information that they collect and store about people and ensure that the information is destroyed when it is no longer needed.

How organisations engage a regulator like the Privacy Commissioner and respond commensurate with the level of the breach both legally and practically can have a positive or negative effect on their reputations.

Crisis management

Don’t Get Mad – Get Factual

Timing is crucial – delaying entry into the media/public debate allows others to set the agenda. Do not go into 'bunker mode'.

A client's spokesperson should stick to the key messages during media interviews. If necessary, they should be written down. Key messages should be worked into any questions if possible. The spokesperson is entitled to attempt to exercise control.

Spokespeople should never get angry - even if provoked by outrageous or rude questions or information that is simply wrong. They can reject the premise of a loaded question, for example, 'I wouldn't characterise it that way - what we are saying is … ' or 'I don't accept the basis of your question but let me just say …'.

Never tell lies! If the spokesperson does not know the answer they should say so, or offer to find out. This is better than blustering or avoiding the question; these can be interpreted as hiding something. Trying to 'wing it' is likely to result in all kinds of trouble and will be disastrous to credibility.

Where there is a crisis, it is crucial that executives at all levels, your risk management, communications, legal and other people, work as a team.

Remember – you are the experts

Remember who the expert is. Journalists will not know or have access to the detail, the facts, the background or potentially, the agenda of the journalists' sources, as you will.

With this in mind, responses should be made with conviction and authority.

Understand how the crisis originated – was it caused by nature, a failed project, industry action, community activism, a whistleblower – this will affect the extent of the public's sense of outrage/interest in a crisis and will dictate your response.

Maximise the opportunity

Maximise the opportunity when talking to a journalist. Clear and concise answers run less chance of being edited, distorted or misunderstood.

If you have positive media experience, you can send an email or note to the journalist thanking him or her for being well prepared and fair. Be careful that your thanks for a positive story are not misinterpreted.

Don’t expect to pre-approve a story

Don't expect to be able to pre-read a story. Journalists will generally refuse any request by an interviewee to approve or 'vet' a story. Imposing pre-approval conditions on an interview will do little to enhance your relationship with the media.

Body language and dress

Think about appearance and dress for a television interview – stylish but not too colourful; corporate but not too sombre.

The person appearing should not look down or sideways when on camera and don't fidget - it distracts from the message.

They also don’t want to look too earnest or nonchalant – but should try to portray the right balance of care and authority.

Setting the tone of a story – be on the 'front foot'

Stay ahead of a story:

  • When a major news story is unfolding, there are a growing number of people who want to comment. If a journalist cannot find someone from the organisation, they will speak to someone outside who purports to have 'expertise' or someone prepared to comment or criticise. It is important not to let 'outsiders' set the tone of the public discussion about an issue.
  • Never underestimate the value of being on the 'front foot' during a crisis. A client's delay in entering the public debate whether because of legal advice or simply because there is a limited amount of information available, allows others with a stake in the issue to offer commentary and interpretation which can cause further damage. A great deal of time and energy can be wasted correcting erroneous and irrelevant matters raised by those without accurate knowledge.

Do not be sidetracked by commentary and personal opinions which may be given a public airing - focus on the central message to be conveyed.

Ensure that one clear consistent message is going out - find out exactly what has happened/is happening and centralise this information. Decide who will speak for the company and determine the limits of what they can say.

Deal with any issues which affect the market or profitability of the organisation before rumour and speculation do damage.

Keep your staff informed of the basics - one of the most insidious ways in which false information is disseminated is by uninformed staff passing on rumours, and sharing information online.

Do not allow legal considerations to unduly hamper a public response. Expressions of sympathy and concern do not have to equate to admissions of liability.

More generally, an apology and change in tack will not necessarily be construed as weak or a 'backflip'; often it will show humility and a vital human touch that in fact heightens the value of a brand.

In May 2010, an eight year old boy sent a crayon drawn concept to Boeing. Boeing sent the boy a standard rejection letter, which prompted the boy's father to publish a less than flattering blog regarding Boeing's values.

Instead of ignoring the blog, a Boeing Engineer sent the boy a long and personal letter regarding his drawing, and the Boeing Communications Director responded personally, offering the boy a tour of the Boeing factory. Ultimately, this potentially brand damaging error was turned into a 'feel good story'.

Understand the evolving nature of news distribution

News has traditionally been disseminated in 'news cycles':

  • early morning which tends to be the domain of talkback radio and newspapers;
  • mid-morning to early afternoon as television news and drive time radio are being put together; and
  • later afternoon/early evening which feeds the newspapers for the following day.

Whilst these phases continue to shape the way a story breaks, the rise of social media and online publication has meant that news increasingly breaks live to our phones and computers and is in turn distributed by us to the individuals in our online communities.

As Arianna Huffington, of Huffington Post has surmised, "We now engage with news, stories, videos and slideshows - we react to them, add to them, talk back to them and share them. In short, content has become social" (Speech by Ms Huffington on 7 July 2011 for the opening of Huffington Post UK)

Perhaps to the dismay of the US Government, a man adjacent to the Osama Bin Laden's Abbottabad compound, tweeted news of the covert raid, live to followers online.

The first reports that a Qantas A380 could be in trouble came from the tweets from an Indonesian island, that parts of a Qantas plane were landing on it. The suggestion was that a plane had crashed.

Tips for when facing a crisis

Remember the context

The media will contextualise a crisis by reference to previous disasters. The BP oil spill in the Gulf of Mexico was quantified by reference to the severity of theExxon Vadez oil spill, and in political terms was labelled 'Obama's Katrina'. 

Be prepared for comparative studies of the crisis, but avoid comparative answers. Sarah Palin lost considerable ground politically when comparing the US economy in 2009 to the Great Depression. Such comparisons invariably beget alarmist headlines and panic. Her reputation also suffered when she said she understands foreign affairs, that she could see Russia from her house.

Reach out to the online constituency

Facebook

Jane Jordan-Meier, in her book 'The Four Stages of Highly Effective Crisis Management', notes that Facebook is "where people gather to share thoughts, feelings and emotions. They post pictures and videos, and stream their collective consciousness of (a) crisis, forming a powerful virtual news channel".

Jordan-Meier notes that Facebook can be harnessed to:

  • dispel rumours
  • post pictures and videos
  • speak to your 'fans' – your staff and customers
  • mobilise your 'friends' into action
  • create a 'safe' environment for people to share feelings, thoughts, and emotions. 

Twitter

Jordan-Meier cites Twitter as providing a company with the ability to respond instantly and can be used to correct false information, reassure interested parties and provide useful links and information.

British Airways, KLM and Virgin Atlantic effectively used Twitter to mitigate brand damage during grounded flights due to volcanic ash. They also personalised tweets to assist individual travellers:

"@Graham_Walsh Glad you got on a flight home tomorrow Graham. Have a safe flight home".

Rebuilding after a crisis

Introduction

The way a crisis is handled will have a significant effect on both of your relationship with the public and the media for a long time afterwards. You must not bear a grudge in ongoing dealings with the media even after serious criticism. It is rarely personal and the crucial objective is to rebuild the company's public image.

Blaming others and not accepting some responsibility is a mistake.

Media organisations have long memories and extensive filing systems - be prepared for your negative past to be revisited in future stories. However, unfair or damaging stories should not be allowed to be perpetuated without challenge. The opportunity must be taken to make the point about how the situation has been remedied and the positive progress that has been made.

Learn from the experience of others - Tylenol or Pan Pharmaceuticals?

There are many examples of 'how not to' manage a crisis.

In 2003, 219 vitamin and health supplement products manufactured by Pan Pharmaceuticals were immediately recalled and the Therapeutic Goods Administration suspended Pan's licence for 6 months, due to a serious concern about the quality and safety of its products.

Pan vigorously protested that its products were safe and said it had nothing to apologise for. The end result was $20 million in liability and the appointment of an administrator.

It is possible to express regret about a particular event without admitting liability. Therefore it is desirable, and not legally compromising, to extend sympathy to those who may have been killed, injured, upset or even inconvenienced as a result of some action involving the organisation.

There are many examples of organisations who have redeemed public confidence in their position - and more - through skilful recovery operations. The textbook example of good crisis management and recovery is Johnson & Johnson's handling of the Tylenol contamination in the United States.

Seven people died in 1982 after taking headache tablets laced with cyanide. The company acted quickly to remove products from the shelves and came back into the marketplace with a tamper-proof pack. There was evidence that consumers even switched over to the brand because of the safety precautions. In 2000, Johnson & Johnson was ranked number one in a major survey of reputations of US corporations. It is worth noting that the company was less successful in its defence of toxic shock syndrome associated with tampons, declining to place warnings on its packaging for several months.

Similarly, trust was restored in Panadol and Herron in Australia when brands of pain reliever were removed from shelves due to contamination fears and were returned with a more secure form of packaging.

PR during litigation

Do you issue?

Think very carefully before you decide to issue legal proceedings. It is rare for the mainstream media to be intimidated just because a writ is issued. They will be more cautious and dot every 'i' and cross every 't' before they publish more material but they are unlikely to stop publishing. A writ does force the Media to do more research, to support their legal defence.

Litigation can lead to further publicity from other media organisations and there are many other factors to take into account:

  • discovery – will sensitive documents be disclosed?
  • executives in the witness box – do you want this? (eg Herald and Weekly Times/News Limited v. Bruce Guthrie)
  • costs
  • publicity surrounding a trial can often be more damaging than the original publication
  • loss of control once the court procedures apply.

The trial will be in a few years. Do you really want all these issues aired again so long after the original publication?

Carefully weigh up the potential upside and the potential downside before issuing proceedings.

Traditionally, the launching of legal proceedings or even the threat of such action has had a 'chilling' effect on public debate of the issues involved. This has changed in recent years, particularly in the corporate area as legal processes become more complex and prolonged. The 'day in court' can sometimes be years away. In these circumstances, individuals and organisations are entitled to defend their personal and business reputations in the public arena. This trend has become so pronounced that a new branch of communications has emerged, called 'Litigation PR'.

These days, most groups represented by plaintiff lawyers have excellent PR skills and excellent contacts in the media. The case of McCabe v British American Tobacco is an example. The anti smoking lobby (via Slater & Gordon) received much more air time than the tobacco companies and as a result, got their message across better than British Tobacco.

Research shows that the public forms strong views about the guilt or innocence of a person or company, in the first few days after a high-profile arrest or prosecution or action by the regulator. This is understandable if public information is based on statements from law enforcement agencies or regulators with no balancing facts. In these circumstances, reputation is just as important as the legal outcome.

We have all seen defendants paraded before the cameras as they are being escorted from their home or work to be placed in custody or face questioning. Images of boxes of documents, computer equipment and other articles being removed from premises are captured and broadcast by the TV networks and can be replayed online. Defendants are entitled to counteract these techniques.

The lawyers, and the barristers in particular, are properly focussed on the next witness, procedural issues and legal tactics. They are generally not focused on advising the client on PR implications during trial. Barristers may counsel against talking to the media, as it may refocus the court's attention or amount to a contempt of court. Effective legal PR advice can recognise that danger and avoid the problem areas so that communications with the media about the legal process stay within the appropriate limits but are still meaningful and effective for the client.

Litigation PR experts can advise on issues such as court demeanour. A defendant who presents as abusive, arrogant, surly or evasive will find themselves portrayed in that way in the news reports of the case. Many defendants may win their case in the court room, but lose it in the court of public opinion. Think of the James Hardie asbestos litigation. Given that Australian court proceedings are not (yet) broadcast, the only image most people gain of a defendant is what they see and hear before and after they appear in court and what the media says about them. An ill-chosen remark may eradicate all legal achievement inside the court. You should be careful to provide a carefully considered response, depending on the outcome of the litigation.

The media reports of a court case or Royal Commission can cause more damage than the actual outcome. Mud does stick, as Neville Wran once said.

Examples of poor litigation PR:

The 'McLibel' Case

McDonalds sued two environmentalists in the UK for distributing a pamphlet stating that the fast food chain produced unhealthy food, abused animals and exploited its workers and the environment. The leaflets were distributed to only a few thousand people. McDonalds took the matter to court in a trial which lasted 314 sitting days and cost more than £10,000,000. The case generated a great deal of negative publicity for McDonalds. While at the time the action began, the original leaflet was out of publication, millions of extra copies were subsequently printed. The case inspired a book, a TV mini-series and an internet site.

Although the court ultimately found in favour of McDonalds, awarding it £40,000, it could scarcely be said that they had 'won'. It gave the defendants a profile which they never would have had if the company had not pursued the litigation.

Conclusion

The way the crisis is handled will have a significant effect on your organisation's relationship with the public and the media for a long time afterwards.

Management must not bear a grudge in ongoing dealings with the media, even after serious criticism. It is rarely personal and the crucial thing is to rebuild your organisation's public image.

Blaming others and not accepting some responsibility is a mistake for any organisation.

Seasoned campaigner Peter Gordon, whose firm Slater and Gordon has relied heavily on the use of the media in advancing its clients' interests, sums it up this way:

'The media is without doubt a powerful tool ... in society and in litigation. There is a queue a mile long lining up to use it … The fundamental truth which a lawyer ignores at his or his client's peril is that there is a court of public opinion and the lawyer may find his case lost long before he rises to greet the Judge.' (Peter Gordon, Slater & Gordon)

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