English for crisis management. Учебное пособие

of time.

Just suppose for a moment that your organization has been responsible for some perceived tragedy that ruins the livelihood of several people, or worse still. TV news crews report vivid images interviews from the scene and then turn to your organization for reassurance that you take the crisis seriously. But the perception is that you do not. For you it's just an incident; and a result you appear out of touch, uncaring and aloof from reality. It seems you are more concerned about spin than honesty. In such a scenario your corporate reputation could collapse due to unsympathetic reporting and subsequent public anger.

When a company runs any crisis management workshop CM experts do advise people to use the obvious noun 'crisis', but not to call themselves a 'crisis team' when the acute phase has been dealt with and the organization is well into recovery. The latter does undoubtedly send the wrong message to stakeholders. But to pretend at the very outset that there is no intense difficulty or anything causing a serious problem by giving the event a deliberately vague title in order to spuriously assuage any stakeholder fears is rather disingenuous.

9.2 Text 2. Crisis Management Practice

Sudden Crises, such as fires, explosions, natural disasters, workplace violence, etc; Smoldering Crises, problems or issues that start out small and could be fixed or averted if someone was paying attention or recognized the potential for trouble; Bezarre, like the finger in the Wendy's Restaurant Chili, a one-of-a-kind crisis; and, Perceptual Crises, such as the long-running problem Proctor & Gamble used to have with their former corporate logo, that included a half-moon and stars, which critics would claim were symbols of devil-worship, calling for boycotts of P&G products.

The practice of crisis management involves attempts to eliminate technological failure as well as the development of formal communication systems to avoid or to manage crisis situations.

The related terms emergency management and business continuity management

81

focus respectively on the prompt but short lived "first aid" type of response (e.g. putting the fire out) and the longer term recovery and restoration phases (e.g. moving operations to another site). Crisis is also a facet of risk management, although it is probably untrue to say that Crisis Management represents a failure of Risk Management since it will never be possible to totally mitigate the chances of catastrophes occurring.

9.3 Text 3. The Aims or Benefits of Crisis Management

Mattel

Mattel Inc., the country's biggest toy maker, has been plagued with more than 28 product recalls and in Summer of 2007, amongst problems with exports from China, faced two product recall in two weeks. The company "did everything it could to get its message out, earning high marks from consumers and retailers. Though upset by the situation, they were appreciative of the company's response. At Mattel, just after the 7 a.m. recall announcement by federal officials, a public relations staff of 16 was set to call reporters at the 40 biggest media outlets. They told each to check their e-mail for a news release outlining the recalls, invited them to a teleconference call with executives and scheduled TV appearances or phone conversations with Mattel's chief executive. The Mattel CEO Robert Eckert did 14 TV interviews on a Tuesday in August and about 20 calls with individual reporters. By the week's end, Mattel had responded to more than 300 media inquiries in the U.S. alone".

Pepsi

One crisis management success story revolves around the Pepsi Corporation. The crisis started with claims of syringes being found in cans of diet Pepsi. Pepsi, confident that the tampering was not their fault, urged stores nation-wide not to remove the product from shelves. The company had the cans and the situation thoroughly investigated. This led to an arrest, which Pepsi made public and then followed with their first video news release. This showed viewers the company's steps in the factories and how it was impossible to happen within their factories. A second video news release displayed the man arrested and proved to the public that he had committed the scam. A third video news

82

release showed surveillance from a convenient store where a woman was caught replicating the tampering incident. The company simultaneously publicly worked with the FDA during the crisis to get to the bottom of the scam. Basically the Corporation was completely open with the public throughout the entire ordeal. Every employee of Pepsi everywhere in the world was completely aware of all of the details as well. This made the internal public communications very effective throughout the crisis. Once the allegations were finalized the corporation launched a series of special campaigns designed to thank the public for standing by the corporation along with coupons for further compensation. This case served as a design for how to handle other crisis situations. The management and public relations worked together stupendously throughout the entire organization.

The aims or benefits of CM

The primary aims or benefits of crisis management would normally include:

1)Ability to assess the situation from inside and outside the Institution asall stakeholders might perceive it.

2)Techniques to direct action(s) to contain the likely or perceived damage spread.

3)Better institutional resilience for all stakeholders.

4)Compliance with regulatory and ethical requirements, e.g. corporate (social responsibility).

5)Mudi better management of serious incidents or any incident that could become

serious.

6)Improved staff awareness of their roles and expectations within the institution.

7)Increased ability, confidence and morale within the institution.

8)Enhanced risk management insofar that obvious risks will be identified, mitigated (where possible) and through crisis and business continuity management as prepared for.

9)Protected and often enhanced reputation a much reduced risk of post event

litigation.

Apology compared to other crisis response strategies: experimental research in the past has established the apology in crisis management to be favourable to other methods. Critics argue that apology opens an organization up for possible legal responsibility for anyone harmed by their products; detailed symptoms of poisoning; and explained what

83

consumers should do with any affected products. Odwalla then developed - through the help of consultants - effective thermal processes that would not harm the products' flavours when production resumed. All of these steps were communicated through close relations with the media and through full-page newspaper ads.

9.4 Text 4. Crisis Management Success Stories

Tylenol (Johnson & Johnson)

In the fall of 1982, a murderer added 65 milligrams of cyanide to some Tylenol capsules on store shelves, killing seven people, including three in one family. Johnson & Johnson recalled and destroyed 31 million capsules at a cost of $100 million. The affable CEO, James Burke, appeared in television ads and at news conferences informing consumers of the company's actions. Tamper-resistant packaging was rapidly introduced, and Tylenol sales swiftly bounced back to near pre-crisis levels.

Johnson & Johnson was again struck by a similar crisis in 1986 when a New York woman died on Feb. 8 after taking cyanide-laced Tylenol capsules. Johnson & Johnson was ready. Responding swiftly and smoothly to the new crisis, it immediately and indefinitely canceled all television commercials for Tylenol, established a toll-free telephone hot-line to answer consumer questions and offered refunds or exchanges to customers who had purchased Tylenol capsules. At week's end, when another bottle of tainted Tylenol was discovered in a store, it took only a matter of minutes for the manufacturer to issue a nationwide warning that people should not use the medication in its capsule form.

Odwalla Foods

When Odwalla's apple juice was thought to be the cause of an outbreak of dangerous infection, the company lost a third of its market value. In October 1996, an outbreak of bacteria in Washington state, California, Colorado and British Columbia was traced to unpasteurized apple juice manufactured by natural juice maker Odwalla Inc. Forty-nine cases were reported, including the death of a small child. Within 24 hours, Odwalla conferred with the FDA and Washington state health officials; established a

84

schedule of daily press briefings; sent out press releases which announced the recall; expressed remorse, concern and apology and took consequences. "However some evidence indicates that compensation and sympathy, two less expensive strategies, are as effective as an apology in shaping people's perceptions of the organization taking responsibility for the crisis because these strategies focus on the victims' needs. The sympathy response expresses concern for victims while compensation offers victims something to offset the suffering.

9.5 Text 5. Lessons learned in Crisis Management: Impact of Catastrophes on

Shareholder value

One of the foremost recognized studies conducted on the impact of a catastrophe on the stock value of an organization was completed in Templeton College, University of Oxford. This undertook a detailed analysis of the stock price, (post impact), of organizations that had experienced catastrophes. The study identified organizations that recovered and even exceeded pre-catastrophe stock price, (Recoverers), and those that did not recover on stock price, (Non-recoverers). The average cumulative impact on shareholder value for the recoverers was 5 % plus on their original stock value. So the net impact on shareholder value by this stage was actually positive. The non-recoverers remained more or less unchanged between days 5 and 50 after the catastrophe, but suffered a net negative cumulative impact of almost 15 % on their stock price up to one year afterwards.

One of the key conclusions of this study is that "Effective management of the consequences of catastrophes would appear to be a more significant factor than whether catastrophe insurance hedges the economic impact of the catastrophe".

While there are technical elements to this report it is highly recommended to those who wish to engage their senior management in the value of crisis management.

Bhopal

The Bhopal disaster in which poor communication before, during, and after the crisis cost thousands of lives, illustrates the importance of incorporating cross-cultural

85

communication in crisis management plans. According to American University's Trade Environmental Database Case Studies, local residents were not sure how to react to warnings of potential threats from the Union Carbide plant. Operating manuals printed only in English is an extreme example of mismanagement but indicative of systemic barriers to information diffusion. According to Union Carbide's own chronology of the incident, a day after the crisis Union Carbide's upper management arrived in India but was unable to assist in the relief efforts because they were placed under house arrest by the Indian government. Symbolic intervention can be counter productive; a crisis management strategy can help upper management make more calculated decisions in how they should respond to disaster scenarios. The Bhopal incident illustrates the difficulty in consistently applying management standards to multi-national operations and the blame shifting that often results from the lack of a clear management plan.

Ford and Firestone Tyre and Rubber Company

The Ford-Firestone dispute transpired in August 2000. In response to claims that their 15-inch Wilderness AT, radial ATX and ATX II tyre treads were separating from the tire core - leading to grisly, spectacular crashes - Bridgestone/Firestone recalled 6.5 million tires. These tyres were mostly used on the Ford Explorer, the world's top-selling sport utility vehicle.

The two companies' committed three major blunders early on, say crisis experts. First, they blamed consumers for not inflating their tyres properly. Then they blamed each other for faulty tyres and faulty vehicle design. Then they said very little about what they were doing to solve a problem that had caused more than 100 deaths - until they got called to Washington to testify before Congress.

Exxon

On March 24, 1989, a tanker belonging to the Exxon Corporation ran aground in the Prince William Sound in Alaska. The Exxon Valdez spilled millions of gallons of crude oil into the waters off Valdez, killing thousands of fish, fowl, and sea otters. Hundreds of miles of coastline were polluted and salmon spawning runs disrupted; numerous fishermen, especially Native Americans, lost their livelihoods. Exxon, by contrast, did not react quickly in terms of dealing with the media and the public; the CEO, did not become

86

an active part of the public relations effort and actually shunned public involvement; the company had neither a communication plan nor a communication team in place to handle the event - in fact, the company did not appoint a public relations manager to its management team until 1993, 4 years after the incident; Exxon established its media center in Valdez, a location too small and too remote to handle the onslaught of media attention; and the company acted defensively in its response to its publics, even laying blame, at times, on other groups such as the Coast Guard. These responses also happened within days of the incident.

9.6 Text 6. Public Sector Crisis Management

America is not the only community that is vulnerable to the perils of a crisis. Whether a school shooting, a public health crisis or a terrorist attack that leaves the public seeking comfort in the calm, steady leadership of an elected official, no sector of society is immune to crisis. In response to that reality, crisis management policies, strategies and practices have been developed and adapted across multiple disciplines.

Schools and Crisis Management

In the wake of the Columbine High School Massacre, the September 11, 2001 attacks, and shootings on college campuses including the Virginia Tech massacre, educational institutions at all levels are now focused on crisis management.

A national study conducted by the University of Arkansas for Medical Sciences and Arkansas Children's Hospital Research Institute has shown that many public school districts have important deficiencies in their emergency and disaster plans. In response the Resource Center has organized a comprehensive set of resources to aid schools in the development of crisis management plans.

Crisis management plans cover a wide variety of incidents including bomb threats, child abuse, natural disasters, suicide, drug abuse and gang activities - just to list a few. In a similar fashion the plans aim to address all audiences in need of information including parents, the media and law enforcement offices.

87

9.7 Text 7. 25 More Crisis Management Lessons Learned

By Jonathan Bernstein

On October 15, 2005,"25 Crisis Management Lessons learned were published based on some consulting assignments of the preceding year. You may wish to review those first, since most, if not all of them are still valid.

1)We have probably not seen the end of food and product-related crises originating in the People's Republic of China. Any organization with relevant connections to the PRC should factor this into their crisis preparedness.

2)The Internet continues to make it easier to read about, hear and view skeletons in your closet. Corollary lesson: Conduct your business as if everything you write, say and do might be recorded and you'll avoid a lot of crises (P.S. There will be 300 million multimedia-capable mobile phones mobile phones shipped in 2008).

3)Intra-organizational infighting is one of the leading causes of crises and plays a major role in exacerbating crises that may otherwise have remained minor.

4)No written statement can transmit crisis-related messages as well as video communication.

5)If you're a technophobic CEO, get the heck out of the way and let your technosavvy staff and/or consultants guide you on the best ways to use technology for crisis management purposes.

6)The Better Business Bureau (at least in the United States) can be a royal pain in the ass to deal with because of its institutionalized bias and bad habit of presenting information out of context. Unfortunately it's probably still worth your reputation management time to be highly responsive to BBB complaints and to be a member as well. BBB complaints are often cited by your critics and it's a very common destination for consumers deciding whether to do business with you.

7)Ignore a committed online critic and he'll take most of the top Google rankings under your preferred search terms.

8)The most predictable judge or jury is unpredictable. Always prepare for multiple potential outcomes in litigation-related crisis management.

88

9)Every organization in the world needs a blog.

10)Changing copy less than once per week on a blog created as a primary communications vehicle (versus strictly for SEO purposes) is like riding a horse in the middle of the German Autobahn - everyone's going to pass you by or run you down. If you don't know what "SEO" means, see lesson #5, above.

11)Too many organizations engage in Search Engine Obfuscation instead of Search Engine Optimization, enhancing their vulnerability to crises.

12)Policies vital to avoiding and/or minimizing the damage from crises MUST be accompanied by initial and refresher training or they are worthless. Corollary lesson: almost every functional area of an organization has (or should have!) such policies.

13)When there are significant cultural differences between the foreign owners of a company and the natives of the country in which they're doing business, those owners must be willing to defer crisis communications strategy and decisions to those who best understand the culture(s) in which they are communicating.

14)If an organizational leader make a commitment to his/her stakeholders, he/she should make certain that everyone in his/her organization (a) is aware of the commitment and (b) does nothing to violate it, or the entire organization's credibility can suffer immense and completely preventable damage.

15)Few organizations have telephone systems or website servers capable of managing the dramatic increase in traffic that would result from a crisis. And many of those who think they do haven't tested their systems through simulation exercises.

16)If I emptied 10 trashcans in the executive suite (and many other parts) of most organizations at the end of a workday, I would find information that could compromise the reputation and/or financial well-being and/or security of those organizations.

17)If you are likely to need certain types of products or services as a result of the types of crises most common to an organization such as yours (e.g., backup generators, testing laboratories), the time to establish relationships with product/service providers is

now, not under the gun of a crisis. Corollary lesson: during times of widespread crises, such as a natural disaster, demand for certain types of products/services is higher than the supply; "preferred customers" move to the front of the line, last-minute customers may not

89

be served at all.

18)It's a mistake to let crisis response depend on the leadership skills of any single individual, no matter how talented and charismatic he/she might be. Crisis response should be based on advance planning that generates a system for effective response which works even when individual team members are unavailable at the time the crisis occurs.

19)PR representatives for any organization need to be very familiar not only with traditional media, but with leading bloggers covering their industry. In times of crisis, leading bloggers can become more important than traditional media, as they are more prolific, more focused on a subject over the long-term, and more frequently quoted by other bloggers.

20)Not all IT departments or consultants are created equal. Some of them think they understand all the ways in which the information on their systems can be compromised. Some of them are wrong.

21)Far too many organizations have no contingency plan whatsoever for what to do if - tonight - they permanently or for some long term lost access to their primary workplace or a major facility due to a disaster of any kind (e.g., fire, flood, earthquake, tornado, hurricane).

22)There are relatively few organizations that have functional disaster response plans - functional meaning that they include all details of what to do in the event of a manmade or natural disaster and that training has accompanied the plans, to including drills and/or exercises.

23)Many crises, from reputational threats to threats of violence, have been foreshadowed by messages on traditional websites, blogs or social media sites, but most organizations fail to regularly monitor these online locations. Those seeking to harm individuals or an organization have the portable ability to easily record the written word, audio, and video and post it on the Internet very quickly - or even live.

24)Quite a few organizations have a policy of not allowing their top leaders to fly together, yet they are actually at more risk driving together, which they do all the time.

25)While many organizations go to great length to protect the security of data stored on their servers, the same organizations usually allow executives (and others) to

90