How To Survive A Scandal
24th March 2016
With the recent scandals hitting the headlines - Maria Sharapova, the VW emissions debacle, there are many more - the question is, “are you prepared to handle a PR disaster?” Do you have a plan set out for when things go astray? You should. Crisis management should be one of the first things set out once you’re big enough to attract that kind of media attention.
Below are some of the worst handled business blunders to clarify what not to do when your business causes a disaster.
- BP Deepwater Horizon (2010) - Tony Hayward the CEO of BP at the time of the disaster came out with possibly the worst comment in crisis management history. After 11 people had lost their lives and the Gulf of Mexico’s ecosystem had been endangered, Mr Hayward stated that he’d like his life back. This awful choice of words (not the first blunder he had made either) coupled with several failed attempts to plug the leak makes this one of the worst. BP were so clueless they even set up a helpline for people to call to give them ideas on how to stop the spillage getting worse. In total it cost BP over $14 billion, a drop in the ocean for a company like BP.
- VW’s current emissions scandal (2015) - Back in September, VW were found out by the Environmental Protection Agency (EPA) that their diesel cars were cheating on emissions tests in America. VW have admitted that about 11 million cars worldwide are fitted with the ‘defeat device’ which made the engine run more economically under test conditions. VW’s response to this has been dramatic although a little patchy, which is why they’ve fallen into our crash and burn category. The lack of transparency and constant unearthing of information that should have been released to stakeholders sooner is what is continuing to damage VW’s previously stellar reputation. Will it be this reputation which saves them? We are 5 months on since the story broke and VW are doing the right things now so only time will tell if they can recover.
- Alton Towers crash (2015) - The re-opening of the Smiler rollercoaster was announced just the other day. All of the victims have publicly spoken out against this as they feel it is far too soon to be running again, claiming the park is prioritising money over its customers. It will be interesting to see how this plays out in the long run as currently, the press is very negative and obviously siding with the victims’ cries for the ride to stay closed. The court date is set in April to prosecute Merlin over the crash, it is likely that they will have to pay significant amount of damages to the victims.
Rise from the Ashes
These are some of the best handled disasters in recent history where the companies have come out stronger after some testing times.
- Johnson & Johnson Tylenol capsules (1982) - The worst thing to happen to a business would have to be killing one of your customers, something Johnson & Johnson dealt with superbly. They did everything in their power to prevent it happening again regardless of the cost. They fully co-operated with the authorities and offered up a reward of $100,000 to find the killer. This is regarded as one of the most successfully managed crises ever.
- Cadbury’s worm bars (2003) - An infamous story of the worm infested bars found in Mumbai, this scandal forced Cadbury to change its manufacturing and storing processes to ensure they didn’t suffer a similar scandal in the future. Initially Cadbury were slow to react but it stopped all of its advertising and launched an educational PR project to target retailers on storing the goods safely. It also kept the media continuously updated with press releases regarding the action it was taking. With the new procedures and packaging, Cadbury’s sales had recovered to pre-crisis levels in just eight weeks. Cadbury has been at the top of the Indian chocolate industry ever since.
- Toyota jamming accelerator (2010) - Toyota had to recall 8.8 million vehicles dues to numerous safety defects, one of which was the accelerator jamming on (scary stuff). Toyota had a shocking start with this crisis as it took them so long to realise there was a problem, however it’s the way they bounced back that’s impressive. The solid, reliable reputation Toyota had built up over the previous decades was what people remembered. They also offered extended warranties which reassured customers of their safety and reliability.
Keys to Success
These are the most important things to do when handling any crisis situation.
- Speed - You should feel the need for it. The rapidity of response (or lack thereof) is one of the prime factors in how the public respond. What helps with speed is having a plan already in place so that your reaction to an event is as quick as possible.
- Accept Responsibility - Always apologize and ensure it is done by the Director or CEO as there is nothing worse than Dave from PR making a statement. It needs to be a sincere apology along with the steps being taken to confront the situation.
- Transparency - Updates and progress reports should be given as often as possible, especially when important information has been uncovered. Maybe not to the extent of BP and their helpline though. Definitely don’t act like Malaysia Airlines did when they notified relatives of those on the Flight MH370 via text message, saying that they should assume “beyond doubt” no one had survived. Relatives were understandably outraged by this.
- Reputation - Have a great one. The better the company’s reputation before a crisis, the easier it will be for the public to forgive and forget any errors that have been made (providing your company has reacted well initially). This was the key for Toyota and probably what VW are hoping for when the Emissions scandal calms down. However, this will take a huge amount of engagement and investment to achieve.
PR is tricky. It takes forever to build up a good public image but it can all be gone in an instant. By learning from the successes and failures of others and following these simple-to-learn but hard-to-master steps, hopefully you can avoid doing anything as invasive as U2’s iTunes scandal.