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  • So, what then is a crisis? It has four elements – or criteria. Most important is that a crisis causes normal day-to-day operations to come to a halt. That halt can be for a few minutes, a few hours – and in the extreme, for days or even weeks. And the reason for a halt is because there is a real threat. A health threat. A community threat. An economic threat. Or an environmental threat. But what’s important to understand, is that threat doesn’t have to be real. It can be perceived. And if it’s perceived, it can be just as devastating and dangerous as if it were real...because people think it’s real, and they’ll still react in ways we’ll discuss later.
  • It’s also important to understand that there can be three different types of crises. One is the result of something actually happening...an explosion, a fire, a fatality, or product contamination are examples. The second is when there is an issue that emerges and can cause us to be in a crisis position...for example, announced workplace safety regulations we can’t comply with, or a scientific study that concludes beer is a health risk. The third is when there’s a problem that we know about, but don’t address, and the problem mushrooms into a crisis. This includes the likes of faulty machinery that’s not fixed properly only to fail and cause a shutdown, or not dealing with a serious employee behavioural problem until it explodes into an act of violence. So there are a number of ways we can have a crisis. And the chances of having one are greater than ever. Not because we aren’t thorough or careful at Labatt, but because of a number of other factors that are part of our world these days. Most crises can be prevented.
  • There are factors like.... The level of expectations of consumers. They’ve been told to expect consistent quality in products and services, and so they become more vocal when that expectation isn’t met. And there’s the reality that many of the systems and technologies in our world are aging...and there’s a greater chance they’ll fail. Levels of measurements scare people, especially when they don’t understand what a part per billion of something really means. There’s the high level of environmental concerns. And, of course, there is the media...with instant and live coverage, media often is “on the scene” before anyone else, and their reporting creates the potential for further frightening the public. So, we’re operating in an environment where there is low tolerance, high skepticism, and rapid judgment...and where facts sometimes aren’t as credible as the perception of wrongdoing or threat.
  • The Concept of Critical Space* The best way to illustrate that is through a concept called Critical Space* , which this diagram shows. The lesson here is that there are two concurrent realities...the operating perception, and the public perception. The point is, both are real, because perception easily can become reality. The operating perception is how we see an incident. Because we’re in the business, we know better than most anyone else what’s happening, and what has to be done when there’s a crisis. So that’s our reality. The public perception is how they believe the incident is happening. Because they know a lot less than we do, they make assumptions and are influenced by all sorts of other factors, like media reporting, rumours and speculation. The gap between the two perceptions is what’s called “Critical Space*”, and the bigger the gap, the more need there is to communicate. Because while we’ll be doing the right things in a crisis, it’s imperative to keep telling everyone what’s happening, why and how in order to manage the perceptual gap. *
  • Management , when unprepared for a crisis, always reacts the same way. Many reviews after a real crisis and after simulated crises confirm that initially, there is a sense of disbelief. “How can this happen to us,” they ask? Then, soon, a high level of frustration sets in. That’s because management teams expect to work with information to make decisions...but in a crisis, usually information is lacking, and there’s pressure to make quick decisions. That, in fact, is one of the most important reasons to have a good crisis communication system on the shelf that can be activated at once. When things aren’t going well – and they never do during the critical first hours of a crisis – the unprepared management team will want to find some means of self-protection, reducing its vulnerability. But there’ll be no place to hide. And that leads to the “flight/fight” option... that’s the desire to fight back with emotion, or to simply vanish in order to reduce the pressure. That moves management to a siege mentality, in which they feel surrounded. And in fact, they are – because employees, the media, regulators, neighbours, sometimes elected officials, maybe emergency services usually will be pressing for decisions and answers. That’s why too often management teams in a crisis take a short-term focus rather than a big- picture, long-term view. In other words, they tend to pick the easiest, fastest solution, rather than the right one.
  • Media is going to be an important factor in a crisis. More often than not, there’s instant initial coverage...and usually that’s going to be a radio bulletin or on the half-hourly news. Quickly, though, that “live eye” camera from the local television station will show up...as will reporters from the local paper. They won’t call, and they won’t be nice. They’ll be pushy and in a hurry, and they’ll demand quick answers you haven’t got. Depending on the kind of situation it is, media will be searching for witnesses...survivors, if that’s the case...and antagonists, who are those who don’t like us, for whatever reason. But make no mistake, media will probe, and media will find people to talk to. Our objective is to have them talk to us because we want to give them factual information and our point of view for the sake of balance. Meanwhile, media will blend fact and fantasy: what’s known with what they and others suspect. They’ll often try to link our incident with something that may have happened to us in the past, or something similar at another company. The danger there is that they may link us to something worse and draw parallels, and that can hurt us. There is also a tendency of reporters interviewing other reporters, and the usual result is added speculation and often misguided conclusions. What we do not know for certain is that the level of reporting...both the quality and the quantity...to a great extent will determine the level of pressure we’ll be feeling. This is true because most people will get their information about our crisis from the media.

Transcript

  • 1. Crisis Planning and Preparation at Labatt Brewing Co. Ltd. Terrance M. Dowhanick, Ph.D . !nBev North America Quality Compliance 303 Richmond Street London, Ontario N6B 2H8 Food Safety: Full Circle. Third Annual One Day Symposium, Sept 21, 2006
  • 2. Are you prepared?
    • Coca-Cola. Great product, great reputation and, even more important, invaluable trademark. Which happens to be in your hands at the moment.
    • You’re two hours into a possible product recall amid feverish speculation that the product has been contaminated. As a member of the crisis management team, you’re trying to leave your office for a high level emergency meeting, when suddenly you collide with a reporter who promptly waves a microphone in your face.
    • “ Would you drink a Coke right now?” He demands.
  • 3. What company can afford headlines like this...
    • …’ The Food Standards Agency (FSA), the British government's food watchdog, has ordered the recall and says salmonella is unacceptable at any level and Cadbury should have notified them earlier when the bacterium was found in their products.’
    • … ’ Cadbury Schweppes apparently delayed informing health authorities for five months that minute traces of salmonella had been found at one of its UK chocolate factories.’
    • …’ Cadbury said the withdrawal was a "precautionary measure“’…
    • …’ the incident is an unmitigated disaster in terms of public relations.’
  • 4. And It’s Not Just Companies At Risk….
    • GM: The cover-up 17.sep.06 The Independent (UK) Geoffrey Lean http://news.independent.co.uk/environment/article1604094.ece
    • … Britain's official food safety watchdog has privately told supermarkets that it will not stop them selling an illegal GM rice to the public. Documents seen by this newspaper show that the Food Standards Agency assured major manufacturers and retailers 10 days ago that it would not make them withdraw the rice - at the same time as it was telling the public it should not be allowed to go on sale…..
    • … Last night, Peter Ainsworth, the shadow Environment Secretary, described the agency's conduct as "a massive scandal" and said it "smelt of a cover-up". He said he would be asking for an official investigation into whether the agency had broken the law….
  • 5. What’s the impact on the bottom line? Ford cars and trucks Cost: $400 million Bridgestone/Firestone tires, Cost: $356 million Intel motherboards, Cost: $253 million General Mills cereals, Cost: $125 million Tylenol, Cost: $100 million Perrier sparkling water, Cost: $70 million Ford Pinto, Cost: $65 million Coca-Cola, Cost: $60 million Fisher-Price PowerWheels, Cost: $30 million Hudson Food Inc. meat prods. Cost: $28 million
  • 6.
    • Planning allows us the best opportunity to influence the consequences before they’re imposed on us.
    Prepare and plan Emergence Interpretation Positioning Resolution
  • 7. What’s a Crisis?
    • A crisis is when :
    • An incident or issue causes normal, day-to-day operation to cease or be altered dramatically;
    • The incident or issue actually threatens – or is perceived to threaten – one or more of the following:
      • lives
      • social/community well-being
      • economic stability
      • environmental balance
    • Intense scrutiny demands action
    • In the extreme, reputation is compromised
  • 8. Crisis Terms and Definitions
    • Crisis Management is the timely implementation of a planned process of crisis operations to effectively bring the incident under control
      • utilization of sustained communication to generate stakeholder understanding
      • application of disaster recovery procedures to allow the organization to function at some level of efficiency
      • post-issue/incident reputation restoration communication.
  • 9. Crisis Terms and Definitions
    • Crisis Operations is the timely implementation of a planned and tested technical response to bring the crisis under control as quickly as possible with the least amount of loss internally or externally. This may involve a specially-trained emergency response team.
  • 10. Crisis Terms and Definitions
    • Crisis Communication is the implementation of a planned process to effectively inform all stakeholders with relevant information during the life of the crisis in a manner that is timely, honest, credible, caring, and socially responsible.
  • 11. Crisis Terms and Definitions
    • Disaster Recovery is the implementation of a planned process to restore or apply alternative systems and services in order that the organization can effectively meet stakeholder expectations.
  • 12. Crisis Terms and Definitions
    • Reputation Restoration is the development and implementation of a planned process to demonstrate and communicate the organization’s commitment to responsible, ethical behaviour to regain over time stakeholder confidence, trust and support.
  • 13. Crisis Terms and Definitions
    • Risk Management is the process of assessing vulnerabilities and exposures and arranging appropriate safeguards and liability/insurance coverage.
  • 14. Two types of Crises
    • Inaction by management/company drives two types of crises:
    • Incident-Driven
    • ammonia/ caustic leak
    • product contamination
    • wildcat strike
    • Issue-Driven
    • responsible use
    • perception vs. reality
    • regulatory issues
      • (US Bioterrorism Act)
    • personnel issues/strike
  • 15. More crises now because...
    • Consumer expectations for high quality products and processes
    • Lack of tolerance; high skepticism; distrust
    • Environmental sensitivities
    • “Instant” media e.g. scientific and technical reporting, comparisons of related disasters after the fact, shortened timelines for credible response
  • 16. Managing the Perceptual Gap Cost to correct & organizational impact increases with time more serious Perception of Event less serious Time Perceptual Gap Public Perception (second reality) “ Operation” Perception (first reality)
  • 17. Managing the Perceptual Gap
    • Credible communication is key to keeping reality as factual as possible
    • technical experience
    • fact-based decision making
    • quantifiable/verifiable data
    • data/evidence gathering
  • 18. Unprepared Management Behavior in a Crisis
    • Disbelief
    • Frustration
    • Self-Protection
    • “ Flight/Fight” Option
    • Siege Mentality
    • Short-Term Focus
    • Lack of technical data  credibility
  • 19. Media Response in a Crisis
    • Instant initial coverage
    • Rapid “live eye”
    • Antagonists Agenda
    • Witnesses/survivors
    • “ Piecing”: Fact and fantasy
    • Linkages
    • Reporters interviewing reporters
    • “ Experts” found
  • 20. Public Reaction to a Crisis Over Time Lack of credible info/data/analysis Curiosity
      • Concern
        • Anxiety
          • Fear/Anger
    Revenge/Avenge
    • _______________________Line of Tolerance
  • 21. Government(s) Reaction to Crisis
    • Political positioning/posturing (e.g. Dawson College/gun registry)
    • Regulatory scrutiny
    • Depending on severity/impact, potential intervention
    • Possible ongoing visibility on the political level
    • Longer-term, potential regulatory change or inhibiting legislation (e.g. 9/11/Bioterrorism Laws/US import regulations)
  • 22. Managing the Crisis
    • Coordination = Contain and Control
    • Managing a crisis requires:
      • superb communication coordination of a number of stakeholders
      • control throughout the crisis and knowing which people must get involved
      • understanding your stakeholders, the information and facts they require, the appropriate time to provide the information and who from the company should be providing it
  • 23. Managing the crisis
    • … and, most important, having a plan that’s been tested over and over again
  • 24. Role of Crisis Management Team
    • Coordinates all people needed to resolve the issue/incident. Determines necessary resources.
    • Coordinates and manages the flow of information and facts to the various stakeholders
    • Acts as a central resource of all information and facts pertaining to the incident
    • Makes the necessary decisions based on the facts provided
    • Maintains the documentation related to the crisis
  • 25.
    • Team Leader (Zone President)
    • On-site Coordinator
    • Information Tracker
    • Communication Coordinator
    • Employee/Family Liaison
      • Team Leader
      • On-site Coordinator
      • Information Tracker
      • Communication Coordinator
      • Employee/Family Liaison
    • Others as determined by team leader:
      • Public Affairs
      • Legal
      • Risk Management
      • People (commercial and supply chain)
      • Finance
      • Commercial
      • Distribution
      • Procurement
      • Brewery Operations
      • Quality Compliance
      • Environment, Health & Safety
    North America Zone Crisis Management Team Site Crisis Management Team (includes breweries, QQT, LNO, King Street)
      • Team Leader (Regional Director)
      • Sales Coordinator
      • On-site Coordinator
      • Information Tracker
      • Communication Coordinator
    • Others as determined by team leader:
      • Public Affairs
      • Legal
      • Risk Management
      • People (commercial and supply chain)
      • Finance
      • Commercial
      • Distribution
      • Procurement
      • Brewery Operations
      • Quality Compliance
      • Environment, Health & Safety
    Commercial Crisis Management Team (includes Ontario, Quebec, West, Atlantic) Types of Crisis to be managed: on-site injury or death, theft, operational failures, product tampering, product recall, major supplier interruption, local or regional boycott, incident at Labatt-sponsored public event, issues involving government compliance or regulations Types of Crisis to be managed: consumer illness or death, national boycott, kidnapping, major computer failure, embezzlement, serious damage to site operations
    • Others as determined by team leader:
    • Public Affairs
    • Legal
    • Risk Management
    • People (commercial and supply chain)
    • Finance
    • Commercial
    • Distribution
    • Procurement
    • Brewery Operations
    • Quality Compliance
    • Environment, Health & Safety
      • Team Leader (Regional Directors)
      • Information Tracker
      • Communication Coordinator
      • Sales Coordinator
    Crisis Management Team for “Partner” Relationships Types of Crisis to be managed: recalls & withdrawals with partners, partner sponsorships, product tampering, brand integrity, customer/consumer relations, corporate reputation, sales, promotional activities Others as determined by team leader: Public Affairs, Legal Risk Management, People (commercial and supply chain) Distribution, Brewery Operations Environment, Health & Safety
      • Legal Coordinator
      • Quality Compliance Coordinator
      • Procurement Coordinator
      • Finance Coordinator
  • 26. Managing the Crisis: Standard process – 7 Steps
    • #1. Follow specific procedures for:
    • Bomb Threat: call police, evacuate, call Risk Management
    • Hostage Taking: call police, evacuate, call Risk Management
    • Kidnapping: get details, don’t make deals, call Risk Management
    • Extortion: get details, don’t make deals, call Risk Management
    • Environmental: involve government authorities
    • Health and Safety: involve government authorities
    • Product Recall : follow recall procedures/ involve government authorities
  • 27.
    • #2. First Alert:
    • Get control immediately!
    • Determine off-site emergency services needed
    • Obtain all available information to decide nature of crisis
    • Determine necessary resources: people and equipment
    • Begin coordination of communication and getting the facts
    Managing the Crisis: Standard process
  • 28. Managing the Crisis: Standard process
    • #3. Get the Facts:
    • On-site coordinator provides known facts to team
    • Team determines what’s missing; what’s needed and when will it be received
    • Team determines “who needs to know;” “who wants to know”
    • Team leader begins coordination of roles
  • 29.
    • #4. Convene the Crisis Management Team:
    • Team leader begins to evaluate:
    • Nature and extent of incident?
    • Time it occurred and discovered?
    • Names and status of people involved?
    • Consequences and likely consequences?
    • What’s being done now, by whom? Additional resources required?
    Managing the Crisis: Standard process
  • 30.
    • #4. Convene the Crisis Management Team:
    • When will more information be available?
    • Who already knows about the incident – what do they know?
    • Have security, switchboard, customer service been notified?
    • Does everyone on the team know what they are to do next? Who are your stakeholders?
    Managing the Crisis: Standard process
  • 31.
    • #5. Manage the flow of information:
    • Determine who needs to know; who wants to know
    • Continuously update information; verify facts; update stakeholders
    • Maintain contact with government, emergency authorities
    • Always track the flow of information
    Managing the Crisis: Standard process
  • 32.
    • #6. Manage the Crisis to Resolution:
    • Remember: it’s not over until it’s over
    • Continue monitoring situation
    • Provide ongoing updates to various stakeholders
    • Determine what is needed to restore reputation and ensure follow through
    Managing the Crisis: Standard process
  • 33.
    • #7. Reporting:
    • Learn from your experience!
    • Determine level of preparedness and act on deficiencies
    • Evaluate risk management and possible vulnerabilities. Address the issues
    • Ensure overall reporting is complete
    Managing the Crisis: Standard process
  • 34. Measures of Success
    • Demonstrated care and compassion to employees and consumers/customers
    • Acts quickly and diligently. Is able to contain the incident.
    • In control and does/is perceived as doing everything possible to manage the incident
    • Timely, appropriate & consistent responses to all stakeholders
    • Credible, honest & socially responsible
  • 35. Measures of Success
    • Fact-based decision making
    • Actions build stakeholder confidence, trust and support
    • Corporate reputation/image is not put at risk
    • Company does/is perceived as providing all necessary resources to control the incident
    • Does/ is seen as working collaboratively with government authorities
  • 36. Measures of Success
    • Today’s reality:
    • The way you manage your crisis is a
    • reflection of the way you manage your business .
  • 37. Y2K – The Potential Crisis of the Millennium
    • Began risk assessments and contingency planning in 1998
      • Completely cross-functional
    • 1999
      • Rolled out contingency plans
      • Trained on-site and corporate crisis teams (bench-top simulations & presentations, on-camera simulations)
      • Developed and conducted full-scale crisis simulations prior to 9/9/99
      • Modified and finalized plans based on simulation learnings
      • Experienced Y2K without problems
  • 38. Pre & Post Y2K Crisis Simulations
    • Continued with updated training sessions & full-scale crisis simulations at breweries
      • Product Recalls
      • On-site accidents
      • On-site deaths
      • Off-site incidences
    • Simulations involved
      • Local actors
      • Local Emergency Response Teams
      • Local Press
  • 39. Anatomy of a Crisis Simulation
    • Components of a Crisis Simulation
      • Technical
        • QA verification
        • Fact gathering
        • Prove/disprove
      • Regulatory
        • Police/Fire Department/Ambulatory Services
        • CFIA
        • Environmental
      • Media/Public Affairs
        • Press
        • Radio
        • Television
  • 40. Anatomy of a Crisis Simulation
    • Scripted simulations prepared months in advance
    • Actors briefed on roles on day prior to simulation
    • Public Affairs ran control center
    • Risk Management audited Crisis Center
    • Quality Compliance audited key players on location
    • Duration: 4-6 hr
  • 41. Anatomy of a Crisis Simulation
    • Post-simulation wrap –up immediately followed with full participation of all actors, external services, corporate auditors and brewery /corporate employees involved
      • Actors impressions on how they were treated
      • Regulators impressions on how on-site brewery personnel handled the situation
      • Risk auditor impressions of how crisis center managed the crisis
      • Quality Compliance auditor impression of how personnel handled actors & regulatory staff
      • Written report within 30 days with key recommendations for follow-up
  • 42. Crisis Planning and Preparation at Labatt Brewing Co. Ltd. Terrance M. Dowhanick, Ph.D . !nBev North America Quality Compliance 303 Richmond Street London, Ontario N6B 2H8 Food Safety: Full Circle. Third Annual One Day Symposium, Sept 21, 2006