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Why senior executives often turn a crisis into a PR disaster

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There are lots of guides for businesses on how to respond to crises so the damage to their reputation is minised. Many of the steps are commonsense. …

There are lots of guides for businesses on how to respond to crises so the damage to their reputation is minised. Many of the steps are commonsense.

Yet, as Toyota and BP show, even the best resourced companies make repeated bad decisions that cause crises to become PR disasters too.

What is it that causes executives to repeatedly make the wrong calls?

This article looks at the psychology behind decision-making and why it often fails under the intense media pressure generated by a crisis.

Published in Business
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  • 1. Why some companies turn a crisis into a PR disaster .... and how not to be one of them Tim Prizeman of Kelso Consulting (www.kelsopr.com) considers: why do organisations frequently mishandle crises, often inflicting on themselves a PR disaster whose damage is far greater than the initial problem? The tactics for stopping a crisis becoming a PR disaster are well A crisis known and have been extensively documented, so why do well- A sudden event that has the potential to in�ict long term resourced companies with lots of bright people (like Toyota et al) �nancial harm on a business. make such a disaster of it? Poor tactics may be the end result, but such PR problems are often driven by underlying psychological A PR disaster factors that lead to group-think, denial and disastrous management Mishandling the communication (often in the �rst few decision-making under pressure. Overcoming these traits before a hours) so that the harm from the publicity generated by the crisis develops is needed to ensure great PR tactics aren’t thwarted crisis is far greater than the event itself! by your own organisation. Toyota will go down in the annals of corporate communications build before they took on damaging proportions. Early action by as a case study of how not to handle a crisis. There is a lot to learn management would have nipped them in the bud. for businesses of all sizes from the way Toyota mishandled its response to allegations of faulty accelerators. The question “how do you deal with a crisis and minimise adverse coverage” is simple to answer – have a crisis response plan based Many people assume that a crisis is something that appears out on a worse case scenario; have a crisis communication plan within of the blue – and certainly businesses can be hit with seemingly it that will allow your business to immediately show concern and unforeseeable events. However, what is foreseeable is the leadership as it deals with the crisis; rehearse them, and apply probability of some sort of crisis – oil companies will inevitably a few other commonsense ingredients widely covered in the have spillages; food companies will inevitably have product recalls; numerous books on the subject! professional �rms will inevitably have their standards criticised; and each year many businesses will �nd their premises burnt or Given dealing effectively with communication to the media in �ooded. There is no excuse for �rms failing to have contingency a crisis is so well documented and is, in the scheme of things, plans for dealing with sudden emergencies. reasonably straightforward, of more interest is the question “why do organisations frequently mishandle crises and manage to By contrast, many crises that become PR disasters, such as Toyota’s inflict on themselves a PR disaster whose damage is far greater than accelerator pedals, are issues that have been allowed to fester and the initial problem?”. PAGE 1 OF 3 PR KELSO CONSULTING 21 Bloomsbury Way, London WC1A 2TH 020 7242 2272 www.kelsopr.com pr@kelsopr.com Media Relations • Thought Leadership • Business Social Media • Crisis Communications
  • 2. Accelerators - what went wrong Toyota initially refused to acknowledge the problem After sustained pressure it offered an explanation (badly �tting �oor mats) that was greeted with skepticism and did not address the allegations After more pressure it changed its position again and agreed to replace the accelerator pedals in affected vehicles Insights from behavioural economics (a combination of economics It allowed others to set the agenda, which in the US and psychology that considers why customers and, particularly, culminated in a panic over their cars’ safety investors often act irrationally) holds some useful insights to decision-making in a crisis too. As well as seeming indecisive, Toyota’s bosses went to ground as the story erupted – failing to show either For instance, people have a “self-serving bias”. Its traits include: concern or leadership in tackling the problem • we typically attribute our successes to personal factors but Public appearances and contrition only happened under failures to factors beyond our control (people with low self- duress after months of sustained pressure from the US esteem do the opposite). This gives the common human Congress and media tendency to take credit for success but deny responsibility By this time, Toyota’s shares had lost more in value then for failure – think of the heads of big banks after the credit the entire value of Ford! crunch. • we evaluate ambiguous information in a way that supports our interests (of course you and I don’t think we do....but we do!) • we believe we perform much better than the average person in As a CEO, when a crisis occurs you areas important to our self-esteem (and, in order to maintain will believe: this belief, we will always rationalize-away failures to – again, think heads of banks or Sir Alex Fergusson’s comments when It won’t happen to us Manchester United gets beaten: it is always the referee or We can deal with it when it happens injuries to blame, never a better squad or manager!). When it happens, you will believe that it is not our fault When people hold a view that is demonstrably wrong, do The criticism of us is unfair or misguided they change their mind? You’d think so. In fact, in the face of The problem is not as bad as is being made out by mounting evidence people generally become even more adamant the media they are right (think of George Bush’s and Tony Blair’s comments on the invasion of Iraq long after the subsequent non-discovery of We are being picked on unfairly weapons of mass destruction). The media is out to get us (paranoia has now set in!) We can �x it if they leave us alone (which no one trusts So as a crisis mounts and the pressure builds, management and you to do – as you have already failed to �x it!) advisers become even more convinced that they are right and outsiders are wrong. Contradictory information is ignored, and If I keep my head down it will be okay in the long run advisers who give contrary views are distrusted. PAGE 2 OF 3 PR KELSO CONSULTING 21 Bloomsbury Way, London WC1A 2TH 020 7242 2272 www.kelsopr.com pr@kelsopr.com Media Relations • Thought Leadership • Business Social Media • Crisis Communications
  • 3. Why do organisations go into “no comment” mode when What you experience in a crisis they know it is damaging? Everyone knows that saying “no comment” and generally refusing to answer legitimate questions Ultra-compressed timescales is generally the worst thing you can do since it is equated with an Lack of clear information admission of guilt. Yet under pressure senior executives suddenly Rumour and speculation forget all this. Events unfolding out of your control Journalists (whose job involves them dealing with many Decision-makers unavailable companies all the time) will judge the company by how professionally it handles the communications during the crisis The need for fast decisions – and companies are often judged at least as harshly on their Communication becomes more adversarial, more competence in handling the communications as they are about probing, faster paced and less predictable the crisis itself. “News journalists” replace business correspondents (and your problems really begin!) Sadly, there are many companies that have found to their cost that the court of public opinion is both immediate and harsh, and if this aspect is mishandled then the business will suffer far more at the hands of customers and investors then it ever will at the The right way to handle a crisis hands of a judge. For instance Andersen, which was embroiled in controversy over its advice to Enron, ultimately won in court.... Britain’s top chef, Heston Blumenthal, faced a high pro�le sadly, all that was left of this accounting giant by then was a crisis when more than 500 diners, including several well known celebrities, suffered food poisoning in early 2009 at his Michelin- handful of employees winding it up. All the clients and employees starred Fat Duck restaurant. Not only the restaurant, but his had walked in the meantime. personal brand were threatened. The celebrity chef immediately acted with direction and concern, HOW KELSO CONSULTING CAN HELP closing the restaurant and ensuring it was sanitised from top to bottom. Kelso Consulting helps our clients prevent PR disasters through working with them to develop, plan and rehearse Suppliers weren’t blamed, the buck wasn’t passed to scapegoats and sick diners’ claims weren’t dismissed. Having done everything crisis communications plans to ensure their con�dence and immediately and transparently that could be expected, his �agship preparedness to respond quickly and appropriately when restaurant re-opened to widespread media interest and the episode problems, whether small or large, occur. was ultimately a non-incident. The outbreak was investigated by the Health Protection Agency. We work within the grain of human behaviour, using scenario According to The Guardian newspaper later than year “Their planning and rehearsal, to ensure management within an �ndings, released today, established that diners were infected by organisation are ready for their role in preventing crises as well as the norovirus bug, which had spread throughout the country at responding to them. We also help organisations learn from how the time. It is thought to have been brought into the restaurant their competitors and comparator organisations handled crises. through contaminated shell�sh, and inspectors criticised food safety standards in the kitchens.” Where clients are concerned about potential negative media It goes on to report numerous failings in the restaurant’s food interest, we provide experienced counsel on minimising coverage hygiene standards, but an initial strong and responsible reaction and harm. ensured the restaurant and chef were well placed to weather this critical coverage. For more information, please contact us on 020 7242 2273. At the time of writing he is featuring in Waitrose adverts, has a www.kelsopr.com series on the TV, and the Tasting Menu at the Fat Duck, including a course entitled “Sound of the sea” costs £150. PAGE 3 OF 3 PR KELSO CONSULTING 21 Bloomsbury Way, London WC1A 2TH 020 7242 2272 www.kelsopr.com pr@kelsopr.com Media Relations • Thought Leadership • Business Social Media • Crisis Communications