Crisis Communications How to Manage Negative News

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What is a crisis? Major, unpredictable event or cultural change Poses a risk to an organization’s reputation Threatens to harm an organization and its stakeholders Common elements Timing and/or scope is unexpected Decisions must be made quickly

Major, unpredictable event or cultural change

Poses a risk to an organization’s reputation

Threatens to harm an organization and its stakeholders

Common elements

Timing and/or scope is unexpected

Decisions must be made quickly

Crises may or may not be “emergencies” Acquisitions Layoffs CEO succession Online ad YouTube Video Nationwide salmonella outbreak Pinelake Rehab & Health Online ad YouTube Video

Protecting and preserving a good reputation According to the Harvard Business Review, 70 – 80% of a company’s market value comes from hard-to-assess intangible assets such as brand equity, intellectual capital and goodwill. Given this, organizations are especially vulnerable to anything that damages their reputations Crisis preparedness and crisis management is critical to protecting and preserving a good reputation

According to the Harvard Business Review, 70 – 80% of a company’s market value comes from hard-to-assess intangible assets such as brand equity, intellectual capital and goodwill.

Given this, organizations are especially vulnerable to anything that damages their reputations

Crisis preparedness and crisis management is critical to protecting and preserving a good reputation

Crisis Communications Planning: Why it’s Important During the next five years 83% of companies will face a crisis that will negatively impact profitability by 20-30%. -Oxford-Metrica study 2006 Impact on shareholder value: Companies with effective crisis plan: 5%+ (positive impact) Companies without plan: net negative cumulative impact of 15% on stock price up to one year after the crisis -Dr Rory Knight and Dr Deborah Pretty, (1995, Templeton College, University of Oxford - commissioned by the Sedgewick Group).

During the next five years 83% of companies will face a crisis that will negatively impact profitability by 20-30%.

-Oxford-Metrica study 2006

Impact on shareholder value:

Companies with effective crisis plan: 5%+ (positive impact)

Companies without plan: net negative cumulative impact of 15% on stock price up to one year after the crisis

-Dr Rory Knight and Dr Deborah Pretty, (1995, Templeton College, University of Oxford - commissioned by the Sedgewick Group).

Why It’s Important (continued) Your credibility and reputation is heavily influenced by the extent of your active and consistent responses during crisis situations. Cases where positive reputation has helped market value: Apple, GE, Google Cases where lack of proactive reputation management hurt when crisis occurred: BP, Exxon, Enron

Your credibility and reputation is heavily influenced by the extent of your active and consistent responses during crisis situations.

Cases where positive reputation has helped market value: Apple, GE, Google

Cases where lack of proactive reputation management hurt when crisis occurred: BP, Exxon, Enron

A crisis puts your reputation at risk Affects more people than you think Lasts longer than you expect Becomes a permanent part of your reputation

Affects more people than you think

Lasts longer than you expect

Becomes a permanent part of your reputation

Why “Exxon” still means “Oil Spill” 20 years later Exxon did not have a crisis communications plan or team in place to handle such an event; therefore it didn’t… Respond quickly enough Communicate broadly enough Help clean up enough Assume responsibility for spill or harm to environment

Exxon did not have a crisis communications plan or team in place to handle such an event; therefore it didn’t…

Respond quickly enough

Communicate broadly enough

Help clean up enough

Assume responsibility for spill or

harm to environment

Effective Crisis Communications = Protecting Your Reputation Preparation Assess current reputation: does it need work Imagine all possible crisis scenarios Assign core crisis communications team Develop and practice crisis response and communications Monitor and participate in media coverage of your company Execution Respond immediately; get out ahead of crisis Customize communications to all audiences Resolution Follow through Make changes; make amends

Preparation

Assess current reputation: does it need work

Imagine all possible crisis scenarios

Assign core crisis communications team

Develop and practice crisis response and communications

Monitor and participate in media coverage of your company

Execution

Respond immediately; get out ahead of crisis

Customize communications to all audiences

Resolution

Follow through

Make changes; make amends

The Media Landscape has Changed News cycle is 24/7 Every media outlet has an online component “ Citizen journalists” constantly “report” Bloggers Posts on YouTube Facebook groups Patient “review” sites

News cycle is 24/7

Every media outlet has an online component

“ Citizen journalists”

constantly “report”

Bloggers

Posts on YouTube

Facebook groups

Patient “review” sites

Consumer Behavior has Changed 63.7% of the U.S. adult population reports having looked for health information for themselves or others online at least once in the previous 12 months. -Health Information National Trends Survey 2005 66% of health seekers began their last online health inquiry at a search engine 27% began at a health-related website 72% of health seekers visited two or more sites during their last health information session - Pew Internet & American Life Project, 2006

63.7% of the U.S. adult population

reports having looked for health

information for themselves or others

online at least once in the previous

12 months.

-Health Information National

Trends Survey 2005

66% of health seekers began their last online health inquiry at a

search engine

27% began at a health-related website

72% of health seekers visited two or more sites during their last health

information session

- Pew Internet & American Life Project, 2006

Case Study: Stryker Medical “ That Must Be Bob. I Hear His New Hip Squeaking”

Case Study: Stryker Medical (continued) Timeline “ Squeaky hips” recalled on January 22, 2008 Only response was a corporate news release online Citizen YouTube video uploads May 1 & 12, 2008

Timeline

“ Squeaky hips” recalled on January 22, 2008

Only response was a corporate news release online

Citizen YouTube video uploads May 1 & 12, 2008

Case Study: Stryker Medical (continued) How bad news travels fast See report on TV Hear about it on radio Hear about it from friends See it online May or may not recall brand Will recall “squeaky hips” That’s what they’ll search for Google it Search YouTube

See report on TV

Hear about it on radio

Hear about it from friends

See it online

May or may not recall brand

Will recall “squeaky hips”

That’s what they’ll search for

Google it

Search YouTube

All YouTube Video Statistics 6 YouTube videos generated 55,493 Views 48 Ratings 29 Favorites 60 Comments 30 “Embeds” led to 957 clicks Video gets repurposed

6 YouTube videos generated

55,493 Views

48 Ratings

29 Favorites

60 Comments

30 “Embeds”

led to 957 clicks

Video gets repurposed

Case Study: Stryker Medical - Results Stryker Medical share price dropped 17% January – May 2008 Negative conversation continues My problem continued to worsen with the squeaking and popping getting louder and worse pain. I eventually elected to have them removed (by the same suregon - because no other surgeon will dare to try and correct someone else's mistake). Even though this was a Stryker problem I needed to go back to the same surgeon. The explants were extremely damaged whcih did not show on xrays. I am very happy with the new parts, no NOISE, no pain. I hope that congress gets this law passed barbmartin2000 (2 months ago) If you or a loved one were seriously injured as a result of a defective Stryker Hip Implant, you may have valuable legal rights. Squeakyhips (2 months ago) I replaced my hip "again" in August 2008 with a Stryker ceramic ball and plastic cup. No more squeaking! Still no word from Stryker on why the squeaking or how they might compensate me for expenses. I could hardly walk towards the end because of pain and discomfort. I am happy to report this hip seems to be working fine! mikemuelleraz (2 months ao)

Stryker Medical share price dropped 17% January – May 2008

Negative conversation continues

My problem continued to worsen with the squeaking and popping getting louder and worse pain. I eventually elected to have them removed (by the same suregon - because no other surgeon will dare to try and correct someone else's mistake). Even though this was a Stryker problem I needed to go back to the same surgeon. The explants were extremely damaged whcih did not show on xrays. I am very happy with the new parts, no NOISE, no pain. I hope that congress gets this law passed

barbmartin2000 (2 months ago)

If you or a loved one were seriously injured as a result of a defective Stryker Hip Implant, you may have valuable legal rights.

Squeakyhips (2 months ago)

I replaced my hip "again" in August 2008 with a Stryker ceramic ball and plastic cup. No more squeaking! Still no word from Stryker on why the squeaking or how they might compensate me for expenses. I could hardly walk towards the end because of pain and discomfort. I am happy to report this hip seems to be working fine!

mikemuelleraz (2 months ao)

Case Study: Stryker Medical – Lessons Learned Prepare for scenarios that may seem “outside the box” Constantly monitor and participate in what is being said about your company Do proactive reputation management before a crisis occurs (i.e., positive media stories, increase your “share of voice”) Be ready to respond quickly and engage all of your audiences Stryker didn’t engage the customer

Prepare for scenarios that may seem “outside the box”

Constantly monitor and participate in what is being said about your company

Do proactive reputation management before a crisis occurs (i.e., positive media stories, increase your “share of voice”)

Be ready to respond quickly and engage all of your audiences

Stryker didn’t engage the customer

Effective crisis communications planning is “reputation insurance” A positive reputation requires that at least 20% of stories in the leading media be positive, no more than 10% be negative, the rest neutral. – Harvard Business Review, February 2007 Generate good media coverage about your company; get to know the journalists who cover your industry BEFORE a crisis strikes Merck still recovering from 2004 Vioxx crisis

A positive reputation requires that at least 20% of stories in the leading media be positive, no more than 10% be negative, the rest neutral.

– Harvard Business Review, February 2007

Generate good media coverage about your company; get to know the journalists who cover your industry BEFORE a crisis strikes

Merck still recovering from 2004 Vioxx crisis

Case Study: Tylenol Scare 1982 Situation Seven people died after taking cyanide-laced Tylenol capsules Response Immediate nationwide recall Assumed responsibility CEO appeared in TV ads and press conferences informing consumers of company’s actions Introduced tamper-resistant packaging

Situation

Seven people died after taking cyanide-laced Tylenol capsules

Response

Immediate nationwide recall

Assumed responsibility

CEO appeared in TV ads and press conferences informing consumers of company’s actions

Introduced tamper-resistant packaging

Case Study: Tylenol (continued) Result Public confidence restored Sales swiftly bounced back to near pre-crisis levels Able to position itself as a market-leader with the introduction of tamper resistant packaging

Result

Public confidence restored

Sales swiftly bounced back to near pre-crisis levels

Able to position itself as a market-leader with the introduction of tamper resistant packaging

Successfully navigating negative news Preparation Resort property accident Execution Methodist Hospital Resolution Comcast

Preparation

Resort property accident

Execution

Methodist Hospital

Resolution

Comcast

Successfully navigating negative news Preparation before a crisis occurs: Evaluate existing and relevant SOPs and consider possible crisis scenarios Create a communications plan Develop a core crisis management team Develop response plan Key messages for each scenario Update your plan annually Develop contingency plans to handle post-crisis impact on production, sales, quality assurance, confidence Participate in table-top exercises and evaluate preparedness Continual online monitoring Consider bringing in outside counsel for an objective perspective

Preparation before a crisis occurs:

Evaluate existing and relevant SOPs and consider possible crisis scenarios

Create a communications plan

Develop a core crisis management team

Develop response plan

Key messages for each scenario

Update your plan annually

Develop contingency plans to handle post-crisis impact on production, sales, quality assurance, confidence

Participate in table-top exercises and evaluate preparedness

Continual online monitoring

Consider bringing in outside counsel for an objective perspective

Successfully navigating negative news Execution once a crisis has occurred: Bring situation under control Reduce public uncertainty Analyze and gather all facts Do not speculate, release only verified information Never purposely mislead your key stakeholders, the media or the public Keep internal and external constituents well-informed Communicate with media Expressing concern is not expressing guilt “ I don’t know” is acceptable Always be accurate, always be consistent

Execution once a crisis has occurred:

Bring situation under control

Reduce public uncertainty

Analyze and gather all facts

Do not speculate, release only verified information

Never purposely mislead your key stakeholders, the media or the public

Keep internal and external constituents well-informed

Communicate with media

Expressing concern is not expressing guilt

“ I don’t know” is acceptable

Always be accurate, always be consistent

Successfully navigating negative news Resolution/Follow Through: Maintain dialogue with key stakeholders, the media and public as appropriate Follow contingency plans to minimize impact on operations Post-crisis, evaluate what happened Make any necessary changes to SOPs, crisis plan or protocols As appropriate seek opportunities to leverage what was learned from the crisis into positive change/news

Resolution/Follow Through:

Maintain dialogue with key stakeholders, the media and public as appropriate

Follow contingency plans to minimize impact on operations

Post-crisis, evaluate what happened

Make any necessary changes to SOPs, crisis plan or protocols

As appropriate seek opportunities to leverage what was learned from the crisis into positive change/news

Why it’s important… “ It takes many good deeds to build a reputation, and only one bad one to lose it.” -Benjamin Franklin

“ It takes many good deeds to build a reputation, and only one bad one to lose it.”

-Benjamin Franklin

Summary A crisis is NOT the time to try and figure out what to do Engage in or increase positive media relations before a crisis occurs A positive reputation requires that 20% of news stories about your organization be positive Put someone in charge of crisis preparedness Establish a crisis plan, complete with scenarios, key messages and contingency plans Your crisis communications plan acts as a “map” during a crisis; one that is comprehensive and flexible enough to accommodate any crisis situation Don’t postpone getting prepared

A crisis is NOT the time to try and figure out what to do

Engage in or increase positive media relations before a crisis occurs

A positive reputation requires that 20% of news stories about your organization be positive

Put someone in charge of crisis preparedness

Establish a crisis plan, complete with scenarios, key messages and contingency plans

Your crisis communications plan acts as a “map” during a crisis; one that is comprehensive and flexible enough to accommodate any crisis situation

Don’t postpone getting prepared

Discussion Stephanie Fox Vice President 952.851.7241 [email_address] Kris Patrow Account Supervisor 952.851.7214 [email_address] David Erickson Director of e-Strategy 952.851.7242 [email_address] Presentation available at Slideshare.net/TunheimPartners