Recovering from disaster: How smart companies handle a PR crisis19 February 2018 Category : Entrepreneurship
Public relations (PR) disasters come in all shapes and sizes, from annoying service suspensions to fatal acts of sabotage, with brand capital that has taken years or decades to build up evaporating in the turn of one unfavourable news cycle or social media storm.
According to PR and advertising agency Ogilvy & Mather, there are two main types of PR disaster: when a brand is directly culpable and when it’s guilty by association. In the former camp we find corporations such as VW, culpable of deception by falsifying emissions tests, and BP, which was ultimately held responsibility for the failure of the Deepwater Horizon platform in the Gulf of Mexico in 2010. In the latter, the partnership between Shell and Lego was seen as an attempt to portray Shell’s controversial Arctic drilling plans in a positive light, casting a cloud over Lego’s brand reputation and forcing it to limit the damage by severing its relationship with Shell.
Then you have companies that simply shoot themselves in the foot; notably the infamous Gerald Ratner gaffe, when the CEO of the eponymous UK jewellery chain inexplicably denigrated the quality of one of his products during a speech in London in 1991, adding that his earrings were cheaper than a prawn sandwich but probably wouldn’t last as long. That speech alone wiped GBP 500m off the value of his company.
Every business will, at some time, suffer a crisis that threatens its reputation, but if handled properly, it need not threaten the survival of the business. On the contrary, the history of such problems features notable examples of smart management that has rescued success from the jaws of disaster.
Every business will, at some time, suffer a crisis that threatens its reputation, but if handled properly, it need not threaten the survival of the business.
JetBlue flies again
We can all learn from the example of American low-cost airline JetBlue, which helped to create its own PR disaster on Valentine’s Day 2007 but pulled a masterstroke that succeeded in turning the crisis to its advantage.
When an ice storm across the eastern US prompted most airlines to cancel flights early and send passengers home, JetBlue banked on an optimistic forecast that the weather would break and carried on as normal. But management overestimated the capability of its reservations and communications systems to handle things when the weather didn’t break, leaving frustrated passengers unable to contact human agents to rebook and countless flight crews out of position as a result of its disastrous miscalculation.
At the height of the crisis, passengers were stuck in their seats on the apron at JFK airport for six hours, unable to take off because the hoped-for break in the weather never came. By the end of that week, over 1,000 flights had been cancelled.
Until then, JetBlue had regularly come out on top in annual customer surveys. So how did the airline stay true to its mission to ‘bring humanity back to travel’ and not become a hostage to fortune because of it?
Crucially, they didn’t blame the weather. In what has become a textbook example of good crisis management, CEO David Neeleman wasted no time in coming clean and apologising to some 130,000 affected customers, simultaneously offering them varying levels of compensation for the cancellations, delays and diversions. ‘We’re going to offer something that no other airline will offer customers,’ Neeleman said. ‘We’re going to be held accountable.’
In a number of broadcast interviews, Neeleman admitted that an undersized reservation system staffed by a distributed workforce, coupled with a shoestring communications system that left crews in the dark, had caused the crisis. He wasted no time in turning his attention to customers, immediately offering compensation to the passengers affected, with those stuck on stranded jets for more than three hours receiving full refunds and free return flights.
Within a week, JetBlue had introduced a customer Bill of Rights, which included explicit compensation for a number of delay scenarios. It received as much publicity as the original debacle and helped move the agenda beyond crisis stage. A stroke of genius.
In a transparent acknowledgment of the airline’s structural and managerial failings, JetBlue also made amends in one crucial area: it promised a USD 30m investment to improve procedures to handle service disruptions in the future, including plans to cross-train all its corporate HQ employees to take on operational roles at JFK in the event of further crises.
By following some essential crisis management rules, JetBlue was able to capitalise on this potentially crippling crisis and regain much of its lustre. As communications specialist and author of Crisis Management in the Spotlight, Jon Harmon, predicted at the time, ‘The pay off likely will be an enhanced corporate reputation and favourable brand recognition, with JetBlue crystallised in customers’ minds as the gold standard in airline customer service.’ Ten years on, JetBlue came second out of 11 airlines in TIME’S list: Best US Airlines for Your Money in 2017.
Johnson & Johnson survives a poisoning
When your product is reported to be lethal, it can be hard to see a way through the crisis. Johnson & Johnson experienced this first-hand in 1982 when a saboteur in Chicago laced bottles of its over-the-counter painkiller Tylenol with the deadly poison potassium cyanide, resulting in the deaths of six adults and one child. Suddenly, the media began reporting that Tylenol was killing people.
Johnson & Johnson’s handling of the crisis was dubbed ‘the grand-daddy of good crisis communication’, although it wasn’t entirely flawless. The company quite correctly put customer safety first, immediately ordering the removal of its product from Chicago shelves, but it wasn’t until the following week, after reports of a poisoning in California, that it initiated the nationwide recall and destruction of over 30 million bottles, at a cost of some USD 100m. In addition, CEO James Burke learned of the deaths on Wednesday 30 September but didn’t convene a meeting to address the problem until the following Monday. Perhaps that was quick for 1982 in the absence of 24/7 news cycles and uncontrollable social media.
Nevertheless, Johnson & Johnson soon turned the tide of public opinion back in its favour with the help of the nation’s media. An estimated 100,000 news stories relating to the incident had appeared in US newspapers within a week and when Johnson & Johnson initiated a multi-channel safety information campaign, warning customers not to consume Tylenol, its message reached 90% of the US population.
The public could see a company that took its moral responsibilities seriously and put public safety above all consideration of profit. Burke conducted a number of interviews in which he was candid, compassionate and, crucially, contrite. The company showed itself to be transparent and open, co-operating with the police, the FBI and FDA, as well as putting up a USD 100,000 reward for the capture of the killer.
Johnson & Johnson quickly demonstrated that it was making amends. Within six weeks, it had designed a new triple-lock, tamper-resistant container before reintroducing the product to market, and as the media showed the company was taking positive action, negative sentiment evaporated. By the following spring, Johnson & Johnson had recovered most of its pre-crisis analgesic market share of 37%, reaching 30% one year on from the crisis.
The golden rules of crisis communication
Some critics have since pointed out that Johnson & Johnson was helped in its recovery by the fact that the Tylenol crisis didn’t originate within the company. As Eric Dezenhall, author of Damage Control states, ‘a company attacked by a criminal will be forgiven more quickly than one accused of being the criminal’. He argues that the Tylenol crisis teaches us what excellent companies do when confronted with saboteurs, rather than how troubled companies can sidestep disaster, but the lessons are still valid: although Johnson & Johnson’s response wasn’t perfect by today’s standards, the company did things right under the circumstances and when viewed in the context of its time.
Even if it’s not immediately apparent where the blame lies, owning up to mistakes is a crucial first step.
The company bounced back by following the four golden rules of crisis communication:
1. Come clean quickly: Even if it’s not immediately apparent where the blame lies, owning up to mistakes is a crucial first step. Any subsequent exoneration will only add to your recovering brand equity.
2. Apologise immediately: The merest hint of culpability in the public’s perception warrants an apology, and it costs relatively little.
3. Be transparent: Transparency requires regular and effective communication. Keep customers and the public informed of actions, developments or interim investigations. Few things can damage a reputation quite like the impression that you’re holding something back.
4. Make amends as soon as possible: Act quickly to compensate and to put in place measures that will prevent any repetition, as JetBlue did with its USD 30m investment and Johnson & Johnson did with its new safety cap. Communicate those measures to customers and the public.
Both JetBlue and Johnson & Johnson followed these rules and came out on top as a result. Both had CEOs who accepted blame and responsibility and apologised without delay. Both kept the public informed of their actions. Both made amends and gained excellent reputational credit by announcing their intentions.
Companies can’t choose the nature of the PR disaster they’re dealt – these things come out of the blue – but by applying the golden rules when considering your response, you will give your company the best chance to survive it, to regain your brand equity and emerge stronger as a result.
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