Negotiating troubled waters

Any type of business, large or small, can experience a problem that causes negative publicity. Even if the consequences are not catastrophic, a crisis can severely compromise an organisation's ability to function in many ways - by restricting its access to financing or negatively impacting on the morale of employees.

The initial problem could be an accident causing injuries or deaths, an air crash, a product recall, threat of labour action, allegations of fraud, poor safety standards, sexual harassment, or even the unexpected departure of a senior executive.

And the potential for a crisis applies to all organisations, not only businesses: a hospital; university; police service - every organisation is vulnerable, particularly when media reporting generates wider public interest. In the internet age news of a crisis is just a mouse-click away from instantly reaching millions of people around the globe.

Negative publicity

Negative publicity hurts sales, damages reputations, affects market position and causes stock prices to fall. For a public service agency or institution, unfavourable press coverage will undermine respect, effectiveness and confidence.

In such situations, it is vital that an organisation quickly restores its image and maintains its stream of business. Companies may think that avoiding the media or trying to manipulate the facts can contain a crisis, but they are mistaken.

The first rule is to communicate openly and honestly with the public: key stakeholders, the authorities, the media as well as the public-at-large. Denying or avoiding discussion of the situation will inevitably lead to a loss of credibility and cause more damage.

With careful planning, a crisis can be turned into an opportunity to demonstrate to the public that the organisation is well-managed, and professional and could emerge even stronger.

It is essential that an organisation quickly gets its key messages to the public. These messages include: determination to resolve the problem; the steps being taken steps to do so; cooperation with the authorities; and an expression of shared public concern.

Case studies

This is exactly what Pick n Pay did so effectively during the recent product tampering concerns. Pick n Pay quickly took the initiative, making it clear that they shared the concerns of the public and they took robust and decisive action to restore confidence in the brand.

There are many other examples of companies effectively managing a crisis. In the United States, the healthcare giant Johnson & Johnson recalled more than 31 million bottles of Tylenol when several customers died from cyanide poisoning in 1982.

Even though it was proved that the substance was added after manufacture, Johnson & Johnson recalled the product at huge financial cost and alerted the public to the danger. By acting openly and honestly, the company retained the confidence of its customers and its various other brands remained intact throughout the crisis.

Tylenol itself, which was positioned at the top of the market share with 35% before the crisis and suffered some decline in the wake of the situation, came back strongly to hold 30% of the market share only 12 months later.

By contrast, there are also many examples of companies that have been permanently damaged because their reaction to a crisis was ineffective or, even worse, non-existent.

In today's business environment any organisation that depends on public confidence in its products or services must be prepared to handle the unexpected by developing policies and procedures for effective crisis management. Not to do so, would be negligent.