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Leaderonomics

The Good, The Bad, And The Ugly Of Crisis Communication

Men (and women) are like tea. Their real strength is not drawn out until they get into hot water

Photo by Jacky Watt on Unsplash

Author, Dr Eugene YJ Tee

No fewer than five important figures have been attributed to this quote – the most well-known and recent being former United States (US) Secretary of State Hillary Clinton. The same is often said of organisations and their leaders. When an organisation faces a crisis, we see what the establishment and its leaders are really made of.

Crises are situations in which organisations experience a severe shortage of resources, an unforeseen challenge that threatens their financial and reputational standing. An organisation’s – and its leader’s – strengths, character and values, are laid bare under such circumstances.

Crises demand that organisations and their leaders respond promptly and convey a clear sense of direction and purpose that address the trials at hand. Communications to both consumers and stakeholders during this time are make-or-break moments for the organisation.

The ambiguity, uncertainty, and heightened emotions that surround a crisis can rapidly escalate to damaging speculations and accusations. In some cases, these lead to conspiracies, rousing negative perceptions, and long-lasting financial and reputational consequences.

Numerous companies have faced crises and emerged stronger from them. One classic example is Johnson & Johnson’s response to the Tylenol murders in Chicago in 1982. Tampered bottles of Tylenol-brand paracetamol were found to be laced with cyanide, which had claimed the lives of seven people.

The pharmaceutical giant acted decisively, making warning announcements to hospitals and distributors and removing over-the-counter bottles of Tylenol from drug stores across the country. The company cooperated with law enforcement agencies and the Food and Drug Administration (FDA) in tracing the perpetrator of this crime – acts that earned much praise from the US government.

Contrast Johnson & Johnson’s crisis communication strategy and response with what was shown by the International Federation of Association Football (FIFA).

In 2015, football’s most powerful governing authority was investigated on allegations that nine of its officials were involved in a massive corruption case. The officials were suspected of colluding with businessmen and benefitting from bribes and kickbacks from the multimillion-dollar global sport.

FIFA did not deny that there was corruption in the game – but it did stop short of implicating their officials for their involvement in this wide-scale fraud. They then removed the word ‘corruption’ from its latest code of conduct manual – with the new code stating, “bribery, misappropriation of funds or manipulation of football matches or competitions may no longer be prosecuted after a lapse of 10 years”.

Put more simply: “If you fix a football match and we can’t find enough evidence to charge you within 10 years, you’re free to go.” FIFA defended the revised code by claiming that 10 years would be enough for investigations into match-fixing to be complete and charges to be laid.

In May 2019, one year after this creative rephrasing, FIFA restored the word ‘corruption’ to its code of conduct – but only in response to scathing criticism and pressure from whistle-blowers and other influential authorities.

The good

Cases provide excellent examples and description of what organisations should and – more importantly – should not do in the face of crises. Of importance is how the crisis is conveyed and managed in the eyes of consumers and the organisation’s stakeholders and employees.

Take two recent short-term crises resulting from a less-than-optimal choice of advertisement (ad) as examples. In 2017, Pepsi ‘Live for Now’ ad starring Kendell Jenner provoked controversy by inadvertently undermining the Black Lives Matter movement in the US.

The two-and-a-half-minute short film featured Jenner joining a public rally calling for peace, love and acceptance across people from various ethnicities, races and sexual orientations. Jenner offers a can of Pepsi to a police officer, who accepts and takes a sip from the can. The crowd bursts into fervent celebration.

“If only daddy would have known about the power of Pepsi,” came the fittingly sarcastic response from Bernice King, daughter of civil rights activist Martin Luther King. Agreeing with King’s quip, critics argued that the ad made light of the plight of African Americans, implying that racism and police brutality can be solved by a fizzy drink.

The ad was pulled 24 hours later, with both Pepsi and Jenner apologising and stating that the video “missed the mark” of what it had originally intended.

Another similar advertising misstep was committed by Dove in 2018. In this ad, a dark-skinned woman removes her blouse, ‘transforming’ herself into a Caucasian woman. Critics were quick to point out the inappropriateness of the ad; many saw it as blatantly racist and insensitive, insinuating the superiority of fair over dark skin.

In both cases, however, the companies responded promptly. Both ads were removed from their official webpages and social media channels, and an apology was issued by senior representatives of both companies.

While not everyone found the crisis communication and apologies to be sincere or sufficient, the companies responded within hours of the public backlash – with action and apology. In crisis situations, the organisation needs to be prompt, not rash; responsive, not reactive.

Organisations also need to convey their intention to consumers and their employees as quickly as possible. This was what Pepsi and Dove did right. Neither company responded by defending or denying – or further justifying their ads.

What the Pepsi and Dove commercials also suggest is that companies need to carefully consider the necessity, relevance, and appropriateness of portraying contemporary race, ethnicity, and gender-related issues alongside promoting their products or services.

Any corporate communication or messages need to be especially sensitive to the norms of the current times and be inclusive to today’s increasingly diverse consumer and employee base.

Internally-circulated crisis communication messages need to inform and update employees of leaders’ and the organisation’s actions – conveying an apology and setting a course of action for the critical time that follows.

As far as we can tell, there appear to have been no long-term repercussions – financial or otherwise – on either Pepsi or Dove.

The take-away here? Sensitivity, empathy, and responsiveness to both consumers and employees are essential when communicating during crises.

The bad

On Apr 9, 2017, United Airlines Flight 3411 awaited departure from Chicago O’Hare International Airport. The flight was overbooked, so an announcement was made requesting four passengers to disembark the flight to make way for four airline staff.

Such procedures were standard practice – necessary to accommodate airline staffing and roster requirements (a practice called deadheading). Three passengers, randomly called, gave up their seats. One passenger, 69-year old doctor David Dao Duy Ahn, refused.

The airline’s response to his refusal was nothing short of brutality. United called in security officers, who aggressively manhandled Dao, dragging him kicking and screaming off the flight.

Chief executive officer (CEO) Oscar Munoz defended the airline’s actions, accusing Dao of being “disruptive and belligerent”, issuing what many perceived as a half-hearted apology for the airline’s aggressive actions. Munoz further defended the security officers’ actions, saying that he backed them “empathically”.

He then claimed that such an act was simply to ‘re-accommodate’ passengers – a term that was sharply criticised by those following the story. One journalist said the euphemism was as bad as “alternative facts” – insincere, inaccurate, and a poor attempt at covering up United’s excessive use of force on one of its passengers.

Public relations (PR) experts called United’s response a “fumbling, clumsy one”. Stakeholder backlash to the airline’s crisis and its response was swift and merciless – investors devalued the airline’s market value to a tune of close to USD1bil following the incident.

There was one major problem with United’s response. Dao was in no way disruptive or belligerent. The entire incident was filmed by Flight 3411 passengers on their phones. The videos defended the doctor, and the passengers themselves attested to his good behaviour.

They also univocally agreed that Dao was undeserving of concussions, broken teeth and nose that the security officers left him with. Bowing to public pressure and feeling the financial and reputational sting of a poorly handled crisis, Munoz retracted his earlier statements.

A more conciliatory tone followed two days after the incident, with the CEO apologetically stating, “…no one should ever be treated this way…we will take full responsibility and we will work to make it right.” United’s CEO also claimed that “…it is never too late to do the right thing.”

Except that in crisis situations, it can often be too late; organisations do not get a second chance at making that important first impression. The leader may express empathy towards staff, but insufficiently towards consumers, as was the case with United.

How an organisation responds first to a crisis signals what its core values are and where its focus is on. And in United’s case, the empathy that was shown to Dao 48 hours later was much too late.

The airline could have responded in a manner that exemplified its claimed values: “We respect every voice…make decisions with facts and empathy and celebrate our journey together.” It could have embodied, through its actions, its slogan: Fly the friendly skies.

Instead, it left the incident reeling from a financial repercussion and reputational damage that would reside in the minds of both passengers and investors in the foreseeable future.

Both internal and external parties need to be carefully considered – and the crisis communication message balanced with an understanding of how the organisation’s first response shapes these parties’ perceptions. When communicating in crisis, companies do not get a second chance at a first impression.

The ugly…(and a bit more good)

There is no shortage of ugly – terribly handled crisis situations. One, however, that comes to mind is the Volkswagen (VW) Emissions Scandal that was traced back to 2008. Also known as ‘Dieselgate’ or ‘Emissionsgate’, the scandal involved VW diesel vehicles being equipped with a ‘defeat device’ – a piece of hardware or software that tampers with the emissions controls when subjected to emissions tests.

It’s a pretty nifty little tweak to make if your goal is to pass emissions tests and certify your vehicles as environmentally friendly, which was what VW intended to do. In order to meet the stringent emissions standards set by the US Environmental Protection Agency (EPA), engineers at VW equipped vehicles with software that limited the emission of NOx (nitrogen oxide) – a known cause of lung cancer.

Under actual driving conditions, however, the vehicles emitted more than 40 times the amount of NOx. By some scientific projections, the excess pollution caused by these unknowingly approved, heavy-pollutant diesel vehicles would lead to 59 premature deaths and aggravate respiratory problems for many more.

Investigations into this unethical, deceptive practice were only made known in 2015 – eight years after these defeat devices were installed into the VW diesel vehicles. And at least initially, the crisis was handled terribly.

Then CEO Martin Winterkorn resigned in Sep 2015 when allegations surfaced and investigations commenced. Winterkorn denied any knowledge of the emissions scandal, stating in a video interview that he was “endlessly sorry” for the crisis befalling the company.

Angry customers were ‘compensated’ with USD1000 prepaid credit in the form of a Visa and dealership card – a response criticised by US Democratic senators as being “insultingly inadequate”. The company posted a loss of €1.7bil in the third quarter of 2015 in dealing with this crisis, and the reputational repercussions from this fallout also spilt over into a loss of trust in the automobile.

Adding insult to injury, investigations then later revealed that disgraced former CEO Winterkorn had known about the cheating as early as May 2014. Instantly, allegations that Winterkorn had known and allowed for the cheating scandal to continue further tarnished VW’s image and standing.

Investigations into this crisis and scandal continue at the time of writing, and Winterkorn could face up to 10 years in prison and millions in fines for his corporate criminal role in denying and covering up the scandal.

PR experts criticised VW’s handling of the situation – one calling the web of deceit, lies, “half-truths”, and downright denial one of the worst PR disasters since the 2001 Enron crisis.

And yet, there is still something to be learnt from this scandal, and VW’s subsequent response.

In the years following this crisis, VW worked almost single-mindedly towards regaining both their employees’ and customers’ trust. The company took responsibility for its role in the cheating scandal.

They reached out to employees to seek their feedback, providing them with the opportunity to vent their thoughts and emotions from this fallout. They kept employees in the loop on any updates, not via internal email, but through face-to-face communication.

Recently, the automobile company even made an ad acknowledging the emissions scandal with the tagline, “In the darkness, we found the light” – presented fittingly, to the tune of Simon and Garfunkel’s Sound of Silence.

The company owned up to the scandal, paid its dues (a large chunk of them being legal ones), and, while it took some time, VW now sees continued growth in emerging markets such as China.

The VW scandal tells us that PR responses and crisis communications strategies are crucial in helping save and even improve the company’s long-term standing. This case also shows that how companies respond to crises and how they integrate corporate communication into their long-term strategy can determine if, and when they recover from a major setback.

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Leaderonomics
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Leaderonomics is a Malaysian social enterprise dedicated to transforming developing nations through leadership development. We believe everyone has the potential to be a leader who can positively and significantly make a difference in their community and organisation. Follow Leaderonomics on the portal, Facebook and LinkedIn.

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