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CHAPTER 7

Crisis Management: Taking Action When Disaster Hits

167

Opening Case, Part 3: The BP Gulf of Mexico Oil Spill

Landscape Survey Strategic Planning Crisis Management Organizational

Learning

The Internal Landscape

The External Landscape

Chapter 10: The Underlying Role of Ethics in Crisis Management

Chapter 9: The Importance of Organiza- tional Learning

Chapter 8: Crisis Communi- cations

Chapter 7: Crisis Management: Taking Action When Disaster Hits

Chapter 4: A Strategic Approach to Crisis Management

Chapter 6: Organiza- tional Strategy and Crises

Chapter 2: The Crisis Management Landscape

Chapter 3: Sources of Organiza- tional Crises

Chapter 5: Forming the Crisis Management Team and Writing the Plan

Crisis

Before the Deepwater Horizon incident in 2010, British Petroleum (BP) was already under scrutiny for some of its maintenance and safety practices. Two incidents that had occurred only a few years earlier had gained much attention. An accident involving worker fatalities occurred in 2005 at a Texas City refinery. In addition, a large amount of oil had spilled in Alaska due to the faulty maintenance of pipes in 2006. Both events would be relived again as the public demanded accountability on the part of the oil giant.

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168 CRISIS MANAGEMENT IN THE NEW STRATEGY LANDSCAPE

Previous Incidents

In 2005, a large explosion occurred at a BP refinery in Texas City, Texas, killing 15 employees and injuring another 170 workers. BP was found to be in violation of the Clean Air Act and was the first company to be prosecuted under a section of the act that was designed to prevent injuries to employees. The company was fined $50 million (Sawayda & Jackson, 2011).

BP acquired the Texas City refinery in 1999 from Amoco. Upon purchase, the refinery was in need of a major overhaul; Amoco had neglected maintenance and safety upgrades for years. Unfortunately, BP headquarters was in the midst of a 25 percent budget cut (Elkind, Whitford, & Burke, 2010), meaning such upgrades would be slow. The at-risk plant eventually had a malfunction on a cooking tank processing gasoline additives. The tank boiled over, sending a vapor cloud over the refinery. A pickup truck in the parking lot backfired, igniting the vapor cloud (Elkind et al., 2010). The accident attracted a lot of negative attention for BP as the refinery declined further, making it vulnerable to this type of accident.

In 2006, BP pipelines leaked in the Prudhoe Bay region of Alaska. The leaks were due to years of neglect in maintaining the lines and addressing corrosion. The pipeline failures triggered a 200,000-gallon oil leak and resulted in another violation of the Clean Air Act. BP was ordered to pay a total of $45 million in fines, $12 million in criminal fines, $4 million to the National Fish and Wildlife Foundation, $4 million in criminal restitution to the state of Alaska, and $25 million for violating clean air and water laws (Sawayda & Jackson, 2011).

The Arrival of Tony Hayward

To help address its safety problems, BP enlisted Tony Hayward as chief execu- tive office (CEO) in 2007. Hayward had joined the company in 1982, working as a geologist and traveling the globe, helping the company find new sources of oil. At the time, John Browne was a charismatic, celebrity-style CEO who had led the com- pany through growth by acquisitions (Elkind et al., 2010). Under Browne’s reign, BP took on more risks but also slashed budgets, creating an atmosphere of vulner- ability in the area of field operations. Texas City and the Alaskan oil pipe problems were examples of how cost cutting created problems for the company.

Hayward’s role was to improve safety and get the company in “silent running” mode, a term used to indicate “a quiet, methodical, trouble-free operation, with no problems, no surprises, and high productivity” (Campbell, 2008, p. 18). Hayward went to work insti- tuting expansive changes to improve safety, including the implementation of a common management system with precise safety rules and training for all facilities (Mouawad, 2010). Under his reign, Hayward has been given credit for improving the safety culture of BP and for its operational performance (Orwall, Langley, & Herron, 2010).

Individual Safety Versus Process Safety

Despite the improvements in the safety culture at BP, critics charged that too much emphasis was placed on ensuring individual worker safety, and not enough

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Chapter 7. Crisis Management: Taking Action When Disaster Hits 169

attention was devoted to process safety. Individual safety in the workplace focuses on ensuring that employees do not commit unsafe acts, such as lifting a heavy object incorrectly. As a result, workplace rules such as requiring employees to wear eye protection when working around machinery are established. At BP, strict guide- lines were in place that prohibited employees from carrying a cup of coffee unless it had a lid (Elkind et al., 2011). While these kinds of rules can decrease accidents, they do not address the hazards that can occur on a drilling rig or in a refinery such as the one at Texas City.

Process safety is much broader and does not assume that employee error is the primary cause for workplace accidents. Instead, it emphasizes the “process” that caused the employee to commit the error in the first place. For example, poor train- ing of an employee—a process—can contribute to that employee’s involvement in a workplace accident. Process safety does not blame an individual employee or equipment failure (Schreiber, 2012). Instead, if equipment did fail, the process that caused the failure would be examined. Perhaps poor maintenance—a process— caused failure. The process approach to safety seeks to identify root causes, at which time safety issues and the prevention of accidents can be addressed from a more holistic perspective.

For BP, one process in particular was suspect: conducting of a negative pressure test on a well. A correct understanding of the test results was necessary, because it indicated whether hydrocarbons and oil were entering the drill casing. However, BP had a process problem because it did not have standardized procedure to conduct the test, interpret the results, and respond if the test indicated the well had failed (Crooks, Pfeifer, & McNulty, 2010). The process for checking the integrity of the well was not defined, and therefore flaws compromised the safety of the well, the rig, and its employees. In hindsight, we know now that flammable hydrocarbons and oil entered the drill casing, that the well was indeed compromised, and that a fatal incident occurred.

Opening Case Part 3 Questions

1. Think of an example of an accident that occurred where you work. Assume that you cannot assign the blame to employee error or faulty equipment. Instead, analyze the process that led to the accident, and identify any flaws that existed in the process.

2. Was the Deepwater Horizon accident a problem associated more with cost cutting or with a faulty process safety culture?

Opening Part 3 Case References

Campbell, H. (2008). Keep on running. BP, Issue 8, 16–23. Crooks, E., Pfeifer, S., & McNulty, S. (2010, October 7). A sea change needed. Financial Times, p. 9. Elkind, P., Whitford, D., & Burke, D. (2011, February 7). An accident waiting to happen.

Fortune, 105–132. Mouawad, J. (2010, May 8). For BP, a history of spills and safety lapses. New York Times,

p. A22.

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170 CRISIS MANAGEMENT IN THE NEW STRATEGY LANDSCAPE

Orwall, B., Langley, M. & Herron, J. (2010, July 26). Embattled BP chief to exit—American Robert Dudley to succeed Tony Hayward as head of British oil giant. Wall Street Journal, p. A1.

Sawayda, J., & Jackson, J. (2011). BP struggles to resolve sustainability disaster. In O. C. Ferrell, John Fraedrich, & Linda Ferrell (Eds.), Business ethics: Ethical decision making and cases (9th ed., pp. 342–354). Mason, OH: South-Western Cengage Learning.

Schreiber, J. (2012). Working with the CSB after a major accident. Chemical Engineering, 119 (7), 49–51.

Introduction

High-profile events such as the terrorist attacks of September 11, 2001, the Enron scandal in 2001, and Hurricane Katrina in 2005 have highlighted the importance of crisis preparedness. Most organizational crises do not receive as much attention as these examples, but they still constitute major events for the firm and the com- munity. As a result, many organizations have begun to analyze their vulnerabilities. Indeed, anticipating and preparing for crises is much less traumatic and costly than experiencing an unexpected calamity without a plan for managing it. Assuming a company will always remain free from any type of crisis is guesswork at best. For some organizational leaders, this may involve confronting “paradigm blindness,” a condition “where people are unable to see information that threatens and discon- firms their worldview” (Wheatley, 2006, p. 18).

There are countless stories about the lack of a plan causing severe or even irrepa- rable damage to a firm. Interestingly, however, there are also examples where proper planning and execution of a crisis plan not only kept the crisis under control but also resulted in positive changes for the business (Borodzicz & van Haperen, 2002). This topic of positive change is explored in depth in Chapter 9, “The Importance of Organizational Learning.”

Most crises are, by their very nature, somewhat unexpected and unpredictable. A poorly managed crisis can severely damage a firm’s reputation and profitability. As mentioned, proactive organizations should develop crisis management responses for managing an event should it occur. Some businesses encounter “smoldering” crises that start internally and slowly create problems that can be more difficult to resolve in their later stages (Institute for Crisis Management, 2011). Other crises can occur externally and take the organization by surprise. Effective crisis manage- ment requires managers to develop strategies that are integrated with the annual corporate planning process (Preble, 1997). Its effectiveness can be enhanced if managers are able to identify a potential crisis and develop appropriate strategies to prevent it, or at least mitigate its effects.

This chapter focuses on the management practices and decision-making activi- ties that should be implemented at the beginning, duration, and conclusion of the crisis event. The first part of this chapter addresses the initial response actions that are critical in the assessment of the crisis during its onset. The next part discusses key issues relating to managing the crisis. Response strategies and mitigation of the crisis are the major concerns here. In this stage, managers must make decisive deci- sions that will determine the success or failure of their crisis management efforts.

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Chapter 7. Crisis Management: Taking Action When Disaster Hits 171

The final part of the chapter discusses what happens after the crisis, including the issues of recovery, reentry, and business continuity. Ultimately, the organization must regroup and return to normal operations or its survival may be in jeopardy.

Strategies at the Beginning of a Crisis

The first step in the formal response to a crisis is to convene the crisis management team (CMT). Recall that the organization should have a preestablished team and a crisis management plan (CMP). Activating the team may be as simple as one member calling the team together. Alternatively, an employee in the organization may alert a member of the CMT to the potential or developing crisis at hand. Once convened, the team begins the process of assessing the situation.

The response to the onset of a crisis depends on the nature of the event. Some crisis situations, such as an industrial accident, the sudden death of a senior executive, the notification of a government investigation, or a chemical spill, can occur quickly and often with little or no warning. Others, such as a hostile takeover, union labor unrest, a consumer boycott, or corporate embezzlement, develop over a longer period of time. The length of time managers have to react to a crisis is related to its impact on the organization and its stakeholders. Having a CMP makes it possible to think and act expediently during the first few hours of a crisis. The CMP is a key strategic organizational tool responsible for initiating the crisis decision-making process by helping to frame the problem, determine the parties responsible for implementing various actions, and develop justifications for the decisions that are made.

Leadership of the CMT

Effective leadership is necessary during a crisis, both by the leader of the CMT and by top management (Wooten & James, 2008). This team is responsible for making and implementing decisions that help the organization resolve the crisis. Three components of the CMT that must be present for crisis leadership to be successful are (1) the right leadership, (2) the structure and resources necessary to accomplish crisis response and containment, and (3) broad public support for the organization (Cavanaugh, 2003).

In a crisis response, CMT members should not only be knowledgeable about their own roles on the team but also willing to accept suggestions presented by members who are experts in other areas. The CMT leader must have an array of both leadership and management skills. Drawing from the experience of the mili- tary and the emergency services sector, Crichton, Lauche, and Flin (2005) identified the following skills needed for the CMT leader:

■ Situation assessment : Being able to identify the problem accurately ■ Decision making : Deciding what the CMT should do ■ Team coordination : Getting the CMT and affiliated stakeholders to work

together

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172 CRISIS MANAGEMENT IN THE NEW STRATEGY LANDSCAPE

■ Communicating : Deciding how to receive and deliver relevant information ■ Monitoring : Keeping abreast of key developments ■ Delegating : Assigning tasks to individual CMT members ■ Prioritizing : Determining the importance of incoming information and

what should be done next ■ Planning : Taking part in the planning process and encouraging task completion

The CMT leader should utilize these competencies by taking charge of the situ- ation, assessing the level of crisis seriousness, determining the level of resources needed, and then making the decisions that will resolve the crisis (Cavanaugh, 2003). Simultaneously, the leader should be in frequent communication with his or her team members to implement the crisis plan. Within the context of this role, the leader must recognize and implement these actions while remaining visible and available. Admiral Thad Allen of the U.S. Coast Guard led the incident command efforts for the Deepwater Horizon oil spill in the Gulf of Mexico in 2010. During the crisis, his visibility and availability demanded that he spend half his time in Washington, D.C., briefing members of Congress, the rest of the administration, and the media. The other half of his time was spent on board Coast Guard boats in the Gulf. He commented, “If you’re not visible to your people out on the boats who are trying to pull a boon in Barataria Bay in 110-degree heat, then you’re not a credible leader, because you don’t understand what they’re going through” (Berinato, 2010, p. 78).

The leader must have the ability to remain calm and focused on the crisis man- agement process while making decisions under significant pressure. In fact, the CMT leader may be required to make decisions without certain desired informa- tion, because a crisis is characterized by high levels of ambiguity and stress (Baran & Adelman, 2010). Moreover, those involved in the crisis are having their assump- tions about reality challenged (Pearson & Clair, 1998). Recall that some crises take the CMT to places they have never been before in terms of experiences, what man- agement scholar Karl Weick (1993) labeled as “cosmology episodes.”

All crises create tension and stress. Acute stressors for the CMT can include cha- otic events, communication problems, time pressure, consequences and account- ability, fear of failure, dealing with the media, and information problems including overload, missing, and/or ambiguous information. Maintaining control allows the leader to sustain an objective perspective and see the way through complex and confusing scenarios. Hence, the leader must present an objective perspective quickly and methodically for all stakeholders (Rolston & McNerney, 2003).

One final note should be mentioned concerning the attributes of the CMT leader: there is no one best profile for success. As Schoenberg (2005) noted:

A crisis leader in one situation may be a follower in a different situation. A cri- sis leader in a natural disaster will need to demonstrate different skills than a crisis leader of a product recall. A crisis leader dealing with employee sabotage or violence faces an entirely different situation. (p. 3)

Crisis leaders should also mentor less experienced team members. In fact, it is likely that the leader is mentoring without even knowing it (Berinato, 2010).

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Chapter 7. Crisis Management: Taking Action When Disaster Hits 173

Situational Assessment

One of the first tasks of the CMT is to assess the situation so that decisions can be made to mitigate the crisis (Wilson, 2004). Situational assessment refers to the information processing and knowledge creation aspects of crisis management (Coombs, 2007). Endsley and Garland (2000) describe it as an awareness of know- ing what is going on and then predicting how the crisis may evolve. Situational awareness is critical to understanding the crisis and identifying its dimensions and intensity. Unfortunately, the crisis management literature offers extensive examples of how the initial stages of assessing the situation were erroneous. We overview several of these.

The 1989 Hillsborough Soccer Tragedy

A tragic case involving errors in the situational assessment stage of a crisis situ- ation occurred at the 1989 Hillsborough soccer match in Sheffield, England. In this incident, 97 fatalities occurred in a section of the stands that had become thronged with people. Most of the victims were crushed to death (Taylor, 1990). The response by police as a simple case of overcrowding was incorrect; in fact, it had become a major safety issue (Crichton et al., 2005).

The tragedy was triggered by a police decision to open the gates at the Leppings Lane entrance to the stadium so that fans could enter the stands more quickly in advance of the 3:00 P.M. start. There was also concern that the situation outside of the stadium could result in a crush, where fans would be penned against each other or trampled to death. The police decided to open the gates to the stadium at 2:52 P.M. to relieve the pressure. Unfortunately, the sudden rush of supporters into the stadium was funneled into pens (i.e., sections) 3 and 4, which were already overcrowded (Elliott & Smith, 1993). The fans at the front of the stands or at the terrace were pinned against the wall and the fence with nowhere to go, resulting in their suffocation.

Numerous photographs and videos showed an odd display of behavior—fans reaching to be pulled up by other fans on the upper terrace, as well as spectators seeking to climb over the fence just near the pitch (i.e., field). Police mistakenly took this to be a sign of a “pitch invasion” by fans, but it was really a desperate attempt to escape the deadly crush of the crowd. At 3:06 P.M ., the police control room became aware of the full extent of the situation and stopped the match. At 3:13, cutting equipment was requested to extract fans penned against the fence. Unfortunately, many of them had already died (Elliott & Smith, 1993). One of the ironies of this tragedy was that a decision to save lives outside of the stadium resulted in the mass casualties inside the stadium. Clearly, the situation had not been assessed properly, and lives were lost.

The 1992 Los Angeles Riots

The Los Angeles riots in 1992 illustrate an erroneous assessment of the crisis situation by the Los Angeles Police Department (LAPD). The riot was rooted in the police beating of Rodney King, an African American motorist who had been

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174 CRISIS MANAGEMENT IN THE NEW STRATEGY LANDSCAPE

stopped by police on March 3, 1991. King had led police on a high-speed chase before being pulled over, and then continued to resist arrest once he was out of his vehicle. Police officers struck King 56 times with batons, in addition to kicking him and stomping on his head. The beating was recorded by an amateur photographer, who sold the tape to a Los Angeles television station (Miller, 2001). Today, such a video would likely appear on YouTube within minutes.

The police officers making the arrest were tried for using excessive force. During the time up to the trial, the video of the beating had been played countless times on television and was fueling contempt for the officers involved, as well as for the LAPD in general. The trigger event for the riots was not the videotape of the beat- ing, but rather the not guilty verdict for the officers. The verdict was announced on April 28, 1992, shortly after 3:15 P.M . By 5:30 P.M ., the riots had begun.

The LAPD and the mayor’s office were unprepared for what happened next. Mayor Thomas Bradley, fearing that a police presence during the verdict would provoke a negative response from the community, objected to the deployment of police during the verdict decision. Police Chief Daryl Gates was not available during the early stages of the riot but instead was attending a political rally in Brentwood. Hence, at the beginning of the riot, there was little police presence and no central control for managing the eventual deployment of police (Miller, 2001).

Unlike the response of the public sector, private organizations were assessing the situation and quickly making their own crisis preparations. Solomon (1992) over- viewed the crisis response of various organizations in the areas where the rioting was worst. Because of the danger of physical harm to employees, companies needed to act quickly. Thrifty Corporation 1 operated 21 pharmacies in these areas. Four of the stores were burned to the ground and the other 17 stores were looted:

Company executives gave guidelines to managers. If they felt that a group of people approaching the stored looked threatening, or if people came in hordes, they were to close down. In addition, if they could see that neighbor- ing stores were having trouble, or if they could see fires anywhere around, they were to close down. (Solomon, 1992, p. 24)

ARCO service stations responded quickly by closing stations so underground gas tanks would not ignite. Employees were notified via a phone chain (e-mail was not available yet) not to report to work because of the danger. In addi- tion, chain-link fences were quickly erected by ARCO around damaged stores. Company headquarters was located 25 miles southeast of the riot area, but executives at the home office were updated continuously on the status of the riot (Solomon, 1992).

The Los Angeles riots were an example of misreading the original situation. This case serves as an example of the importance of situational assessment. The Hillsborough stadium tragedy and the Los Angeles riots are clearly unusual events that fall outside of the realm of crisis vulnerabilities for many businesses, however. Can situational assessment be as difficult in less dramatic examples? Consider the problem that many companies faced when they tried to assess the impact of Y2K.

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Chapter 7. Crisis Management: Taking Action When Disaster Hits 175

The Y2K Crisis

We mentioned the Y2K crisis briefly in Chapter 2. The Y2K crisis was especially interesting because it was difficult for leaders and CMTs to determine how it would affect their organizations. Conducting a situational assessment was difficult as well. This particular crisis was different for three key reasons. First, it was associated with a particular date. At the turn of the century, computers could interpret a two-digit year as 1900 instead of 2000, triggering an array of potential problems. Second, there was an apocalyptic fervor associated with this particular event. A minority of Christians believed that this event would usher in the second coming of Christ, an event associated with biblical prophecy (Powell, Hickson, Self, & Bodon, 2001). Finally, a number of writers, church leaders, and other self-proclaimed experts— some with significant followings—offered their own viewpoints on the issue.

Interestingly, many of these experts lacked any computer background but pre- dicted that the Y2K computer bug would commence a series of events that would ultimately trigger a widespread meltdown of society, including but not limited to social upheaval, riots, food shortages, electric grid malfunctions, airplane crashes, and even nuclear war. Misinformation was widespread, including the story of a 104-year-old woman—presumably identified as four years old by a computer— who had received a note from the local public school system reminding her to enroll in kindergarten. This story was shared by Florida-based televangelist James Kennedy in his booklet on the topic. Kennedy borrowed the story from another doomsday author, Michael Hyatt, who appeared on many Christian radio pro- grams but neglected to tell his audience that it occurred in 1993, not 1999, and was attributed to human error, not computer error. Various versions of the story were propagated, including the use of different locations (Boston, 2000). Why and how this story spread so easily is beyond the scope of this discussion, but it does illus- trate the amount of misinformation that was disseminated at the time.

An understanding of how these thought processes developed and progressed is important for crisis management for two reasons. First, we must not presume that the cognitions exhibited during Y2K were simply illogical or conjured up by a small group of uneducated people. While some citizens naively believed what they heard without questioning it, many caught in the Y2K panic were represented a variety of socioeconomic and educational backgrounds, including physicians, attorneys, and professors, some of whom even left their homes and set up isolated communities in rural areas (McMinn, 2001). Second, the fact that a large group of people believed a crisis was eminent runs counter to what we see in the crisis management literature; it is more common for the masses to be in denial.

Y2K was indeed a one-of-a-kind crisis in that so many people both erred and were correct in their situational assessments. The concern over what the computer bug might do prompted most companies to simply fix the problem, which in the end, was not very difficult. And yet, the Y2K panic was spreading as if nothing could be done to stop the problem, when in fact computers by the thousands were being fixed every day, well in advance of the fated end of the year. When the new millen- nium arrived with no major snags, both sides on the Y2K issue were able to claim victory. The doomsdayers claimed that their alarm raised the attention needed to

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176 CRISIS MANAGEMENT IN THE NEW STRATEGY LANDSCAPE

remedy the bug (Cowan, 2003). Those who did not panic suggested that the bug was fixed simply because it was a necessary component of a sound-running man- agement information system (MIS) and would have been done anyway.

Mitigation Strategies

Once the situational analysis is completed, strategies for managing the crisis can be identified and implemented. Not all strategies will work initially, so care must be taken to reassess the situation on a regular basis. Flexibility must be main- tained because a crisis situation can change almost hourly. Care should be taken to address the crisis directly and restore confidence with the affected stakeholders.

The Sheetz convenience store chain, based in Pennsylvania and run by members of the Sheetz family, experienced such a crisis in July 2004. Hundreds of customers in western Pennsylvania became sick from salmonella. The source was later found to be Roma tomatoes that Sheetz procured from one of its produce suppliers. Sheetz executives immediately called a press conference to alert their customers and the media that the company would take full responsibility for the crisis. Shortly thereafter, the chain switched to a new type of tomato from a different supplier. In addition, company chairman Steve Sheetz, president Stan Sheetz, and vice presi- dent Travis Sheetz personally visited stores to meet with customers and offered to pay medical bills and lost wages to those who had become sick (Donahue, 2004). The company also posted a toll-free number on its website to field any questions that customers or other stakeholders might have. In this example, the mitigating strategies had to begin early and be sustained for several weeks until the crisis was brought under control.

The major goal at the beginning of a crisis is to minimize potential damage to the firm and its reputation. In some cases the objective may even be to turn any potential negatives associated with the crisis into positives for the organization. For example, one of the first successful cases in crisis management involved the 1990 cruise ship fire aboard the Crystal Harmony, a vessel owned by Crystal Cruises of Los Angeles, California. The company turned this crisis into a positive situation by immediately convening its crisis management team and implementing its 61-page crisis management plan (Sklarewitz, 1991). The first task was to conduct the situ- ational analysis, which in this case involved assessing the damage to the ship and the extent of injuries. Fortunately, there were no injuries from the fire, which had started in an auxiliary engine room. However, because the ship had only minimal emergency power, it was not able to propel itself in the water. With 920 guests and 540 crew members, it was necessary to transport the vessel back safely to port as soon as possible. The CMT arranged to have tugboats move the ship back.

Sometimes strategies need to be changed after implementation has already begun. In the case of the Crystal Harmony, the CMT later learned that the ship was able to regain 80 percent of its power, meaning the tugboats would no longer be needed. Once the safety of the ship was ensured, the CMT went to work prepar- ing statements for the media. The director of public relations, Darlene Papalini, managed the media proactively by issuing these press statements. Because of this

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Chapter 7. Crisis Management: Taking Action When Disaster Hits 177

forthcoming approach, media coverage of the event was minimal, which is what Papalini had desired (Sklarewitz, 1991). Meanwhile, another part of the CMT was managing the refund process to the passengers. When guests disembarked from the ship, they received a full refund and were offered a $500 credit off any future cruise. The aggressive crisis management had a positive spin: 280 passengers signed a letter expressing their appreciation for the way the company managed the event (Sklarewitz, 1991).

The initial mitigation strategies also begin the long-range quest for managing and surviving the crisis. Decision-making activities are similar to a number of other projects that employees may be part of. What is different here is the nature of the project. In crisis management, the goal is to contain the crisis quickly and return the organization to normal operations. Table 7.1 suggests seven decision-making functions that should take place during the management of a crisis.

Initial Communications

Chapter 5 stressed the importance of designating a spokesperson ahead of time who can manage organizational communications with the media. The major stake- holders in the crisis must be identified and informed, and given both an assessment of what exists and a sense of what is likely to occur next. In some instances, the

Table 7.1 Decision Making During a Crisis

Step 1: Alert and assemble the crisis management team. As soon as the crisis is detected, the CMT should be activated.

Step 2: Collect all relevant information. Learn as much as possible about the situation, including what happened, who was involved, where it took place, and the current status of the crisis. This step not only occurs during the situational analysis but also throughout the duration of the crisis.

Step 3: Assign tasks and continue fact finding. The crisis management team should delegate duties, just like a project management team would.

Step 4: Develop solution alternatives. Identify possible solutions that can be implemented.

Step 5: Implement the chosen solution(s). Implementation is often the most difficult part of the process. It requires competent people, time, and money. Allocation of sufficient resources is important.

Step 6: Communicate with the media. The organization should be proactive in meeting with the media and presenting its side of the story. If the organization does not communicate, the media must find the facts of the story elsewhere, a situation that takes control out of the hands of management.

Step 7: Review what happened. Evaluate the decisions that were made and the results that followed. What was learned, and how might such a crisis be handled differently in the future?

Source: Wilson (2003), 58–61.

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organization may have to move quickly to make its first statements to the media. Exxon, a company that has been through its share of crises, experienced a refinery fire in Baton Rouge, Louisiana, on August 2, 1993. The oil company reacted in less than three hours by issuing its first press release at 7:00 A.M. Follow-up statements were issued at 8:00 A.M. , 9:00 A.M ., 10:00 A.M ., 12:15 P.M ., 6:00 P.M ., and 9:30 P.M. that same day (Duhe & Zoch, 1994). This crisis claimed the lives of three workers and had been preceded by a similar explosion and fire in December 1989, when two employees were killed.

Companies should also use the Internet to communicate to their stakeholders. The organization’s website and social media outlets must be activated, communi- cating what is known about the crisis and what is being done to remedy the situa- tion. The communications aspects of crisis management, including the use of social media tools, are covered more extensively in Chapter 8.

Information Needs

Managers and affected staff from all divisions of the company must share a com- mon and systematic approach to obtaining and utilizing information (Coombs, 2006). It is important to monitor and evaluate the crisis and to make adjustments as needed. It can be difficult to know whether one is making the best decisions during a crisis, however. The CMT must recognize the importance of monitoring the opinions and behaviors of its key publics during a crisis and exercising its own influence when possible. It may be necessary to adjust the message being commu- nicated, the stakeholders being addressed, and the manner in which the leader is communicating (Caponigro, 2000).

Two elements of information are essential in crisis management. First, it must be timely. Timely details of the crisis should be made available to the CMT. An interesting comparison between the private and public sectors before the arrival of Hurricane Katrina illustrates this point. Wal-Mart’s emergency operations center began tracking the storm six days before it hit New Orleans. Wal-Mart reacted early to this timely information by sending bottled water, flashlights, batteries, tarps, canned tuna, and strawberry Pop-Tarts to those stores that were likely to be in the path of the storm (Olasky, 2006). In contrast, government agency responses were hampered by late information, slow response, and a general inability to make decisions.

Second, information must be accurate. It must include the precise location, description, and status of the crisis. The Sago Mine disaster in West Virginia illustrates how muddled communications and tired emotions triggered a wave of inaccurate information concerning the fate of 12 trapped miners. In this January 2006 crisis, a mine explosion trapped the miners. They were later found dead, save for one, some 40 hours later by rescuers. The original message originating from the rescuers simply said that “twelve individuals” had been found and one was alive. The radio message was transmitted through five underground relay sta- tions and had to be conveyed through the rescuers’ breathing masks, which they were wearing due to the carbon monoxide danger. Unfortunately, the message,

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muddied by all of the communication “noise,” came out “twelve alive” (Langfitt, 2006). The wave of misinformation morphed into a frenzied celebration outside the mine, which would later be silenced by the news that 11 of the miners had in fact died.

Inaccurate information was also exemplified in the Hurricane Katrina disaster. The media displayed a vast amount of information, much of it accurate and dra- matic, and some of it useful to those in crisis management capacities. But decision makers seeking new information about the status of the damage or evacuations were often met with media reports of unfounded stories, some of which hindered crisis response. In one instance, a CNN report detailed how two patients had died because rescue helicopters were grounded due to false media reports of sniper fire (Olasky, 2006).

Timely and accurate information is vital to managing a crisis. In addition, crisis managers need systems and resources that ensure a continuous flow of appropriate information. Structures, procedures, and processes for gathering and monitoring information must be established and continuously monitored throughout the cri- sis. It may be necessary to restructure or modify the information-gathering process as the crisis evolves. Without a well-developed system of gathering information, the success of any crisis management effort is hindered.

Strategies During the Crisis: Response and Mitigation

The mid-crisis stage represents a turning point for all affected stakeholders. Three potential scenarios may emerge at this stage. The first is the belief that the crisis is under control and the damage can be contained. This is a positive sign that the business or organization may be able to continue operating in a close-to-normal capacity. In the second scenario, however, crisis managers must continue to assess the situation and take action to bring it under control. The third scenario suggests that the outcome is hopeless and managers should take steps to salvage whatever they can for the organization.

This third scenario was illustrated when, in early 2012, an unusual crisis occurred within the beef processing industry that proved to be costly to some of the companies involved. One company monitoring the event, AFA Foods, Inc., had to file for bankruptcy as a direct result of the crisis. Customers became aware that ground beef had an additive to it, a substance that had been nicknamed “pink slime.” Few were aware that pink slime is actually finely textured beef, a substance that has been used as a filler for ground beef products for two decades (Gleason & Berry, 2012).

For AFA Foods, the crisis added a new dimension to its day-to-day operations because it was already in financial straits. The company processes beef for several of the nation’s fast-food chains. Pink slime, or as it is known in the industry, “bone- less lean beef trimmings,” was ground into its beef products. AFA Foods does not make the filler but purchases it from a supplier. One of them, Beef Products, Inc.,

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experienced a sharp decline in demand and had to close three of its four plants just weeks after the crisis commenced (Gleason & Berry, 2012).

The pink slime case illustrates that during the crisis, unfolding events should be monitored to determine the following:

■ Which of the three scenarios appears to be unfolding? ■ What resources are available and how long will it take to deploy them? ■ How long will it take to execute a decision or solution? ■ Who and what are the victims of the crisis? (Leskin et al., 2004)

Regardless of the type of crisis, the organization is usually damaged in some way. Hence, it is important that the CMT do what is feasible to contain the damage inflicted on people, the reputation of the organization, and its assets. This task is the bottom-line goal for all crisis managers.

Damage Containment

Damage containment is the effort to keep the effects of a crisis from spreading and affecting other parts of the business (Mitroff & Anagnos, 2001). Management needs to gather resources such as capital and physical and human resources to help contain the damage (Pearson & Rondinelli, 1998). As a side note, what we call “crisis management” within the four-phase framework of this book is actually the reactive part of the process. From this perspective, the four-step crisis management process is both reactive and proactive. Figure 7.1 illustrates this tradeoff within the four steps of the framework.

With the proper information flowing to the right stakeholders at the right time, damage to people and property can be minimized. In this regard, the main empha- sis of crisis management should be focused on three major goals:

1. Gaining complete control of the crisis

2. Conducting frequent damage assessments

3. Restoring normal operations to the organization

Landscape Survey Strategic Planning Crisis Management Organizational

Learning

The Internal Landscape

Proactive

Seeks to determine the organization’s internal strengths and weaknesses and external opportunities and threats that can lead to a crisis.

Proactive

Seeks to formulate a crisis management team and a crisis plan that can be used to both prevent and mitigate potential crisis events.

Reactive

Seeks to respond to the crisis events that do occur. Emphasis is on containing the damage and restoring normal operations.

Proactive

Seeks to learn lessons from the crisis. Emphasis is on future prevention of a crisis and to function better as a crisis management team.

The External Landscape

Figure 7.1 Proactive and Reactive Perspectives in Crisis Management

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Chapter 7. Crisis Management: Taking Action When Disaster Hits 181

Communicating With Internal and External Stakeholders

Although Chapter 8 addresses the subject of communication more deeply, we introduce the topic briefly here. Because organizational crises usually have negative effects on internal and external stakeholders, truthful communication with both groups is crucial (Barton, 2008; Coombs, 2007). Internal stakeholders include the employees and owners of the firm. External stakeholders include customers, suppli- ers, the local community, and any segment of the general public that is affected by the organization’s crisis. A union strike, for example, affects all of the stakeholders mentioned. Suppliers in particular should be informed of a strike and any subse- quent picket lines around the organization that may be set up by union members, as delivery trucks in these areas may be subject to vandalism (Crandall & Menefee, 1996). In some cases involving larger facilities, it may be necessary to inform suppli- ers of alternate delivery routes and gates that may be needed to ensure safe delivery. If any danger is present, such as rock throwing or gunshots fired in the area by strik- ers, then the organization must communicate these potential dangers to suppliers making deliveries (Herman, 1995).

Crisis communication should meet two goals. First, the organization should initiate communications with the media. This process requires that the CMT have a clear understanding of the issues and the selection of the appropriate response, anticipate the need to communicate, and prepare press releases for the media in advance (Barton, 2008). The second goal of effective crisis communication requires the organizational spokespersons to restore and maintain stakeholder confidence. Sometimes this task may simply involve being at the scene of the crisis and working at a grassroots level to ensure that recovery efforts are being maintained. Former California Governor Arnold Schwarzenegger presided over a state that had its share of crises, from earthquakes and wildfires to urban crime and gang problems. During a string of wildfires, the governor was out in the field both encouraging firefighters and consoling victims (Walsh, 2007). Schwarzenegger earned praise during crisis events for being available to his constituents.

As previously mentioned, communications must occur quickly from the affected firm. Communications can be especially tricky when the crisis transcends several countries, however. In the following example, the trigger event for the crisis occurred at the Cannes Film Festival in France, while the backlash was felt primarily in China.

The Sharon Stone/Karma Comment Crisis

A major earthquake measuring 7.8 on the Richter scale jolted southwest China’s Sichuan Province on May 12, 2008, resulting in almost 70,000 deaths. An outpour- ing of relief efforts from around the world followed to help the victims of this tragedy (Long, Crandall, & Parnell, 2010). However, the tragedy took a strange twist on May 24, less than two weeks after the earthquake, when actress Sharon Stone was asked her feelings on the earthquake during the Cannes Film Festival:

“Well you know it was very interesting because at first, I’m you know, I’m not happy about the ways the Chinese were treating the Tibetans because I don’t think

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anyone should be unkind to anyone else. And so I have been very concerned about how to think and what to do about that because I don’t like that. And then I’ve been this, you know, concerned about, oh how should we deal with the Olympics because they are not being nice to the Dalai Lama, who is a good friend of mine. And then all this earthquake and all this stuff happened and I thought: Is that karma, when you are not nice that bad things happen to you. . . .” (Gardner, 2008)

The karma comment created a wave of criticism on Internet blogs in China because the actress was suggesting that the country’s earthquake was retribution for its policies on Tibet (Passariello & Meichtry, 2008). Internet postings said she was ignorant of the Tibet issue and had no sympathy for those who were suffering from the earthquake. One online comment, from a woman calling herself Mariah, summed up the reaction of many Chinese citizens: “These kind of remarks deeply hurt Chinese people’s feeling and are totally unacceptable” (Roberts, 2008, p. 12).

The backlash in China was swift and powerful. Media reports described protes- tors tearing down billboards featuring the actress in advertisements (McLaughlin & Kaiser, 2008). In addition, many cinemas on the Chinese mainland and in Hong Kong cinemas pledged not to show her films again. Ng See-Yuen, the founder of the UME Cineplex chain, said films featuring Stone would be banned from any UME cinema in Hong Kong and the Chinese mainland. Moreover, the Shanghai International Film Festival had also decided to permanently ban Stone and her films (Du, 2008).

Consider the impact this incident had on one particular company, Dior, a French firm that offers upscale clothing, cosmetics, and apparel for women. Stone was representing the company as a model. The karma comment erupted into a cri- sis for the firm’s Chinese branch, Dior China. On May 27, 2008, three days after the Stone comment, Dior China issued the following statement through its Shangahi office: “We absolutely disagree with and cannot understand Sharon Stone’s illogical remark” (Xiao & Li, 2012, p. 30).

On May 28, Dior China issued another statement, this time quoting the actress: “I am deeply sorry and sad about hurting Chinese people” (Horyn, 2008). On May 31, Stone issued a formal apology through CNN. However, a survey of 250,000 Chinese citizens found that 69 percent did not accept her apology and vowed to never forgive her (Xinhua, 2008). Many Chinese citizens wrote letters to Dior China to express their opinions, indicating they would never buy any Dior products as long as the company was affiliated with Sharon Stone (Passariello & Meichtry, 2008). Under this pressure Dior China began removing all of its advertisements with Stone’s image nationwide (McLaughlin & Kaiser, 2008). On June 2, almost one month after the earthquake, the company issued an official statement indicating it would stop using Sharon Stone as a spokesperson in China (Roberts, 2008).

Evaluating What Is Going Right and What Is Not

The evaluation process is not an activity that occurs only after the crisis ends. Evaluation is a process that begins when the crisis commences and continues

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Chapter 7. Crisis Management: Taking Action When Disaster Hits 183

throughout its duration. The more the CMT can understand what is and what is not working in the crisis response, the more easily they can adjust their plans in attacking the crisis. Because the evaluation process is so important, the following benchmark questions should be raised:

■ How has the crisis affected both internal and external stakeholders’ behav- iors and opinions?

■ To what extent have sales and share prices been affected? ■ Which crisis response strategies and tactics were effective and which

were not?

In reference to the first benchmark, it is important to note that public opinion can work for or against the company. Human-induced crises are usually perceived more negatively by the general public than those resulting from natural disasters. Hence, human-induced crises such as corporate scandals or other ethical viola- tions can harm the reputation of the company (Pearson & Mitroff, 1993). In the case of a natural disaster, however, the public’s perception is often that the com- pany is the victim of an outside threat that could not be controlled. Therefore, public opinion may generally still favor the organization, depending on how the crisis is managed.

The second benchmark is important because revenues and shareholder val- ues often decrease during a crisis (Coombs, 2006). Ralph Erben, CEO for Luby’s Cafeteria, Inc., knew immediately after a gunman killed 23 people in a Killeen, Texas, restaurant on October 16, 1991, that a massive selloff of Luby’s stock would follow. On his flight to Killeen to address the crisis, he called the New York Stock Exchange and requested that stock sales be suspended (Barton, 2001).

Some crises can leave a lingering impact on an industry for years. Consider the travel and tourism industry; part of the overall crisis management effort is not just to keep guests safe, but to keep them traveling back to tourist destina- tions (Ali & Ali, 2010). Nonetheless, the September 11, 2001, terrorist attacks, Hurricane Katrina in 2005, and the deadly 2004 tsunami that struck coastal com- munities along the Indian Ocean have all created both primary crises, the events themselves with their destruction and fatalities, and secondary crises, a loss of tourism in the affected areas (Kondraschow, 2006). Events such as these have created the “tourism crisis,” which is “any unexpected event that affects traveler confidence in a destination and interferes with its (i.e., the economic entities that support that destination) ability to continue operating normally” (World Tourism Organisation, 1998).

The third benchmark should be a reminder that not all crisis response strategies will be successful and that changes may be necessary. Even a CMP recommended strategy may need to be altered. In the Luby’s case, the company’s crisis manage- ment plan called for the marketing manager to speak with the media. However, due to the severity of the massacre, CEO Erben decided that it would be better if he served as the spokesperson (Barton, 2001).

Understanding whether the crisis management effort has been effective requires the gathering of necessary information. Methods that can be used to obtain the information necessary include:

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■ Tracking sales and profits during and after the crisis ■ Establishing a special communication avenue for stakeholders to call with

questions and comments about the crisis and how it was managed ■ Conducting focus groups to obtain information from key stakeholders ■ Conducting surveys of external publics to determine their attitudes ■ Documenting the information flow to and from the news media ■ Documenting the information about those strategies that worked and those

that did not work, and investigating why they were or were not effective (Caponigro, 2000)

The End of the Crisis: Getting the Organization Back on Its Feet

After the immediate crisis, the work of picking up the pieces and going forward begins. It is here that advanced planning, perhaps from the CMP, can help acceler- ate the recovery and minimize the long-term negative effects of the disaster. During the recovery, the CMT needs to take stock, assess the damage, and determine what resources are readily available to the organization. In some ways the struggle is similar to the startup phase for a business in that it must think strategically and take an entrepreneurial approach to solving future crisis matters (Munneke & Davis, 2004). Business continuity focuses on getting the organization back on its feet after a major crisis. This can be viewed as a subarea of crisis management whereby the functions of the business are restored so that day-to-day operations can continue (Herbane, 2010).

Business Continuity

Business continuity refers to the ability of the business to resume or continue activities after a crisis occurs. Essentially, business continuity is about maintain- ing the important business functions during and after a crisis. Meeting customer demand is important, especially when a company is a key player in a supply chain network (Zsidisin, Melnyk, & Ragatz, 2005). A crisis can affect the core functional areas of marketing, accounting, financial management, human resource manage- ment, and manufacturing. Two areas especially prone to an interruption are the organization’s management information system and its production operations capabilities.

MIS and Production Operations

There are a number of companies that help organizations restore their MIS when it has been damaged. Such disaster recovery firms can provide backup software and computer equipment in an emergency. Some organizations, in preparation for a

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Chapter 7. Crisis Management: Taking Action When Disaster Hits 185

major MIS disaster, have alternate worksites prearranged for possible use in the event that a crisis takes down their primary operating facility. A hot site is a facility that has all of the backup equipment and electronic connections required to oper- ate the business. A cold site is a facility that lacks such equipment but is ready to be equipped when needed. Somewhere in between these classifications are warm sites, which offer some but not all of the equipment and connections necessary to operate the business (Bartlett, 2007).

When the crisis is over and the immediate threat has passed, the firm moves from a crisis response mode to a crisis recovery posture. The recovery effort depends on the extent of the damage that has taken place. For example, in the tour- ism industry, weather and natural disasters are two of the main crises that organiza- tions experience (Pennington-Gray, Thapa, Kaplanidou, Cahyanto, & McLaughlin, 2011). As a result, some firms are closed for months because the business was either totally destroyed or suffered major damage as a result of the crisis. Other firms that have experienced relatively minor damage may be able to open within a few hours or days. Some companies may remain open but have business units that are not operational because of localized damage, a common occurrence after a crisis such as a hurricane. Chain restaurants and retail stores are examples of companies that may have geographically specific damage.

Assessing the state of business operations after the crisis helps determine the decisions that must be made next. Managers must assess whether the firm has the ability to meet the needs of its stakeholders or not. If substantial rebuilding is nec- essary, it is probably a good time to upgrade the facility. A new and more modern plant may be built, upgraded manufacturing equipment may be secured, and/or a new management information system may be implemented.

Employee Needs After the Crisis

When employees are out of work because of a disaster at the business, there is a good chance that they may not be able to return once the business is func- tioning again. Employees need to support their families and are likely to secure employment elsewhere if their economic needs are great. As a result, some com- panies keep displaced employees on the payroll, but this move is feasible only if the company has the resources to do so. The Malden Mills fire is an example of a crisis that took multiple turns as the firm sought to recover from a devastating 1995 fire.

The Malden Mills Fire

A fire in Lawrence, Massachusetts, on December 11, 1995, commenced as an apparent boiler explosion at the Malden Mills complex. The plant manufactured fleece, a textile component in clothing and upholstery fabric, and had about 700 employees at the time. This single explosion led to a series of additional explo- sions, all of which were believed to be rupturing gas lines. These escalating events caused the fire to spread quickly. More than 200 firefighters fought the blaze, some

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186 CRISIS MANAGEMENT IN THE NEW STRATEGY LANDSCAPE

coming from as far away as New Hampshire and Boston (“December 11, 1995,” 2005). Although there were no fatalities, 33 people were injured, eight critically (McCurry, 1997).

CEO Aaron Feuerstein made a decision after the fire that proved to be fateful: (1) to rebuild the manufacturing facilities; and, (2) to pay the employees during the rebuilding process. Both decisions were expensive, especially considering that cash flow was compromised. Feuerstein received positive publicity for his decision to keep the employees on the payroll. His move was touted as a good model of employer–employee loyalty (Fisher, Schoenfeldt, & Shaw, 2003).

However, the decision to pay the employees came at a great cost to the company. While it generated waves of good press, it severely depleted cash reserves. In 2001, the company went through bankruptcy, partly due to the $100 million debt it took on after the fire in 1995. These tough financial times were also influenced by several unexpected factors, including warm weather the previous year (which hurt product sales), the loss of a key customer, and an abundance of fleece knockoffs entering the market (Moreno, 2003). The resulting declines in sales and cash flow devastated the company while it was still reeling from the debt it had incurred after the fire.

In hindsight, CEO Feuerstein may have actually contributed to a second crisis years down the road: bankruptcy. Many textile firms closed, outsourcing their pro- duction to companies in China and other nations during this time. Feuerstein not only paid his employees while they were not working but also opened up the plant in the center of an expensive labor market. “While Mr. Feuerstein kept all of his employees on the payroll, using insurance money, in part, the company wound up with $100 million in additional debt, the seed of his subsequent undoing” (Pacelle, 2003). However, it is also true that markets such as the one in which Malden Mills operates can be tough and are subject to environmental jolts, as discussed in Chapter 3.

Feuerstein was eventually forced to retire in 2004 amid a turnaround strat- egy led by a new wave of management. In 2007, the company became part of Chrysalis Capital Partners and now operates under the name Polartec (Clark, 2007). The complexity of the Malden Mills case and the unusual twists that took place after the fire reinforce the idea that paying for the wages of employees during the reconstruction of a business devastated by a disaster must be taken cautiously.

Summary

Actions when disaster hits occur in three stages. Certain responses and tactics are conducted when the crisis begins, when its effects are most pronounced, and when it is at a closing stage. At the beginning of the crisis, the CMT should meet and begin the situational analysis. As information about the crisis begins to unfold, strategies for how to manage the event can then be developed. Some of these strate- gies may originate from the crisis management plan, while others may have roots in the plan but need to be adjusted for use in the particular crisis at hand. The company spokesperson should be planning a media strategy.

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Chapter 7. Crisis Management: Taking Action When Disaster Hits 187

The mid-crisis stage is focused on response and mitigation. Efforts should be made to contain the damage and to respond to internal and external stakeholders’ needs. Assessments should be made as to which crisis response strategies are work- ing and which ones should be altered. As the crisis nears its end, the response is geared to assessing the damage and getting the organization up and running again.

Questions for Discussion

1. What actions should be taken when the crisis is just beginning?

2. What are the desirable leadership traits for the CMT leader?

3. What is meant by situational assessment in crisis management? What problems can be created when mistakes are made in the situational assess- ment stage?

4. What are the major decisions that should be made during the management of the crisis event?

5. Why is it important to establish and monitor an information-gathering system?

6. What is damage containment?

7. Why is it important to have consistent and continuous communication with the internal and external stakeholders?

8. Why is there a need to evaluate what is going right and what is going wrong in the management of the crisis?

9. What is business continuity and why is it important?

Chapter Exercise

Divide the class into groups of three to five students. Each group will represent a crisis management team that is addressing the following scenario:

Suppose a major snowstorm is about to hit your campus in the next 12 hours. 2

Weather information indicates that widespread power outages are likely and travel will be nearly impossible once the blizzard arrives. It is the first week of February and most students have been back on campus for several weeks following the holi- day break. Convene your team and discuss the following questions.

1. What actions should be taken immediately? In other words, within 4 to 6 hours before the arrival of the storm? As you discuss this question, con- sider the following:

Who will be the key leader on campus during this crisis?

Which stakeholders should the communication spokesperson address and what messages should be conveyed?

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188 CRISIS MANAGEMENT IN THE NEW STRATEGY LANDSCAPE

What type of information-monitoring requirements will your team need during the crisis?

What possible crises could occur during the storm?

2. During the storm, what actions should be taken? Be sure to consider the following items:

How will you monitor the extent of the damage that occurs across the campus? Keep in mind that some communication networks may be com- promised due to power outages.

What will be the main objectives of the CMT during the storm?

What social media tools and strategies can you use during the storm?

3. After the storm has passed, what actions should the CMT take? Keep in mind the following items:

What are the main priorities that must be addressed?

How will you assess the damage on campus?

What messages should be communicated to the students, parents, faculty, and staff?

What messages should be communicated to traditional and social media?

Opening Case, Part 4: The BP Gulf of Mexico Oil Spill

The resulting oil spill after the 2010 sinking of the Deepwater Horizon created an enormous environmental nightmare in the Gulf of Mexico. Attempts to stop the leak were largely unsuccessful for nearly three months. A number of stakeholders felt the need to comment on the event, including politicians, the general public, the media, and industry experts. One message was consistent from BP’s external stakeholders: there was little sympathy for the company. In the section that follows, we examine how each company blamed the other for the accident.

The Blame Game

BP contracted the work of drilling the well to Transocean. BP also contracted Halliburton to seal the well with cement. However, one of the key roles that BP had was in determining the integrity of the well seal through its use of the negative pressure test. The official response of each firm follows.

Transocean

Of the companies involved in the accident, Transocean was the most aggressive in denying blame (Barrett, 2011). In a statement before a Senate panel, Transocean’s CEO Steven Newman put the blame on Halliburton, the company contracted to

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Chapter 7. Crisis Management: Taking Action When Disaster Hits 189

cement the drill casing in place (Holly, 2010). However, in an internal investigative report, the company also blamed BP for its misinterpretation of the negative pressure test on the well (Polczer, 2011). A correct understanding of the test results is essential to determine whether gas is leaking from the well or not. Transocean also blamed BP for its role in creating a “fatally flawed well design” (“Contractors,” 2010, p. 24).

Much of the blame for the accident, though, has been directed toward Transocean. One of the key points of criticism has been the company’s inspection of the blowout preventer (BOP). The BOP was constructed by another contractor, Cameron International, but Transocean is required to maintain the equipment.

Halliburton

Halliburton was the company contracted to cement the drill casing and seal the well. The firm maintains that the cement it used was stable and was not a factor in the well explosion (Russell, 2010). Stability is an important function of cement, which must be able to withstand the pressures of the deep well environment. In addition, the cement slurry must be nonpermeable, lest hydrocarbon gasses escape from the well and into the drill casing.

Immediately after the accident, an irate Tony Hayward lamented that it wasn’t his company’s accident, but that it was the fault of the subcontractor, Transocean, and its faulty BOP (Elkind et al., 2011). An internal report completed in September 2010 confirms his initial response, spreads the blame across contractors, and also adds the element of sequential failures to the accident (Cook, 2010). Specifically, BP puts the blame on both the cementing job by Halliburton and the failure of the BOP provided by Transocean. The accident was sequential in their findings; hence, both failures were necessary to cause the disaster.

The U.S. Coast Guard

The U.S. Coast Guard was active in the search-and-rescue efforts immediately after the rig explosion. The Coast Guard also investigates and issues its report whenever there are accidents involving fatalities at sea. Their findings put the blame largely on Transocean, citing the company’s poor maintenance of electrical equip- ment and lack of training on how the crew should shut down engines and discon- nect the drilling rig from the well in the event of a gas buildup (Rickman, 2011). In addition, their report expressed concern over why gas alarms and automatic shutdown systems were not operating correctly. Such systems would have been instrumental in powering down equipment that could generate ignition sources that could cause an explosion in the presence of hydrocarbon gasses.

The Obama Administration

President Barack Obama held BP liable for cleanup costs and damages. Estimates for the cleanup costs were around $40 billion (Sawayda & Jackson, 2011). BP divested assets to help finance the cleanup bill, selling assets that were not essential

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to its core operations. In July 2010, BP sold some oil and gas assets to Apache Corporation for $7 billion to generate necessary cash (Chazan & Chon 2010).

The Departure of Tony Hayward

Tony Hayward became the target of criticism for BP. Many considered his per- formance as a spokesperson after the accident to be poor. Hayward had become CEO after his predecessor, John Browne, had to step down because of a personal scandal (Elkind et al., 2011). Now, Hayward would have to step down as well. His ability to handle the media hit a low point when he made an infamous gaffe while talking informally about the accident, stating, “I’d like my life back.” The comment was viewed by many as being insensitive and became the subject of much debate.

Succeeding Hayward on October 1, 2010, was BP veteran Robert Dudley, an American who was head of U.S. operations. The move to replace Hayward by the BP board was seen as an effort to repair the company’s reputation and to restore the confidence of the U.S. market (Orwall et al., 2010).

Opening Case Part 4 Questions

1. What is the responsibility of a general subcontractor such as BP when overseeing the work of its subcontractors?

2. After hearing all of the evidence in this case, what are your conclusions as to which parties are at fault in the cause of this accident?

Opening Case Part 4 References

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Holly, C. (2010, May 12). Transocean blames oil spill on cementing: BP cites blowout preventer. Energy Daily, Issue 89, 2.

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Notes

1. Thrifty operated about 1,000 pharmacies on the West Coast of the United States. Rite Aid acquired Thrifty in 1996.

2. If your campus is not in an area where snow is a problem, then substitute a tor- rential rainstorm in this scenario.

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Crisis Communication

195

Opening Case: The Domino’s Boogergate Incident

Landscape Survey Strategic Planning Crisis Management Organizational

Learning

The Internal Landscape

The External Landscape

Chapter 10: The Underlying Role of Ethics in Crisis Management

Chapter 9: The Importance of Organiza- tional Learning

Chapter 8: Crisis Communi- cations

Chapter 7: Crisis Management: Taking Action When Disaster Hits

Chapter 4: A Strategic Approach to Crisis Management

Chapter 6: Organiza- tional Strategy and Crises

Chapter 2: The Crisis Management Landscape

Chapter 3: Sources of Organiza- tional Crises

Chapter 5: Forming the Crisis Management Team and Writing the Plan

Crisis

On Easter Sunday in April 2009, two Domino’s Pizza employees posted a video on YouTube showing one of the employees sticking cheese up his nose and then putting it on a sandwich. Because of this and other unsanitary acts in the video, it earned the infamous name “Boogergate” (York & Wheaton, 2009). The now-former employees, Kristy Hammonds and Michael Setzer, were not teenage pranksters but were both in their thirties, which made the event seem even more serious to Domino’s top management (Jacques, 2009).

Domino’s responded aggressively, but only after an agonizing daylong wait by the general public. Indeed, to understand why the wait was so important; one must look at the sequence of events that occurred:

Easter Sunday: The video is recorded in the store. The two employees are obvi- ously bored because no orders are coming in, a fact that was confirmed by the store’s computer system. Hence, despite the comments by Michael Setzer

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in the video, the sandwich in question was never intended for delivery to a customer (Jacques, 2009).

Monday: The video had been posted and received nearly 1 million views before it was taken off YouTube on Wednesday (York & Wheaton, 2009). Meanwhile, a blog site, The Consumerist, posted the video as well. It was not until 11:00 P.M . on Monday night that the store and the two employees had been identified (Jacques, 2009). Ironically, two readers of the Consumerist blog identified the store loca- tion. Using the Jack-in-the-Box sign visible from the window in the video as a clue, they used a Google satellite images and street views to confirm the Conover, North Carolina, location (York & Wheaton, 2009).

Tuesday: In the morning, Domino’s notifies the owner of the store and the local health department and advises the police of the identity of the two employees. As the day progresses, the company works on a response using Twitter, with help from an outside public relations company. The company staffers issue tweets indicating Domino’s is aware of the problem. They also refer people to the Domino’s website, which has issued a formal statement addressing the crisis (Zerillo, 2009).

Wednesday: Domino’s decides to address the crisis by targeting the audience that would be most aware of it: those who spend a lot of time on the Internet, particularly YouTube. By Wednesday afternoon, Patrick Doyle, president of Domino USA, is briefed and prepares to record a video indicating the response of the company, which will be posted on YouTube. Later in the day, the video is recorded and posted on both the company website and YouTube (Jacques, 2009). In the video, Patrick Doyle is both serious and angry.

“We sincerely apologize for this incident. We thank members of the online com- munity who quickly alerted us and allowed us to take immediate action. Although the individuals in question claim it’s a hoax, we are taking this incredibly seriously,” he said, also adding that the company is revamping its selection processes so that “people like this don’t make it into our stores” (York & Wheaton, 2009, p. 24).

Despite its slow response with the YouTube video—almost 48 hours after the incident—Domino’s was praised by public relations experts for its tactics in han- dling the crisis. In fact, several cited this event as a landmark case in crisis man- agement (Beaubien, 2009; Johnson, 2009; York & Wheaton, 2009). The Domino’s incident illustrates the merit in the old adage of “learning to fight fire with fire.” In this case, Domino’s used its own YouTube video to counter a YouTube-induced crisis in order to best respond to concerned consumers (Zerillo, 2009).

Opening Case Discussion Questions

Access the original video from The Consumerist at http://consumerist.com/2009/04/ dominos-rogue-employees-do-disgusting-things-to-the-food-put-it-on-youtube .html.

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Chapter 8. Crisis Communication 197

1. Why do you think these employees made the video?

2. What information is available online about these two employees?

3. How can Domino’s reduce the chances of this type of activity occurring again?

Now access the response video by Domino’s at http://www.youtube.com/ watch?feature=endscreen&NR=1&v=dem6eA7-A2I.

4. Why is the company’s response effective?

5. Is there anything you would have recommended to Domino’s to improve this video?

Opening Case References

Beaubien, G. (2009). Domino’s YouTube flap: “A landmark event in crisis management.” Public Relations Tactics, 16 (5), 4.

Jacques, A. (2009). Domino’s delivers during crisis: The company’s step-by-step response after a vulgar video goes viral. The Strategist, 15 (3), 6–10.

Johnson, C. (2009). Social media in crisis: Blog and Tweet your way back to success. Public Relations Strategist, 15 (2), 23–24.

York, E., & Wheaton, K. (2009). What Domino’s did right—and wrong—in squelching hub- bub over YouTube video. Advertising Age, 80 (14), 1, 24.

Zerillo, N. (2009). Crisis forces Domino’s to revamp social media plan. PRWeek, 12 (16), 1, 20.

Introduction

Crisis communications has undergone a dramatic shift in the past five years. Social media tools such as YouTube, Twitter, Facebook, and blog pages have changed the entire way we view the communication function. “With social media and the 24-hour news cycle, there will never again be a major disaster that won’t involve public participation” (Berinato, 2010, p. 78). Much of what has been taught about crisis communications in the past still holds true. However, with social media, there is a greater need to be ever more cognizant of what is said about the organization in the online environment. Moreover, communications to the public after a crisis need to be made in a matter of minutes, perhaps a few hours at the most. In the “old days” of crisis communications, it was acceptable to wait 24 hours before making a public statement to the media. Today, 24 hours is just too long to wait.

Communication strategies are necessary to successfully manage a crisis. The crisis management team (CMT) needs accurate information in order to commu- nicate quickly to its stakeholders. Issues of fear, hostility, and anger can complicate an already complex situation, and communications can become distorted and inac- curate. These complexities often result in rumors and imprecise information over the Internet that can make the situation worse. Hence, creating a communication structure and flow of information that is objective, truthful, and timely is necessary to inform internal and external stakeholders about the crisis management activities.

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The more effective the communication, the better the prospects for resolving the crisis successfully. This chapter discusses crisis management communication prac- tices, how they affect the respective stakeholders, and how the crisis communica- tion function can be managed effectively.

Crisis management and crisis communication are intricately interlinked. As Scanlon (1975) recognized long ago, “Every crisis is also a crisis of information.” He goes on to say, “Failure to control the crisis of information can ultimately result in a failure to control the crisis” (p. 431). The study of organizational crisis communi- cation has resulted in a greater understanding of the role communication plays in both defining the origin of a crisis and launching the crisis recovery plan (Spillan, Rowles, & Mino, 2002/2003).

This chapter begins with a discussion on crisis communication basics, which includes communicating with both internal and external stakeholders. This sec- tion covers more of the traditional practices used in crisis communications that have been in existence for several decades. We then address a newer form of communication—social media—and how it has influenced the crisis communica- tion function. In this section we offer guidelines on using social media as part of the organization’s crisis response. An evaluation of the effectiveness of the crisis communication function is offered next. We conclude the chapter with insights on the training needed for effective crisis communication.

Crisis Communication Basics

Communication strategies for crisis management are needed to explain the pre- crisis and postcrisis plans to all affected stakeholders (Coombs, 2007; Heath, 1997; Pauchant & Mitroff, 1992; Seeger, Sellnow, & Ulmer, 1998; Sturges, 1994). The old adage that “perception is reality” should also be remembered. “Communication provides for the interpretation of the informational environment communally. It sets the stage for how those individuals outside the organization are likely to make sense of the crisis event” (Seeger et al., 1998, p. 235). In the following sections, we overview the basic components of the communication process.

Initiating the Communication Process

When a crisis commences, activating the crisis management team is the first step in managing the event. The CMT will execute the crisis management plan (CMP), which contains communication strategies as part of the crisis response. This part of the plan can be thought of as the organization’s crisis communication plan. The purpose of a crisis communication plan is to develop procedures for communicat- ing with internal and external stakeholders during a crisis. The main goal of com- munications is conveying what has happened and what plans are in place to address the crisis (Nelson, 2004). Communications with stakeholders must be carried out in an expedient manner. It enhances the credibility of the organization and builds trust. The communicated messages should satisfy the unique requirements of each

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Chapter 8. Crisis Communication 199

audience and provide the tone, context, and consistency of all additional messages. The point to remember is that the objective and the key messages are consis- tent, while the detail and delivery methods may vary depending on the audience (Nelson, 2004).

Crisis Communication With Internal Stakeholders

When a crisis strikes the organization, there are two functions that must be addressed concerning communication with internal stakeholders. First, managing the crisis requires a command-and-control function that involves management, the owners, and selected employees. Second, the general employee population needs to be updated on the status of the crisis and how it has affected the organization and what can be expected in the future in terms of its resolution. Each of these issues is examined in more detail.

The Command-and-Control Function

The location of the command center and its accompanying facilities is important to the successful management of the crisis. The command center is the physical area where the company spokesperson and members of the media can communicate. In addition, the physical location should be equipped to disseminate information to stakeholders who are not in the immediate vicinity of the organization. Equipment such as telephones, computer connections, Internet access, appropriate seating facilities, and other infrastructure items are required. It is also feasible to arrange for appropriate video conferencing capabilities (Chandler & Wallace, 2008). Such an arrangement would be useful if the crisis management team is disbursed over a wide geographical area. A mobile system is useful when the crisis involves coordi- nation among multiple locations. Information can be monitored and reported to a central command center where it is assessed, and then it can be determined what strategies to follow to mitigate the crisis (Yuan & Detlor, 2005).

It is common for a large company with a designated corporate headquarters to experience a crisis “in the field,” that is, at the unit level. Such would be the case if a restaurant or retail chain experienced a crisis at one of its stores. Under these condi- tions, the crisis and communication response is typically directed from the home office. The Chi-Chi’s hepatitis A illness, the Wendy’s finger incident, and the Luby’s Cafeteria murders (addressed in previous chapters) were all directed from locations above the unit level. This is not unexpected, since the home office is where the company resources of public relations and crisis expertise are located. Sometimes, however, the home office does not find out about the crisis until an inopportune moment arises. The Domino’s YouTube crisis at the beginning of the chapter illus- trates this type of situation. This situation occurred with Bowater Incorporated during a weather event involving severe fog.

Bowater Incorporated’s Southern Division, a newsprint manufacturer in Calhoun, Tennessee, experienced a horrific crisis on December 11, 1990. At 9:05 A.M . a massive 99-vehicle accident occurred on Interstate 75, about 2 miles from the plant. For years, complaints about industrial fog produced by the mill’s aeration

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ponds had been directed at the company (McLaren, 1994). Ironically, the multi- vehicle accident started when a speeding car collided with one of the company’s tractor-trailer trucks on the interstate. The resulting smoke, along with the already present fog, created a whiteout condition that made visibility impossible for driv- ers near the accident scene. The accident was the worst in Tennessee’s history, with 12 motorists perishing in the resulting collisions and fires. Communication within the company was haphazard after the incident. The chairman of the board did not learn of the event until watching the evening news (Maggart, 1994). Internal communications within the company, which consisted of various mills in different locations of the southeastern United States, was haphazard to nonexistent. Some of the other mills received telephone calls shortly after the wreck, unaware that the accident had even taken place.

Communications to the Organization’s Employees

Employees are critical to the success of any crisis management communication. They are continuously on the front line of the action and must also communicate with external stakeholders such as customers on a daily basis. In this role, they act as ambassadors for the company and thus should be kept abreast on how manage- ment is addressing the crisis (Weiner, 2006). It is also important to communicate with employees who are not directly involved in managing the crisis or responding directly to outside stakeholders. Indeed, employees must also respond to questions from friends, neighbors, and clients (Valentine, 2007). Depending on the crisis, some employees may be apprehensive and fear losing their jobs as a result of the crisis. Keeping them focused on the day-to-day operations can offer reassurance and help maintain morale (Argenti, 2002; Reilly, 2008).

With the growth of the Internet, many organizations have used their company Web pages as a means of communicating with employees and other stakeholders during a crisis (Ulmer, Sellnow, & Seeger, 2007). This form of one-way communica- tion remains a potent weapon in an organization’s crisis communications arsenal. When a problem is detected, details of the event and its effects on consumers, employees, and the community can be posted. Utilizing the company intranet (not to be confused with the organization’s Internet Web page) can be an excellent way to update employees using more of a two-way form of communication. Setting up a discussion board just for employee access can be therapeutic and enable socialization to continue, especially if employees are geographically separated, say, for example, because of storm damage in the area (Premeaux & Breaux, 2007). Providing a toll-free hotline for employees to call to obtain updates is also useful. During Hurricane Katrina, McDonald’s used its toll-free numbers to communicate with employees and also to account for any employees who might be missing as a result of the storm (Marquez, 2005).

One analogy that applies to employee communication during a crisis is the classic “mushroom” problem. Employees often complain that downward com- munication from management is often infrequent or nonexistent when something goes wrong in the organization. This results in a situation where they feel like a mushroom—“They keep us in the dark and feed us garbage” (Reilly, 2008, p. 335). The remedy, of course, is to keep employees informed, even if the news is not always

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positive. Otherwise, they may be forced to speculate on what the news actually is; and speculation is dangerous because it can launch a wave of rumors. Employees are generally concerned about their companies and want to be updated with fre- quent and candid summaries of the status of the crisis (Barton, 2001).

Sometimes rapid communication is required, as in the case of a workplace violence incident. The Virginia Tech massacre illustrates such a scenario. The April 2007 incident, which is discussed in other chapters of this book, consisted of two separate attacks approximately 3 hours apart (Reilly, 2008). What is troublesome in terms of communication is that students were still going to classes several hours after the first shooting (Madhani & Janega, 2007). In response to this crisis, as well as other types of sudden calamities that can hit a university campus, many institu- tions have installed rapid communication systems that can alert faculty, staff, and students of an impending event such as a tornado or a serious crime in progress. West Virginia University at Parkersburg installed an emergency paging system in all classrooms and key administrative areas. The system consists of paging phones and overhead broadcast speakers that can provide quick messaging, not only on the main campus in Parkersburg but also at its rural Jackson County Center campus, 35 miles away (Gnage, Dziagwa, & White, 2009).

Finally, employees should be reminded not to respond on their own to reporters’ questions but should refer all inquires to the organization’s designated spokesper- son (Coombs, 2007; Wailes, 2003). Using one designated spokesperson helps ensure the organization’s message is consistent. Updating employees regularly on the prog- ress and the status of the crisis through internal reports can help maintain a sense of normalcy in day-to-day operations. It also has a major effect on decreasing the flow of rumors and inaccuracies seeping out to the media (Wailes, 2003).

Crisis Communication With External Stakeholders

Communicating with external stakeholders requires designating a spokes- person skilled at interacting with various media outlets and public groups. Communication must also follow a strategy that fits the severity of the situation. Each of these is discussed next.

Designating a Spokesperson

When traditional outlets are used to communicate to the media—that is, through press conferences, interviews, and so on—it is generally best to designate one spokesperson to carry out this function. There is no set rule on who this per- son should be, except that it should be consistent with the hierarchy and culture of the organization. The appointed person may vary according to the type of crisis encountered. A crisis in the production sector of the company may be headed up by a production or manufacturing member of the CMT. Likewise, a problem with information technology (IT) may be led by a crisis team member from that depart- ment in the company.

When should the chief executive officer (CEO) be the spokesperson? In general, the more severe the crisis, the more likely the CEO should be in control and visible

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to the public. The classic case that supports this adage is the 1989 Exxon Valdez oil spill. CEO Lawrence Rawl chose to remain at Exxon headquarters rather than personally visit the oil-drenched Alaskan coast. Instead, he sent other executives to manage the situation, creating the impression that he thought the crisis was trivial (Vernon, 1998). In most cases though, the designated spokesperson will not be the CEO, but a member of the senior staff who is articulate and can speak convincingly and with empathy. In many larger organizations, this person comes from public relations or a similar department.

The spokesperson selected should have the potential to communicate on behalf of the organization in an effective and professional manner, not just because he or she is the most senior person available. Barton (2001) illustrates an example from the 1999 Columbine (Colorado) High School shootings. The initial spokesperson was in that role by virtue of his seniority. Unfortunately, he lacked technical knowl- edge of the dynamics of the incident and was soon replaced by a more knowledge- able spokesperson. Rank alone should not be the sole consideration when choosing a spokesperson. The traits of the spokesperson are critical because this role is a highly visible one.

Ideal Traits for the Spokesperson

The spokesperson should be able to appear pleasant on camera, answer ques- tions effectively, present crisis information clearly, and have the ability to answer difficult questions (Coombs, 2007). Appearing pleasant on camera means being able to maximize the delivery style element of:

■ Maintaining eye contact. It is recommended that the speaker look at the audience at least 60 percent of the time.

■ Using hand gestures. A movement of the hand helps emphasize a verbal point.

■ Varying voice inflection. Doing so helps avoid a monotone delivery style. ■ Changing facial expressions. This is necessary to avoid a blank-stare “deer in

the headlights” look. ■ Avoiding verbal disfluencies. These are words like uhm , uh , and so on

(Coombs, 2007).

Answering questions effectively means that spokesperson addresses each ques- tion asked by stakeholders. The spokesperson must not deflect it or answer a dif- ferent question from the one that was asked. The spokesperson should be able to communicate a sense of compassion and concern for the victims of a crisis. The restaurant chain Chi-Chi’s stopped operating in the United States in 2004 due in part to a crisis it faced in September 2003. An outbreak of hepatitis A, stemming from a shipment of green onions used in salsa, resulted in three deaths and more than 600 illnesses (Veil, Liu, Erickson, & Sellnow, 2005). The first official public response by the company was made by a divisional vice president on November 4, 2003. In looking for the compassion and concern of the company’s communication response, Veil and colleagues noted:

In this first public comment the spokesperson was not reported as being regretful for the outbreak or compassionate for the hundreds of victims.

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In effect, the message failed to characterize the company as caring or willing to serve the public need, and thus lacked the essence of character. (p. 20)

A third trait is the ability to present the crisis information clearly. The spokes- person should avoid using a lot of technical jargon in their explanations. This experience may parallel how many consumers feel when their automobile techni- cians attempt to explain what is wrong with their car or truck. They simply fail to understand the explanation. Moreover, some listeners may feel it is a way for the organization to avoid telling the truth (Reynolds & Earley, 2010). Hence, the spokesperson needs to be able to explain the details of the crisis in a nontechnical manner that can be understood by a wide audience (Coombs, 2007).

Finally, the spokesperson must be able to handle difficult questions from the audience. These can include one or more of the following five scenarios:

■ Long and complicated questions. The spokesperson should ask for the ques- tion to be repeated or rephrased.

■ Multiple questions. The spokesperson should reconstruct the question in smaller parts, perhaps numbering each part so the audience is able to follow the explanation better.

■ Tricky or tough questions. These are often meant to make the spokesperson look incompetent. Some questions may not be answerable, and the spokes- person will need to point this out to the questioner and the audience.

■ Questions that are based on wrong information. The spokesperson must identify the erroneous assumptions when the question is first asked.

■ Multiple-choice questions based on alternatives that are limited or unacceptable. The spokesperson must determine whether the response options are fair or not (Coombs, 2007).

Some questions are not really questions at all, but simply a way to make a statement or express a particular viewpoint. Two of the authors were recently at an international meeting on accreditation. During one of the sessions, a promi- nent speaker was taking questions from the audience, which numbered close to a thousand people. An individual ostensibly wanted to ask a question, but was really venting about a number of problems he had with the speaker’s comments. In the end, his question was not a question, but a way of stating his disagreement with the speaker. Although the speaker was friendly and tried to address some of the points, it might have been better to simply say to the audience, “This sounds more like a comment, not a question. Perhaps these are some items that can be discussed in a separate venue outside of this session.” Indeed, all crisis spokes- persons must be aware of the bully questioners out there and respond to them appropriately.

When handling difficult questions the spokesperson must have the ability to remain calm under pressure. During a crisis, the organization may be criticized, often unfairly, by the media, by elected officials, or by customers. Such was the case for Connective Power Delivery, a distributor of electric power in the mid-Atlantic region, including areas of New Jersey, Maryland, and Delaware. In September 2003, Hurricane Isabel swept through the area and knocked out power to 400,000 customers. Although the company worked hard to restore power quickly, some

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criticism was received from external stakeholders, yet Connective Power Delivery president Tom Shaw took the “high road” and focused on restoring power instead of worrying about unwarranted criticism (Brown, 2003, p. 32).

With this list of requirements, it is not surprising that many experts recommend media training for the spokespersons.

It is also important that the organization arrange backup spokespersons in case the designated one is not available (Barton, 2001; Coombs, 2007). The organization must still speak with one voice, even if more than one spokesperson is designated. Such could be the case if the primary spokesperson is out of town when a crisis commences. Alternate spokespersons may also be needed if the crisis lingers on for several days. In addition, some advocate designating a team of spokespersons to be available and ready to go on camera. This situation would occur if the organiza- tion’s audience is particularly diverse or if a certain level of expertise is needed to explain the crisis response in a more detailed manner (Gainey, 2010).

Communicating With the News Media

One of the mistakes many managers make is to assume that members of the media represent the enemy and are out to discredit the organization when a cri- sis occurs (Sherman, 1989). While some in the media harbor a skeptical view of business organizations, the media can be beneficial in some instances by enabling the company to reach important audiences (Weiner, 2006). Members of the news media are more likely to misrepresent a situation when they lack the facts. The result depends on what the organization does or says in the first few hours fol- lowing the crisis. The essential rule is to cooperate with the media and understand that journalists are trained to be inquisitive (Barton, 2001; Sherman, 1989; Wailes, 2003). Updating the media periodically enables them to keep the public informed as well. When developing the media message, the organizational spokesperson should be trained to deliver the message in a consistent fashion. In some instances, detractors—and perhaps competitors—will find “experts” who can demonstrate blame against the company. Organizations should be prepared to confront these claims. Crisis communication preparedness includes utilizing third-party experts who are capable of addressing the media to support the organization’s position and endorse its response to the crisis (Wailes, 2003).

In order to ensure that the news media obtain a consistent message from a responsible spokesperson, news conferences should be held. News confer- ences need to be arranged and managed by those experienced in press relations. Table 8.1 offers guidelines for the organization’s spokesperson in preparing for a news conference.

One phrase that should be avoided when addressing the media is “No com- ment.” The crisis communication literature is consistent in making this recom- mendation for several reasons. First, “No comment” implies that the company is hiding something (Vise, 2005). Members of the media, as well as the general public, are skeptical when they hear this statement. There are certainly some situations where certain information cannot be divulged initially to the media. For example,

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there may be an ongoing criminal investigation and revealing details of the inquiry may damage the case. Also, if there has been an incident where employees or cus- tomers have been injured or died, care must be taken always to notify the next of kin first before revealing their identities to the media. Under these circumstances, the spokesperson must inform the media that some information must be withheld until it is authorized for release (Valentine, 2007).

A second reason “No comment” should not be used is that it shows a lack of concern on the part of the organization. Such a terse comment is a sure sign of disrespect to victims and to the media. Third, a “No comment” response forces journalists to obtain their information from some other source (Barton, 2001; Coombs, 2007). When this situation occurs, the company loses control of the infor- mation source and its credibility. In many cases, the media will then find sources among stakeholders who may already have an unfavorable view of the organization. For example, disgruntled former employees may be more than willing to talk to a reporter about alleged safety problems at the manufacturing facility where they used to work.

It should go without saying that the organizational spokesperson should always report the truth to the media. Certainly, there will be times some details cannot be revealed at the exact moment a press conference is held or a press release is issued. This could occur when there has been a death on the premises and the victim’s next of kin need to be notified before the identity of the victim can be released to the public. However, communicating the truthfulness of an event is important. Communicating the truth may be painful for the organization, but hiding it is not

Table 8.1 Guidelines for News Conferences

1. The spokesperson should continually practice and rehearse, based on potential questions that may be asked by the media.

2. The spokesperson should seek to develop rapport and be candid with members of the media.

3. The spokesperson should avoid canned speeches and instead strive for a presentation that is more conversational and spontaneous.

4. Technical experts should be used if necessary to clarify to the public details about the crisis. This person can also serve to field technical questions from reporters that may be beyond the scope of the regular company spokesperson’s knowledge.

5. The spokesperson should maintain a sense of calm and concern, and not resort to anger over questions from reporters.

6. The spokesperson should always report the truth. No attempt should ever be made to mislead the press.

7. The media should be alerted 3 to 4 hours before a news conference is held. Late morning or early afternoon conferences are ideal since they give management time to review its information and also provide ample time for reporters to prepare their story for the evening news.

Source: Barton (2001).

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advisable. Barth (2010) notes in his study of crisis management within the Catholic Church that it was the church’s hiding of the truth of its pedophile priests that led to much public outcry.

Communicating With Customers

Customers are the lifeblood of any business because they represent the cash flow that every firm needs. They are free to abandon their relationships with the orga- nization because they have their own goals and objectives to achieve. Companies can keep the loyalty of customers by telling them the truth, responding to product or service complaints, and giving them the proper information concerning a crisis. When the facts around a crisis are properly explained, customers tend to under- stand and may be more likely to continue their relationship with the organization. However, when customers have not been given an appropriate explanation of a crisis problem, particularly if there is a consumer complaint involved, credibility issues arise and they may search for other vendors (Grégoire, Tripp, & Legoux, 2011).

Poor communication with customers can result in unpleasant consequences for any organization whose managers do not appreciate its proper implementation. Utility companies are especially cognizant of the importance of customer con- cerns because they must communicate to a customer base that is already without power. Customers can be especially irate when they have been without power for an extended period of time. Matt (2004) illustrates this dilemma with the story of customers beating a utility truck with baseball bats when power had not been restored after a hurricane.

The methods of communicating during a crisis should include a mix of differ- ent types of media (Gainey, 2010). In the Internet age, the most logical method of communicating is via the company’s website. However, as we will see in the next section, social media tools should also be utilized. Details of the crisis and its effects on consumers, employees, and the community should be communicated. Press releases can also be archived on the website for all to view. As an example, school systems use this approach to alert students and parents about class cancellations due to inclement weather and other factors.

Some companies prepare special websites that can be added to the regular website during a crisis. These so-called dark sites contain information that some- one could access to obtain the latest information on a crisis (González-Herrero & Smith, 2008; Snellen, 2003). A dark site can contain a prearranged space for ques- tions and answers about the crisis. This section is then updated when a real crisis occurs. Potential questions might include where to return a defective product, what the safety record is for the company, or the latest status on a recall effort. Procter & Gamble used a website successfully when it was suggested that its scent fresh- ener product Febreze could kill pets. To refute these rumors, the Febreze website included an addition that addressed these charges. It also provided a link to an urban legend website that elaborated on the nature of the rumor (Coombs, 2006).

It is easy to assume that all customers will automatically access the organization’s website when a crisis occurs, but there is still a segment of the population that is on

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the other side of the digital divide, and for various reasons does not use the Internet. They might be reached by full-page ads that the company places in newspapers to update the public about a crisis matter. On the other side of this digital divide are customers who may only use certain social media sites to educate themselves about a specific organizational crisis. Because social media is powerful, and relatively new in crisis management history, we address it separately in the next section.

Crisis Communications and Social Media

Social media was once considered a unique communication outlet. Today, it has evolved into a widely used source of news and participation by many stakeholders. As we have seen elsewhere in the book, social media can actually spawn problems for business operations. Social media adds two new dimensions for crisis manage- ment practitioners to consider: (1) news travels faster, and (2) news travels farther (Gonzalez-Herrero & Smith, 2010). Some companies have discovered that their products or employees have been the source of a problem by learning about the occurrence from a social media outlet. Blogs can attract negative news (Benjamin, 2008). Along with other forms of social media, they serve as a vehicle for misin- formation that can quickly spread into a communication crisis if left unchecked.

Social media includes specific types of websites that promote communication among friends and Web surfers who share a common interest. Such outlets include Facebook, YouTube, and Twitter. In addition, an increasing number of blogging sites are set up like a diary, archiving the thoughts and opinions of experts and non-experts who have an insight or an opinion to share.

One of the outgrowths of social media has been their role in crisis communica- tions. For example, social media tools were used during the October 2007 wildfires in Southern California to communicate news that was not readily available on national or local news outlets. Updates on the progression of the fires, the avail- ability and location of emergency shelters, and the opening or closing of businesses and schools were available in almost real time through social media outlets (Palmer, 2008). As this example illustrates, crisis managers should understand the various ways social media can be used to augment response efforts, particularly as it relates to the communications function. It is also necessary to be aware of how social media can cause or intensify an organizational crisis. Understanding the nature of blogging is an important concept for CMTs.

The Impact of Blogging

Blogging can convey negative news and opinions and should be given special consideration by those in corporate communications (Benjamin, 2008). Bloggers who have significant followings can quickly reach a large audience. These online audiences can then convey their thoughts and opinions on a topic or event to their online friends and colleagues.

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Bloggers have achieved the status of “citizen journalists”; anyone can blog about anything. One does not have to have a degree in journalism to circulate an opin- ion electronically. This situation creates challenges for crisis managers who must be able to distinguish between bloggers who warrant attention and those who do not. The principles of media relations that apply to journalists can also apply to some bloggers. In the past, some public relations professionals created media lists of journalists who were their contact points. Similarly, crisis communicators must now view bloggers as another key stakeholder to establish ongoing two-way com- munication. Just as traditional media relations strategies revolve around building trust with the media, managers must now earn the trust of bloggers (Ziemnowicz, Harrison, & Crandall, 2011).

Computer maker Dell experienced a blogging crisis in 2005 when a well-known blogger, Jeff Jarvis, wrote about his poor customer service experience with the company. The result was negative publicity damage for the firm (Flynn, 2009). Dell responded slowly at first, but eventually hired a blog specialist to help the company improve its social media strategies. Dell also worked at improving its cus- tomer service and communicating these efforts through its newly established blog. Michael Dell even caught up with Jarvis at a social gathering and apologized for the company’s poor customer service performance (Conlin, 2007).

In March 2007, Home Depot was the target of an onslaught of negative publicity when MSN money columnist Scott Burns stated that the company was a “consistent abuser” of the customer’s time. Within hours, the comment section to MSN was filled with similar stories from customers who were tired of the poor service they were receiving at Home Depot due to cutbacks in store staff. Altogether, there were more than 10,000 angry e-mails and another 4,000 posts criticizing the company for its poor service (Conlin, 2007). CEO Francis Blake responded by going online and apologizing for the poor showing of the company. He promised to improve staffing and even thanked Scott Burns for his critique. There is a point to remem- ber: Negative news concerning poor management on the part of the company can travel exceedingly fast on the Internet even when it originates from a single source. In this event, influential columnist Scott Burns triggered this online media crisis (Ziemnowicz et al., 2011).

Consider the case of Beef Products Inc. (BPI), which was been associated with the term “pink slime” during the first half of 2012. BPI manufactures lean finely textured beef, a common low-fat additive to ground beef products. Food blog- ger Bettina Elias Siegel noticed the term pink slime in a news article referencing lean finely textured beef. She responded by launching an online petition to have it banned from the federal school lunch program (Gruley & Campbell, 2012). Soon ABC News covered the story and the blogosphere became active as various stake- holders weighed in on the product.

Lean finely textured beef is made by running scraps of meat through a process that eliminates the fat and is treated with ammonia to kill bacteria such as E. coli and salmonella. It is then used as a filler for ground beef, low-fat hot dogs, pepperoni, frozen meat entrees like meatballs, and canned foods. McDonald’s, Taco Bell, and Burger King used lean finely textured beef until 2012 (Bloomgarden-Smoke, 2012). There has never been a health-related crisis associated with the product, which has

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been available for two decades and is considered safe by the U.S. Department of Agriculture (Gleason & Berry, 2012). Nonetheless, this social media related crisis appears to have hurt the lean finely textured beef industry.

Living in a YouTube World

The opening case to this chapter on Domino’s illustrates how vulnerable an organization can be in this new world of social media. YouTube offers the viewer a video of almost any negative event that can be recorded. A number of orga- nizational crises have erupted as a result of videos appearing on YouTube. For example, some companies discover a product was defective only when someone aired a YouTube video about it. This was the case for Kryptonite, a maker of heavy- duty locks for bicycles and motorcycles. In September 2004, unexpected publicity resulted when it was revealed, via an online video posting, that using the cap of a Bic ballpoint pen could open the company’s locks. In just a few days, the company faced enormous negative Internet-generated hype, resulting in a recall of their locks and an estimated $10 million in lost sales revenue (Kirkpatrick, Roth, & Ryan, 2005; Moore, 2005).

In November 2008, Johnson & Johnson (J&J) placed an online ad featuring a voice-over of a mom saying she carries her baby in a sling because it makes a “fash- ion statement.” The ad contained a short cartoon showing how carrying a baby in a sling can be a bonding experience for the mother and child but can also cause back pain, hence, the need for Motrin pain reliever. However, a small group of online moms complained that the ad was offensive. Some moms vented their outrage by posting their own YouTube videos asking the company to pull the offensive ad. J&J removed the ad shortly after its airing (Johnson, 2009).

The crisis response by J&J to remove the ad was strategic, even though the nega- tive response to it was quite small:

Mommy bloggers and Twitterers make up a tiny fraction of the U.S. popula- tion, 0.15% in the case of Twitter. It just happens that a large number of that 0.15% work in advertising and media. A not-insignificant number of mommy bloggers have worked in advertising or media. In essence, this was a ready- made media firestorm. (Wheaton, 2008, p. 12)

Companies have to accept that mistakes they make are now going to become very public for quite some time. “It’s a transparent world—get used to being seen living in it” (Edwards, 2008).

One of the more famous cases involving YouTube concerned an event with United Airlines. In the spring of 2008, Canadian musician Dave Carroll was traveling with his band from Canada to Nebraska when the neck of his guitar was damaged by United personnel. Not only was his guitar damaged by baggage handlers, but he witnessed the event while waiting on the plane during a connection at Chicago’s O’Hare airport. Carroll informed three different United employees in Chicago of the event, but none of them took any action or responsibility. After the flight,

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Carroll spent nine months trying to get United to pay for the repair, to no avail. Frustrated over this chain of events, Carroll and his band wrote and performed a song, “United Breaks Guitars,” and posted it on YouTube on July 6, 2009. The song eventually amassed 8 million hits and created a huge public relations embarrassment for United Airlines. United finally offered compensation for the repair and to change its operations procedures (Grégoire et al., 2011).

The United case is significant for our attention because it shows the attempt of a customer to try to resolve a service mistake with a company. Carroll’s attempts to fix the problem over a nine-month period were not taken seriously by the airline. During this time, only a few people knew of the event, which could have been easily remedied by the airline. United’s decision to stick with is policies rather than try to remedy an obvious mistake on their part left Carroll no choice but to become a YouTube whistleblower.

Customers typically engage in online public complaining when a service fail- ure is followed by failed recoveries—that is to say, when firms keep failing to address direct complaints. Such instances are also referred to as “double devia- tions.” That is exactly what happened in Dave Carroll’s case. Before he went public, he aimed to solve this problem in direct contact with United Airlines— he even tried for nine months! (Grégoire et al., 2011, p. 28)

The concept of the double deviation, mentioned in the previous quote, makes the United case different from the J&J Motrin ad crisis and the Kryptonite bike lock inci- dent. J&J and Kryptonite both sought to remedy their crises soon after they occurred. On the other hand, United entered a crisis on its own and took several years to resolve it. All three cases illustrate how negative news travels both fast and far.

Impact on Crisis Communications

The impact of social media raises a number of implications for crisis commu- nications policies. These are discussed in the next sections and are based on com- ments by Ziemnowicz et al. (2011).

Monitor the Internet

An organization should periodically check blog, YouTube, and other Internet activity to determine potential problem areas that may exist with products, services, or company reputation. A new industry is growing with organizations that can help managers track blog and other social networking activity relating to a specific com- pany or crisis event. Various methods such as searching on Google’s Whos Talkin or utilizing the services of Technorati can be used to measure the degree of influence of what is being said about a company and who is saying it. Using platforms such as these, managers can find websites and blogs that are discussing their companies. Examining blog activity can yield insights on a crisis and to what magnitude it is being communicated via the Internet (Guo, Vogel, Zhou, Zhang, & Chen, 2009).

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Utilize Social Media Outlets as an Ongoing Component of the Overall Corporate Communications Plan

A look at company websites today reveals that many organizations have Facebook, YouTube, and Twitter links as well as blogs. We expect this trend to continue as companies seek to develop more interactive online communications with their stakeholders. For example, the company blog gives the organization an approachable human element (Kirkpatrick et al., 2005). Whereas blogs are dynamic and aimed at the human side of the Internet audience, corporate Web pages, by contrast, are meant to showcase the company’s products, services, and to some degree, its his- tory. Web pages offer only one-way communication and, of course, the opportunity to purchase products where applicable. Social media, though, makes the company more personable by offering two-way communication with its external stakeholders.

Include Social Media Tools as Part of the Crisis Communications Plan

The CMT should develop a crisis communication plan that specifies how it will use social media tools during a crisis. Larger companies usually have an in-house staff, whereas smaller firms may need to use social media specialists on retainer. Three of the companies discussed previously—Dell, Home Depot, and Domino’s— utilized social media to counter the crises they had encountered.

Some experts are calling the incorporation of social networking resources with traditional media “digital crisis communication” (Faulhaber, 2009). Using conven- tional media outlets remains important, but organizations that do not have Twitter accounts or Facebook pages should probably acquire them and develop fan pages and groups on these sites. Then, in the event of a crisis, these pages can be in place to disseminate messages to stakeholders. In the case of Twitter’s message size limits, communicators can use the outlet to link readers to Internet sites providing details of the organization’s response (Ziemnowicz et al., 2011).

Communication Response Time Should Be in Minutes, Several Hours at the Most

Publicly responding to an organizational crisis within 24 hours was once consid- ered the standard by some PR practitioners. Today, however, that standard is now measured in terms of minutes and, perhaps, several hours at most (Flynn, 2009). In this social media world, external stakeholders want information in minutes when a crisis occurs. It took Domino’s more than 24 hours to respond with its now-famous YouTube video of Patrick Doyle speaking on the crisis. Tim McIntyre, vice presi- dent of communications for Domino’s commented:

So you post a video on YouTube featuring the president of an iconic brand within 48 hours of a hoax video being posted by two idiots. And the [criti- cism] of this has been amazing to me—because on one hand, we’re lauded for doing something unprecedented, something that had never been done before

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[posting only a YouTube response]. And yet, we didn’t do it fast enough. And yet nobody has been able to answer: How can you do something that’s never been done before, but not fast enough? (Jacques, 2009, p. 9)

Clearly, the social media world demands that the company make a response quickly. It is worse when there is no response from the organization’s website or social media outlets. Not commenting online can be interpreted as a “No com- ment” from the company (Taylor & Perry, 2005), a definite taboo that raises suspi- cion in crisis communications (Gonzalez-Herrero & Smith, 2010).

Prepare the Message for a Wide Audience, Not Just for Journalists

Message development is crucial when using social media outlets. The traditional approach was to design the organization’s messages for delivery to various stake- holders via a third party, usually a journalist. However, using social media outlets requires the organization’s message sender to function in the role of a journalist. Moreover, a corporate tone such as typically found in an “official” press release posting will not usually be appropriate using social networking media (Ziemnowciz et al., 2011). Twitter may eventually cause a message revolution whereby manag- ers will be forced to become adept at writing clear crisis communications in 140 characters or less (Levinson, 2009).

Use Search Engine Optimization Programs to Move Up Internet Search Results

In the event of a developing organizational crisis, the organization’s website might not appear on the first page of a Google or another Internet search. This occurs because news websites and other social networking sites addressing the crisis crowd out the organization’s website, pushing it further down the list of search pages. This puts the organization at a disadvantage during the crisis because its side of the story is not getting through to the Internet audience. Furthermore, what the viewers do see may be primarily negative news about the organization.

Utilizing search engine optimization (SEO) programs helps to move the com- pany’s Web pages to the first page of an Internet search (González-Herrero & Smith, 2010). Many users only view the first page of a Google search, and few go on to view other pages that follow (Benjamin, 2008). While SEO programs cannot prevent a crisis, they can help mitigate by allowing the organization to reach the Internet audience and tell its side of the story.

Pick Your Battles

When a crisis occurs, some stakeholders will never be satisfied no matter what the organization does to appease them. It is important to be aware of the differ- ence between a dissatisfied customer (who can eventually be satisfied) and a troll (who will never be satisfied). “Dissatisfied customers can be approached personally and want to change their minds about something. Bigger fights only satisfy trolls.

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Bloggers have learned to ignore trolls. . . . PR professionals must develop the same skill—pick your battles” (Johnson, 2009, p. 24).

Dave Carroll, discussed previously in the United Airlines case, was an example of a dissatisfied customer. He was not out to “get” United Airlines but simply wanted fair compensation for his broken guitar. United lost an opportunity to appease a dissatisfied customer. However, there are some websites and blogs that are set up by people who in no way want to have their minds changed concerning a particu- lar company; these are “the trolls” mentioned by Johnson (2009) in the preceding paragraph. Such websites are sometimes referred to as rogue sites, sucks sites, or anti-websites (González-Herrero & Smith, 2008).

Evaluating the Success of the Crisis Communication Process

Chapter 9 focuses exclusively on the organizational learning that must take place after a crisis. Here, we briefly address the assessment of the organization’s crisis com- munication responses. The evaluation process provides information and facts that build a knowledge base that promotes learning. This process of evaluation is critical because it determines which actions were effective and which were not. Hence, the reality of crisis management (and hence, communications) is that some aspects of implementation may be successful, while others will be unsuccessful (Pearson & Clair, 1998).

In this section, we focus on the successes and failures of the crisis communi- cation process. For example, after the severe hurricane season of 2005, a number of retail chains began reassessing their crisis communications. The successes and failures in this area have led management to implement changes in how communication takes place during a crisis. Some retailers now utilize sophis- ticated technological applications, including GPS (global positioning systems) and satellite telephones, so they can stay in touch with employees during a crisis (Amato-McCoy, 2007).

Debriefing and Postcrisis Analysis

After a reasonable interval following the crisis, the CMT should meet to evalu- ate the management of the organization’s crisis response. Written notes should be recorded that provide an assessment of internal and external communications. This notes should include an evaluation of how the company communicated to the media as well as how the media portrayed the company. Documenting this process and evaluation is important so the materials can be retrieved for later referral and continuous learning.

The team should make recommendations for improving the crisis communi- cations function. Bovender and Carey (2006) provide a summary of how HCA’s (Hospital Corporation of America) Tulane University’s hospital assessed its crisis

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responses and communications after Hurricane Katrina. Key observations made during this hurricane concerning telephone usage included:

■ Cell phones may not work after a disaster such as a hurricane. ■ Cell phones seeking to call area codes outside of the disaster area might

work better than those cell phones calling area codes inside the disaster area. ■ Digital phone lines will go down when a building loses power; therefore

some analog phones should be kept on hand. ■ Amateur radio operators can often fill the void when other types of techni-

cal communication systems fail. ■ Communication between headquarters (in this case, HCA is based in

Nashville) and the field office (Tulane Hospital is in New Orleans) needs to be arranged on a regular schedule. In this case, hourly phone calls were made during the most critical period of the crisis.

■ As strange as it may seem, there were not problems with long-distance calls, but making a phone call across town was impossible (Bovender & Carey, 2006).

A case involving the death of a professional wrestler employed by the World Wrestling Entertainment (WWE) illustrates how crisis communications can falter after a tragic event. On Sunday, June 24, 2007, the bodies of WWE wrestler Chris Benoit, his wife, and son were found in their Atlanta home. Benoit was to appear on the WWE’s televised Monday Night Raw the next day, but due to the tragedy, the event was cancelled. Vince McMahon, CEO of WWE, made the decision to cancel, and instead, a tribute to Chris Benoit was aired, out of courtesy to the employees of the WWE and Benoit’s family. During the tribute, McMahon eulogized Benoit as one of the greatest wrestlers of all time (Walton & Williams, 2011). At this point in the crisis, though, the exact circumstances surrounding the death had yet to be determined.

Unbeknownst to McMahon or the WWE, police determined that Benoit had murdered his wife and son by asphyxiation before hanging himself. The timing could not have been worse for airing the tribute to Benoit. The WWE was left with an embarrassing situation; the very person they had honored on Monday was con- sidered a monster on Tuesday, the night of the next WWE broadcast. Furthermore, speculations were now running rampant that Benoit had succumbed to steroid abuse or “roid rage” (Mosconi, Quinn, & Nichols, 2007). This news item had cre- ated a second crisis for the WWE, as critics, including Congress, began to question the WWE about its drug policies. In hindsight, an assessment of the WWE’s crisis communications concludes that although the tribute showed respect to his family, employees of the WWE, and the fans, it was aired without having full knowledge of the deaths. It was an honest mistake, but a mistake nonetheless (Walton & Williams, 2011).

The evaluation process should lead to revised plans that can be used in future crisis communication preparations and responses. The evaluation can also indi- cate where crisis communication training may need to be improved. This topic is covered in the next section.

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Crisis Communication Training

The CMT is responsible for coordinating the training efforts needed to ensure that relevant organizational members have the necessary knowledge of crisis manage- ment procedures. Medium-sized and large organizations with human resource management departments should take advantage of the training expertise these departments can offer. Specifically, the training and development resources are needed to achieve the organization’s overall crisis management capabilities (Reilly, 2008; Roemer, 2007).

When it comes to crisis communications training, the burden usually shifts from human resources to the organization’s marketing or public relations departments. Staff members in these departments spend their time promoting the company and its products, which makes them a good choice for crisis communications training (Barton, 2008).

Media Training

Media training prepares a spokesperson to communicate effectively with various members of the media, such as newspaper, magazine, and television reporters. The company spokesperson should remember that journalists make a living conduct- ing interviews every day. From this perspective, a company spokesperson is like an amateur taking on a professional (Blyth, 2009). Hence, media training is an abso- lute must, even for staff with good speaking abilities.

One perspective is to approach training through four basic types of instruc- tion: (1) discussion and staging, (2) instruction, (3) simulation and drama, and (4) evaluation (Caponigro, 2000).

Discussion and Staging

This training involves viewing videos and reading news reports with the inten- tion of comparing effective and ineffective spokespersons. The emphasis here is on the effects their comments have on the audiences. There is a famous crisis train- ing video involving a television interview with former Exxon CEO Lawrence Rawl shortly after the 1989 Exxon Valdez oil spill in Alaska. The interview took place on the Good Morning America show with anchor Kathleen Sullivan. The interview did not go well for Rawl, who was being pushed to answer questions about Exxon’s plan to clean up the oil spill. At one point, Rawl accuses Sullivan of creating a public relations nightmare for Exxon (Lentini, 2009).

Instruction

Modules in this segment instruct the participants about the “behind the scenes” activities in a news organization. These lessons help crisis spokespeople understand media needs and the deadlines that they must meet. As such, the spokesperson

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216 CRISIS MANAGEMENT IN THE NEW STRATEGY LANDSCAPE

can learn to express what the CMT needs to communicate while simultaneously providing the media with the information they need.

Simulation and Drama

This training typically involves responding to potential questions that may be asked by media representatives. The need for continuous rehearsal is emphasized to help the spokesperson become confident with stressful questions (Coombs, 2007). Barton (2008) recommends an approach whereby the CMT develop “the worst 20.” These are the 20 most disturbing questions a spokesperson could be asked after a crisis occurs. This part of the training can also take place in a private television stu- dio where participants become accustomed to the basic tools and techniques used in a television interview.

Evaluation

This element of the training focuses on areas that need improvement. Learning from past successes and mistakes is an important part of becoming an effective media spokesperson (Caponigro, 2000).

A key skill spokespersons must learn is how to limit comments to a few well- chosen key messages. Media training instructs the participants to identify those key messages correctly and then to articulate them successfully. It shows the spokesper- son how to confront a succession of different questions that might arise in print and broadcast interviews (Wailes, 2003). Generally, it is suggested that this type of training take place every 9–12 months (Caponigro, 2000).

Summary

The crisis management team oversees the function of crisis communications. When a crisis commences, a command-and-control function must be established by the team. Communicating to employees is especially important because they are the ambassadors of the company during the crisis. The organization should not with- hold information from employees, as they are the ones who have the most contact with customers and the general public.

Communicating to external stakeholders such as customers, the media, and the general public will need to take place at several levels. For formal press conferences or interviews, a spokesperson will need to be designated well in advance of any cri- sis. This person should be carefully chosen and must display the appropriate traits for being a high-profile representative of the company. Social media outlets should also be considered in the crisis communications strategy. Using the appropriate outlet—such as the organizational Web page, YouTube, Facebook, or Twitter—will help reach the widest audience, including those who may have firsthand knowledge of the crisis.

The effectiveness of the crisis communications function should always be evaluated during the postcrisis stage, where organizational learning needs to occur.

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Chapter 8. Crisis Communication 217

Finally, care should be taken to insure that the appropriate training is taking place to improve crisis communications.

Questions for Discussion

1. How can effective crisis communication aid in managing the crisis in a more favorable manner?

2. How does communicating to internal stakeholders differ from communi- cating to external stakeholders?

3. What problems can occur with crisis communications directed to internal stakeholders (i.e., within the organization)?

4. What examples of the “mushroom analogy” of communication have you witnessed in organizations?

5. What traits are needed in a company spokesperson? What examples of poor spokespersons have you seen in the news?

6. What is the impact of a social media on a crisis? What examples can you provide that are not in the chapter?

7. How would you prepare for a news conference if you were the spokesper- son and your organization had just been involved in a serious industrial accident?

8. How can the crisis management team evaluate the effectiveness of its communications?

Chapter Exercise

The purpose of this exercise is to become familiar with the various types of crises that are emerging because of the advent of social media. This exercise can be done in groups if the class is large and time is limited. Otherwise, each student in the class finds an organizational crisis that has surfaced on YouTube. Note that for a single crisis, there will likely be a number of videos that address it. For each crisis, address the following questions:

1. Why is this event considered to be a crisis? Remember the book definition of a crisis presented in Chapter 1.

2. If this event has not been recorded on YouTube, would it have still been a crisis?

3. What is the nature of the comments that accompany the YouTube video? Do you feel these comments are justified? Do you see any patterns in the comments?

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218 CRISIS MANAGEMENT IN THE NEW STRATEGY LANDSCAPE

4. What is the nature of the blame that is being assigned in the videos and comments sections? Is the organization being blamed? If so, is it justified? Is there another party involved that is to blame for the crisis?

Mini-Case: Taco Bell Thanks You for Suing Them

An amazing thing happened during 2011: Taco Bell thanked those who filed a lawsuit against them! Of course, this was not just any thank-you; it was part of a well-orchestrated marketing campaign to tell its side of the story in regard to a law- suit. In addition, it shows how a company used social media in an effective manner to counter a crisis.

The story began when a disgruntled customer filed a lawsuit against Taco Bell and complained about the beef content in their tacos. The customer claimed that the taco meat was more “filler” than beef. In fact, similar allegations had already been circulating on the Internet (Beaubien, 2011). The impending crisis was now not just a lawsuit, but a potential social media fiasco.

Taco Bell had a preappointed crisis management team, and on January 25, 2011, the day the news of the lawsuit broke, they met to discuss the company’s response (Levy, 2011). The response by Taco Bell was a history maker in terms of using social media to address a crisis. Following are the components of the company’s crisis communications strategy that were used in what has been labeled “Tacogate”:

■ A nationwide print campaign featured ads in the Wall Street Journal, the New York Times, USA Today, the Boston Globe, the Chicago Tribune, the Los Angeles Times, the San Diego Tribune, the San Francisco Chronicle, and the Orange County Register (Beck, 2011).

■ The ads contained a headline that read, “Thank you for suing us.” Underneath the headline, the company explains in a five-paragraph letter the truth about their seasoned beef. The letter is signed by Taco Bell presi- dent Greg Creed. The purpose of the ad, which is bold in that it acknowl- edges the lawsuit publically, is to get the reader’s attention quickly so that Taco Bell can tell its side of the story (Levy, 2011).

■ In a YouTube video, Taco Bell president Greg Creed explains the ingredients in the company’s taco meat under the title, “Of course we use real beef!” The 1:32 video, verifies that the company’s taco meat is 88 percent USDA- inspected beef. The other 12 percent (he grins) is “our secret,” which he cheerfully describes as 5 percent water (to keep the meat moist and juicy), 4 percent Mexican spices, and 5 percent oats, caramelized yeast, citric acid, and other ingredients.

■ Search engine optimization was used to make sure Taco Bell’s point of view appears on the first page of a Google search (Beck, 2011).

■ During the crisis, a link on the company’s website directed the viewer to a microsite dedicated to addressing the ingredients in the taco meat. It also posted a link to its response on Facebook with a coupon for a free taco (Levy, 2011).

■ A Twitter campaign was launched using the hashtag #beef in addition to #Taco Bell in all tweets related to the lawsuit (Daitch, 2011).

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The effectiveness of the campaign culminated in the withdrawing of the original lawsuit by the Alabama law firm, Beasley Allen (Becker, 2011).

Mini-Case Questions

1. What other companies besides Taco Bell could be the victim of a similar crisis?

2. What risks did Taco Bell take in running the “Thank you for suing us” ads?

3. The lawsuit did not ask for any monetary compensation. Instead, it asked that Taco Bell change its advertising. Why do you think Taco Bell spent so much money to counter the lawsuit?

Mini-Case References

Beaubien, G. (2011). Taco Bell bites back at beef complaint. The Strategist, 17 (1), 7. Beck, K. (2011). Taco Bell’s meaty marketing campaign. Customer Relationship Management,

15 (4), 12–13. Becker, N. (2011, April 20). Corporate news: Taco Bell’s critic drops beef. Wall Street Journal,

p. B7. Daitch, C. (2011, February 4). Taco Bell uses humor, social media to dig itself out of beef

scandal. Advertising Age. Retrieved July 24, 2012, from http://adage.com/article/ digitalnext/taco-bell-social-media-emerge-beef-scandal/148675/.

Levy, P. (2011). Crisis control. Marketing News, 45 (9), 8–9.

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