Anthonissen Р.F. Crisis communication: practical public relations strategies for reputation management and company survival

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overall globalization of activities, markets and the media brings about

a globalization of the crisis (see Figure 16.1). An incident that takes

place in a small area and which, in the past, could easily have been con-

tained (with costs limited to damages and repair) is now blown out of

proportion on a worldwide scale, with commensurate costs.

Here are some cases in point. (Please note that the information

given here is pertinent to France.)

Bridgestone & Firestone tyres (2000)

ɀ Tyre blowouts (200 deaths and more than 500 hurt) – 1,400

complaints filed in 2002.

ɀ 6.5 million tyres recalled.

ɀ Net profits divided by 4 between 1999 and 2000.

ɀ Share value fell by 60 per cent.

Automobile manufacturers

ɀ Regular recalls in this industry.

ɀ Average recall – 100,000 vehicles for an average cost of r50

million.

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1k€ 10 100 1M€ 10 100 500 1Md€ 5 10Md€

• Products crisis without

known danger

– without media

– with media

• Industrial crisis with

known danger

• Industrial crisis with

known casualties

• Products crisis with

known casualties

• Reputation crisis

The impact of the number of casualties and the level of danger

Cost of crises – losses and expenses

Figure 16.1 An exponential inflation in the cost of crises

Camembert cheese contaminated by listeria and

salmonella (March 1999)

ɀ 25,000 products recalled (or 5,000 according to some

sources).

ɀ An immediate drop in sales of 75 per cent.

ɀ A 14.5 per cent loss of market share – nine months later, pre-

crisis sales level regained (reaching about 25 per cent of the

market).

Bayer drug recall (Baycol, Staltor and Cholstat) August

2001

ɀ Financial consequences – share price fell by 43 per cent.

ɀ Consequences on the operating result: a 6.5 per cent decline

in sales figures for the 2002 first quarter and a 46 per cent

drop in operating profit.

ɀ Legal consequences: 40,000 patients filed complaints in the

United States, which led to 600 trials. In France, 400 com-

plaints were filed at the end of 2001.

Faced with this sort of situation, the company and its risk manager

must take into account the limits of its insurance coverage. In fact,

today, insurance policies essentially cover four fields:

1. Product recalls.

2. Crisis management costs, that is, reimbursement of those expenses

related to maintaining company market share (communication,

advertising, working to get outlets to continue to distribute the

product).

3. Legal liability.

4. Assets.

Some additional risks are partially covered by a few companies up to

an amount that varies from r2 million to r25 million. These are loss of

brand image (in France, in our experience, there is only one insurance

product on the market, developed by AGF (Allianz group) and Beau

Fixe); loss or decrease in sales figures; and personal liability of man-

agers and social agents. Items not covered by such policies are:

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ɀ ongoing loss of confidence;

ɀ loss of market share;

ɀ loss of stock market value;

ɀ R&D expenses necessary to recuperate the three previous items.

Of course, it is just these, the most costly risks, that are not covered by

insurance companies and which could drive a company out of busi-

ness. Faced with this situation and other dramatic examples in the

1990s and the early 2000s (Enron, Andersen, Parmalat, etc) risk man-

agers of large organizations found themselves faced with the necessity

of having to coordinate with company spokespeople.

The implications of recent events give renewed meaning to preven-

tion and management of crisis communication. Where before commu-

nications departments focused solely on boosting the brand image,

without necessarily taking into account the overall stakes for a

company, adding risk managers to the picture will give companies a

big-picture strategy.

The main advantage is to expand the company vision and make it

more all-encompassing. The crisis management team is in a better

position to anticipate super-crises and to take into account the destabi-

lizing factors that crisis management itself implies.

Crises need to be handled in real-time

Because of the new forms of media like blogs, forums, e-mails and text

messages that allow consumers, citizens and employees to broadcast

and receive all sorts of information, crisis management can no longer

completely control the situation. For Christophe Roux Dufort,

Professor of Strategic Management at the Management School in

Lyons, France, when a crisis occurs, the speed that information travels

greatly exceeds the capacity of companies to deal with it:

Moreover, the information gets distorted as it rapidly spreads. What is

worse, the new forms of media lead their users to believe in their

perfect transparency, which is an illusion, while company communica-

tion is regarded with suspicion.

In order to act quickly, it is imperative to prioritize targets and to make

certain choices. It is unrealistic to think that the company can deal with

all the targets at once. Moreover, it is necessary to plan upstream for

the organization to have a robust IT infrastructure in place to deal

with congested servers and also to mobilize the human resources nec-

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essary to answer the huge number of e-mails pouring in. As an

example, when the Michelin-equipped teams refused to participate in

the Formula 1 US Grand Prix in June 2005, visits to the Michelin

internet site multiplied by eight. The company received 2,000 e-mails

in a week, when normally it receives 1,000 per year on this subject.

This suggests that companies may even want to step up their corporate

communication to corporate interaction.

Company governance: a new source

of crises

It is not easy to define company governance; it probably varies from

one country to the next. Generally speaking, we can attempt to define

it as a renewed shareholder counter-power. It is as much based on

more active board roles as it is a way for shareholders to monitor com-

panies. It is a type of management that looks after shareholder value

and actively participates in meetings and possible legal proceedings as

a means of taking care of shareholders’ rights.

Company governance can be thought of as a balance between

unconditional shareholder power and managerial excesses. Here is a

quote about governance as seen by the French. A French company’s

management ‘see it as a means of contesting through which their

authority is put into question by Anglo-Saxon troublemakers, and

reported by ignorant journalists and conference organizers at a loss

for real ideas’.

Despite the resistance of some company leaders, company gover-

nance has become a new source of crises for which organizations and

risk managers are not always prepared and often find themselves at a

loss to respond. Companies as well known as Suez, Carrefour, Shell

and Vinci have all recently experienced this. The following illustrates

how brand risk is more and more linked to financial risk.

The US Sarbannes–Oxley financial transparency act is applicable to

all US company subsidiaries throughout the world. However, applying

this law, especially in Europe, is not all that easy. For example, in

France it clashes with the policies of the CNIL (Commission Nationale

de Informatique et des Libertés). Beau Fixe has had to intervene twice

this year for subsidiaries of US groups when their factories went on

strike, pitting French law against US law, calling on support from the

CNIL. A solution was reached with the French authorities. Only

recently, both Dupont de Nemours and McDonalds were judged in

France on this subject. We are sliding toward more and more legal

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hearings, which is not going to simplify matters. This is just another

reason why risk management skills are increasingly important for

businesses today.

The risk manager, director of communication and public relations

consulting agency now make up a trio that works to preserve company

image and reputation. The speed with which information travels, the

rising number of communication outlets, as well as the exorbitant cost

of crises all make this an inescapable step for the future of numerous

companies throughout the world.

Conclusion

It could have been dangerous to have sensitive matters or crisis com-

munication handled by various risk managers, communication man-

agers or consulting firms. Indeed, there could have been a risk in

sharing responsibilities, and delays in decision making could have

occurred. Nevertheless, somehow it works pretty well. There’s no

single model that defines each one’s responsibility because patterns

differ from one company to another – but they work. However, this

does mean that all crises are well handled. There are good times ahead

for consulting firms.

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Crisis

communication

checklists

Peter Frans Anthonissen (Belgium)

Crisis-control list

1. Preparations

ɀ What crises could confront our company?

ɀ What public groups and stakeholders do we have to take into con-

sideration?

ɀ How can we communicate with them?

ɀ What do we tell them?

ɀ Who will be on the crisis team and the crisis communication team?

ɀ What are our options?

ɀ Are the members of the crisis team and our spokespeople trained

sufficiently?

ɀ Do we know how to deal with stress properly?

ɀ What crisis manual do we use?

ɀ Can it be used in practice?

ɀ Do we have contact with our public groups and stakeholders?

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Crisis-control list

2. Public groups and stakeholders

Below you will find an overview of the most common public groups.

This list should be augmented in accordance with the needs of your

company. For the public group ‘relevant ministries’, for example, you

will have to investigate yourself which ministries are important to your

company. This list is not complete, of course. Investigate who could be

among your public groups.

ɀ Media: international/national

– print media, general and specialist;

–TV;

– radio;

– news magazines;

– internet: e-zines, websites.

ɀ Media: local

– general newspapers and corporate publications;

–TV;

– radio.

ɀ Trade press.

ɀ Government:

– relevant ministries;

– other government services;

– members of parliament;

– provincial administrations.

ɀ Local government and emergency services:

– municipal administrations;

– police;

– hospitals;

– fire brigade.

Do not forget that police, fire brigades and other emergency services

often have their own communication services. Such organizations also

have an interest in not keeping facts secret because they could them-

selves be affected negatively.

ɀ Company:

– personnel;

– if the company is part of a group: head office, parent company,

branches;

– employee organizations;

– lawyers;

– insurance companies;

– shareholders;

– investment companies;

– clients;

– competitors;

– suppliers;

– employer organizations and professional associations.

ɀ Miscellaneous:

– family members;

– neighbourhood residents;

– environmental associations, pressure groups, non-govern-

mental organizations (NGOs).

General or public opinion is also a public group and can be reached

indirectly via communication with another public group such as the

media, or directly via online information on your own website.

Crisis-control list

3. Crisis centre

Major international companies have their own crisis centres that are

equipped with everything imaginable. For many companies, such a set

up is financially unfeasible. Nevertheless, every company should take

some minimum precautions. The more prepared a company is, the

easier it will be to get a crisis under control. Those who are prepared will

not be disturbed during the crisis with irrelevant telephone calls; people

know where they need to go; and there will always be recording equip-

ment available to record news reports.

Some items to consider:

ɀ Crisis room and crisis-communication room: a meeting room in the

company itself? A hotel in the neighbourhood? A specially equipped

room?

ɀ Alternative crisis rooms and crisis-communication rooms (for

example in the event of fire, explosion, inaccessibility of the build-

ings, such as during sit-ins.)

ɀ Mobile telephones and personal digital assistants.

ɀ Guarded access.

ɀ A suitable area and furnishings for the crisis team, crisis-communi-

cation team and others.

Crisis Communication Checklists

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ɀ Some telephones, including one telephone with a secret outside

line.

ɀ Computer with e-mail and internet access.

ɀ Fax equipment.

ɀ Material to view/listen to TV and radio messages (and contact with

the press agency).

ɀ An area to prepare TV or radio interviews.

ɀ ISDN line to transmit video conferences, images and interviews.

ɀ Writing paper, pens and pencils.

ɀ The capability to send out mailings quickly (on paper or by e-mail).

ɀ Log book to record all actions taken.

ɀ Support: press and TV monitoring, text typing, dissemination, etc.

ɀ Equipment to record telephone calls.

ɀ Soft drinks, coffee and tea, snacks, etc (catering service that is avail-

able 24 hours a day).

ɀ Provision to spend the night at the company site (or close by).

ɀ A separate room to receive the media (preferably in the company

and as close as possible to the entrance).

Crisis-control list

4. What’s in your crisis-communication

survival kit?

What should every member of the crisis-communication team always

have close at hand? Think of things that are essential for someone who is

away from the company site and who must speak to the media.

Here are some suggestions:

ɀ Crisis manual and sufficient information on the background to the

crisis situation.

ɀ Essential telephone numbers.

ɀ Media list with names and addresses of journalists.

ɀ Mobile telephones, digital personal assistants and chargeable bat-

teries.

ɀ Telephone cards.

ɀ Portable PC.

ɀ Writing paper, pens and pencils.

ɀ Tape recorder, Dictaphone (and tapes).

ɀ Radio.

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ɀ Portable TV.

ɀ Wristwatch with alarm function.

ɀ Reserve batteries.

ɀ Sufficient money.

ɀ Credit cards and bank cards.

Crisis-control list

5. Background information

Every member of the crisis-communication team must be prepared for

questions from the media or other groups. Ensure that every member

has sufficient information about the company:

ɀ Information on the company: size, products, sector, history, figures,

number of employees, etc.

ɀ Production processes and/or methods.

ɀ Detailed information on the products and services.

ɀ Chemicals and/or other materials: which ones? What are they used

for? Why are they necessary?

ɀ Safety and quality: point out the good reputation of the company.

What investments have been made? What quality controls are in

place?

ɀ Location: history of the company/factory/organization.

ɀ All other information that can be useful for the company.

Ensure that the information is available in clear language (avoid jargon

and explain abbreviations) and structured in such a way that a busy

journalist can understand the most important information easily and

can process it properly.

Also give the journalists graphics, organizational diagrams, photo-

graphs, film and video material, PowerPoint presentations and similar

material that they can use to illustrate their broadcast, article or report.

That way, your own material gets published.

Crisis Communication Checklists

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