World in Crisis!

Crisis Management and Communications

Madison, WIClarke L. Caywood, Ph.D.

21st Century Crises

Natural Disasters

Earthquakes

Typhoons

Health risks

Hurricanes

Tornados

Storms

Fire

More

Man-made Disasters

Terrorism

Financial Failure

Mis-Management

Moral Corruption

Political Failure

Violence

Health Failure

Education

“Media Reported Crises”

Front Page Crises

Terrorism

Health Risks

Disasters

Financial Failure

Product Recalls

Business Page Crises

Failed managers

Factory safety

Financial

Recalls

Definition of a Crisis

• Crisis: an intense and urgent event or series of events that …– cause the death or severe risk to

individuals– destroy stakeholder relationships– break the organization’s reputation and

brand.

Which businesses are at greatest risk of crises?

• Risk Consumers and Risky Products– Sell to children, elderly, poor, – Environmentally (ecology) sensitive – Products we eat, drink– Moving vehicles, cars, buses, motorcycles,– Skin care, aging cosmetics– Pharmaceuticals and healthcare instruments– Alcohol, tobacco, guns – Heavily regulated by government– International businesses

Risk Management Response

• Insurance industry calls for leaders to manage the reputations and brands of their firms.

• Lack of a crisis plan and brand protection can increase costs of insurance or not allow insurance

Melamine milk powder 2008

Apology to victims of milk poisoning

• September 26, 2008CHINA'S Premier, Wen Jiabao, has sought to ease growing concern abroad over contaminated Chinese milk by vowing to strengthen safety checks and meet international standards, as more countries boosted testing of Chinese food imports.

• Speaking from New York where he is attending the United Nations general assembly, Mr Wen said China needed to better enforce checks at every stage of production and step up efforts to protect consumer interests.

• "We want to make sure that our products and our food will not only meet domestic and international standards, but also meet the specific requirements of importing countries," the Premier said.

• Mr Wen's remarks underscored China's recognition that the scandal, which has sickened about 54,000 Chinese babies and is blamed for the deaths of four infants, also has repercussions beyond its borders with the reputation of its exports at stake.

• Chinese officials have withdrawn lollies thought to contain contaminated milk from shop shelves, echoing the expanding recalls across Asia and Europe of products ranging from yoghurt to biscuits.

• Chinese authorities yanked White Rabbit Candy lollies from shelves in Shanghai and the southern province of Hainan in the first widely known recall on the Chinese mainland of goods other than milk products and milk.

Tools to Manage and Audit Crises:

Stakeholder Maps

NGOsInvestors

Analysts

Consumer

Suppliers

PressCommunity

Universities

Employees

Government

Competitors

Company

CEO’s on Stakeholders• Sr. V.P. “CEO’s are looking for leaders

who can understand and integrate the corporate stakeholders, not just customer and not just business functions”. Cited September 2009 Chicago

Process• Brainstorm List• Double• Research• Discuss the dynamics of the list –

power, resources, partners• Draw the maps• Discuss • Assign Stakeholder Managers• Review and Improve

Stakeholder MapsNGOs

Investors

Analysts

Consumer

Suppliers

PressCommunity

Universities

Employees

Government

Competitors

Company

Colchicine and Yasmin

http://www.youtube.com/watch?v=EO-G8O0lHq0&feature=relatedhttp://www.youtube.com/watch?v=uCg1q0h1PP0http://www.promega.com/Default.asphttp://www.adrugrecall.com/yaz-birth-control/yasmin.html

Let’s build a stakeholder map for your industry and profession

Process• Brainstorm List• Double• Research• Discuss the dynamics of the list –

power, resources, partners• Draw the maps• Discuss • Assign Stakeholder Managers• Review and Improve

Advanced Map Dynamics and Metrics

• SH Estimated Degree of Impact (size of circle) • SH Past, Current, Future Influence Timing (dated)• SH Linkages between Stakeholders (alliances)• SH Conflicts between Stakeholders (battles) • SH Boundaries more open or rigid (thickness of circle

line)• SH Frequency of Contact (Proximity to Core Circle)• SH Many Contacts in SH (thickness of line to circles)• SH Public and Media Perceptions of “tone” (number of

+ or – symbols)• SH History Tracked and Monitored (dated and saved)• More

Retail Channel Stakeholder Maps

Labor Unions Docks

Box stores

Consumer

Shipping

Government

Retailers

CompanyCompany

University Research Competitors

TSA US

Trade Shows JIT suppliers

Air, Sea, Rail, LandIllegal copies of product

U.S. Food Quality RecallsAnnual

U.S. Autos Recalls: Is this a Constant Crises?

• •

• RECALLS•

• Vehicles  Select your year, make and model to retrieve any RECALL NOTICES.   Year        » 2008 » 2007 » 2006 » 2005 » 2004 » 2003   » 2002 » 2001 » 2000 » 1999 » 1998 » 1997   » 1996 » 1995 » 1994 » 1993 » 1992 » 1991   » 1990 » 1989 » 1988 » 1987 » 1986 » 1985 

TOYOTA RECALL

TOYOTA – Watch your back

Your companies: Is a management problem or is it a

crisis?

Self-audit• Someone died near your product.

• It’s a law suit taking 20% of your time.

• Your stock has taken a major hit.

• You lost a major customers or supplier.

• Requires more than 5 trips to Washington D.C. or to Madison, Springfield, Albany.

• It appeared in a blog, the trade press called and the popular press are calling.

• Hearing comments are being prepared.

• You wish you had kept the notes from today.

If it was 4 of the previous and more it was a …

• Crisis, maybe.

• If you came home late, muttering under your breadth, needed a drink and as a man or a woman wished you had a real cave… it was probably just another day at the office.

• You should consider applying more ideas from your degree from the UW.

Three things government does really well.

• Collect data.

• Collect data.

•Collect data.

Medical Instrument Recall

• http://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfRES/textresults.cfm

FDA Food

• http://www.fda.gov/Safety/Recalls/default.htm

organic baby food recall

“Little Oscar” was not a rapper.

Twitters on Recalls of Everything?

• http://www.recalls.gov/

• http://twitter.com/FDArecalls

Research, professional articles and projects for you…

• Best practices on management of recalls• Six Sigma and ISO Standards• Crisis Plan and Ready Website to go dark• Defining your firm with audits on high visibility

and high risk• Go to the Library …is there still a bar named

the Library on Park Street? • No, Near Randall/Univ.Ave.The Library

Cafe & Bar

CHILE and HAITIAIDMATRIX.ORG

NGOs responding to the disaster in Chile need your support to help the victims.

Financial support is always the most flexible way to help relief organizations (NGOs).

NGOs' in-kind & transportation needs are being consolidated for you to view. Our link will redirect you to this website.

Aidmatrix

• Humanitarian Relief Technology• The Aidmatrix Network® for Humanitarian Relief

offers a robust set of Supply Chain Management , Volunteer Management and Fundraising technologies as well as Business Process Management, Consulting and Infrastructure Services. These solutions include modules that work together or independently to help empower your efforts to procure, manage and deliver humanitarian relief.

Mattel Apologies to Customers and China 2009

Mattel Recalls: Crises?• Keyword (s): Phone:    Zip/Postal Code:  Home

Recall Information Please select a recall from the list below and follow the link to learn about that recall.   Return to this page if you are interested in learning about additional recalls.   This list includes Mattel recalls announced

since August 4, 1998.   For general recall information on any consumer product, and for earlier Mattel recalls, please visit www.recalls.gov.

DateDescriptionProduct # 09/4/2007Barbie® Accessory Sets Lead Paint Hazard Recall

K8609K8608K8607K8606K8613J9485J9486 09/4/2007GeoTrax™ Engine Lead Paint Hazard RecallH5705K3013 09/4/2007It's a Big Big World™ Lead Paint Hazard Recall K9343 08/14/2007

Mattel Playsets with Magnet Hazard Recall J1944J1946J4142J5114J5115G4457G4458G4459G4460G4461G4462G4464G9703H1530H1532H1533B7124B2632B3158B3201B3203B3204B3207B3209B3210B3211B3396B7078B7082B7118B7125B7127B7129B8478B9521B9522B9523B9525B9578B9929C0504C0505C1341C1342G8602G8605G8612G8614G8615H1537H1538H1553H1554H3211J1659J1661J1662J1670J1681

J1687J1695J4169J4170J4171J4172J9305J9306J9648J9965J9966K3460 08/14/2007Barbie® Doll and Tanner™ Magnet Hazard Recall J9472J9560

08/14/2007Pixar Cars Sarge Lead Paint Hazard Recall H6414M1253K5925L6294L4051 08/01/2007

Fisher-Price Toys with Lead Paint Hazard Recall H5570J6763L5202L3507B78889026790267H3344H5569J6765L581393107G971793492J0338H9124K3580H4628K3571J034693493J6537H9125K0617H8236346583366293615J0343H9186L3194H82379061433664B7554J0344H9188H4187H82388794690611B7989J0345H2943L3215M052493780C6908H9203K4139L0305M0527906099330890745C6911J9518K4140M0351M20519061393307C6909C6910J9692M0352M20529061239054B7987B9620K3414J5935G5112J79839306839038J6762J5936J2248M0732G382533663H3343---

---------------------------------------------------Sold inCanadaH6859J1136J9451K9287L5342H4650H4649K0730K2448

05/30/2007Rainforest™ Open Top Take-Along Swing™ Recall K7203 02/15/2007Laugh & Learn™ Learning Bunny™ Recall

K0468K5862K6898K7884L0327 11/20/2006Polly Pocket!™ Assortments B2632B3201B3158G8605H3211H1538H1537B7118 1/18/2006

Laugh & Learn™ Musical Learning Chair™ Recall H4609H7168 6/14/2005Power Wheels Lightning PAC™ Tire Recall 73530 6/14/2005Power Wheels MX3™ Mini Bike Tire Recall 73535 5/10/2005

Grow-To-Pro® Recall 7338677356 5/10/2005Lil' Wagster Dragster™ B0335 4/14/2004BATMAN™ BATMOBILE™ Vehicle B4944 11/13/2003

Power Wheels MX3 Mini Bike 73535B2222 11/13/2003Power Wheels Lightning PAC™ 73530 6/19/2003Sparkling Symphony™ Mobile 71985 4/23/2003

Little People® Animal Sounds Farm™ 7797377746 4/10/2002Smart Response™ Swing 796457964779644 7/31/2001Bassinet

793367933879334 7/31/2001Grow to Pro® Basketball 72408

• Product ImageElmo Light Up Musical Pal33662 Ernie Light Up Musical Pal33663 Big Bird Light Up Musical Pal33664 Elmo Stacking Rings34658 Elmo Tub Sub39038 Sesame Street Shape Sorter39054

Product Image

Elmo Light Up Musical Pal 33662

                    

  

Ernie Light Up Musical Pal 33663

                    

  

Big Bird Light Up Musical Pal

33664

                    

  

Elmo Stacking Rings 34658

                    

  

Elmo Tub Sub 39038

                    

  

Sesame Street Shape Sorter 39054

                    

  

Mattel Apologizes for its toys • UPDATE 1-Mattel apologizes to China for product recalls• Fri Sep 21, 2007 5:26am EDT• • (Adds quotes, background)

• BEIJING, Sept 21 (Reuters) - A senior Mattel executive apologized to China on Friday for recent recalls of Chinese-made toys and said it took full responsibility.

• Mattel, the world's largest toy maker, has come under scrutiny following the recall of about 21 million of its Chinese-made toys in a span of five weeks, many because of excessive levels of lead paint.

• "Our reputation has been damaged lately by these recalls," Thomas Debrowski, Mattel's executive vice president of worldwide operations, told China's quality watchdog chief, Li Changjiang.

• "Mattel takes full responsibility for these recalls and apologises personally to you, the Chinese people and all of our customers who received the toys."

• He said he realized the damage that had been done to the reputation of Chinese goods. • "But it's important for everyone to understand that the vast majority of those products that we

recalled were the result of a design flaw in Mattel's design, not through a manufacturing flaw in Chinese manufacturers."

• Before the Mattel recalls, a spate of incidents involving unsafe Chinese products ranging from toys and seafood to toothpaste that entered both EU and U.S. markets prompted calls on both sides of the Atlantic for a ban on products "made in China".  

Don’t be this CEO…• http://www.youtube.com/watch?v=xH9O8JlvOe4

Mattel• http://www.youtube.com/watch?v=J1YDa3t-z20

Mattel• http://www.youtube.com/watch?v=-r_PIg7EAUw

Jet Blue• http://www.youtube.com/watch?v=atsW0qyBuM

E Baxter

• http://www.youtube.com/watch?v=IcVDok5LrAg attack on Baxterhttp://www.youtube.com/watch?v=IcVDok5LrAg

Crisis leadership has two important components…

– Behavior – determines the outcome … what you do, how you do it, when you do it.

– Communications – telling the story in a way that lets you become an advocate for the public in the media and other.

Leadership for Crises Management

1. Pre-Crisis

2. Warning - signs of trouble?

3. Acute - Initial response,

4. Final Phase and resolution

Crisis management is more about how the crisis is handled

Don’t wish it will go away Don’t denyDon’t cover-upDon’t let lawyers tell you to be silent. Don’t have an agency speak for you.

Actions: write press release in advance, practice media training, have clear values, act first hour,

reveal truth early

1. Pre-Crisis

Financial Costs of Crises

The cost of crisis is determined more by the market than by the courts.– Litigation costs are almost always the smallest

segment.– Loss of equity is immediate and severe, and

stock prices do not automatically rebound.– The loss of reputation is the greatest damage

2. Warning Phases of Crises

• Often common to an industry Financial scandals

Product failure - recalls

Plant safety

Employee security

Consumer fraud• Use issues and trend tracking• Use research and planning

Be sure to cancel ads

3. Acute Phase• Corporation must respond – Do not say “no

comment”. Do not wait for investigation results.• Your initial response is crucial• As a “public figure”, you frame the issue and set

agenda with key message .• All witnesses are “journalists” with camerasSolutions: Video and Blogs, VNRs ready, cancel ads

Be ready with web page to go “dark”

ID and train spokesperson (and others)

Know third party experts for referral, you are the brand,

Build lifelong media relationships,

– You acted as a “human”, then communicated– You located the crisis team and met quickly

and frequently - all numbers– You avoided just protecting management– You saw the crisis through stakeholder’s eyes– You acted as a “public figure”

4. Final Phase

Crisis Training: The Seven R's

Respond 1… “An hour ago we learned…”Respond 1… “An hour ago we learned…”

Regret 2 … “If this is true we are outraged”Regret 2 … “If this is true we are outraged”

Resolution 3… “We will fix the problem now”Resolution 3… “We will fix the problem now”

Restitution 4… “We will aid each family”Restitution 4… “We will aid each family”

Reform 5… “We will do everything possible to be sure that this never happens again.”Reform 5… “We will do everything possible to be sure that this never happens again.”

Seven R’s

Responsibility 6… “As CEO I accept…”Responsibility 6… “As CEO I accept…”

Reputation/Brand Rebuilding 7… “We recognizethat we exist with the permission of society.”Reputation/Brand Rebuilding 7… “We recognizethat we exist with the permission of society.”

More Media Training for You?More Media Training for You?

Thank you.

• Discussion

• Questions?