How to Handle a Company Crisis

This blog will discuss:

• How individuals deal with pre-crisis preparation and risk management
• Examples of poorly managed corporate crises
• Companies successfully navigating through a public relations disaster
• Steps needed to control the narrative
• How an advertising agency’s public relations and social media specialists can manage any crisis

Preparing for a Storm

There are over 21 million people living in Florida. If you were one of those people, you’d probably be aware that Florida gets hit by hurricanes. And it isn’t difficult to imagine that every responsible Floridian has some kind of hurricane preparedness plan: a plan which includes stocking up on water and canned goods; gathering items which may be needed, like a manual can opener, waterproof matches, batteries, and a flashlight; keeping medications and a first aid kit somewhere easily accessible; keeping important documents where they’ll be dry and accessible. It’s even probable that most Florida residents have a home evacuation plan and an evacuation plan for getting further inland. Hurricane preparedness is a lot of work, but if you know something bad might happen, it’s reassuring to know you’re ready for it.

Companies Without a Crisis Management Plan

Of course, if your company isn’t located in a state susceptible to hurricanes, tornadoes, earthquakes or wildfires, you don’t need any kind of disaster plan, right? If that’s what you think, then storm clouds are already gathering on the horizon because your company isn’t prepared for a public relations or social media crisis, which could strike without warning. And, like Florida’s hurricanes, it isn’t a matter of “if,” it’s a matter of “when.”

Here are three examples of what can happen if a crisis situation occurs and you have no response plans:

• United Airlines – Many crises are self-inflicted, as was United Airlines‘ 2017 public relations disaster. As passengers in Chicago were boarding a flight to Louisville, it was announced that the flight was overbooked because United needed to get four employees on the plane. United asked for volunteers to give up their seat in exchange for $400, a free overnight stay and a guaranteed flight the following day, but there were no takers. 

Once boarding was complete, they announced that they were choosing four people who would have to get off the plane. Three went willingly, but one passenger—a doctor—refused. The doctor was forcefully dragged from his seat, was struck in the process and, thanks to phones, a video was recorded and posted on social media. United’s CEO later tweeted that the event was upsetting to employees, and he was sorry the doctor had to be re-accommodated. He also emailed the employees involved, telling them what a good job they’d done. This pale apology and wrong-headed email cost United more than $800 million in revenue, and they eventually had to hire a professional crisis management team to quell the uproar. 

• Equifax – As a credit-reporting company, Equifax was a prime target to be hacked, so they couldn’t have been surprised when, on July 29, 2017, they discovered that the personal information of 143-million Americans had been stolen. Equifax thought perhaps the security breach had happened several months before, perhaps as early as March 2017; however, they waited until September to announce the problem. Their crisis management included setting up a customer response telephone line, which took several weeks to get working, and revealing that three executives sold two-million dollars in company stock in the period between when the hack was discovered and when it was announced. 
• British Petroleum – After an oil rig explosion which killed 11 workers, and the subsequent oil spill which released 210-million gallons of oil into the Gulf of Mexico, British Petroleum’s (BP) first response was not to apologize or show concern for residents of the gulf shore, but to blame the manufacturer of the rig. Weeks later, BP’s empty-headed CEO, Tony Hayward, was still trying to blame others, as he walked the oil-covered shore in a starched white shirt and said, “No one wants this thing over more than I do. You know, I’d like my life back.” In the two months following the disaster, BP’s stock went from $59.48 a share to $27, and the public never regained its confidence in BP. 

Companies That Turned a Crisis to Their Advantage

On the other hand, thoughtful and well-planned crisis management can reinforce a company’s positive image by mitigating a potential crisis and could even attract new customers:

• Kentucky Fried Chicken – In February 2018, Kentucky Fried Chicken (KFC) outlets across Britain and Ireland ran out of chicken. The shortage lasted several weeks and was due to a glitch in the KFC supply chain. British chicken lovers were aghast that most of the 870 KFC stores were closed during the crisis. This chicken shortage could have easily gotten out of hand and had a negative impact on the company, were it not for a brilliant crisis-management team. In a humorous and apologetic ad campaign, they turned a public relations crisis into a public relations triumph by responding immediately, taking responsibility, and making irate customers laugh. (To see what they did, click here.) KFC’s unorthodox response to the crisis won them, not only many new fans, but also praise and admiration from advertising professionals at Inc., Adweek, Fortune, CNN, AdAge, and the New York Times. 
• Southwest Airlines – In 2018, an engine ruptured on Southwest Airlines flight 1308 from New York to Dallas. At 30,000 feet, pieces of the engine broke a window and a passenger was sucked headfirst into the opening, where she died. As passengers strapped on their oxygen masks, they were also taking videos of the scene and posting them to social media. While some companies would have considered the videos as a negative, Southwest used them to stay informed on what was happening, and those videos helped the company to respond. 

The response from Southwest’s CEO was quick, heartfelt, and took responsibility. By the time the airline made an emergency landing in Philadelphia, the company

• • Changed the website banner from their normal red, yellow and blue heart to a gray, broken heart
  • Suspended all promotional offers on social media and via email for one month following the accident
  • Gave all passengers on flight 1308 a no-strings-attached check for $5000 and a $1000 Southwest travel voucher 
  • Emailed and called all passengers letting them know that counselling was available 24/7 

While Southwest did lose $100 million following the event, that was from moratorium on promotions, not from customers cancelling Southwest flights. Because of their transparency and compassion, customers seemed to not hold Southwest responsible for the accident. 

• Johnson & Johnson – The model for modern crisis management was Johnson & Johnson’s handling of Chicago’s 1982 Tylenol cyanide scare. The perpetrator was never found, and the theories ranged from the FDA’s theory that someone purchased Tylenol, tampered with it, and then returned it store shelves, to the Illinois attorney general’s theory that the cyanide was put in the capsules at the factory by a disgruntled employee. Either way, the pills killed seven people in three days. With no suspect to act as the target of consumers’ anger, it would have been easy to hold Johnson & Johnson responsible; however, acted quickly and showed that their concern was for their customers, not for company profits. 

Johnson & Johnson recalled 31-million bottles of Tylenol from store shelves and offered to replace the capsules with Tylenol in tablet form. Almost all product recalls prior to this were from the auto industry, so pulling 31-million bottles from shelves was an historic event. The company’s chairman also held a news conference six weeks after the tragedy to offer a full chronology of everything the company had done and was doing to ensure public safety. Further, the company responded with the first tamper-proof packaging and the invention of the caplet. Throughout the crisis, it was always clear that Johnson & Johnson put the well-being of its customers before anything else. 

Steps to Correctly Handle a Company Crisis

Although there are many types of crises, according to Forbes and many others, companies in any crisis situation should take the following steps:

• Take Responsibility – Companies can only take control of a situation if they take responsibility for it.
• Be Proactive, Transparent, and Accountable – Not unlike the previous step, companies must acknowledge the incident, accept responsibility, and apologize.
• Get Ahead of the Story – Don’t wait for a public relations strategy. Getting out ahead of the story is the strategy.
• Be Ready for a Social Media Backlash – Have a plan on how to deal with social media’s response, even on platforms on which your company may not be active. Monitoring social media can not only offer a way to respond, it can also keep you up-to-date on the public’s perception in real time. 
• Understand the Situation – Communicate openly with everyone, both publicly and privately. If you don’t know the answer to a question, say that you’re still assessing the situation rather than saying, “I’ll look into it,” “I don’t know,” or “No comment.” 
• Consult With Your Crisis Team – Get a variety of opinions on a strategy, from social media to press conferences. 
• Be Prepared – One crisis can quickly lead to a cascade of related crises. Try to anticipate every potential crisis scenario and strategize on how to be ready and how to respond to them. 

Other ideas which may seem obvious now, but may not be so clearly defined in the event of a crisis, are to find the right person to be the public face of your company throughout the crisis; always be honest; don’t hide any information, no matter how damaging you may think it is. 

Let an Ad Agency Manage the Crisis

Good crisis management can make or break a company, and having a good, experienced public relations team in your corner can be crucial. Wouldn’t you like to have the peace of mind in knowing that, should a negative event arise, public relations professionals are ready to help your company weather the storm? Then get in touch with McFadden/Gavender Advertising. You’ll find our contact information here. Our PR experts can guide you through the crisis, steering your company back into calm waters. Don’t wait until a crisis develops. We’re here to help before, during, and after problems arise.