Don't make a PR crisis out of a disaster

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The Independent Online
From Piper Alpha to the Southall train collision, the risk of disaster is everywhere. For the organisations involved, there can be a second catastrophe - the media handling afterwards. Roger Trapp investigates the latest thinking.

As the recent rail crash at Southall, west London, demonstrated, even in this high-tech age, disasters can happen. And only too often senior executives can suddenly find themselves thrust into the media spotlight and questioned about the innermost workings of their organisations.

With the public and the media seemingly increasingly disinclined to give such people the benefit of the doubt, many companies are training their managers to deal with reporters at such stressful times.

The idea is that, if an executive can come across on the evening news as human, understanding and, above all, contrite, all will not be lost for his or her company. On the other hand, if they appear shifty, arrogant or uncaring, the disaster could be only just starting.

In response to this changing view of the world, the insurance group AIG has recently launched a package that not only offers cover for such areas as fraud and directors' and officers' liability, but provides access to lawyers, public relations officers and other experts to help them deal with the problem.

Indeed, managing this kind of issue has become such a skill that many public relations agencies have begun to offer it as a specialist skill. One such is Regester Larkin, founded a few years ago by two crisis-management experts, Michael Regester and Judy Larkin. And in their recently published book Risk Issues and Crisis Management (Kogan Page, pounds 14.99), they offer a few pointers on how to - and, more importantly perhaps, how not to - go about it.

In what they term "a casebook of best practice", they compare the ways in which different incidents were dealt with, and assess the long-term effects of such differences.

For example, in the wake of the Lockerbie disaster, Pan-Am seemed to adopt a policy of not communicating with the media on the basis that this would help to diminish its link with the incident in the eyes of the public, the authors say. They point out that the company then committed a cardinal sin in attempting to conceal the truth that it had been warned of the possibility of a terrorist attack.

Rather than visit the site of the disaster, adversely, the company's president stayed at home. Already in financial trouble, the airline saw passengers move to rivals because their confidence in Pan-Am's ability to transport them across the Atlantic - the company's one remaining profitable route - had been hit. And it collapsed.

By contrast, JAL - in the wake of its worst ever crash, the 1985 accident in which 520 people died - and British Midland Airways after the M1 crash are deemed to have got it right.

British Midland's Sir Michael Bishop did not follow JAL's chief in offering to resign, nor did his head of maintenance commit suicide as his Japanese counterpart had done. But Sir Michael won high praise for the way that as soon as he heard the news he rushed to the scene and even answered media inquiries on his mobile phone as he went.

And both companies obtained tangible benefits, the authors argue. JAL did suffer some media criticism, despite following an elaborate procedure to atone for the tragedy, and for a while lost market share, but eventually made a full recovery. And it has been argued that - although the cause of the British Midland accident was found to be pilot error - the company actually saw its reputation enhanced by the chairman's response. "It was seen to be caring and responsible," Regester and Larkin write.

Like much in management, most of this seems both obvious and vital to master. But, as the book points out, organisations still get it wrong.

Take the Exxon Valdez oil spill in Alaska in 1989. Lawrence Rawl, chairman of Exxon, one of the biggest companies in the United States, initially refused to communicate with the media and then gave a live television interview in which he was felt to have behaved arrogantly. When asked about the public relations disaster that continued to damage the reputation of his company, he blamed it on the media.

But it is not just crashes and natural disasters that can threaten a company's reputation. Look at what happened to British Gas over Cedric Brown's pay.

In certain cases, the problem may not be directly the company's doing at all. It can, for instance, be the victim of staff poaching or of the decision by a key executive to depart. Here, financial recompense of the kind being offered by AIG may make up for the crisis created.

But in most other circumstances the company can end up paying dearly. In fact, the choice is often between paying upfront on a comprehensive clean-up, say, or a thorough product recall operation, or paying heavily over the long term in diminished reputation. And, as Shell discovered over the Brent Spar affair, past good performance is no guarantee of a smooth future.