PR Damage Control

October 15, 2001

8 Min Read
PR Damage Control


PR Damage Control

by Sheldon Baker

The companies, names and situations discussed here are purely fictitious. The marketing and legal information is real. A crisis can happen to a company or organization in the nutraceutical industry or any other marketplace. Corporate crisis communications are never pretty or easy. If your company does not have a crisis communications plan in place--one that includes input from your legal and marketing advisors, including public relations--the time is now to develop a plan. Tomorrow may be too late.

Jones Natural Products 14-hour emergency meeting last month wasn't about layoffs, sales collapsing or any other textbook business challenge.

Top executives and board members met because Ray Jones, co-founder and chief executive officer (CEO) of Jones Natural Products, Inc., the California-based company, had been arrested for allegedly raping a
12-year-old girl he met via the Internet and for allegedly using the Internet to engage a minor in sexual relations in another incident.

While personally stunned by the news, officials of the dietary supplement firm knew the accusations against the high-ranking individual could put the whole company in a negative light.

For companies whose identities are intertwined with a high-profile executive, managing crises is the key to survival. Though Jones had stopped overseeing daily operations for the company, he was a voice for Jones Natural Products, often providing expertise about political and marketing issues to investors and the media at industry conferences.

"There are only two facts that are relevant to the media and the public market--Was the company involved, and how will the future of the company be affected?" said Harry Black, principal of Black and Black, a Chicago-based public relations firm.

In an era where news travels fast, companies must act quickly and decisively to get their side of the story told. "If they get all the information out quickly, the story ends sooner than if they said nothing," Black said.

Companies that stall, stonewall or deliver conflicting messages, such as Bridgestone/Firestone and its recent defective tires, or Exxon and the 1989 oil spill from its tanker Valdez, can worsen the situation, communications experts say.

In cases like Jones', where the matter is unrelated to the company's products or operations, management should still strive to be open and candid to draw a sharp distinction between the individual involved and the business.

Compounding matters, this supposed incident occurred just a week before one of the biggest deal-making trade shows of the year, Natural Products Expo East in Washington, D.C., where the company would have to face questions from its peers, potential financial backers and customers.

After learning about the arrest that day, Jones' president Charlie Stone headed straight to the office, where he got on the telephone with board members to gauge their support and get their advice.

Stone, a longtime colleague of Jones at ABC Vitamins before they left to co-found Jones Natural Products in 1998, spent the rest of the day and evening on the telephone with key investors, as well as company managers, who would inform their workers of the arrest. He wanted to alert the employees before the news broke.

On Saturday, the company's executives and the board derived a strategy, such as creating answers to frequently asked questions for customers and employees, instituting daily meetings, bringing in crisis counselors and catering lunch to encourage discussion among workers.

The next day, Jones' management held a company-wide meeting with its 87 employees. Stone, who was named CEO after Jones was arrested, assured them that the board and investors remained behind the company.

"Of course, the arrest would be a distraction," Stone told an anxious crowd, "but other companies have gone through this type of situation and still continued to flourish."

The message then, and repeated still, was that the incident was a personal matter, not a company issue, which Stone conveyed to employees, customers and investors.

Jack Smith, chief operating officer of Healthy Life Inc., a Canadian company that invested in Jones' $29 million round of funding, said his first reaction to the news was sympathy toward Jones and the other managers, rather than worrying about the bottom line. But he was confident they could handle the problem.

"I knew it would be a management distraction, but that's what management does," Smith said. "Life is full of distractions, and this is a nasty one."

As much as companies develop game plans for natural disasters or workplace accidents, officials should also determine a plan of action should an executive become embroiled in illegal activities, crises and other public relations nightmares, advisers say.

However, getting management to play "what if" about a prominent member of their team can be difficult. "They think, if we don't imagine it, it won't happen," said Sam Johnson, Crisis Communications Inc. vice president.

Regardless, management must reassure investors and customers that they are taking action, experts say. For example, companies should find out as much as possible about the case from the suspect's attorney and conduct their own investigation into whether company equipment or property was involved. An organization could expose itself to liability if an executive engages in misconduct using business equipment or facilities.

Through an investigation, a company can better avoid surprises and prevent similar accidents by developing workplace policies and emergency plans. That way, officials can reassure investors that they have control over their business and can help eliminate culpability.

Jones officials are discussing whether they will conduct an internal investigation. The company would not comment on the case.

The Lessons

A crisis can show a company at its best or its worst, and being candid and open with investors, workers, customers and the media can go a long way in weathering the storm. This is an attractive feature from an investor's view for management to deal with a difficult situation in tough times. The following are a few tips in dealing with a crisis situation.

1. Develop a contingency plan for all types of emergencies, from FDA recalls or product defects to scandals involving top executives.

2. Conduct an internal investigation to determine any company liability and to prevent such accidents from occurring in the future.

3. Create a written public relations crisis communications plan and follow it.

4. Avoid Hollywood clichés. "No comment" responses to the media can be more damaging than making a statement.

5. Ensure that company information flows through one pre-determined spokesperson and the message is consistent.

6. Monitor media coverage and investor's attitudes to measure the success of your communications strategy.

7. Have a mid- or long-range view--it may take time for the company to recover.

Sheldon Baker has developed public relations for more than 25 years and has worked with many leading nutraceutical firms. He is past president of the Consultants Association for the Natural Products Industry(CANI) and can be reached at (800) 570-1262 or bye-mail at [email protected].

 

Until recently, a fire, hurricane, tornado or earthquake were natural disasters that could strike at will. But a disaster can strike at anytime, anywhere, as we all witnessed with the acts of terrorism in New York City, our nation's capitol and Pennsylvania.

Public announcements regarding products consumers purchased that may be a health risk, or contaminated products that have found their way to store shelves or the dumping of dangerous chemicals into waterways, are all corporate developments that can create a crisis and generate negative reactions from your customers, the trade industry, your community and the media.

Natural disasters or business calamities can wreak havoc on any business, at any time. Public relations experts agree that a crisis communications plan should be developed and readied for use in the event any emergency strikes. No matter the size of your business, or if the company is public or privately held, preparedness is an important and necessary communications tool.

During a period when business is interrupted by a disaster, it's important to react quickly. Your company can win or lose in the first couple of hours if appropriate announcements are not made. Statements should reflect concern, a call to action, and a move toward resolution.

Provide as much information as possible. If your company has an involvement in the situation, admit it. The public can be very forgiving unless they perceive you're hiding something.

The wreck of the Exxon Valdez in 1989 is not considered the worst sort of catastrophe because the tanker spewed oil across the pristine wilderness of Alaska, but because Exxon's public relations was handled so clumsily in the aftermath of the accident that the oil company's image was tarnished for years to come. In public relations, problems arise from the failure to communicate strategically, not from wrongful activity.

The media can be your friend or foe during a disaster. It's better to have them on your side. Assuming you have a plan, once your message has been developed after a situation, a number of elements can be used to distribute your message. Simply speaking to the trade industry media one-on-one via telephone is a vehicle to tell your story. For a national or international crisis, video conferencing and Web casting are two electronic tools that can move your message to the media, industry analysts, representatives and other important groups.

Crisis management critics say they would prefer corporations spend millions of dollars fixing physical consequences of their mistakes, and preventing their recurrence, than pay money to the public relations firms that make things look better.

As Dr. Sharon Beder points out in her book, Global Spin, many companies turn to public relations firms to clean up their reputation rather than change environmentally damaging practices. Beder noted, "It's easier and less costly to change the way people think about reality than it is to change reality."

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