Lessons from PR Disasters

Turn the clock back one year and you’d find Toyota Motor Corp. riding high, enjoying an international reputation for high quality and reliability that was almost unsurpassed in the automotive industry. In a blink the car company’s world shifted on its axis. The tumult that’s since transpired is well known, as problems with stuck accelerators, faulty brake systems and rollovers knocked Toyota from its lofty perch. These ills threaten to affect the company’s reputation and sales for years to come.

What’s less understood is Toyota’s response to its public-relations crisis, an approach with both flaws and strengths that carries valuable lessons for any organization that suddenly finds itself under siege by the press or public. The Toyota case, along with a string of other recent cases involving celebrities such as David Letter­man, companies like Domino’s Pizza and Global Crossing, the banking industry and even the venerable Catholic Church, may rewrite the textbooks on how to effectively handle crisis communications in the age of social media.

Chief among those lessons: Don’t bury the bad news. To best limit the damage, accept responsibility and promptly communicate the information needed to address them. When possible, use social-media tools to help convey your message.

All kinds of organizations and individuals can face public relations nightmares. Will you be ready if a crisis hits? 

Countering Human Nature
The biggest obstacle to handling any such crisis well is – and likely will always be – human nature. When problems emerge, organizations and individuals alike are prone to display the three Ds – delay, deny and dismiss.

“It’s natural human instinct to try to bury the worst parts of a story, thinking they won’t come out – but they almost always do,” says Brad Phillips, founder and president of Phillips Media Relations, a New York-based firm that specializes in crisis-communications consulting. “What you see time and again in crisis situations is that the cost of not communicating quickly and admitting error up front far exceeds the cost of ­taking those steps.”

Speed and transparency, two factors that can strike fear into the hearts of ­cor­porate communicators faced with a crisis, are ­ironically the most critical to containing public relations damage. Communicating immediately doesn’t make bad stories go away, Phillips says, but it usually makes them shorter lasting and less severe. Tackling problems with a sense of openness and directness also builds all-important ­credibility ­during a time when that trait is ­usually being questioned by onlookers.

Case in point: David Letterman. When the U.S. late-night talk show host became embroiled in a blackmail case that revealed he’d had inappropriate relationships with members of his staff, he wasted little time in going on air, facing the world directly, accepting responsibility and apologizing for his actions. As a result of Letterman’s head-on approach, media coverage of the story quickly died down.

“David Letterman dealt with his problem forthrightly, and only had to deal with it once,” Phillips says. “There’s a belief in crisis communications that you should hold one press conference early on, and encourage journalists to ask every question under the sun until they’re almost exhausted from inquiry. But then you are done and can move on, rather than facing the drip, drip, drip of media reports and theories that extend the story over weeks or months.” 

Damage from Delay and Denial
Although Letterman benefited from having another villain in his case (the accused blackmailer), organizations that have taken the opposite tact – delaying, denying or simply hiding in a bunker as problems become known – clearly have paid the price for their evasiveness. In Toyota’s case, president and Chief Executive Officer (CEO) Akio Toyoda remained silent for days after problems with its cars were made public, and even allowed a lower-level executive to appear before legislative hearings to face the music. (Eventually, Toyoda did travel from Japan, where Toyota Motor Corp. is headquartered, to appear before the United States Congress.)

Cultural aspects also come into play in this particular public-relations dynamic. In contrast to the aggressive American political and media culture, Japan’s customs are reserved – giving a quick and forceful response wouldn’t come as naturally.

Phillips says while early media coverage about the Toyota crisis focused on the parts defects in the recalled autos, it quickly shifted to executives’ questionable handling of the crisis.

“There were very serious accusations against the company. Toyota knew about them but calculated that they shouldn’t talk about them publicly yet,” Phillips says. But the public tends to see a crisis through the eyes of its victims, and in this case many visualized a young mother driving her kids to school in a Toyota vehicle. “For weeks Toyota let go unanswered the question of whether that family was at risk riding in that car, and that damaged its reputation substantially,” Phillips says. 

Getting it Fast and Right
Toyota isn’t the only company or individual to have reacted slowly to a crisis. When two rogue employees at Domino’s Pizza posted a video on YouTube that showed them vandalizing sandwiches and pizzas prior to delivery, company executives were slow to realize how big an Internet sensation the video had become before addressing the situation. Although Domino’s CEO posted his own video on YouTube apologizing for the stunt, much of the damage to the company’s reputation had already been done.

Even the Catholic Church has come to see, albeit slowly, the value of communicating more openly about problems in its ranks. After going months without directly addressing the new revelations of sexual abuse that made headlines in the international press, Pope Benedict, in a May speech to reporters in Portugal, called the crisis “truly terrifying,” and suggested that high-ranking church officials who downplayed or concealed the problems were at fault.

The speech marked a significant shift in tone from earlier Vatican communications that blamed the media and perceived enemies of the church for the crisis.

In addition, the Pope indicated in the Portugal speech that the Vatican will be changing its practice of handling abuse cases inside the church instead of reporting them to civil authorities.

Says Phillips: “The crisis with the church became so big, in large measure, because of the way they tried to cover it up. They say, ‘It’s not the crime, it’s the cover up,’ but both were bad in this case.”

With the advent of social media sites like Twitter and Facebook, the media cycle has shrunk from 24 hours to a few hours, or even minutes, says Jason Voiovich, principal and co-founder of the Ecra Creative Group in St. Paul, Minnesota, which specializes in crisis-communication consulting. Bad news spreads like wildfire across social networks, and that chatter – regardless of its veracity – can do untold damage to brand reputations. That puts new pressure on companies to respond quickly in a crisis, but communicators still need to strike the right balance between accuracy and speed.

“Fast is good so long as fast is right,” Voiovich says. “Organizations that handle crisis the best are those that respond quickly, but that also are predictable in its communications, take control of the schedule and tell the press and public what is going to happen when [in terms of responding].”

While you don’t want to start sending out tweets 20 minutes after a problem or accusation becomes known, some type of rapid communication is vital, crisis-communication experts say.

“You do have to act immediately, and the only question is what that action is going to be,” Phillips says. “In Toyota’s case, the immediate crisis wasn’t whether its cars were truly defective or not, it was that the public was perceiving them to be defective. Once there is a public perception, you have to act quickly. It doesn’t mean you have to shut down production or recall every car. It does mean there needs to be some kind of clear, directed communication to all of the company’s stakeholders about the developing situation.” 

What Toyota Did Right: Social Media
One area where experts give Toyota high marks is in its use of social media to speak directly to customers who now rely on those channels. For example, Jim Lentz, president and CEO of Toyota Motor Sales USA, fielded questions from consumers on Twitter and Digg.com.

“What was interesting is that traditional media reporting was overwhelming negative about Toyota during the crisis, but if you look at social media it was almost two to one in support of the company,” says Voiovich, who closely monitored chatter about Toyota on social media networks throughout its crisis. “Toyota did an excellent job of honing and cultivating the social media networks. They didn’t egg people on, but they provided them with data and worked hard to engage them. When the traditional media whipped out its sword, Toyota used social media as a shield.”

The beleagured banking industry is also trying to marshal social media forces in its public-relations battle. As it struggles to rebuild the public’s trust amid the recession, the industry is taking to the Web. For example, earlier this year Citigroup launched “New.Citi.com,” a blog that features Citigroup CEO Vikram Pandit and other high-level executives (as well as low-level employees) trying fervently to win back public support. There are video testimonials, musical interludes and messages aplenty. Most notably, there is a mea culpa from the CEO himself. Pandit says in a video:

“When you look at Citi and what we’ve been through in the last two years, it’s clear we made some mistakes coming into this environment. We have to acknowledge that, we have to take responsibility for what we didn’t do correctly”

Northern Rock, a bank in the United Kingdom, was nationalized by the British government soon after it suffered the first run on a UK bank in more than century. Its Web site reveals tabs for both Corporate Communications and a newsroom. Both contain updates on the bank’s financial triumphs as well as challenges. 

Don’t Overlook Internal Audiences
Equally important as communicating with external audiences amid a crisis is the need to communicate openly and frequently with your own employees – and ensure consistency across those different channels. That’s something that Global Crossing, the Florham Park, N.J.-based telecommunications firm, understood when it filed Chapter 11 bankruptcy in 2002. The company, which has since emerged from that period stronger than ever, knew employees would have a high level of anxiety and uncertainty in the bankruptcy period. So CEO John Legere went out of his way to be “communicator in chief” during that trying time.

For example, the CEO held weekly worldwide open-microphone conference calls to provide financial updates and field employee questions. No inquiries were off limits, says Jerry Santos, Global Crossing’s senior vice president of corporate communications.

“I can’t tell you how many times our CEO was put on the spot about executive compensation and every other issue under the sun during those calls,” Santos says. “That built a lot of credibility with our workforce, because he was dealing with these issues head on and not sugar coating anything.”

Global Crossing took other actions to retain top employees and restore morale in its crisis period. An annual bonus program was augmented with quarterly cash incentives for achieving certain performance targets, and new investors approved the granting of stock units to all staff members who came through the bankruptcy period. In addition, CEO Legere worked hard to keep employees’ minds focused on a brighter future.

“Month after month if you deliver on your promises, employees start to believe you will survive and eventually thrive once Chapter 11 is over,” Santos says. “Our CEO was always very clear in stressing that once we emerged from bankruptcy we’d be a whole different company, and we have been.” 

Dave Zielinski is a freelance writer who lives in Minneapolis, Minnesota.

How To Do It Right: Survival Tips for Crisis Communication

While it’s easy to make mistakes in the middle of a ­crisis, knowing how to react can help mitigate the fallout. Help your group rebuild its good name by doing the following:

  • Plan for communications in potential crisis ­situations. Outline, in advance, what and how your group will communicate with the rest of the world.
  • Respond in a timely fashion. Delaying makes it appear that you’re covering something up.
  • Admit any culpability, as much as you can without legal ramifications.
  • Discuss how you plan to make amends.
  • Send your messages out on social media ­platforms.
  • Monitor risk factors and work to reduce all risk that exposes your group to a future crisis.