OPINION: Crisis and Issues Management - three recent examples show its impact on perception and reputation

published September - October 2005 

By Grant Common
Editor

Grant has 30 years direct experience in public relations and communication in Australia and New Zealand - as well as directing and managing programs in the UK and USA. He has consulted to Governments, publicly listed companies, industry bodies, marketing organisations, multinationals and not-for-profit organisations.

He is Managing Director of Sydney-based Network PR and as a Fellow of the Australian Institute of Company Directors (having completed the Company Directors Diploma examination) he is also one of the few PR practitioners to have the perspective of the company director.

Three recent occurrences locally and internationally show how organisations grapple with communications issues that can have a major impact on how they are perceived.

Consumer Marketer Shows the Way

In New South Wales, confectionery maker MasterFoods gave a classic lesson to other consumer marketers of how to turn a crisis into a major publicity and brand building opportunity.

MasterFoods was forced to withdraw 3 million Mars and Snickers bars from retail shelves throughout NSW following an extortion threat. However, they  wrung every possible media angle out of the story - first with the withdrawal of the product (even alerting media to go to refuse dumps to see the product being destroyed) and later to its re-introduction (with many media actually publicising where to go to get free samples). 

Was it a coincidence that the re-appearance of Mars products on the shelves got so much coverage, when every media newsroom in NSW received large ‘complimentary’ boxes of the extortion-proofed Mars and Snickers, which it integrated with a concerted advertising campaign? 

Admittedly the withdrawal of the stock from retailers for a period cost MasterFoods, but what they lost in hard cash was more than compensated for in brand awareness. (As evidenced by sales, which were reported to be 250 percent higher than average during the product’s first week back on NSW shelves).

IT Company Slips Up

Contrasting this is an international experience that demonstrates the IT industry still has a lot to learn from consumer marketers about how to handle criticisms or slip-ups.

Cisco attracted significant ‘bad press’ and a lot of angst from the IT community for two recent ‘incidents’.

Firstly, Cisco took legal steps to prevent a former internet security systems analyst from discussing alleged security vulnerability in its software at a major industry conference. The uproar that this action created in the Internet community (and the resulting media coverage) proved that companies try and hide from, or gag those with, opposing views at their peril. 

Then Cisco was forced to admit that there were vulnerabilities which could have compromised passwords of customers. However, according to reports, the way they handled this issue gave an appearance of reluctance to admit mistakes and was notable for a lack of full disclosure - which again gave the IT and business media a field day at Cisco’s expense.

Corporate Watchdog St*ffs Up

Finally, Australia’s corporate watchdog - the Australian Securities and Investment Commission (ASIC) - made a mess that will likely haunt it for years over the handling of its explanation for its failure to pursue prominent businessman Steve Vizard over insider trading.

Now the dust has settled after the furore, it appears there may have been some mitigating circumstances beyond ASIC’s control. But it’s too late - perception is reality and the way ASIC handled the matter bought down on its head waves of terrible publicity, including some of the most vitriolic comment seen from Australian business, financial and political commentators.

ASIC Chairman, Jeff Lucy, in what may go down as 2005’s most classic understatement, has now admitted “It’s fair to say that we have received a lot of criticism. I do believe that we could have handled the media and communications more broadly to the community better”. 

The result is that ASIC’s credibility is as low as it can be for an organisation of that nature. Whatever it does in the immediate future, the media is always likely to link it back to its handling of the Vizard affair.  It may have been technically right in what it decided, but its failure to communicate will arguably inhibit its ability to fulfil its statutory function, which includes winning business and public confidence for the decisions it makes.

So, how should these efforts be rated?

• MasterFoods - brand strengthened. A masterful effort from a leading consumer marketer who clearly knows how to ‘work’ the media in situations like this.
  
• Cisco - no permanent damage done although media reports suggest some disquiet from customers and stakeholders. Disconcerting behaviour for a company in such a dominant position in the enterprise sector. Hopefully, a momentary lapse which they should learn from.
  
• ASIC - a ham-fisted effort that will undermine everything they do (and say) for the foreseeable future. Shows why for this type of organisation, with a responsibility to the public, technical ability is not by itself a sufficient attribute for a Chairman or CEO. Will Jeff Lucy always be remembered as the person who kept Steve Vizard out of jail?

Grant Common
Editor

Note: Network PR, publishers of PR Influences, advises and trains organisations on how to equip themselves to handle issues and crises. For further information click here.