Most companies will face a crisis at one point, but it’s not necessarily the crisis itself that will dictate that company’s future, but rather how it is handled.
In Japan, as the post-bubble economy continues to boil, changes in the corporate, regulatory and economic environments are pushing companies to comply with global standards of disclosure to both consumers and shareholders alike.
As dramatically displayed in the recent incidents involving Snow Brand, Mitsubishi Motors and Bridgestone/Firestone, corporations can no longer get away with a simple bow and an apology. The market is demanding more, and the winners in the renewed Japanese economy will be the companies that comply with global reporting standards and don’t sweep bad news under the rug.
As Snow Brand, Mitsubishi and Bridgestone/Firestone struggle to regain their reputations, senior executives and communications professionals alike are taking notes on the do’s and don’ts of responding to a crisis. In fact, there have been so many questions locally that the Tokyo Chamber of Commerce decided to issue a “how-to” crisis manual.
The most graphic cases of the three was the Snow Brand food-poisoning debacle, which will undoubtedly serve as a case study in the future. There were several major mistakes that Snow Brand made, both on the senior-management level and corporate-communications level:
First, Snow Brand did not move quickly enough; it should have acted faster to assemble the facts and act on them, both in the form of moving toward a product recall and in terms of communicating with the media and the public. Three days passed before either of these happened, following numerous reports and inquiries from public-health centers.
Second, Snow Brand had no structure in place to accurately respond to a crisis, including no method of getting information to top management. Therefore, management was unprepared when it finally did speak to the media and was not armed with all the facts.
Third, Snow Brand lacked a unified front and did not have key messages in place. Not only did executives focus too heavily on how the incident would affect financial performance (rather than consumers), but they went so far as to complain about lack of sleep — none of which helped salvage their image with consumers.
Although Japanese companies are beginning to wake up to the need for a good crisis-communications plan, it may be a long, painful process.
The best way to tackle that inevitable crisis situation is to have a crisis plan already in place. Obviously, each situation will vary, but there are some basic issues to review and fundamental steps to take when a crisis comes your company’s way:
* Assemble a task force. Every company should have a group of individuals who will serve as the task force upon the onset of a crisis. This task force will assess the situation according to a list of predetermined criteria and choose the best course of action and whom else they need to involve.
* Determine the potential impact. It is crucial that a company review how the crisis will impact each of its constituents — customers, employees, shareholders, business partners and the like.
* Develop a communications plan. Each audience will have its own communications needs; the company must determine what form of communication should be employed to reach each audience and in what time frame. For example, should the company call a special employee meeting; should they call a press conference to talk to the media, should they send a letter to shareholders?
* Take immediate action. One of the biggest mistakes a company or organization can make is withholding information and not taking action. Even if the company doesn’t have all the answers — or even any of the answers — to a given situation, a statement of some sort is almost always the best course of action.
* Follow up. Once initial statements are made, it is crucial that companies stick to their word. If they say they are investigating a situation, then they should issue followup reports. In most cases, key constituencies won’t forget incidents. Companies who stick to their word will come out ahead.
Japanese corporations and the economy as a whole are going through growing pains as the country faces the new century. If corporations are to survive crises, a simple bow and an apology will no longer suffice. Companies must comply with global standards of disclosure and communications at all times — not just when things are going well. The winners will be those who respond, not just react, to difficult situations. Although companies cannot often predict a crisis, they can prepare, and in the case of crisis communications, preparedness is indeed the best measure.
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