COM215
Taejin Jung, Ph.D.
Week 15: Business and Industry
Public Relations: Conflict
Management
Strategic Conflict Management

Business Misconduct
(cases)
-
Adelphia Communication
Corp.
Arthur Andersen
Enron
InClone Systems Inc.
Martha Stewart
WorldCom Inc.
-

Strategic Conflict
Management
- Public Relations professional
must develop communication
strategies to influence the
course of conflicts to the
benefit of the organization.
- Served as “warning system”
and “organization’s
conscience”
1st Stage: Issue Management

Proactive (↔reactive, crisis management) and
systematic approach to
- predict problem
- anticipate threats
- minimize surprises
- resolve issues
- prevent crisis

“Sweat shop” labor of NIKE

Process
- Issue identification
- Issue analysis
- Strategy options
- Action plan
- Evaluation
2nd Stage: Risk Communication

Any verbal or written exchange that attempts to communicate information
regarding risks to public health, safety, and environment (e.g., food
products, chemical spills, radioactive waste disposal…)

“Variables” affecting risk perceptions
1. “Voluntary risks” tended to be accepted better than “risks with no control” (e.g.,
smoking vs. airline passengers)
2. The more complex situation, the higher the perception of risk (e.g., radioactive
wastes vs. smoking)
3. Familiarity breeds confidence (e.g., proximity & risk perception)
4. Perception of risks increases when the messages of experts conflict
5. The severity of consequences affects risk perceptions

Suggestions
- Begin early and initiate a dialogue with publics
- Actively solicit and identify people’s concerns
- Recognize the public as a legitimate partner
- Anticipate and prepare for hostility
- Understand the needs of the news media
- Always be honest, even when it hurts
3rd Stage: Crisis Communication

Definition of “crisis”
- An extraordinary event or series of events that adversely affects the
integrity of the product, the reputation or financial stability or organization; or
health or wellbeing of employees, the community, or the public at large.
- Crises are forewarning situations that run the risk of escalating in intensity,
falling under close media or government scrutiny, interfering with normal
operations, jeopardizing organizational image and damaging a company’s
bottom line.

Example scenarios
- A product recall; a plane crash; a very public sexual harassment suit; a
market crash; a labor union strike

“Smoldering” crises
- Only 14 percent of crises are unexpected
- With proper issue management, many of smoldering crises could be
prevented
Samples of Major Crises

NIKE
- Nike became the archetype of the company that lacked a social
conscience due to its exploitation of workers in foreign plants. The value of
the company stock went down, the media wrote numerous unflattering
stories, and human rights activists had a field day.

Microsoft
- Caught in a battle with US Department of Justice and its competitors about
monopolistic polices, received mostly unfavorable publicity throughout 1998
to 1999.

McDonald
- Got negative publicity when an 81-year old woman won a multi-milliondollar lawsuit against the company because she suffered third-degree burns
from a scalding cup of coffee.

Intel
- The leading manufacturer of computer chips, faced a major credibility
problem when flaws were found in its Pentium chip.
How to Communicate during a Crisis

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Put the public first
Take responsibility
Be honest
Never say, “No comments”
Designate a single spokesperson
Set up a central information center
Provide a constant flow of information
Be familiar with media needs and deadlines
Be accessible
Monitor news coverage and telephone inquiries
Communicate with key publics
4th Stage: Reputation Management

Definition
- A collective representation of
an organization’s past
performance that describes the
firm’s ability to deliver valued
outcomes to multiple
stakeholders
- The track record of an
organization in the public’s
mind

The three foundation of
reputation
- Economic performance
- Social responsibility
- Ability to deliver valuable
outcomes to stakeholders

“Most Admired Companies”