Abstract
The paper focuses upon the analysis on crisis management. For the understanding of this topic we
have focus upon the main dominant theories available on the topic. The main dominant theories
can be categorized according to three dominant definitional camps: event-based approach,
process-based approach and systemic-based approached (Forgues & Roux-Dufort, 1998). We’ve
sectioned the theory into two parts where we first elaborate on theories of the combined eventbased and process-based approaches. This part is based on the theories provided by Coombs
(2007), which are event-based approach. Though research has given us reason that it may be
rather seen as a combination with process-based approaches as Coombs’ approach also elaborates
on the identification of warning signs (a typical process-based approach). This theoretical
observation is based on articles, journals and books elucidated on different views. Secondly we
will elaborate on combined systemic-based and process-based approaches: an alternative view
that illustrates elements from a cross-disciplinary approach in which we focus upon contextual,
cultural and psycho-dynamical influences. The elaborated theories have been used for the
analysis of two cases in organizational crisis management. We have chosen the Tylenol case of
Johnson & Johnson to illustrate good practice of crisis management, whereas the case of the Coca
Cola Company in 1999 illustrates malpractice. We concluded that there is no standard way in
solving a crisis, as every crisis is different. Relying on only one approach or theory may limit an
organization in its actions, therefore having a broader perspective and approach makes the
situational approach visible and accessible from different views and gives opportunities to
manage a crisis well in advance and well prepared. Information in crisis management is a key
element in acting accordingly to avoid mistakes in crisis management and prevent further
escalation of the crisis.
Index
Abstract ..................................................................................................................................................... 2 1 -­‐ Introductory chapter ...................................................................................................................... 5 1.1 – Problem statement ................................................................................................................................... 5 1.1.1 – Motivation ............................................................................................................................................................. 5 1.1.2 – Research question ................................................................................................................................................ 6 1.1.3 – Interpretation of our question .......................................................................................................................... 7 1.1.4 – Scope/limitations ................................................................................................................................................. 7 1.2 – Methodology .............................................................................................................................................. 8 1.2.1 – Theories and models used ................................................................................................................................ 8 1.2.2 – Structure ................................................................................................................................................................. 9 1.2.3 – Scholars ............................................................................................................................................................... 10 1.2.4 – Data collection ................................................................................................................................................... 13 1.2.5 – Criticism of sources ......................................................................................................................................... 13 1.2.6 – Philosophy of Science – Critical Realism ................................................................................................ 14 2 – Crisis Definition ............................................................................................................................ 16 3 – The combined events approach and process approach ................................................. 20 3.1 – Crisis Management ................................................................................................................................ 20 3.1.1 – Prior to Crisis ..................................................................................................................................................... 22 3.1.1.1 – Crisis Prevention ......................................................................................................................................................... 22 3.1.1.2 – Crisis Preparation ........................................................................................................................................................ 24 3.1.1.2.1 – Crisis Management Team ............................................................................................................................... 24 3.1.1.2.2 – Crisis Management Planning ......................................................................................................................... 26 3.1.1.2.3 – Product Recall Management .......................................................................................................................... 27 3.1.1.2.3.1 – Key elements before recall .................................................................................................................... 27 3.1.2 – During Crisis ...................................................................................................................................................... 28 3.1.2.1 – Crisis recognition ........................................................................................................................................................ 29 3.1.2.1.1 – Crisis dimensions ............................................................................................................................................... 30 3.1.2.1.2. – Expertise of the dominant coalition ........................................................................................................... 31 3.1.2.1.3 – Persuasiveness of the presentation ............................................................................................................... 32 3.1.2.2 – Crisis containment ...................................................................................................................................................... 32 3.1.2.2.1 - Communication ................................................................................................................................................... 33 3.1.2.2.1 – Quick ...................................................................................................................................................................... 34 3.1.2.2.2 – Consistency .......................................................................................................................................................... 35 3.1.2.2.3 – Accuracy ............................................................................................................................................................... 35 3.1.2.3 – Key elements during recall ...................................................................................................................................... 37 3.1.3 – After Crisis ......................................................................................................................................................... 38 3.1.3.1 – Corporate apologia by Keith Hearit ...................................................................................................................... 39 3.1.3.2 – Image Restoration Theory (IRT) by William L. Benoit ................................................................................. 39 3.1.3.3 – Situational Crisis Communication Theory (SCCT) by Coombs ................................................................. 43 3.1.3.4 – Key elements after recall .......................................................................................................................................... 44 4 – The Combined Systemic Approach and Process Approach ........................................... 45 4.1 – A Cross Disciplinary approach ........................................................................................................... 45 4.2 – Context Theory ....................................................................................................................................... 47 4.3 – Organizational Culture ......................................................................................................................... 51 4.4 – A psychodynamic perspective on organizational crisis management. ........................................ 55 4.5 – Organizational Dysfunctions ............................................................................................................... 57 4.6 – The Learning Organization ................................................................................................................. 59 5 – Case Description ........................................................................................................................... 62 5.1 – Coca Cola Company Crisis in 1999 .................................................................................................... 62 5.2 – Johnson & Johnson’s Tylenol crisis in 1982 ..................................................................................... 64 6 – Case Analysis ................................................................................................................................. 66 6.1 – The crises and Crisis Containment .................................................................................................... 67 6.2 – Understanding the context ................................................................................................................... 70 6.2.1 – The Coca Cola Company ............................................................................................................................... 70 6.2.2 – Johnson & Johnson .......................................................................................................................................... 73 6.3 – Organizational Culture ......................................................................................................................... 75 6.4 – Product Recall Procedures ................................................................................................................... 78 6.5 – Image Restoration & Communication .............................................................................................. 81 7 – Conclusion ...................................................................................................................................... 87 BIBLIOGRAPHY .................................................................................................................................... 90 APPENDIX .............................................................................................................................................. 93 4 1 - Introductory chapter
1.1 – Problem statement
1.1.1 – Motivation
As an organisation operating in today's society, it is quite common to have a detailed course of
action ready to guide and secure the ideal management of a potential crisis situation. However,
far from all organisations have a specified crisis management plan, yet a crisis management plan
does not provide a guaranteed to control a crisis. Take for example the world renowned soft drink
production company The Coca Cola Company. In 1999, they experienced a case of product
contamination in Belgium. The case escalated into the company's biggest product recall also
involving the Netherlands, France and Luxemburg resulting in a loss of 60 million US dollars
according to the British newspaper The Guardian.1 Even though The Coca Cola Company had a
crisis management plan, the company still failed to respond to the crisis effectively.
If we turn our look towards another company such as Johnson & Johnson, an American
multinational pharmaceutical and consumer manufacturer that dealt in 1982 with product
contamination of their painkillers, Tylenol. We see their crisis also turned into an enormous
product recall, resulting in a loss of 100 Million USD.2 However, Johnson & Johnson succeeded
in responding and managing their crisis effectively, despite the fact that they had no crisis
management plan.3
So even though The Coca Cola Company had a crisis management plan, they failed to respond
effectively and contained their crisis, Johnson & Johnson who had no crisis management plan,
succeeded to respond and managed their crisis. What did Johnson & Johnson know or do
differently than The Coca Cola Company?
1
http://www.guardian.co.uk/business/1999/jun/25/20 -­‐Accessed the 18th of Dec. 2012 2
http://www.history.com/this-day-in-history/the-tylenol-murders -­‐Accessed the 18th of Dec. 2012 3
2
Both cases of Coca Cola and Johnson & Johnson will be elaborated
upon later
in the
case
http://www.history.com/this-day-in-history/the-tylenol-murders
-­‐Accessed the on
18th of D
ec. description
2012 3
Both cases of Coca Cola and Johnson & Johnson will be elaborated upon later on in the case description Even though the field of crisis communication has been researched by scholars and practiced by
organisations for years, the majority of theory regarding crisis management has been focusing on
strategic and action oriented crisis management (Avery et. al, 2010: 191). In this respect, it can be
argued that William L. Benoit and Timothy W. Coombs have been dominating the field with their
strategy and practice oriented approaches to image restoration and crisis management. In fact, a
longitudinal study including 66 sample articles4 over a span of 18 years of academic contribution
to the field of crisis management from 1991 to 2009, all carry references to either the work of
Benoit or Coombs - or both of them (Avery et. al, 2010: 191).
We hypothesize that an increased focus upon the context of a crisis, organizational culture, crisis
response teams, culture, and psychodynamics can give provide a better understanding of why
organisations like The Coca Cola Company and Johnson & Johnson behaved the way that they
did, during their crises, and thereby shed light upon processes and factors and that might be able
to assist an organization in improving its response to crises.
The intentions of this project should not be considered as an attempt to replace existing theories;
it merely seeks to fill the apparent void of academic contributions of cross-disciplinary
approaches to crisis management. The project will therefore investigate how organisations could
improve their crisis management, by supplementing dominating crisis management theories with
a cross-disciplinary perspective, integrating organizational culture and psychodynamics as well as
an understanding of the context surrounding the crisis.
1.1.2 – Research question
“What are the dominant theoretical understandings of crisis management and how could
a cross-disciplinary approach assist in gaining an advantage in managing crises?”
4
"A census of relevant articles was retrieved from databases of communication and business related journals. The key terms “crisis
communication,” “crisis management,” “image restoration strategy,” and “crisis response strategy” guided the search." (Avery et. al, 2010:
191)
6 1.1.3 – Interpretation of our question
By dominant theoretical understandings we are primarily referring Coombs' (2007) and Benoit’s
contributions to the field of crisis management, as supported in the before mentioned findings by
Avery et. al (2010).
By cross-disciplinary approach we are referring to the integration of organizational culture and
psycho-dynamics as well as an understanding of the context surrounding a crisis.
By assist in gaining an advantage in managing crises we are here referring to a purely theoretical
advantage. It is with the cases of The Coca Cola Company and Johnson & Johnson in mind that
we seek this theoretical advantage.
1.1.4 – Scope/limitations
Due to time constraints, there were in this project not enough resources to commit to qualitative
research, which could have helped in providing more depth to our case analysis. Instead we
choose to include two cases that have had substantial media coverage, and have been treated by
scholars in the field of crisis management, limiting ourselves to news articles, websites, academic
journals and books. Furthermore due to the time when the two crises took place, we have not
given attention to the influence of modern mediums, such as social media, during a crisis.
The cases were chosen in order to understand real life situation how two companies managed
their crisis situations. The cases demonstrate a “best practice” with the Johnson & Johnson case,
who successfully managed their crisis, and a “bad practice” with The Coca-Cola Company case,
who struggled managing the crises. The cases are therefore used for illustrational purposes in the
analysis, showing how the cross-disciplinary approach can be applied to provide an advantage in
managing a crisis.
7 1.2 – Methodology
1.2.1 – Theories and models used
This following provides a brief overview of the main theories used in this project:
Crisis Management Process divides crisis into three different stages with three focus points:
prior, during and post crisis. The stages provide an overview of the actual crisis and suggest
strategic and tactical tools for each of the stages.
SCCT or Situational Crisis Communication Theory is described to have an overview of how
organizations, and especially managers, can deal with a crisis by using crisis response strategies
according to the impact of the crisis. It also helps us to have an overview on communication with
the different stakeholders involved in the crisis.
Image Restoration Theory is described in the project to get an overview about the types of
strategies that a company can use in order to respond to a crisis and repair its image, or at least
improve it as the name of the theory suggests.
Organizational theory described how organizational culture sets the grounds for how an
organization is structured. Structure and organization reflect in way on how an organization
responds and acts to crisis situations. The theories are based on culture and influential leadership;
and culture and effectiveness.
Context theory is described in order to understand how the environmental circumstances could
influence on a crisis progression.
The psychodynamic theory applied in this project derives from psychoanalysis, and is based on
the premise that it is just as possible for organizations as for individuals to suffer from
8 psychodynamic dysfunctions. It provides alternative perspectives to why organizations fail to
respond effectively to crises, and gives suggestions to how an organization can work and
overcome its dysfunctions.
1.2.2 – Structure
This paper is an analysis on two cases (The Coca Cola Company and Johnson & Johnson) with
different crisis management. The paper starts of with a theoretical outline on crisis management
as a whole and then continues with the actual analysis of the cases in relation to the theoretical
outlines mentioned earlier.
The theoretical outline on crisis management is sub structured into two parts. Firstly it starts of
with a description of theoretical actions of a combination of events approach and process
approach. An elaboration on aspects that see crisis is a suddenly occurring event. The second part
on the theoretical outline on crisis management points out elements in a combination of process
approach and systemic approach. Organizations ought to take these psychodynamic elements into
account, as they are kinds of underlying, unconsciously influential functional.
Thereafter the paper will continue with the two cases of The Coca Cola Company and Johnson &
Johnson. Firstly the cases will be introduced and described, followed with an analysis using the
theoretical observations mentioned in the previous part. The report is followed through with a
conclusion on our findings.
For better visualization, please refer to the illustrated table below.
Theoretical Outlines Crisis Management project Cases Combined event and process approach Combined systemic and proess approach Case Description Case Analysis Conclusion 9 1.2.3 – Scholars
In order to give clear idea about the authors we applied, following are the introduction of main
scholars in this project.
Otto Lerbinger holds PhD at Massachusetts Institute of Technology. His specialty is corporate
affairs and communication theory. He is the author of “The Crisis Manager: Facing Risk and
Responsibility, Designs for Persuasive Communication.”
Granville King, III (Ph.D., Indiana University, 1994) is an Associate Professor of
Organizational Communication at Indiana University Southeast. His primary research interest
includes peer reporting, whistle blowing, and crisis management.
Michael Regester and Judy Larkin. Regester is a founding director of Regester Larkin and an
author and lecturer on reputation and crisis management. Regester and Judy Larkin co-worked on
what to do in anticipation of potential risk issues and how to cope in crisis situations.
Laurence Barton, Dr. Barton holds a PhD degree in public affairs and international
communications from Boston University. He is one of the world’s leading experts in crisis
management and workplace violence prevention.
Ian I. Mitroff is professor emeritus at the Marshall School of Business and the Annenberg
School for Communication at the University of Southern California. Mitroff's research interests
are in the management of organizational crises, spirituality at work and complex problem solving.
W. Timothy Coombs PhD, Purdue University is a full professor in the Nicholson School of
Communication at the University of Central Florida. He is the 2002 recipient of the Jackson,
10 Jackson & Wagner Behavioral Science Prize, which established by JJ&W in 1991 on the firm’s
35th anniversary, recognizes individual behavioral science researchers whose scholarly work
enhances the understanding of the concepts and theories that contribute to effective public
relations practice. He has also consulted with companies in the petrochemical and health care
industries on crisis-related topics.
Sherry Holladay is a Professor at the Nicholson School of Communication at the University of
Central Florida in Orlando, FL. She earned Ph.D. from Purdue University.
Keith Michael Hearit is an Associate Professor of Communication and Associate Dean of the
Lee Honors College at Western Michigan University. Hearit holds a Ph.D. at Purdue University
in 1992.
William L. Benoit. He earned a Ph.D. from Wayne State University. His research concerns
image repair discourse and political campaign communication. He was “ Ranked as the most
prolific scholar in Communication 2002-2006 and tied for second most productive scholar in
communication (Hickson et al., 2009) and tied for second most published scholar in “top”
communication journals (Buntz, 2005) ”5.
Fearn-Banks is a tenured associate professor, joined the faculty of the School of
Communications, University of Washington (Seattle) in 1990. She completed the coursework for
a doctorate in instructional technology from the University of Southern California.
Geert Hofstede, Geert graduated from Delft Technical University with a M.Sc. in Mechanical
Engineering. He is an influential Dutch researcher in the fields of organizational studies and more
concretely organizational culture, also cultural economics and management.
5
Source : www.coms.ohiou.edu/Websites/.../Benoit_vita.rtf - Accessed the 18th of Dec 2012
11 Gandace White is an associate professor of public relations. She got Ph.D. in mass
communication from the University of Georgia.
Thierry C. Pauchant is a professor in management at HEC Montreal and earned Ph. D,
University of Southern California.
Paul Shrivastava is the David O’Brien Distinguished Professor of Sustainable Enterprise at the
John Molson School of Business, Concordia University, Montreal. He received his Ph. D. from
the University of Pittsburgh.
Brown, Andrew D., Ken Starkey Brown comes from the University of Cambridge. Starkey is
from the University of Nottingham. Their interests are on Organizational identity.
Bernard Forgues PhD, Strategic Management hos Université Paris Dauphine. He is a professor
of Strategic Management and Organization theory. He is interested in how organizations use
socially constructed technologies to pursue their strategic goals.
Tony Jaques earned PhD, Communication hos RMIT University, Managing outcomes online
issue and crisis newsletter. He is the Owner and director at Issue Outcomes P/L, Melbourne,
Australia
Astrid Kersten got PhD at Department of Communication, University of Pittsburgh. Dr. Astrid
Kersten is a Professor of Management at La Roche College.
Karl Willard Giberson holds a PhD in Physics from Rice University. Giberson is a contributing
editor to Books & Culture, where he has published many essays on science.
12 William R. Hough & Geoff Spillane
William R. Hough is a prominent investment banker and is known for being the most generous
benefactor of the University of Florida. Hough received his Masters of Business Administration
from the University of Florida
Geoff Spillane Marketing, Communications, Journalism BS, Marketing, American Studies hos
Babson College
N. Craig Smith got Ph.D. Management (Marketing and Consumer Behavior) at Cranfield School
of Management, Cranfield Institute of Technology, U.K. is the INSEAD Chair in Ethics and
Social Responsibility at INSEAD in Fontainebleau, France.
Robert
J.
Thomas
Ph.D.,
Business
and
Applied
Economics,
Wharton
School,
University of Pennsylvania
John A. Quelch Quelch is a British business school academic, administrator, public servant,
corporate director and consultant. He received an MS from the Harvard School of Public Health
and finally a DBA from Harvard Business School.
1.2.4 – Data collection
This project is based on a desk research as a main research tool. Primary and secondary sources
will be used. Articles of scientific journals, theory books will provide various perspectives on the
crisis management and crisis communication theories. For the case study, articles from different
journals connected with The Coca-Cola Company case and the Johnson & Johnson case will be
the main source of the information. In order to get a closer look into cases, the news articles and
interviews connected with the cases will be reviewed in order to see the attitude of the media.
1.2.5 – Criticism of sources
One of the main source criticisms for this project is that there are no direct press releases for both
analysed cases as well as no first-hand information due to the time period when the cases took
13 place. From the fact that the information is out dated, it is hard to see the real emotions of those
who were affected by the crisis situation. The attention from the media to these cases is also
unclear because it is hard to reach all news articles and press releases that were connected with
the crisis of the two companies.
The case analyses are based on the information that was provided by other authors’ opinions and
then evaluated by the group members.
The interview about the Tylenol case was included in analyses part. It was found on the YouTube
webpage, but was considered as a reliable due to the reason it was uploaded through the CNN
channel.
1.2.6 – Philosophy of Science – Critical Realism
The science of philosophy from which we strive to operate from in this project is critical realism.
Critical realists define reality in two dimensions, namely the transitive and the intransitive
dimension (Fuglsang & Bitsch Olsen, 2004: 35). The two dimensions are best explained in using
the metaphor of an iceberg. An iceberg divided into two parts, the tip of the iceberg which is
directly observable, while the bottom is underneath the water and not directly observable
(Fuglsang & Bitsch Olsen, 2004: 35). The tip of the iceberg is the transitive dimension, while the
invisible part of the iceberg is the intransitive dimension that we seek to reveal to attain a better
understanding of reality.
The transitive dimension consists of all existing knowledge including theories, paradigms,
concepts, analytical tools and techniques (Buch-Hansen and Nielsen, 2005: 22). The transitive is
considered a social construct as it contains knowledge produced by humans. However, as the
transitive dimension is only the tip of the iceberg, critical realists do not believe that that
transitive data is definitive or infallible (Buch-Hansen & Nielsen, 2005: 22).
14 The intransitive dimension is considered the reality that exists independently of our knowledge of
its existence. Critical realists argue that scientists should quit their attempt to predict events and
instead seek to understand and explain why they happened in the first place (Buch-Hansen and
Nielsen, 2005: 22-23). The intransitive dimension is divided into three domains:
Domain
Content
The Empirical
Experiences and observations.
The Actual
Events and phenomenon’.
The Real
Structures, mechanisms,
(Buch-Hansen and Nielsen, 2005: 24)
As we can see in the table above, the empirical aspect consists of collected data, the past
experiences and observations about the subject of study, in our case this is the current knowledge
about the field of organizational crises and crisis management. The actual domain is composed by
events and phenomenon', such as actual crises, where the formation of theories and hypothesis' to
their causation also belong. Opposite the empirical and actual domains that can be experienced
and observed with our senses, the real domain belongs to a deeper level that can is uncovered by
using the empirical and actual domains as tools to provide a better understanding of the
underlying structures and mechanisms of the subject of study (Buch-Hansen and Nielsen, 2005:
22-24). In our case we are seeking to understand the potential of cross-disciplinary approach to
organizational crises.
The transitive dimension of our project is therefore the existing theory within the field of crisis
management, including theories that carry traits from the cultural, psychological and sociological
disciplines. The Intransitive dimension of our project is an ideal holistic understanding of crises
and their causations.
15 Through the involvement of a multidimensional theoretical body of work (the empirical domain),
we seek to apply this existing knowledge to past crisis cases (the actual domain) in an attempt to
uncover some of the mechanisms and structures behind the causations to the crises (the real
domain).
Applying critical realism as a philosophy of science allows us to explore, question and potentially
provide additional depth to the reasons for why some organizational crises happen in the first
place. Furthermore it also gives space to approach crisis from cross-disciplinary perspective that
could be of benefit to the creation of crisis management plans, as well as for crisis managers and
organization leaders in general.
2 – Crisis Definition
Crisis can be defined from various perspectives. Robert Hamblin (1958) gave a rather general
definition of crisis in which crisis is "(...) an urgent situation in which all group members face a
common threat" (Hamblin, 1958: 322). Whereas for example Stephan Fink (1986) described
crisis as "(...) an event that may escalate in intensity; fall under close media and government
scrutiny, interferes with normal business operations, and affects the image and bottom line of a
company" (Fink, 1986). The definition of crisis keeps shaping and developing. Take for example
Laurence Barton’s (1993) description of crisis, “(...) a major, unpredictable event that has
potentially negative results. The event and its aftermath may significantly damage an
organization and its employees, products, services, financial condition, and reputation” (Barton,
1993: 2). Otto Lerbinger (1997), another author on crisis and crisis management refers to crisis as
“(...) an event that brings, or has the potential for bringing, an organization into disrepute and
imperils its future profitability, growth, and possibly its very survival” (Lerbinger, 1997: 4). On
the paper written by Pauchant and Mitroff (1992), the authors see crisis as a “(...) a disruption
16 that physically affects a system as a whole and threatens its basic assumptions, its subjective
sense of self, its existential core” (Pauchant & Mitroff, 1992: 12).
Just as it is difficult to construct one universal framework for managing crises, scholars also
struggle to reach an agreement on how to define crisis as a phenomenon in itself. However as we
start to read through the crisis definitions presented above we notice that a majority of these
describe crisis with the characteristic of being an event. Bernard Forgues and Christophe RouxDufort (1998), who conducted an analytical study that included 28 definitions of the term crisis
from management literature, make a point out of distinguishing crisis definitions from what they
call the event approach, and the process approach (Forgues & Roux-Dufort, 1998:
101). Forgues and Roux-Dufort are also not the only ones that make this distinction, Tony
Jaques (2010), crisis management consultant and professor in communication, argues that the
most widespread understandings and characteristic of crises is that they are considered as sudden
events (Jaques, 2010: 10). If we turn to the above crisis definitions again, we notice that Pauchant
and Mitroff (1992) are the only ones that differentiate themselves by not referring to crisis as
events.
So why is it important to differentiate between the event approach and the process
approach when seeking to define crisis? The answer to this question lies within the philosophy
applied when managing the actual crisis.
“Crisis management is not the same as crash management – what to do when everything falls
apart. Obviously this is important, but it is only one part of total crisis management effort. Here
we focus not only on crash management – what to do in the heat of a crisis – but also on why
crises happen in the first place and what can be done to prevent them” (Pauchant & Mitroff,
1992:11).
17 The above quote by Pauchant & Mitroff (1992) highlights the rough distinction between what is
also recognized as the events and process approaches to crisis management. The events approach
considers crisis management as a tactical approach to handle the incident of a crisis when it
occurs, and how to prepare for it (Jaques, 2010: 10). Scholars such as Coombs (2007) talk about
crisis in a similar way, as a "(…) sudden and unexpected event that threatens to disrupt an
organization’s operations and poses both a financial and reputational threat." (Coombs, 2007:
164). Furthermore the events approach to crisis management is often associated with negative
connotations from the organizations side and described as unanticipated with low probability
(Forgues & Roux-Dufort, 1998: 104). The events approach or crash management as Pauchant
and Mitroff (1992) call it, is by Forgues and Roux-Dufort (1998) also argued to be more focused
on the consequences and nature of the crisis, rather than focusing on the crisis in its entirety,
understanding how things have led up to it (Forgues & Roux-Dufort, 1998: 104).
Newer developments in the field have however been dedicating an increased interest towards a
process based approach to crisis management. Jaques (2010) explains that crisis from this point
of view is built upon a recognition that follows two premises (Jaques, 2010: 10-11). Firstly, most
crises are not considered as sudden events, but rather as periods of warning signs or red flags that
have been neglected. Secondly, organizational leaders and crisis managers have the opportunity
to proactively implement processes and activities into the organization in order to identify, take
control off and/or prevent the crisis from happening in the first place (Jaques, 2010: 11).
Moreover this view on crisis management also tends to consider crisis as an integral part of an
organization and as extended in time and space, underlining the idea of understanding crisis as
something that manifests itself in phases (Forgues & Roux-Dufort, 1998: 100). It is a branch
closely associated with process approach called the systemic approach combined with the process
approach that we wish to use for our definition of crisis in this project. Shrivastava and Mitroff
explain that a consensus within the field has developed about what is meant by systemic
(Pauchant et al., 1991: 210). According to Pauchant et al (1991) as well as Forgue and Roux-
18 Dufort (1998) the systemic approach is based in the ideas of Charles Perrov's Normal Accident
Theory (NAT). The basic idea of NAT is that it is inevitable for complex and tightly coupled
systems to avoid accidents, as the complexity of the system will sooner or later lead to
combinations between independent failures that burst the systems margin of errors and ultimately
causes the accident, or in our case the crisis (Rijpma, 1997: 15). Furthermore Pauchant et al.
explain that scholars who believe in the systemic crisis perspective focus on complex
interrelations between technical systems and humans, but also between the company and its
stakeholders (Pauchant et al., 1991: 210).
Forgues and Roux-Dufort stated that most of the scholars who argue for the process approach, are
calling for an understanding of systemic crisis management (Forgues & Roux-Dufort, 1998:
105). "(…) systemic management is needed to study crisis because they reveal hidden systemic
patterns by crystallizing different spheres that go beyond the frontiers of organizations" (Forgues
& Roux-Dufort, 1998: 105). Considering crisis as a process and as an integral part of a larger
system, also allows the uncovering of positive aspects of crisis. These are aspects to services,
production or processes that the organization would not otherwise be aware of if the crisis had
not happened (Forgues & Roux-Dufort, 1998: 105). The following attributes can therefore be
associated with the term crisis in this project.
Characteristics from the process approach
•
Extended in time and space
•
Composed by a period of neglected warning signs
•
It is possible to proactively implement processes and activities into an organization in order to
•
Identify, take control off and possibly prevent it from happening in the first place
Characteristics from the systemic approach
19 •
Considered as processes and an integral part of a larger system
•
A natural outcome of complex and tightly coupled systems
•
Capable of providing a competitive advantage by embracing the lesson from it.
As the reader might notice there is a slight contradiction between the possibility of preventing a
crisis and at the same time considering crisis as an unavoidable and natural outcome of complex
tightly coupled systems. However the possible margin of failing to prevent the crisis, supports the
statement that crisis are unavoidable outcomes of complex and tightly coupled systems. In the
following chapter we will look into some of the more prominent authors and their theories on
crisis management. It is worth noting particularly Coombs (2007) contradictory approach when
considering his definition of crisis from events based view, but still treats it as a process by
dividing crisis management into prior, during and post. As critical realist we claim no definite
and universal understanding of crisis as we are merely seeking to contribute to the current
understandings of the causations of crises and the crisis management of our cases. This is why we
have chosen to include Coombs theory on crisis management despite that it takes grounds in a
mix of the events crisis definition and the process approach to crisis management. We will
thereafter proceed with presenting some of the crisis management theories that are influenced by
the systemic approach and the process approach.
3 – The combined events approach and process approach
3.1 – Crisis Management
Timothy W. Coombs and Sherry Holladay (2010: 238) define crisis as “the perception of an
unpredictable event that threatens important expectancies of stakeholders and can seriously
impact an organization’s performance and generate negative outcomes.” and crisis management
“as a set of factors to combat crises and to lessen the actual damage inflicted” (Coombs &
Holladay, 2010: 238). Crisis management process can be separated into 3 parts: Pre, During and
20 Post crisis as seen I the figure. After the crisis of work, examines the crisis and proposes ways to
enhance preparedness pre-crisis. (Coombs & Holladay, 2010: 239)
Pre-­‐crisis Post-­‐crisis Crisis event (Coombs Holladay, 2010)
When organizations find themselves in a situation that a crisis has struck them, they may find a
need to have the situation under control and they may wish to manage the problem in order to
solve it. The most efficient way to manage a problem or a crisis is when the organization is well
prepared for this type of crisis and that people in the organization are aware of what to do to solve
the crisis situation. This managing process is also known as crisis management. Crisis
management is not the only a way to plan or control the crisis but it also involves aspects of how
to communicate with the organizations staff and the greater audience who directly or indirectly is
suffering from the crisis. Crisis Management is a tool that is designed to ward off and/or to
reduce the threats of an occurring crisis by providing recommendations for properly handling
21 crises situations. Coombs (2007) has defined crisis management as “… a set of factors to combat
crises and to lessen the actual damage inflicted” (Coombs, 2007: 5).
Crisis management will be elaborated more thoroughly in the three stages initially used by
Coombs (2007): Prior, During and Post crisis stages.
3.1.1 – Prior to Crisis
Coombs (2007) divided prior crisis into two sections: crisis prevention and crisis preparation.
The crisis prevention section, elaborates on points that ought to be taken which could prevent the
crisis from happening or at least to limit the consequences of a crisis. The crisis preparation event
section refers to the actions an organization ought to take in order to be prepared to handle and
deal with a crisis when it actually hits the organization. Let’s begin with the first stage: crisis
prevention.
3.1.1.1 – Crisis Prevention
Finding warning signs
Crises such as pollution, industrial accidents, and product defects can cause extensive damage to
human life and social environment. Researchers such as Coombs, Mitroff and Udwadia cleverly
argue that the best crisis management is the crisis that is prevented. Prevention is therefore the
ideal form of crisis management. According to Coombs (2007), the process that people in an
organization where people search for warning signs is known as signal detection (Coombs, 2007:
21). Signal detection is a part of the organization’s early warning systems (Mitroff, Shrivastava &
Udwadia, 1987: 285). Early warning signals are in most cases the signs that indicate the
probability of crisis occurrence (Mitroff, 2004: 71). Mitroff states that if a crisis team can catch
on these signals, then the crisis might be able to be prevented (Mitroff, 2004: 71). Coombs also
hold the same opinion that if crisis teams take appropriate actions based on the warning signs, a
crisis might be prevented (Coombs, 2007: 21). Coombs further suggests that a crisis manager
should design a system to scan and monitor for crisis warning signals, a term which he names the
22 crisis- sensing mechanism (Coombs, 2007: 21). Similarily Mitroff states that signal detection
mechanisms have been designed and implemented it helps organizations put the crisis under
control (Mitroff, 2004: 82).
Referring to Coombs, scanning is a kind of radar, the basic element of signal detection. Crisis
teams must be aware of the information that might contain warning signs. Mitroff suggests that
people in crisis teams need to monitor the signals as soon as they have been perceived as warning
signs (Mitroff, 2004: 86). Monitoring is a form of tracking, people in crisis team should take well
care of the warning signs that might have the greatest potential to be crises (Coombs, 2007: 22).
Coombs
(2007) describe three scanning system: issues management, risk assessment, and
reputation management to (Coombs, 2007: 22).
Issues management
Issues management is ”(…)an attempt to define the strategies that organization needed to use to
counter the efforts of activist groups which were putting pressure on legislators for stricter
controls of business activity.” (Regester & Larkin, 1997:37) Coombs finds that the way to deal
with a crisis can definitely impact the organization. In order to lessen the negative impact of an
issue on an organization, issue management should try to resolve an issue in a way that is
favourable to an organization (Coombs, 2007: 23).
Risk assessment
Risk assessment is about figuring out the risk factors in an organization. Coombs thinks that risk
assessment has more focus on internal parts rather than external. Internal warning signs are more
likely to be taken seriously by the organization because they fit in with the business (Mitroff,
Shrivastava & Udwadia, 1987: 285). Crisis manager should therefore attempt to assess the
probability that risk factors will be developed into crises. Through risk assessment the identified
23 internal risk factors provide important information for the crisis scanning process, by which the
crisis team could prevent crisis or reduce risk factors (Coombs, 2007: 24).
Reputation management
According to Coombs (2007) the reputation of an organization is a reflection of its relationship
with its stakeholders. Stakeholder's attitude is very important for crisis management (Coombs,
2007: 24). It could be said that the organization’s reputation is evaluated by the stakeholders of
the organization. Many of the actions and decisions made by the crisis team may affect not only
the organization, but also the stakeholders (Barton, 2001 in King, 2002:243). Stakeholders’
actions can both be harmful or beneficial to an organization. Keeping a good relationship with
stakeholders could result in the good reputation of the organization. Problems with stakeholders
can be considered as warning signs for a crisis closer related to an organization reputations
(Coombs, 2007: 24).
3.1.1.2 – Crisis Preparation
One could wonder what the essence is of establishing a crisis team, how effective a prepared
crisis management plan is for a corporation or the importance of well-managed communication.
Managing a crisis can occur through several variables. Crisis management teams is one of them.
3.1.1.2.1 – Crisis Management Team
A Crisis Management Team (CMT) is “(…) a cross-functional group of people within the
organization who have been designated to handle any crisis” (Coombs, 1999: 63). The essence
of building up a CMT is for corporations to have a team that is prepared at all times to effectively
communicate and respond in an effective manner whenever a crisis occurs. Mostly the CMT is a
group within the corporation from different departments, individuals with different skills and
roles of importance or influence. Individuals do not necessary need to managers or leaders in
charge (Hough & Spillan, 2005: 3). Not every individual performs well under pressure and/or
stress, therefore there is a need to investigate whom may function best under pressured situations.
24 As the core responsibility of a CMT is to respond in an effective manner, the team should be
prepared to put in any kind of force at any point in time. The communication skills of the CMT
play a rather great role prior to, during and after the crisis. An important factor is also the team
size (Hough, Spillan, 2005: 3). It seems desirable to have a team with members for most/all
departments, but it seems unlikely to coordinate and control a big group. Big crisis teams are then
seen as their own obstacle in solving the crisis, as a team may be considered as less effective
(Hough, Spillan, 2005: 3).
In the article Crisis Management and Team Effectiveness: a closer examination, King (2002)
examined and elaborated the purpose of setting up a CMT. King concluded that it takes much
time and effort to establish a well functioning crisis management team. If an organization fails in
establishing an effective team, it may increase the level of risk in performance of crisis
management, not even to mention that failure damages the image (King, 2002: 238). King is
referring to more critical points in the team assembly process. King writes that the effectiveness
of a team is a result of the influence of the circumstances and the environment that the team finds
itself in. Components that could carry out this influence are prior interaction between the team
members. Team members are more at ease as they are familiar with each other and are familiar
with each other’s strengths, weaknesses and performance capability, this including team
composition. Other influences on the effectiveness of the team are; task knowledge (each
member should be prepared and aware of its duties), responsibilities when a crisis situation
occurs, leadership ability as well as the overall organizational culture (King, 2002: 239)
With a well functioning CMT established, an organization can focus on the meaning of why a
team needs to be established. One of the functions of the CMT is to identify early signs of crisis
situations. The source of signs depends on the type of industry an organization belongs to, but
one could also think of natural crises or global crises, which affect any organization. Once the
problem has been identified the team seeks for a solution. This process is part of the earlier
25 mentioned crisis prevention. It is also the team’s responsibility to identify problem areas within
the organization. The aim here is to discuss the issues with the involved employees in order to
find a solution together. However, one of the main functions of the CMT is to set up a crisis
management plan of what needs to occur and happen when the organization finds itself in a crisis
or an emergency. The team also needs to know how to guide the employees when the crisis
occurs, one may think of encouragement, motivation and determination for employees to get
through the situation. Post crisis activities of the CMT are to assist in getting the organization
back to its position prior to the crisis and to prepare / prevent the organization for any similar
type of crisis.
To manage a crisis, it is good to have a solid team that the company can count on, but this is not
enough. They should also know what to do and when to do it.
3.1.1.2.2 – Crisis Management Planning
Crisis Management Plan (CMP) involves a plan of action for when a crisis occurs and the
organization is forced to temporarily take a different direction.6 The plan tries to detail out which
direction an organization should take, how to divert from the original plan to get back on trail. An
important aspect in the planning process is to outline the employees and assign employees with
tasks and duties that they need to undertake when the plan needs to come into action – in an
actual crisis moment. In advance, the CMT is drawing up a CMP that needs to visualize crisis
situations and prepare a strategic plan / method for the organization to keep performing and to get
the organization out of the crisis situation best possible. Drawing up this CMP could be very
unilateral as one cannot predict what kind of crisis may hit the company, when the crisis will hit
the organization and what effects the crisis will have on the organizations. The plan needs to
prepare them not only for one situation but should give them the liberty to proceed with the right
planned approach/strategy. An important aspect would also be to know whether the plan is
6 http://www.managementstudyguide.com/crisis-management-plan.htm - accesed the 18th of Dec. 26 manageable and achievable.7
The crisis management plan should enable the company to direct and put in the rails. Some
decisions, difficult to take, can be considered, such as recalls of product.
3.1.1.2.3 – Product Recall Management
For certain products lines, a product recall may occur as a crisis hits a company and especially its
product. Product recall is a serious matter and the recall can have severe consequences on the
brand and image of the product and company. Organizations ought to be aware of the importance
of having a product recall management plan or at least be prepared for a situation alike. In the
article A Strategic Approach to Managing Product Recalls Smith et al. (1999) divided the
product recall management process into three stages (before; during and after) and assigned
functional areas (policy and planning, product development; communication and logistics &
information systems). The key points of the before, during and after recall activities elaborated by
Smith et al. (1999) will be pointed out.
Recalls of defective products is not done lightly and some elements must be taken into
consideration before the recalls.
3.1.1.2.3.1 – Key elements before recall
Smith et al. (1999) have identified what is necessary to plan before a recall. Naturally it refers to
setting up a recall response team to handle the recall. Management should set up a team
responsible for making crucial decisions and take fast action (Smith et al., 1999, 63). The authors
do not specify how the team should be formed; one should take into consideration to appoint a
leader, who will be in charge of the recall response team when it ought to be necessary. Naturally
as mentioned above, it takes time to establish a well functioning team where all members feel
confident and confortable with one another. (Smith et al., 1999: 69-75) Regarding to the
7 http://www.managementstudyguide.com/crisis-management-plan.htm - Accesed the 18th of Dec. 27 development of the product, Smith et al. (1999) refer to the importance of product testing to
indicate the probability of future recall of the product (Smith et al., 1999: 75-78). In the
development of the product, there is a necessity to mark the product with identifiable serial
numbers. The use of serial number is an effective way for organizations to trace the products that
contain faults. (Smith et al., 1999: 75-78) As in many cases, communication stands central in this
task. Before the actual recall organizations need to take into account their collaboration with
suppliers and their general stakeholders. Poor communication on their behalf could eventually
lead to a damage of their reputation and trust in collaboration. Proper communication in advance
regarding issues shows honesty and prepares direct involved stakeholders in the process. (Smith
et al., 1999: 78 – 82) The logistics and information systems are the sources that support all efforts
undertaken for the recall. One may think of a well-prepared customer service department with
trained staff who posses’ knowledge on how to deal with incoming calls regarding defects of
products prior to the recall. The customer service department is one of the teams that can identify
product defaults at an early stage that may result in a product recall procedure. (Smith et al.,
1999: 82-84) The elements mentioned above should be taken into account before the crisis
develops.
3.1.2 – During Crisis
Coombs (2007) describe that crisis is initiated with a triggering event that signs the beginning of
the crisis. During a crisis, Coombs (2007) states that crisis managers must take alert and realize
that the organization is in a crisis and respond appropriately and take appropriate actions
(Coombs, 2007:19). Coombs (2007) divided the during crisis event into two stages: (1) crisis
recognition and (2) crisis containment (Coombs, 2007:19). The terms of stages used vary from
scholar to scholar, but their meanings are alike. Therefore, here we are going to focus on the
crisis stages from Coombs. For a better understanding and visualisation of Coombs (2007)
description of during crisis events, please refer to the image below in which the during crisis
stages stated by Coombs are drawn up.
28 Perceived important Crisis Dimensions Immediancy
The expertise of the dominant coalition Uncertainty Crisis Recognition Credibility Crisis Containment The persuasiveness of the presentation Emotion Responding quickly Reason Consistency Opneness 3.1.2.1 – Crisis recognition
According to Coombs, people in a crisis organization must notice and realize that crisis exists and
respond to the crisis (Coombs, 2007:103). In Lerbinger’s (2012) opinion, a manager must
immediately decide whether the situation merits a crisis label (Lerbinger, 2012: 8). Crisis
recognition is about an understanding of how a situation get marked and regarded as a crisis
(Coombs, 2007:103). Crises vary from case to case. Some crises are easy to recognize, take for
example an explosion or tidal wave, but some are not obvious to define, due to their complexity.
Lerbinger (2012) states that people in organization sense “big trouble” rather than a crisis
(Lerbinger, 2012:8). Coombs (2007) utters that it is a crisis when key stakeholders regard a
29 situation as a crisis (Coombs, 2007:103). If your customers, for instance, define a situation as a
crisis, it is a crisis. Even if initially the organization does not define it as a crisis. Lerbinger
(2012) further explains that the crisis demands full attention if the organization found some
potential crisis signs (Lerbinger 2012:9). Unfortunately, people in organizations might not agree
on whether or not a situation is a crisis. They may refuse to accept a crisis even when
stakeholders, like customers are considering the situation as a crisis (Coombs, 2007:105).
Therefore, it is important for a problem to be defined as a crisis when it is (Coombs (2007).
suggests that crisis managers need to frame the crisis. Lerbinger (2012) states that people in
organizations facing a crisis situation may experience uncertainty, confusion and even chaos,
which are accompanied by a sense of “(…) loss of control” (Lerbinger, 2012: 10). According to
Coombs (2007), all problems within organizations are framed in some way and that three factors
compose this crisis frame: (1) the crisis dimensions, (2) the expertise of the dominant coalition,
and (3) the persuasiveness of the presentation (Coombs, 2007:105). See figure 1.
3.1.2.1.1 – Crisis dimensions
Coombs (2007) describes three dimensions that vary in crises: perceived importance, immediacy,
and uncertainty.
Perceived importance varies by size of the possible loss (impact) and the probability of the loss
(likelihood). The greater the opportunity is to have a possible loss or probability of loss, the
greater the perceived importance is of a crisis (Coombs, 2007:106). Crisis managers need to
present the danger to dominant coalition if they are going to ignore the warnings (Billings et
al.,1980; Dutton, 1986 in Coombs 2007:106).
Immediacy is related to the time pressure associated with the crisis. Rapidity is a key element in
crisis management (Michael Regester & Judy Larkin, 1997: 185). Coombs (2007) thinks that
there are two components to time pressure; how quickly the crisis will hit and the degree of
pressure from the stakeholders to take action.
30 In a crisis that endangers customers’ lives, it is always the highly important to take immediate
action. Furthermore, another form of time pressure is intense pressure from key stakeholders. If
main stakeholders, like customers or employees, want action as rapidly as possible the crisis
should be taken into consideration immediate (Coombs, 2007:107).
Every crisis brings some level of uncertainty with them. Researchers such as Coombs (2007) and
Ulmer & Sellnow (2007), refer to this as the uncertainty to the extent of crisis ambiguity. Due to
the inherent uncertainty of crises, there are various interpretations and arguments made about the
crisis, how the crisis has begun, who is affected, and whether the organization is responsible for
the event. Coombs (2007) explains that people in organizations must pay effort and attention to
when crisis ambiguity increases and need to find the reasons where the problem is coming from
and what is going on in their operations (Coombs, 2007:107). Ulmer & Sellnow (2007) suggests
that crisis communicators should be ready and willing to defend their interpretations of a crisis
towards its stakeholders practice good and honest ethical conduct before and after a crisis
develops (Robert R. Ulmer and al., 2007: 25).
3.1.2.1.2. – Expertise of the dominant coalition
Crisis managers ought to take care of the expertise of the dominant coalition when framing a
crisis. According to Coombs (2007) the more expertise, the more comfort when dealing with
problems. One way to get expertise is to use jargon, namely the language of a profession
(Coombs, 2007:108). A jargon message from the expertise of the dominant coalition reflects a
sense of familiarity with the situation (Fairhurst & Sarr, 1996 in Coombs, 2007:108). It is very
important to present some aspect of their expertise for framing a crisis. If the dominant coalition
has financial expertise, the CMT should put the financial part into crisis frame. Successful crisis
management rescues the trustworthy perception by showing the dominant coalition’s
competence, while failure of crisis management further erodes it (Dutton, 1986; Pearson & Clair,
1998 in Coombs 2007:108).
31 3.1.2.1.3 – Persuasiveness of the presentation
Coombs (2007) states that persuasive skills play a supportive role for the crisis team on arguing
for a crisis. Stakeholders are persuaded by three basic factors: credibility, emotion, reason
(Coombs, 2007:109) – see figure 1.
Credibility is an element used in persuasion. During a crisis, the organization is the
communicator and the stakeholders are the receivers. The receivers’ attitude will be affected by
the communicator’s credibility. Coombs (2007) divides credibility into two components:
expertise and trustworthiness. Expertise is the communicator’s knowledge about the crisis.
Trustworthiness is the communicator’s goodwill or concern for the receivers (Coombs, 2007:
109). To be credible, a crisis manager needs to be an expert when persuading messages to
stakeholders in order to have trustworthiness.
Emotion is defined as the way in which crisis managers present the crisis information (Coombs,
2007: 109). Coombs (2007) suggests that a crisis should be presented in an emotional fashion for
catching stakeholders’ attention. Vivid stories help to create a dramatic presentation, which make
the information more interesting and easier to understand (Coombs, 2007: 109).
Reason is a rational way to persuade stakeholders, by using facts and logical evidences (Coombs,
2007: 109). To control a crisis situation, crisis managers need to use rational information to
support the likelihood and impact of a crisis (Coombs, 2007: 109). Crisis managers who use
emotions to catch the stakeholders’ attention must also use rational evidence to support the
provided information about crisis (Dutton & Ashford, 1993 in Coombs, 2007: 109).
3.1.2.2 – Crisis containment
According to Coombs (2007), crisis containment is about the organization’s response on crisis,
where communication with stakeholders is a critical part of this phase. But before going into
Coombs ideas deeply, there will be a part describing communication in general.
32 3.1.2.2.1 - Communication
In this project, communication is defined as an activity, which tranfers information from one side
to another.
(Shannon & Weaver, 1949)
Above is presented the sender-receiver communication model by Shannon and Weaver (1949).
The sender is the person who wants to convey a message to the receiver. According to Shannon
and Weaver (1949) the sender should encode his information in an understandable way for a
receiver to collect (writes in English, speaks in France, etc.). The message is the product of the
encoding and the medium is the method used in order to send the message; it could be face-toface communication, an email or a conference. Before the message reaches the receiver, there
could be noise. Noise is any kind of interference that makes it harder to send or understand the
message, like culture issues, distance or languages. Decoding is the transformation of the
message from the medium into the receiver thoughts.8 This model could have several receivers if
it was a bigger auditorium or a TV channel for example, and due to the noise, every receiver will
understand the message in a different way.
8
http://www.mosaicprojects.com.au/WhitePapers/WP1066_Communcation_Theory.pdf -­‐ Accessed the 18th of Dec. 33 By Oxford dictionary, media is defined as “the main means of mass communication (television,
radio, and newspapers) regarded collectively”. Or in other words, a communication channel,
through which one receives information.
Crisis communication could be explained as the way of transmitting messages during and after a
crisis with stakeholders, when the company’s reputation is under pressure9. During a crisis it is
important to reach out to those who are affected by the crisis and provide them with all
information that is available, in order to avoid confusion and negative rumours. Some
organizations have a message drafted beforehand, and only need to insert the detailed information
when it is known (Coombs, 2007). Therefore these organizations have their own template for the
company statement in case of a crisis, but however it does not provide any further assistance in
managing the actual crisis communication. Crisis communications should be quick, consistent,
and accurate. (Coombs, 2007: 128)
3.1.2.2.1 – Quick
In order to be quick, an organization should draw up a press release showing and convey their
message in order to calm down stakeholders. If the organization becomes the source of
information about their own crisis situation, there will be less damage of their reputation and
more control, rather than if the media will be the first to provide the public with information
(Coombs, 2010: 28). If there is not enough information from the organizations behalf, others will
try to fill in the voids of missing information and potentially misinform the receiver. Competitors
could take advantage of this situation and provide onlookers with unreliable information, which
could damage the reputation of an organization. A fast response from the company's side can
therefore avoid misunderstandings. The media reports crises extremely fast, not only through TV
or radio report but also including post the stories on the Internet. Nowadays, media report through
advance technology is the most influential way to get to know the information for stakeholders.
In some cases, key stakeholders are aware of the crisis from media reports before they have been
9
http://www.businessdictionary.com/definition/crisis-­‐communication.html -­‐ Accesed the 18th of Dec. 34 officially notified. The quicker the stakeholders can hear about a crisis from the media, the faster
the crisis team must respond. Speed is therefore naturally of the essence for an organization to
coordinate with stakeholders, and to establish good a reputation in public. Coombs strongly
mentions that silence is very passive response and reflects uncertainty and passivity, the exact
opposite of what an organization should be attempting to create (Coombs, 2007: 129).
3.1.2.2.2 – Consistency
Coombs finds that consistency plays an important role in setting up the credibility of the
response, the organization must send consistent messages to stakeholders, and through a unified
response enhance consistency (Coombs, 2007: 131). During the crisis, stakeholders and media
are eager to know the information about the crisis. Therefore spokesperson of a team need to be
prepared with a clear and consistent messages, and present updates with accurate information
regularly. Regester & Larkin (1997: 185) utter that: “A crisis simply will not wait, and do not
stop until the plague of locusts has had enough or found a richer source of food elsewhere.” If
the organization is not prepared to provide consistent messages, some rumours might get chance
to enter to the ear of stakeholders through the space of inconsistency.
3.1.2.2.3 – Accuracy
During a crisis, the public needs accurate information that shows openness of an organization,
informing them how the crisis can affect them. Occasionally when actions are chaotic, chances of
giving inaccurate information are big, and mistakes should be corrected with right information
promptly. Being quick and accurate is very important when there is a threat for humans, can in
the long run saves the organization money by avoiding future damages. As Coombs states
“(…)the openness of an organization is a multifaceted concept(…)” (Coombs, 2007: 133).
Openness means that the spokesperson should be of availability to the media, and have a
willingness to disclose information and be honest to the public and not lie to stakeholders.
Regester & Larkin (1997: 185) say that it’s better to “tell it all, tell it fast, tell it truthfully.” Crisis
team in organization should completely disclose information about a crisis in order to prevent
35 further risks or even death resulting from the crisis. Lack of honesty, can not only seriously
damage the relationship between the organization and its stakeholders, but it can potentially also
harm the organization’s reputation (Coombs, 2007: 133).
According to Coombs (2007) the best practice in a crisis response will look like this:
•
Be quick and try to have initial response within the first hour
•
Be accurate by carefully checking all facts
•
Be consistent by keeping spokespeople informed of crisis events and key message points.
•
Make public safety the number one priority
•
Use all of the available communication channels including the Internet, Intranet, and mass
notification systems
•
Provide an expression of concern/sympathy for victims
•
Remember to include employees in the initial response
•
Be ready to provide stress and trauma counselling to victims of the crisis and their families,
including employees. 10
The media is capable of providing the public with all sorts of information, even without getting
any direct information from an organization. Disrespecting media power could play a crucial role
on an organization reputation.
A crisis generates a demand for information among the public (White, 2009; Coombs 2006). For
an organization, in a crisis situation, it is important to manage messages and context in the right
way, due to the reason it can affect the way news about the crises is being conveyed in the media.
A company’s spokesman has to create a frame around the subject when presenting to the media
because this frame can influence how the media will interpret the subject (White, 2009). The
amount of news about the crisis, defines how significant and essential it is for the organizations
reputation. When an organization cannot manage the problem effectively, there is a chance to
10
http://www.instituteforpr.org/topics/crisis-­‐management-­‐and-­‐communications/ 36 reach a serious stage, where public outside an organization will start to rely on the information
provided by the media, and therefore request for more actions from an organization. (White,
2009). At this stage, the media has the ability to misinterpret the overall crisis situation and cause
panic in the public with potentially false panic.
3.1.2.3 – Key elements during recall
Smith et al. (1999) indicate some key factors for planning and policy during the recall of a
product. Smith et al. (1999) talk about the importance of analysing the seriousness of the
situation. Based on the analysis one can determine what kind of recall is necessary – whether it’s
a full recall, a selective recall, repair recall, change in production and distribution of the products
etc. Smith et al. (1999) also indicate that with knowledge of the situation, the organization has a
better basis for helping the solving the issue; offering a recall or even perhaps offering a new
product. For the further development of the product and to successfully proceed with the recall,
the recall response team ought to find out what exactly caused the problem and assess its
effectiveness. While the organization is busy carrying out the recall, it should still remember the
importance of communication with its direct stakeholders, especially their distributors and
suppliers of their product. Smith et al. (1999) also point towards the importance of keeping their
stakeholders up to date to keep up the organizations credibility in the eyes of their stakeholders.
Customers are also very important stakeholders, the organization should aim to keep them
informed and should convince customers to support the recall process. Not only for the well
functioning of the product, but to keep their trust and their customer loyalty. A company may
focus on a reverse marketing strategy – to trigger the need of customers to seek the help of the
company. Of course a company cannot only focus upon this, but with effective reverse marketing
the strategy to get customers to seek the organization to fix the recalled product works. Through
logistics and information systems, an organization is able to trace specific details about faults that
caused the recall. As mentioned earlier, before the recall in the product development phase,
organization ought to apply identifiable serial numbers to trace products with faults. The
37 information system enables the organization to find out the batch contaminated by the fault. This
leads to specific recalls for specific batches of products. Having the information system well
structured could lead to a more narrow and specific product recall procedure.
Once the crisis is “over”, the organization must still work on these consequences, it is one of the
most important steps because it determines the magnitude of the effects that the crisis has had on
its image.
3.1.3 – After Crisis
Different scholars within crisis management, as William Benoit and Timothy Coombs have
contributed with theories on how to behave during the aftermath of a crisis. Both of the two
authors have done research on what type of strategies that could be applied to better manage the
post-crisis to minimize damages and reduce its impact on the image. These strategies can be used
in different ways depending on the crisis, all strategies cannot be used and this is why strategies
to implement differ, as each crisis is different. The following section will elaborate on some of
the organizational strategies that they propose for crisis managers.
Once the crisis has occurred, it should be managed against shocks and repercussions that have
resulted in its passage. The post crisis phase is a very important phase, as it will determine
whether or not the company can rebound and continue its activities according to its attitude
towards the crisis. Fortunately, there are several ways to try to defuse the magnitude of the crisis,
as Benoit also argues when the reputation is threatened, companies feel obliged to offer
explanations, justifications and excuses for such a behaviour. (Coombs & Holladay, 2010: 70).
The following three theories are central to the reputation of organizations during the post crisis
phase (Coombs, Holladay, 2010: 245).
38 - Corporate apologia (by Keith Hearit, 1994)
- Image restoration theory (by William L. Benoit, 1995)
- Situational crisis communication theory (by Timothy Coombs, )
3.1.3.1 – Corporate apologia by Keith Hearit
The approach of Corporate Apologia written by Keith Hearit (1994) was the first dealing with
the crisis and the protection of organizational reputation. This theory is designed to an
organization by trying "(…)to present a convincing account of competing organizational
measures(…)"
(Hearit, 1994: 502).
The table 1 in the appendix shows 5, different strategies that can be used:
Denial - the company denies the act
Counterattack - the company denies the act and pretend that guilty person is the accuser
Differentiation - the company is trying to differentiate itself from the blame of the
crisis. It
recognizes its responsibility, but factor identified which limit the responsibility of the company.
Apology - The company approves its responsibility and pledges that it won’t happened again.
Legal - The company authorizes the legal crew to manage the crisis and avoids public
declarations.
Hearit strategies are used in connection with protection of reputation and apologia. However it is
not the only angle that managers can use. Indeed, Benoit was more focused on image restoration
as we will see in the following.
3.1.3.2 – Image Restoration Theory (IRT) by William L. Benoit
For Benoit (1995), managing post crisis is going through a restoration of the image. This is also
one of the leading theories on which he worked a lot. This theory concentrates on one particular
39 point in restoring or protecting an organizations’ image. (Benoit, 1995: 75).
To understand this theory, it must be assumed that maintaining a positive reputation is the goal
of the communication and that communication is an objective-oriented activity. He also said that
it needs to have 2 components to attack someone’s image or reputation : one act which is not
desirable and that you are responsible for that action. Benoit used a typology of image restoration
as strategies for restoring reputation. They are organized into five categories: Denial (Simple
denial and Shifting the blame), Evading of Responsibility (Provocation, Defeasibility, Accident,
Good intentions), Reducing Offensiveness of Event (Bolstering, Minimization, Differentiation,
Transcendence, Attack accuser, Compensation) Corrective Action and Mortification11
•
Denial - can be defined as “a refusal to grant the truth of a statement or allegation; a
contradiction”.12 “Any person who is forced to defend himself or herself against the suspicious
or attacks of others has several options. The speaker may deny performing the wrongful act as
Ware and Linkugel (1973) suggest. Goffman (1971) observes that the accused may deny the act
occurred or that the accused committed it. Schonbach (1980) suggests that one may claim the
failure event did not occur. Schlenker (1980) lists innocence as an option. Tedeschi and Reiss
(1981) discuss denial of agency, and Semin and Manstead (1983) mention mistaken identity as a
defensive
option”
(Benoit, 1995: 75).
Benoit divided this category into 2 sub categories, Simple denial, this is when the person simply
refuses to charge, and Shifting the blame, used to accuse someone else by directing the focus
away from the person or company and providing a person or organization responsible for the
11
12
See appendix Table 2
www.freedictionary.com/denial - Acceseed the 18th of Dec
40 crisis. As Benoit (1995: 80) said “The immediate effect of (successfully) shifting the blame is to
damage the reputation of the other person. However, the ultimate end or goal sought by shifting
the blame is to exonerate the source.
•
Evading of Responsibility can be defined as “to avoid fulfilling, answering, or performing13”.
Benoit (1995) argues that those who are unable to refute performing the act could be able to
escape or minimize their seeming responsibility for it (Benoit, 1995: 76). Scott and Lyman’s
(1968) suggested that the actor may request that the act in question was made in response to
another unlawful act which caused the aggressive act in question. According to Benoit this
strategy can be divided into four different parts:
•
Provocation is used when the act in question was performed in response to another wrongful act
•
Defeasibility is used for pleading lack of information about or control over important factors in
the situation.
•
Accident is used when apologies based on accidents are made by the actor
•
Good intentions - "(…)are used when for the actor to suggest that performance of the actin in
question may be justified on the basis of motives or intentions (discussed by Ware & Linkugel,
1973).“ (Benoit, 1995: 77)
Reducing Offensiveness of Event: “A person accused of misbehavior may attempt to reduce the
degree of ill feeling experienced by the audience. This approach to image repair has six variants:
bolstering, minimization, differentiation, transcendence, attacking one’s accuser, and
13
www.freedictionary.com/avoid - Acceseed the 18th of Dec
41 compensation” (Benoit, 1995: 77).
•
Bolstering is used when negative effects of the act on the actor are attenuated by reinforcing the
audience’s positive affect for the rhetor.
•
Minimization is used to reduce the quantity of negative affect associated with the abusive act. The
feeling of discomfort associated with the act can be reduced to the rhetor managed to convince
the public that the act is not as bad as it seems.
•
Differentiation is used when the act performed are distinguished from other similar but less
desirable actions as, if people compare, the act may seems less offensive.
•
Transcendence is used by placing the act in another context.
•
Attacking one’s accuser is when the defendant accuses his accusers. If the source charge may be
reduced, the repercussions on the image may be reduced notably.
•
Compensation is used to minimize the offensiveness of an action. The person offers to
remunerate the victim to help compensate negative feeling resulting from an unlawful act.
None of these six subcategories denies that the actor make the wrongness of the act or try to
reduce the actor’s responsibility for that act. Any attempt to diminish the negative feelings
towards the actor increasing public appreciation for the actor or decreasing their negative feelings
about the act (Benoit, 1995: 77)
•
Corrective Action This is a change carried out to remedy a weakness identified in a management
42 system. Usually corrective actions are implemented in answer to a complaint from a customer,"
for example. The accused person wishes to correct the problem. This can take two forms: the
restoration of the status of the state of affairs before the action and make changes to avoid
undesirable repetition of the act (Benoit, 1995: 79) .
Benoit & Lindsey (1987) said that companies can take corrective action without admitting guilt,
like Tylenol made by inserting appropriate inviolable bottles after poisoning of the Tylenol pills
(Benoit, 1995: 79).
Mortification can be defined as “a feeling of shame, humiliation, or wounded pride.”14. As Burke
(1970, 1973) acknowledges, the accused person may accept responsibility for the illegal act and
seek forgiveness, engaging in mortification. If people think that the excuses are real, they can
choose to forgive the act illegal. Schonbach (1980) also talked about concessions, in which one
person could express remorse and admit guilt (Benoit, 1995: 79).
IRT research shows that the main recommendation is that accepting responsibility in public is the
preferred answer to a crisis event (Brinson & Benoit, 1999; Tyler, 1997).
3.1.3.3 – Situational Crisis Communication Theory (SCCT) by Coombs
Situational crisis communication theory (SCCT) “(…) seeks to establish the level of threat posed
by a crisis and selects crisis response strategies that should provide the maximal reputation
defense for that threat level. Crisis responsibility is the primary threat to the organization’s
reputation(…)SCCT seeks to match the crisis response strategy to the situation. SCCT arrays
crisis response strategy according to the level of accommodation. Accommodation is a function
of focus on the victim and the amount of responsibility the crisis response strategy seems to
14
www.freedictionary.com/avoid - Acceseed the 18th of Dec
43 accept for the crisis“(Coombs, Holladay, 2010: 248-249)15
3.1.3.4 – Key elements after recall
Post recall events consist of drawing up a resolution plan and an approach on how to introduce
the product on the market again (Smith et al., 2000; 80). For further development of the product,
the team needs to conduct a study on the faults of the product, analyse and implement changes for
the further development for reintroduction of the product to the market. Communication activity
after the recall is of high importance as well. As it is likely that after a recall the reputation and
brand can be heavily affected. Therefore it is essential for the company to restore and strengthen
the reputation of the brand but also of the product. The authors Smith et al. (1999) recommend
companies to the following two actions: 1) “(…) organization should inform and reassure their
customers and other stakeholders(…)” (Smith et al., 2000; 80). For the sake of the organization,
each stakeholder should to receive an appropriate and customized note with what caused the
recall process. The organization also needs to think of the various ways it wishes to use to reach
the customers and stakeholders; 2) “(…)organization should seize opportunities to tell success
stories(…)”(Smith et al., 2000; 80). One may think of special advertising where the marketing
department and the public affairs department join forces. Smith et al. (2000) use an example of
how the car manufacturer Saturn handles post recalls events. Saturn had to recall car as they
discovered a fault in the car’s front seat recliner mechanisms. After the recall their new campaign
advertisement illustrated a representative from Saturn carrying a replacement car seat on a plane
heading towards Alaska indicated broad customer service and the success of their customer
service during the recall. From the logistics and information systems perspective, after a recall
the organization ought to analyse the overall recall to get a better insight in the distribution and
logistics. An audit of this process can be a lesson learned for any possible future recall processes.
Post crisis – image restoration via media
15
See Appendix table 3 and 4
44 The media is an important tool when there is a need to restore a company’s reputation after a
crisis. If a company make active use of media from the beginning of a crisis and provide it with
the right message, it will work for the company through a crisis. Image is central for
organizations, and is very vulnerable when it comes to a crisis event connected with the
company’s reputation (Benoit, 1997: 177).
Even if a company is not to blame for the crises, the public can still perceive it to be so. Benoit
(1997) argues that perceptions are more essential than reality, meaning that the company may still
have to act with caution despite its innocence (Benoit, 1997: 178). In order to avoid such
confusions among the public, accurate information should be provided to the media with an
organization as the main source. Lastly an organization should also take into account that the
media can also cause noise in transmission of the communication, which could prevent the public
from receiving accurate information.
4 – The Combined Systemic Approach and Process Approach
4.1 – A Cross Disciplinary approach
Before we dive into our theoretical suggestions for contributing to the understanding of crisis, we
will first quickly highlight some criticism that has been expressed by Forgue and Roux-Dufort
(1998) regarding the combination of the systemic approach and the process approach, as this
particular combination lays the ground for the following theoretical chapter. Forgues and RouxDufort (1998) have two points of criticism towards the association with the systemic and the
process approach. Firstly they argue that the systemic approach does not necessarily fit with the
process approach. Secondly, despite the contributions by Perrov (1984 in Forgues & RouxDufort, 1998: 104). as well as Shrivastava & Mitroff (1987), not much research reflects the
process approach through a systemic view upon crisis (Forgues & Roux-Dufort, 1998: 105). We
argue that the cross disciplinary approach that will be introduced in the following section
concerning crisis context theory, organizational culture and psychodynamic perspectives on crisis
and crisis management, is one way to theoretically combine the process and systemic approach
45 that prevails the criticism of Forgues & Roux-Dufort (1998). As will be elaborated in each of the
three fields' own professional language, all three theories are rooted in a systemic process based
approach that understands crisis as an accumulative process that can be learned from and possibly
controlled if not avoided in the first place. The inclusion of social, societal and psychological
approaches in a combined systemic and process-oriented approach to crisis management is not
entirely new since this path has already been carved by Shrivastava & Mitroff (1987). However,
Shrivastava and Mitroff (1987) define crisis as "(…) events that threaten their most important
goals of survival and profitability. Crises are triggered by specific low probability events that
have high impact on a variety of stakeholders (…)" (Shrivastava & Mitroff, 1987: 6). One could
argue that these are definitional characteristics that belong to an events based view and not a
process based view defining crisis as something more sudden and unexpected than part of a
natural evolution that takes place within a longer process and a larger system. In this aspect
Forgues and Roux-Dufort's (1998) criticism prevails since the statement from two of the
spokesmen for the systemic approach contradicts a harmonious relation with the process based
approach.
As mentioned earlier in the crisis definition chapter, Forgues and Roux-Dufort (1998) state that
most scholars who argue for the process approach are calling for a better understanding of the
systemic approach to crisis management as it can "(…)reveal hidden systemic patterns by
crystallizing different spheres that go beyond the frontiers of organizations" (Forgues & RouxDufort, 1998: 105).
The field's call for an understanding of systemic management therefore still appears to be
relevant. We will attempt to embark on this task through a theoretical combination with the
process approach by firstly devoting our attention to context theory, exploring how this might be
beneficial to pay attention to when dealing with crisis management.
46 4.2 – Context Theory
When dealing with a crisis situation, the surroundings around it is very important, as it provides
better overview about the circumstantial factors that can prove useful in order to solve a crisis.
The context could be everything, from environmental disaster to the new shop that opened next to
an organization. When a crisis happens, there is also something happening around it. In the
following, we will elaborate on which role the overall context of a crisis plays in relation to crisis
management.
When a crisis occurs, some companies are limiting their thinking in their crisis solving actions,
due to the reason that they concentrate only on how to avoid a crisis promptly, but cannot see the
full picture around it. It is important to remember that there are many other actions that can
increase or decrease individuals’ reaction to a crisis. Placing the problem in a larger context
increases companies’ abilities to observe the overall picture and matters for the company and its
stakeholders.
Rick A. Myer and Holly B. Moore (2006) are the authors to the crisis in context theory (CCT)
that theory tries to look into matters relevant to understand the possible influence of a crisis'
surrounding circumstances. In order to gain control of a crisis, the intervention should be
comprehensive and with good background knowledge. Extensive research is needed in order to
take appropriate action. According to the Myer & Moore the model is based on an ecological
awareness, stating that crisis cannot be created in a vacuum, but rather that it is formed by
cultural and social contexts. It is therefore to be considered as an advantage to understand the
context of the crisis and use it as a tool to improve crisis management (Myer & Moore, 2006).
47 (Myer & Moore, 2006: 184)
(Myer & Moore, 2006) illustrates the CCT model. This model could be used for and individual
person in a crisis as well as on an organization (system-1). Each element represents an individual
or a group affected by the crisis event. Individual or system-1 (organization) are those who are
strongly connected with the crisis. The community could be everything from the world to a small
local community in a specific place. System-2 represents closest people to the individual (family)
and stakeholders-A are represented by other connections like co-workers, friends, organizations
etc. From the other side of the figure, subsystems are groups within system-1, while stakeholders
are a group outside system-1 like customers, suppliers. There are three constituent parts of CCT
that make the model complete layer of a crisis, reciprocal effect and time factor.
The first constituent part revolving about layer of a crisis describes (the solid lines in Myer &
Moore's model) that everybody suffers differently from the crisis; depending on how close they
are connected with it. Previous experience influences the differences in people's response to
crisis. Some responses to the crisis could add additional meaning to it.
48 In order to control crises effectively, there is a need to pay attention to how different subsystems
become affected by the crisis within the organization. Stakeholders should also be considered in
relation to this. There could be several layers that can impact crisis. Failing to study all layers
could lead to a lack of information, or missing some of the important nuances of the crisis.
The second constituent (the dashed lines in Myer & Moore's model) explains that a reciprocal
effect happens among individuals and systems when they are damaged by a crisis. In other words
it could be described as the whole world is connected and affected by everything, meaning that
one incident will have an effect on the entire web of interconnections. The interaction between
the parts is very important in order to reduce the impact of crisis while cold interactions can the
entire situation.
Time factor is the third and last mentioned constituent part. It is an important part of this model,
because it is relevant to understand or find out how much time individuals or system needs to
recover from a crisis. Some events could last longer than another, depending on how deeply they
affected life and the ability to function. The longer time from the crisis' initial outbreak, the less it
will influence them and more recovered they are. In times of crisis, an organization will face a
problem with the decision-making process, shift of roles and loss of moral, leading to chaotic
actions. The CCT model considers that if the crisis happened on important days such as holidays
or anniversaries, there is an opportunity that people will re-experience the crisis (the holidays will
repeat year after year, reminding people what happened more on this day), understand if it gave
them positive outcome or negative. Depending on the outcome, respond to the event could be
different.
The CCT comes up with a conclusion that research should be made in times of crisis. This will
give better overview of the situation, finding out the weak points and using the information in the
right direction. One of the helpful tools for the research of real time situation is media that
49 provides people with information about how crisis impacted the individuals and systems (Myer &
Moore, 2006). The CCT is useful as for organizations so as for individual person. If crisis has
affected a person, then the left side of the model should be chosen, if an organization than right
side should be chosen.
In order to understand how people or organizations will react in crisis situation, analyses of
cultural behaviour will be relevant so that could be seen what to expect and how people will react
due to their cultural issues, they should not be neglected. It will create a different context as well
on the event and interfere with possible complications or vice versa. If there is an opportunity to
collect all this information before creating chaotic decisions, it will be an advantage for solving
the problem.
In the globalized area, companies are working on the international levels facing different cultural
traditions and ways of thinking. The problem solving process varies also depending on their
cultural morals. Geert Hofstede16 conducted most inclusive study on how culture can influence
the values in the organization. He has identified five cultural dimensions:
1. Power distance – all societies are unequal, but some of them are more than others. Power
distance shows how some society is more dependent on their superiors and cannot disagree with
them (high PD) while other society depend less on their superiors and do not need to refer to
them all the time (low PD).
2. Individualism versus collectivism (I vs. WE) – Individualism refers to the society where people
relations are weak; everybody is expected to look after himself\family. Collectivism is more
about people belonging to one group, being represented as a group.
3. Uncertainty avoidance – looks into how the society will manage the future threat possibilities
and how comfortable they will feel in the risky situation. Those with high UA will try to be
structured, conscious of what can happen.
16
http://geert-hofstede.com/dimensions.html
50 4. Masculinity versus femininity – allocation of responsibilities in the society between men and
women. Some societies tend to be masculine, being more competitive, strong, while feminine are
more concerned about helping each other
5. Long term perspectives versus short term – some groups of people are more future oriented
while others are concentrated on what is happening at the moment.
4.3 – Organizational Culture
As mentioned in the chapter Combined Events and Process Approach, some organization builds
their crisis management on the presence of a crisis management plan. Many opinions have been
given about the essence of a Crisis Management Plan (CMP), opinions supported by example and
theories. These are for example academic books and articles Coombs (2007), Fearn-Banks
(1996), Mitroff (1992). They rely on the theory that having a CMP is a necessity to have prepared
at organizations in order to be prepared at any time for a crisis situations. Though R. Heath
(2002) author of “Crisis Management for managers and executives” indicated that for good
management of crisis situations, a prefixed crisis management plan is not a necessity. But that it
all depends on the company culture. Furthermore Marra (1998) wrote about poor performance by
organizations with a crisis management plan. But to substantiate this theory, we will to firstly
elaborate on the definition of organizational culture, its influences and its use to before
proceeding to an explanation on why organizations do not need a plan to successfully overcome a
crisis, but that just simply organizational culture could be the problem solver.
Organizational culture is defined
by Schneider (1987); Trice and
Beyer (1993) as “(…) a collective
phenomenon
members’
emerging
beliefs
and
from
social
interactions” (Giberson et al.,
(Quinn & Kimberly, 1984)
51 2009: 124). In the same passages Giberson et al. (2009: 124) refer to Rousseau (1990) in which
he describes organizational culture as shared values among a group of people, with mutual
understandings, beliefs and behavioural expectations. Culture then functions as a system on how
the organization generally speaking performs, reflected by the values which employees share
among each other. The values shared in an organization therefore reflects an understanding of its
culture.
Understanding of cultural values is elaborated by the Competing Values Framework (figure 1), a
framework by Quinn and Kimberly (1984) assessing an organization by its focus (internal and
external dimensions) and an organizations preferred structures (flexibility/change and
stability/control), but further elaborated by Quinn and Cameron (1999) in which the two postulate
four types of organizational cultures: Clan culture being flexible structured and internally
focused; Adhocracy culture being flexible structures but externally focused; Hierarchy culture
being internally focused and control structured; and Market culture being control structured but
externally focused. The Competing Values Framework refers to how a culture is shaped and
refers to the influential role of focus and structure. The organizational culture is a reflection on
what a company stands for, what message the management passes on to their employees and how
it is picked up and adapted by the employees, it reflects behavioural patterns as in what is
normative actionable behaviour within the overall organization.
Organizational culture identifies how an organization performs and is unique for each
organization. Giberson et al. (2009) describe in their article, organizational culture is closely
related to the leader and his leadership style. The article by the above-mentioned authors puts a
link between the leader and the organizational culture. Bennis and Nanus (1985), Schein (2004)
are examples of authors who have indicated: “(…) upper echelon leaders are believed to be the
primary influence on the creation and development of organizational culture”. The Competing
Values Framework indicates what kind of leadership characteristics (traits) each of the four
52 organizational cultures ought to possess. Traits are characteristics individuals possess and are
unique for each. Traits cannot be learned but are characteristics inherited, which come natural.
Traits mirror personal characteristics of leaders and are different from person to person.
Therefore how a leader practices his/her traits are unique for each individual, and set a unique
trademark on his/her leadership style. The article by Giberson et al. (2009) cross references to
statements by for example Schein (2004) that organizational culture is a reflection of how a
leader establishes, maintains and changes the content of organizational culture, indicating that the
leader is a leading example to his/her employees. The characteristics presented in a certain
pattern, are allied to the Big Five taxonomy personality traits (Mount & Barrick, 1995) naming
agreeableness, conscientiousness, extraversion, emotional stability or neuroticism, and openness
to experience. These classified trait patterns outline specifically related characteristics to the
traits. The article by Giberson et al. (2009) bring forward that the way a leader interacts with
his/her employees, grounds a fundament for employees’ behaviour to be acceptable and in line
with their leader. Leading to an effect started by the leaders’ characteristics and adapted by the
employees and passing on into the organizational culture that has become or will become a norm
and habit to the understanding of all employees in the organization. Studies have been conducted
to link the relationship between organizational culture and effectiveness. It is based on a paper
written by Denison (1995) – Professor in Organization and Management in Switzerland & Mishra
(1995) – coach, consultant Professor in leadership development.
Closely linked to organizational culture is organizational structure. Organizational structure
regards roles within the organization, coordination and information flows between employees on
equal levels and on different levels. Traditionally it is the top management to which employees
(supporting staff) report information to and it is the top management who is in charge of the
decision-making processes. The organizational culture sets the ground for the structure within the
organization. The article by E. Schrauben (2011) highlights the influence of organizational
structure and effectiveness of crisis communication. Schrauben (2011) explains that the lack
53 structure in organizations will cause failure in effectiveness and links the importance of these two
aspects. Schrauben (2011) furthermore theorize that a tight organizational structure with a high
hierarchy within the organization, communication within the organization shifts through many
levels, often too many hierarchical levels are involved in the communication process, where
information may get lost and decisions made by the upper management of the decision making
team may not have all first hand and essential information for the decision making process. While
Schrauben (2011) describes the situation from a negative perspective, we can also see how the
case would be if all would be put in a positive perspective and where there is a well-functioning
organizational structure. It can be concluded that if the organizational culture is set that
employees can be open with a low hierarchy, the information flow will go with less
complications, unlike to a cultures with high density, effectiveness will increase. The overall
difference is then especially visible in moments of crises, whereas an organization is relying on
its internal forces and strengths. Essentially in crisis situations an organization needs to be able to
access all information, in order to get a good overview of the crisis and to make effective and
efficient decisions to solve the crisis. Having a well-structured organization allows effectiveness
to come as a natural process, a process where not much effort needed accomodate, as it is
normative behaviour within the organizational culture.
In the article Organizational Culture: Can It Be a Source of Sustained Competitive Barney
(1986) writes about how to gain competitive advantage in running your business with a good
basis of an organizational culture. Barney (1986) argues that an organizational culture has 3
characteristics that result in sustained performance superiority (Barney, 1986: 658).
These are
Values – organizations act and behave in ways to achieve high sales, low costs and high margins;
Rare Culture - unique in its attributes and characteristics, not common to the culture and/or the
organization
54 imperfectly imitable – an organization needs to engage with the culture to perform the same
activities (Barney, 1986: 658). Having these characteristic aims to make performances unique
and inseparable from the culture. As Barney (1986) states, sustained superiority in performance
comes with three characteristics and that culture sets the grounds to get the sustained superiority
in performance. When an organization finds itself in a crisis situation, the balance within the
organization is disturbed as for the sustained superiority in performance. Barney (1986) links
performance with culture, so when performance is not at its peak it the organization should turn
its attention towards the culture to enhance the performance.
4.4 – A psychodynamic perspective on organizational crisis management.
The following chapter elaborates on the potential of approaching organizations from a
psychodynamic perspective when trying to understand the rationality behind the actions taken by
organizations during a crisis. This particular approach is based on the hypothesis that it is just as
possible for organizations as for individuals to suffer from psychological illnesses (Cohen &
Cohen, 2003 in Kersten, 2005: 546). The arguments for this hypothesis will be provided in the
following section, however it is worth noting already that by psychodynamic, we are in this paper
referring to all of the conscious, unconscious and emotional processes that has an influence on
the behaviour and attitudes developed by an organization as a whole, including its workers,
managers etc.17 However, as mentioned in the limitations the application of this theory is limited
to the knowledge we have acquired about our case study from newspapers, academic articles and
books - and thereby not our own first hand observations.
Astrid Kersten (2005) Professor of Management at La Roche College in Pittsburg, explains that
relational and cultural approaches to crisis management believe that organisational crisis is not
always to be considered random, but has to be understood as something deeply rooted into the
organizations culture, structure and its operational management (Kersten, 2005: 544). The
17 http://www.thefreedictionary.com/psychodynamic -­‐ Accessed the 13th of Novemeber 2012 55 rationality behind the actions of individuals working within organisations are therefore to be
considered as social construction, or as Kersten (2005) phrases it herself "(…)what appears to us
as rational and real is determined by the organisational culture we exist within and the economic
and political reality that constructs that culture." (Kersten, 2005: 545). Kersten (2005) argues
that many organisations suffer from systemic dysfunctions, meaning their organisational culture,
structure and operational procedures are seriously impeded during a crisis situation (Kersten,
2005: 545). The systemic dysfunctions that Kersten (2005) is referring to are however only
visible when approaching organizations from a psychodynamic perspective, as they apply
psychoanalysis to the behavioural patterns of the workers, managers and culture of the
organization. Kersten (2005) is however not the only one who believes that many organizational
crises have not appeared randomly, but from systemic dysfunctions. Tarja Ketola (2006),
Professor in Environmental Management at Turku School of Economics in Finland, argues that
psychological defence mechanisms causes people in organisations to stick to the organizations
ritualistic behaviour and routines as an initial reaction to an organizational crisis (Ketola, 2006:
150). This argument implies that the organizational culture also has an influence on how the
people would potentially react in a crisis situation. Scholars such as Andrew D. Brown (2000)
Professor in Organisational Behaviour and Ken Starkey (2000) professor in Management and
Organisational Learning (2000) refer to this as organizational identity through a description
acquired from Gioia & Thomas's (1996) definition of organizational identity:
"(…)organizational identity concerns those features of the organization that members perceive as
ostensibly central, enduring, and distinctive in character that contribute to how they define the
organization and their identification with it(...)"
(Gioia & Thomas, 1996 in Brown & Starkey 2000: 104).
What the above means, is that a certain reciprocal interdependence exist between the
psychological processes of individuals and the organizations in which they work in (Turner, 1987
56 in Brown & Starkey, 2000: 104). Individuals working within an organisation therefore reinforce
the organizational culture that they are attempting to adopt too, the same culture that Ketola
argues to be the essence of the both conscious and subconscious regression that individuals
initially return to within the company that is undergoing an organisational crisis (Ketola, 2006:
150). Knowing that there is a psychological reciprocal relationship between the individuals
within an organization and the organization itself, it becomes understandable that if the
organizations culture, structure, management or identity is dysfunctional, it will have a
reinforcing influence on the people working within it, unless it is dealt with.
4.5 – Organizational Dysfunctions
Approaching organizations from a psychodynamic perspective, allows us to differentiate between
psychologically healthy and unhealthy organizations, and use the filter of psychoanalysis on the
dysfunctional organizations (Kersten, 2005: 546). At this point it is important for us to remember
that the label of a dysfunctional organization is based on an organizations everyday behaviour,
and that this behaviour is argued to have an influence on the handling of a crisis situation. The
psychodynamic perspective therefore provides an extended insight for how organizations could
end up in a crisis in the first place.
There are various ways that organizations can be unhealthy or psychodynamically dysfunctional,
and each illness can have its own particular influence on the development of a crisis, as well as
the management of a crisis management of an organization. Through the work of Cohen & Cohen
(2003), Kersten (2005) explains that "Psychosis occurs when organizations lose contact with
reality(…)and begin to ignore any information that contradicts their particular view of the
world" (Kersten, 2005: 546). Examples of psychotic behaviour could be paranoid and manicdepressive. Paranoid organizations constantly monitor and evaluate their employees for signs of
disloyalty, attacking and confronting any actual or imagined enemy of the organization (Kersten,
2005: 546). Manic organizations are convinced by their own ideological and moral truth and are
57 quick to lock themselves on this path regardless of the material, ethical or psychological
consequences (Kersten, 2005: 546). As for the organizational neurotic tendencies, Kersten
furthermore describes how Cohen and Cohen's model include neurotic patterns such as obsessivecompulsive disorder (OCD), intoxication, lack of self-esteem and in general neurotic behaviour
that "(…)is caused less by an environmental disconnect and more by internal self-doubt and
avoidance" (Kersten, 2005: 546). Organizational OCD shows itself through an obsession with
regulations, rules and a clinging to standard procedures, rather than allowing an assessment of the
individual case or scenario. Intoxication comes to form through denial, similar to an addicted
individual "(…)intoxicated organizations deny the existence of any problems and refuse to
consider alternative perspectives or information until the crisis hits" (Kersten, 2005: 546).
It is not difficult to imagine how paranoid and OCD organizations could foster a culture where
people are afraid to act and work outside standards and regulations, a behaviour that is not always
optimal during a crisis. Similarly the one sided approach developed by manic and intoxicated
organizations could also seriously harm their image if proven wrong. As we saw with the case of
Coca cola, the organization were steadfast in their knowledge about the contamination of the coca
cola cans, but did not recognize the mass sociogenic illness developing in the public. As argued
by Benoit (1997) in his image repair theory, perception are far more important than reality, so
whether the organization is actually guilty or not is not of importance "As long as the audience
thinks the firm is at fault the image is at risk." (Benoit, 1997: 178).
Another dysfunction is the one of co-dependency;
"(…)a term used to describe the psychological and behavioural pathologies people develop to
cope with addicted others(…)expressed through low self-esteem, excessive need for perfection
and conformity, addiction to work and problematic relations to authority figures" (Kersten, 2005:
547).
58 With the above characteristics, it is also visible how such dysfunction could potentially reinforce
an action prohibiting work culture that does not give the necessary autonomy for ground level
workers to have trust in their own skills and doing their job without managerial intervention or
clearance. Some scholars even argue that an organizations dysfunction stem from the neurosis of
its top executive, which then spread out to the organization structure and its culture as well
(Kersten, 2005: 547). However, co-dependency can of course also be considered a way to
safeguard the quality of work and information given from the company, however in a crisis
scenario, time is often of the essence, and first responders to a crisis scenario would often be the
ground and midlevel workers who have direct contact to customers and other stakeholders. As
with the case of coca cola, their international central management was at the time positioned in
America with no locally administrative office in Belgium, so communication had to go through
offices that had little, if any, information about the recent political focus on health crisis
combined with upcoming elections.
4.6 – The Learning Organization
Even though psychologists so far have been able to identify 48 ego defence mechanisms, Brown
and Starkey (2000) argue that the root of organizational dysfunctions such as denial,
rationalization, intoxication and paranoia
stem from the organizational-self's defence
mechanisms triggered by either excessively high self-esteem or extremely low self-esteem
(Brown & Starkey, 2000: 105).
"(…)overprotection of self-esteem from powerful ego defenses reduces an organization's ability
and desire to search for, interpret, evaluate and deploy information in ways that influence its
dominant routines(…)inadequate protection of collective self-esteem will expose the organization
to fears and anxieties that militate against self-confident action and, hence, organizational
learning" (Brown & Starkey, 2000: 105).
Brown & Starkey (2000) explain that a certain level of ego defence mechanisms should be
59 considered as normal for individuals and organizations as it forms part of a healthy psyche
allowing it to reduce doubt and uncertainty and increase self-confidence in order to comprehend
and perform complex phenomena and tasks (Brown & Starkey, 2000: 104). However, as evident
through the above quote's argument, any extreme of high- or low self-esteem, could lay the
foundation for potential organizational dysfunctions that we now know can have an influence on
the handling of a crisis situation. So how might organizations be able to overcome such
dysfunctions?
Despite an organization's willingness to commit to a change of structure, culture and leadership,
effective change takes time, meaning that "Most change efforts do not immediately succeed in
eliminating institutionalized behaviours let alone much of the sedimented neurosis that has come
to characterize every element of the culture" (Kersten, 2005: 548).
However, Brown & Starkey (2000) argue that the most fundamental change process is to develop
an integrative way that organizations can deal with the anxiety that its ego defence mechanisms
shields it from (Brown & Starkey, 2000: 108). They suggest that the shape of a learning
organization can provide a possible solution for an organization with dysfunctional symptoms.
The learning organization accepts that its identity formation continues to change and develop
over time, reflecting its members evolving self-concepts (Brown, & Starkey, 2000: 109).
Brown & Starkey (2000) present 3 points that we believe could prove to be useful for crisis
manager to take note off, when wishing to pursue the path and shape of a learning organization
(Brown & Starkey, 2000: 108-114).
Critical self-reflexivity and the Evolution of identity Through Time
The point of critical self-reflexivity is to nurture the alternatives understandings of the
60 organizational self, in order to form scenarios of the future, with a clear line of reference to the
current state of the organization. Furthermore, it is crucial to understand that "(…)premature
closure of identity exploration processes, or too tight a closure around an over-defined identity,
is inimical to the multiple and alternative meanings that make organization development
possible(…)" (Brown & Starkey, 2000: 110).
The promotion of dialogue about future identity as an integral feature of strategic
management
The essence of this point is that the organization and its employee's need to build in a structure
that allows a continuous dialogue about future identities. The strategic management of the
organization needs to involve reflexive and on-going analysis of the organizations foundational
services, following up on the evolving concept of the organizational-self. The existing ways of
thinking are not considered as optimal basis for the learning organizations approach to the future.
Managers are therefore "(…)urged to relax their conventional modes of thinking and learn by
setting aside their existing frames of reference(…)" (Brown & Starkey, 2000: 112).
The attainment of an attitude of wisdom
This last point, suggest that organisational managers should obtain a broad understanding of the
organizations psychodynamic health, and have a willingness to question and explore egothreatening matters (Brown & Starkey, 2000: 113). The wisdom is displayed by the abandonment
of narcissistic insistence on omnipotence and acceptance of limitations. Furthermore the wisdom
also refers to an understanding of the temporal aspect and the necessary long-term commitments
needed for an organization to adjust its identity towards the path of the learning organization
(Brown & Starkey, 2000: 113).
The psychodynamic perspective does however not highlight all possible causations to
organizational crisis, nor are all defence mechanisms necessarily inhibiting, as it all depends on
61 the degree and extent to which they are taken.
However, if a crisis plan requires to be executed with a structure, culture, identity or lack of
managerial supervision that does not harmonies with the organisational identity and the
organizations potential inherent dysfunctions, there could be reasons to believe that the
organization would fail to manage it successfully. A psychodynamic approach could therefore
provide a broader understanding for why a crisis plan, despite its existence, is not to be
considered a necessary insurance for overcoming a crisis successfully.
5 – Case Description
5.1 – Coca Cola Company Crisis in 1999
In June 1999, the beverage production company Coca Cola faced product slump due to the reason
of health complains connected with their soft drinks. It initially started in Belgium and later on
spread to the Northern France, Netherlands and Luxemborg (Johnson & Peppas, 2003: 18). First
complains were from pupils from a school in Bornem, (school children) and adults who felt sick.
The symptom common with all these children was that they were all sick after drinking Coca
Cola from bottles. Some of them went to the hospital because they felt dizzy, had headaches and
nausea and were trembling (Johnson & Peppas, 2003: 18). Nevertheless, clinical examinations
showed that there was nothing wrong. In the evening news of a Flemmish TV channel VTM it
was reported that cans of Coca Cola to have caused the school children (Regester & Larkin,
2008: 160). However, it was the bottled products that were problems with and not the cans.
After some times, The Coca Cola Company decided to recall bottled products with same batch
number from all shops, automatic dispensers and other places where they could be purchase or
used, so all the production of Coca-Cola before the crisis happened were recalled and destroyed.
During this same period there had been a lot of focus on local food-health crises, in Belgium.
This crisis was still fresh in the minds of the Belgians and the crisis of Coca Cola had created a
sort of panic in the population. During the investigation period, the company withdrew itself from
62 for media, trying to find out what went wrong. Due to the intense public focus on food-health, as
well as upcoming elections the government pushed for actions and information from The Coca
Cola Company about what had gone wrong (Johnson & Peppas, 2003: 18). However The Coca
Cola Company did not want to inform that they still had no lead on the investigation and
therefore did not know what was wrong at the time. The fact that there were a crisis in Belgium
and that The Coca Cola Company did not respond to media immediately after the event had
aggravated the crisis. People began to doubt about them and the media played a negative role in
writing articles not very positive towards society.
During the entire process, decisions were made by people from the head office of Coca Cola in
Atlanta, Georgia USA and not those who were in charge of the local office in Belgium and knew
situation on the market better. Due to actual response from Coca Cola Company, government of
Belgium decided to ban all Coca Cola products, and the sale of all their products were not
allowed, in order to get trust from its citizens.
Map of Belgium showing the location of the schools where the outbreak took place (with date of outbreak and number of children
involved), and the site of the bottling plans. Antwerp which served Bornem and Dunkerque, France which served the other
locations (B. Nemerya, 2002, s. 1659).
The map of Belgium shows the location of the schools where the outbreak took place (with date
63 of outbreak and number of children involved), and the site of the bottling plans. Antwerp which
served Bornem and Dunkerque, France which served the other locations (B. Nemerya, 2002:
1659).
After a period of time, The Coca Cola Company was permitted to sell again their products. In
order to win back their reputation, the Chairman of the company, Mr. Douglas Ivester, wrote
apologies in the newspaper, as well as to all Belgian families involved who got a free bottle of
Coca Cola. One of the explanations of the public reactions to the Coca Cola crisis was that people
suffered from mass sociogenic illness (MSI). This created panic among the people who were
drinking Coca Cola cans and caused them to think that they were ill.
To restore their image, a voucher for a free bottle of Coca Cola was given for all the Belgium
families. But the damage had already been done.
5.2 – Johnson & Johnson’s Tylenol crisis in 1982
Johnson & Johnson is an American multinational providing pharmaceutical, medical and
consumer supply products. The three brothers Robert Wood Johnson, James Wood Johnson and
Edward Mead Johnson founded the company in 1886. Robert Wood Johnson was also the person
who formulated Johnson & Johnson’s Credo, which set grounds for their organizational culture.
The organization has more than 250 stores operating in over 60 countries. In total the corporation
has over 129,000 employees employed worldwide. Examples of Johnson & Johnson’s worldwide
known brands are Johnson’s and Natusan – baby care products, Listerine – oral health care
products, Splenda – Nutritionals, O.B. – women’s health
products, Tylenol – over-the-counter medicines products.
With the last mentioned product, Tylenol, Johnson &
Johnson experienced a crisis situation in 1982.
64 Tylenol is Johnson & Johnson’s leading over-the-counter painkiller. In 1982, Tylenol
encountered a crisis in the United States of America. Seven people living in the surroundings of
Chicago were reported dead after taking Extra-Strength Tylenol capsules. It was discovered that a
numerous amount of bottles of Extra-Strength Tylenol capsules were contaminated with a poison
called cyanide. Results of the investigation showed that 1 capsule contained 65 mg of cyanide,
which is 10.000 times more than needed to cause death. Up until today the suspect of the
tampering is yet unknown18.
People’s safety was Johnson & Johnsons first and main concern. Therefore they did not wait with
the recall, it happened immediately in the shops in Chicago area. Doctors, hospitals were warned,
but also households were made aware of the crisis and that any capsule of Extra-Strength Tylenol
should not be used anymore. Having the company’s credo in mind, it suited the team and their
organizational culture that they wanted to make a public occurring. Warnings were sent to
doctors, hospital, shops and distributors. Johnson & Johnson believed that being open to the
media and recalling the products were the main points for them being successful in the crisis
management (Fearn-Banks, 2001: 86-94). The recall primarily occurred in the area of Chicago,
later a nationwide recall was called into force and Johnson & Johnson 31 million bottles19 of
Tylenol were called back resulting in a los over $100 million. The recall was coupled with an
immediate stop on media advertisement on Tylenol.
At the time of the crisis McNeil was Johnson & Johnson’s manufacturing plant where the
capsules of Tylenol were produced. In the beginning Johnson & Johnson, was blamed of the
incidents, whereas people were assuming the tampering happened at the manufacturing plant,
McNeil. Also cyanide had been found at the premises, but the organization claimed to have used
it for its cleaning process. After investigations, it became clear that Johnson & Johnson was not
18
http://www.fda.gov/AboutFDA/WhatWeDo/History/ProductRegulation/PromotingSafeandEffectiveDrugsfor100Years/default.htm -Accessed
the 18th of Dec 2012.
19
http://www.nytimes.com/2002/03/23/your-money/23iht-mjj_ed3_.html- Accessed the 18th of Dec 2012.
65 involved in the tampering, as it appeared that cyanide was placed in the Tylenol bottles while it
had already left the manufacturing plant. Furthermore it was discovered that the cyanide found at
McNeil did not miss any stock20. The investigation also showed that from 8 million tested
capsules from 1 batch, merely 75 capsules were contaminated with cyanide (Regester & Larkin,
2008: 158-159).
Significant to Johnson & Johnson’s actions on handling the crisis, was how open and cooperative
they were with media and public during the entire period of the crisis. People were kept informed
during the whole process of the crisis. Johnson & Johnson's crisis team was working from its
credo, where the safety of people came first. Johnson & Johnson kept communication with and
through the media and “(…)the messages they delivered were candid, contrite, compassionate,
and committed to solving the murders and protect the public(…)” (Knight, 1982: 1 in FearnBanks, 2011).
Johnson & Johnson was not afraid of the overall profit because their product variety was large,
but they wanted to restore Tylenol name. Prior to the re-launch Johnson & Johnson wanted to
take cautious actions in order to try preventing a similar crisis from happening again. After the
Tylenol crisis a law was passed, enforcing producers of medicine to ensure a seal break on their
product containers to prevent a similar situation.21 Johnson & Johnson was the first to present a
new safety packaging precautions on the market. Once the product was safe, sales and marketing
of Tylenol picked up where they had left. While the crisis occurred in late September, by
December Tylenol was back on the market and ready to take over the market again.
6 – Case Analysis
We have come to the part where we will analyse our two chosen cases of The Coca Cola
Company and Johnson & Johnson. In the previous chapters, we have elaborated and discussed
20
http://www.ci.uri.edu/ciip/CIIPLeadership/Docs/Tylenol%20Case.pdf -Accessed the 18th of Dec 2012. 21
http://www.nytimes.com/2002/03/23/your-money/23iht-mjj_ed3_.html - Accessed the 18th of Dec 2012.
66 analytical tools to be used and factors to take into account when an organization finds itself in a
crisis situation.
6.1 – The crises and Crisis Containment
When a crisis occurs, it is very important for an organization to understand its presence in a crisis
situation in order to undertake proper actions for solving it. Sometimes organizations
underestimate the crisis situation they find themselves in. In order to begin solving a crisis,
proper actions should be made, where communication with stakeholders is a serious part at this
stage and crisis communication should be quick, consistent and open (Coombs, 2007:128).
In the case of The Coca Cola Company, many mistakes were made. Right actions should be taken
from the start due to the reason that speed is very important during a crisis, as the crisis will move
on no matter what (Coombs, 2007:107). As there were health complaints deriving from
consumers, it was important to take immediate action. In this case, The Coca Cola Company
recalled products from the contaminated batch number. And then, there was a period of silence,
where everybody was waiting for some useful information from the company’s side. This created
uncertainty among stakeholders, because it was not clear how the company will manage this
crisis and what was the reason for such health problems connected with Coca Cola. At this point,
The Coca Cola Company could predict such ambiguity and could try to find the underlying
reason for the ambiguous situation in their organization. The Coca Cola Company closed their
communication with the stakeholders and media, as they were stressed about finding and
providing an answer to the Belgian Minister of Health, instead of directing stakeholders’ physical
and psychological responses. As Coombs (2007) and Lerbinger (2012) utter, it is always a good
approach for a crisis team to prepare the trustworthy information for the stakeholders but also try
to find out the reason for the crisis. The Coca Cola Company had better to provide messages to
stakeholders openly and consistently, including customers, employees and the news media about
how everything is proceeding and which difficulties they met. Besides it would not matter if the
finding were not favourable; the most important is that they have something to say and nothing to
67 hide. These actions will show stakeholders that the organization controls the crisis. For the
stakeholders it is highly important to feel safe and if there is something they need to do in order
to protect themselves from a crisis as well as to know what is to be done by an organization to
solve a crisis. Many scholars, such as Coombs (2007) and Regester & Larkin (1997) state that
silence during crisis communication may be interpreted as guilt, which transfers information to
stakeholders that The Coca Cola Company might had something to hide.
As Coombs (2007) states in his finding, when crisis was recognized the media plays an
influential role in transferring information from the organization to all involved stakeholders and
all the people affected by the crisis. Therefore in order to be in charge of the situation, people in
organizations should take quick respond to deal with the crisis. The message should be sent in the
specific terminology for this organization, which reflects a sense of awareness of the situation,
and gives the public confidence. If there will be no flow of information from the company, than
people internally and externally may start guessing randomly what happened, rumours can get the
chance to take a first scene; providing stakeholders with inadequate information. Regester &
Larkin (1997) state that ignoring the public when dealing with issues will escalate the crisis and
will always be a catastrophic mistake. Exactly this happened in the case of The Coca Cola
Company, where the organization did not want to pay attention on what is happening among the
public; a small crisis became a big one. Coombs (2007) advocates an open and honest response
conveys compassion and concern is the best possible approach. It was never too late to start to be
honest with the public, but The Coca Cola Company still could not undertake the right actions in
order to recover their position.
In order to be prepared for crisis escalation, the managers of The Coca Cola Company could see
the red flags, which were as a warning signals, and if the management could identify them, that
could reduce risk factors. In overall, the company could not handle the crisis situation, being
unprepared and slow in their response. Being close for the stakeholders and the media played a
68 crucial role for the company’s reputation. The crisis situation went out of their control, growing
bigger and more vital.
In spite of The Coca Cola Company case, the Johnson & Johnson case achieved sympathy among
stakeholders and the media due to their openness. Their communication with the stakeholders and
the media was supportive, people from inside and outside were kept informed during the whole
process of the investigation, which showed their trustworthy, credibility and sincere to the public.
They believed that the organization’s openness to the media, well-care of their stakeholders and a
willingness to recall the product regardless of the cost were the main points for them being
successful in handling the case of Tylenol.
The case of Tylenol had severe consequences when taking seven lives of consumers of their
painkiller. It was not clear if the mistake happened in the production plant. Johnson & Johnson
could not know when a malevolent person(s) has tainted Tylenol capsules with cyanide, but the
whole prosecution dropped on the company’s name. The company reacted very quickly on the
crisis situation, what should be done in the case of when the product is dangerous for the human
health. Johnson & Johnson was seen as the company that knew what they were doing; even
though their product took people lives, the public trusted them and could feel that Johnson &
Johnson controlled the situation.
Openness with the media helped Johnson & Johnson restore their reputation very fast and without
big spending on the media, meanwhile, The Coca Cola Company had to spend a lot of money on
the advertising campaigns and to get back the trust of the media. Johnson & Johnson’s honest
attitude made them high trustworthy, while The Coca Cola Company’s silence and simulate
attitude caused stakeholders rage.
69 6.2 – Understanding the context
6.2.1 – The Coca Cola Company
The Coca Cola case was inconvenient for the company. Belgium and France were the main areas
where people claimed to have the same symptoms from drinking Coca Cola. Yet Belgium had
suffered most from mass socio-genic illness (MSI) or also known as ‘mass hysteria’. There were
preconditions such as food crisis for such a huge hysteria to happen in Belgium, which harmed
The Coca Cola Company seriously.
In 1999 the World Health Organization (WHO) stated that a high level of dioxins was traced in
poultry and eggs from Belgium. Dioxin found in poultry and eggs lead to the overall food panic.
Reason for excess level of dioxin was the nutritional supplementing for animals, which was
polluted with illegally disposed waste based on industrial oil. High levels of dioxins for humans
may have different consequences, from skin illnesses to damaged immune system, nervous
system and reproduction.
Many animal products got banned from the market and were taken away from the store shelves.
The same happened with the export from Belgium. The food issue has caused a political crisis in
Belgium. It was the time of European and national elections and the Ministers of Health and
Agriculture were criticized for keeping information about the contagions as a secret for a few
months, and they left their position on June 1st 1999. Belgium was worried about their export and
being banned by other countries, so Belgium tried to limit the negative affect on the agricultural
sector rather than caring about public health.
While the food crisis in Belgium was still on going, the defective carbon dioxide crisis struck The
Coca Cola Company. The crisis has affected some consumers of frizzy soft drinks of The Coca
Cola Company. When The Coca Cola Company was notified about the fact that their product was
the cause of the illness, they started an investigation and called back all products with the affected
batch number manufactured in Antwerp and possibly could be made defective. After the general
70 elections in Belgium, the current government lost its position due to the reason of neglect in
relation to the food crisis – slow response and detection of the dioxin. The newly elected
government wanted to get the public’s trust and issued an order to recall all products of The Coca
Cola Company (Regester & Larkin, 2008: 161). The Belgian government wanted to prove that
they did care about their citizens (Regester & Larkinz, 2008: 160) resulting for the government
banning all sales of Coca Cola products22. The total recall of all products was a big loose for The
Coca Cola Company, because not all products were contaminated. Merely those that were
produced in Antwerp (Belgium) and Dunkerque (France) were harmful, yet all products had to be
removed. This was an opportunity for the competitors to fill up the empty shelves with their own
products; we’re referring to competitors like Pepsi.
Once the crisis occurred The Coca Cola Company was not able to respond to the crisis
successfully. They could not give any proper explanation to the public and concentrated too much
on the investigation to report to the Belgian government on what is going on. As the focus was
too much put on reporting to the government, it led to the consequence that they lacked in
communicating with the media and the overall audience. All crisis management activities were
managed and carried out by the head quarters of The Coca Cola Company in Atlanta, where
people had little knowledge about the current situation in Belgium, where the context was
affected by the Belgian elections and the on-going food crisis. This indicates that cultural issues
are very important when doing business on an international scale. First of all, managing problems
that occur in Europe from the headquarters in the United States of America was strategically not
a good move. The managers in the United State of America were not aware of what was
happening in Belgium at this moment. This led to misunderstanding of the overall case, and
decision-making was based on incomplete information.
22
http://news.bbc.co.uk/2/hi/europe/369089.stm
71 PDI – Power Distance, IDV – Individualism, MAS – Masculinity, UAI - Uncertainty avoidance, LTO – Long term oriented. 23
From Hofstede’s analyses of cultural dimension, it could be seen that Belgium and the United
States of America have some significant differences on their cultural level but it is hard to say
that they stand opposite each other. One of the strongest points of differentiation is that Belgium
has a high level of UAI, 94%. Meaning that Belgians prefers to have rules and security in their
lives, if missing these aspects, it builds stress. For the society, it was a great stress moment when
they faced problems with The Coca Cola Company, mainly due to the reason that the government
did not do anything that could make the Belgians feel more secure. Also the prior food crisis
played a great role in being sceptical towards The Coca Cola Company. The PDI of 65% also
confirms that the control is approved among Belgians; people needed a response from the
organization or the government in order to feel they controlled the situation, but seen from their
sceptical reactions, they did not feel this was the case. As an assumption, actions from the
23
http://geert-hofstede.com/united-states.html and http://geert-hofstede.com/belgium.html
72 government to connect with The Coca Cola Company products was in desperate need to monitor
the crisis someway. From the managing point of view, the United States has a different culture in
comparison with Belgium. The United States has a UAI of 46% stating they are open to new
things and is not so emotional when change is occurring; being very individualistic. The bad
strategic approach was very costly for The Coca Cola Company in many ways, but one of the
important points is that when all products were withdrawn from the Belgium market, there were
competitors (like Pepsi) who took an advantage of the situation and filled up the empty shelves
(Regester & Larkin, 2008: 160).
The Coca Cola Company failed at looking deeply into the crisis. As it could be seen in our Case
Description chapter, The Coca Cola Company did not put much effort into researching all aspects
of the crisis. They tended to take things rather the easy way: only recalling products with the
same batch number. This gave The Coca Cola Company more time to investigate what was
actually going on. In this case is an example of the reciprocal effect. When the food crisis
amplified the impact of The Coca Cola Company crisis, being seen by public as something
dangerous and important. By finding weak points of the crisis event, Coca Cola could assume
that there could be more aggressive reaction on the crisis due to preconditions.
The new CEO of The Coca Cola Company, Douglas Ivester, made changes after the Belgium
crisis, modifying company structure of being less centralized, and giving the autonomy for the
local offices to deal with the crises in the future due to the reason of their better knowledge of the
area situations. Another add on to their strategy was to manage crises as they are perceived from
the outside (Regester & Larkin, 2008: 161).
6.2.2 – Johnson & Johnson
It comes to the light that successful crisis management does not necessarily need a pre-fixed
CMP. Referring here to the Tylenol crisis case of Johnson & Johnson. The Tylenol case of
Johnson & Johnson was an unexpected crisis for the company. There were no prerequisites that
73 such an event would happen. Due to the reason that seven people died from consuming Tylenol
capsules (pain killers), it created panic in the area of Chicago, which was the main area of deaths,
as well as its suburbs. Panic created the fear of all over the counter pain medicine. But the
company managed the crisis very fast even though they had to recall Tylenol from the shelves.
Johnson & Johnson did not have any specific crisis management plan at that time because it was
unusual to have one. As for the crisis, it was a rather unusual event as the nation was struck by an
event that never had such a great impact on the United States of America. People tended to panic
and wanted to get answer from either Johnson & Johnson or professional medial advice. The
lines of the regional poison control centre for the entire Chicago area at the Saint Luke’s Medical
Centre in Chicago24 was constantly occupied as people called with their concerns. To handle the
crisis successfully, Johnson & Johnson set up a seven-member team that was dealing with the
communication area and decided on strategies and tactics. The recall of Tylenol in the Chicago
area was carried out, after the products were investigated and cyanide was found. The company
hoped that the criminality took place externally as the likelihood for it the tampering to happen at
the production factory was close to impossible. Investigation proved that the tampering of the
capsules happened externally.
In this case, the company was managing its crisis in the home country of Johnson & Johnson,
which made it easier to understand in regards to cultural issues. The timing was also good; as
there were no preconditions for the crisis to become something great.
Even a small crisis event could grow up in a great one if there will be preconditions to it. In the
case of Coca Cola it was a matter of bad timing, there management did not put into account the
overall situation on the Belgium market and Belgian society in general. Poor research was a big
24
CNN news topic by Jeff Flock on poison control Chicago - http://www.youtube.com/watch?v=PUMTthcDBfU -accessed the 18th of Dec. 2012
74 mistake when trying to solve the problem. In the end a small crisis grow up in a disaster for the
company25.
6.3 – Organizational Culture
Impacts of the top management
In one of our previous chapters we have elaborated on the influence of an organizational culture
on the performance by an organization. We have also indicated how leaders/top management of
an organization are the driving forces behind the establishment of the organizational culture and
that leaders/top management practice great influence on the culture and the development of it.
We questioned ourselves how the organizational culture set by the leaders of Coca Cola and
Johnson & Johnson practiced influence on how the specific crisis was handled.
Robert Wood Johnson, former chairman of the organization, was the leader at Johnson and
Johnson why formulated the credo of the organization. The credo reflects what the leader values
in the organization, and that that's a message he ought’s to pass on further into the hierarchy of
the organization. The credo sounds as following: “(...) We believe our first responsibility is to the
doctors, nurses, and patients, to mothers and fathers and all others who use our products and
services … we are responsible to our employees, the men and women who work with us
throughout the world … we are responsible to the community in which we live and work and to
the world as a community as well … our final responsibility is to our stakeholders.”26 The credo
can also be seen as the organizational culture, the driving force within Johnson and Johnson. The
credo emphasis that Johnson & Johnson is putting its customers first, and that the organization
and its product come on the second place: a culture that is shared by the employees at Johnson &
Johnson. With the discovery of the tampering of the Tylenol capsules in the surrounds of Chicago
in 1982, Johnson & Johnson responded to the crisis in a 'natural' manner. As Johnson &
Johnson’s organizational culture and credo states, the organization believe is prioritizing people
25
http://www.economist.com/node/322736 -accessed the 18th of Dec. 2012
26
http://www.jnj.com/connect/about-jnj/jnj-credo/ -accessed the 18th of Dec. 2012
75 first, and that business and the product come second. It was significant and remarkable that
Johnson & Johnson did not have a crisis management plan prepared prior to the crisis, but yet the
Tylenol crisis was managed and handled professionally, effectively and successfully. As a
reaction to the Tylenol crisis and incoming attending to Johnson & Johnson, the management set
up a seven-member strategic team to deal with the crisis. It was made very clear by the
management, which the strategic crisis team must work from their credo: “how do we save our
people?” and then “how do we save our product?”. Even without a prefixed crisis management
plan, Johnson & Johnson overcame the crisis; they managed to do that due to a very strong
organizational culture. The top management made the right decisions on how the get their hands
on handling the crisis.
In the Johnson & Johnson case, the organizational culture played a great role in the performance
of crisis management. In the Coca Cola crisis case in Belgium, the management performed in a
different manner in comparison with Johnson & Johnson. Organizational values are one of the
aspects that are part of organizational culture. The organizational values on which The Coca Cola
Company are driving on involves leadership, passion, integration, accountability, collaboration,
innovation and quality. When the Coca Cola crisis struck, the management of The Coca Cola
Company department in Belgium was already in its disadvantage as their communication
department was unstaffed, the general manager of Coca Cola Belgium was due to illness not
present at the office, so states Coca Cola's Communication Manager Steve Leroy in an interview
with De Standaard, a Flemish Belgian newspaper27. Leroy states that these were two major
factors for lacking in communication from Coca Cola's side. Internal communication in the
Belgium department was not at its peak. Further, the Coca Cola headquarters in Atlanta, Georgia,
the United States, decided to take control over the crisis and aimed to manage the crisis from
Atlanta. All major decisions were made from Atlanta. The issue with managing the crisis from a
distance was that the team responsible in Atlanta, was not aware of contextual issues present in
27
http://www.standaard.be/artikel/detail.aspx?artikelid=DST01042000_018 -accessed the 18th of Dec. 2012
76 Belgium. The top management, mainly in Atlanta, was lacking in its performance with
communication with the Belgian audience. From the other perspective, the top management of
the Belgian department of Coca Cola failed in informing the management team in Atlanta
properly. It ought to be perceived that the internal communication was lacking and performed as
an underlying reason for inadequate performance.
Douglas Ivester, the chief executive officer of Coca Cola, was during the crisis widely criticised
by the organizations board members for his arrogance towards the crisis in Belgium28. This
arrogance was combined with the fact that the crisis had grown far bigger than what the
organization’s crisis management plan was capable of handling. Consequently, The Coca Cola
Company choose to withdraw from the media as much as possible as they did not know the
reason for why their product had caused so many people to become sick, which the directorgeneral of bottling division also confirmed in an interview with Belgium’s RTBF television29. It
could be argued that The Coca Cola Company’s organizational dysfunction bear traits of an
intoxicated organization. As presented earlier the intoxicated organization denies the existence of
any problems and does not consider alternative perspectives or information until the crisis
actually occurs. The Coca Cola Company undermined the seriousness of the crisis given its
context in Belgium and did not recognize nor understand the implications of the mass socio-genic
illness developing in the public. As argued by Benoit in his image repair theory, perceptions are
far more important than reality, so whether the organization was actually guilty or not was not of
importance "As long as the audience thinks the firm is at fault the image is at risk." (Benoit,
1997: 178).
The arrogance towards the situation expressed from the chief executive officer, seemed to be
running through the firm's legal department as well, as they insisted that there were no serious
28
http://online.wsj.com/article/SB944496345264477011.html -accessed the 18th of Dec. 2012
29
http://articles.latimes.com/1999/jun/28/business/fi-50859 -accessed the 18th of Dec. 2012
77 health issues related with the product30. The Coca Cola Company even released a toxicology
report that suggested that something else was the source of the symptoms31. In the light of this, it
seems that the diagnose of The Coca Cola Company as an intoxicated organization does not fall
completely short, considering the organizations expression of denial and the refusal to accept
alternative views on the matter. As Brown and Starkey (2000) argue, the defence mechanism of
the organizations ego such as denial and rationalization are triggered by excessively low or high
self-esteem (Brown & Starkey, 2000: 105). Brown and Starkey (2000) argue this overprotection
of this self-esteem also reduces an organization's ability and desire convey and take in
information similar to the symptoms of an intoxicated organization.
As both organizations value their customers and the safety of their customers. There seemed to be
no doubt on managing a product recall for the sake of their customers’ welfare. Differences in
organizational culture set grounds for on how the product recall procedure has been carried out.
6.4 – Product Recall Procedures
In our previous chapter we have written about actions/activities for organizations in crisis to take
before, during and after the actual recall event. One of the crucial before recall activities is for
organizations
identifiable
to
serial
give
their
number.
products
an
Especially
for
products that are to be consume into the human
body. As both products, the Tylenol capsule by
Johnson & Johnson and the frizzy soft drink
beverage by Coca Cola Company, are these
types of product, it is people’s health which is
then at risk.
30
http://www.economist.com/node/322736 -accessed the 18th of Dec. 2012
31
http://www.nytimes.com/1999/06/27/weekinreview/the-world-coca-cola-hopes-things-go-better-with-sorry.html
78 The Tylenol re-call process by Johnson & Johnson was a successful deed as Johnson & Johnson
was prepared from the start with a good re-call approach. All Tylenol products are provided with
a serial number, a so-called batch number. Products with the same batch number are from the
same production unit. Each Tylenol bottles with capsules was provided with a batch number,
referring that the capsules are all from the same unite. Once the batch number of the tampered
capsules was identified, the batch number was immediately published as it was of national danger
to not keep this information to them selves, but to share it with the people. Further response was a
recall of the product primarily in drug stores, supermarkets, hospitals and other points of sale or
public availability in the area of Chicago. Not long after, Johnson & Johnson announced a
national recall, knowing the recall would cost a lot, yet the management was working through its
credo of “first people, then the company and product” and a nationwide recall would be right
according their credo, culture, values and believes. There was no possibility for Johnson &
Johnson to “repair” the product as the pills had to be destroyed to prevent the crisis from
escalating any further. Johnson & Johnson did come up with a “replacement” products, and
provided without any charge a more save and replacing Tylenol tablet form.
Barely 2 months after the discovery of the tampering of the Tylenol capsules, Johnson & Johnson
re-launched Tylenol to the market. Not only Johnson & Johnson but also the whole medical
supplier industry was shocked by the occurred event and to prevent a similar event to happen
again the Food and Drug Administration mandated a tamper-resistant packaging. As follows
Johnson & Johnson was the first organization to introduce their triple-seal safety packaging with
seals on the opening of the bottles, around the bottle neck and a box in which the bottle was
packed (see figure 1). The bottle of capsules/tables also including a note stating “Do not use if
safety seals are broken”. And to recover from the entire re-call process, Johnson & Johnson
changed their pricing strategy on Tylenol. With their new pricing programme, the purchase of
Tylenol saved customers up to 25% of the original price. As the crisis made an impact on the
image of the company and the product, there was also a need to actively promote Tylenol while
79 Johnson & Johnson re-launched the product. Johnson and Johnson put in around 2,250 sales
people to promote Tylenol again, and holding presentations to medical institutes in order to
convince them that Tylenol and Johnson & Johnson were to be trusted again. The Tylenol re-call
is one of the most significant and successful recall stories in history: starting from product usage
leading to fatale death to seven individuals to re-calling the capsule nationwide and to
successfully re-launch the product to the market and even gaining back a great markets share.
The Coca Cola crisis is Belgium also resulted in a product re-call. As like in the Tylenol case,
Coca Cola Company is providing their products with a batch number to track down in which
production unit a specific bottle, can etc. is produced. As Antwerp is not The Coca Cola
Company’s only bottling plant, information with regards to which batch numbers were
effectived. With the occurrence of the crisis, Coca Cola Company was able to track down which
batch number was the source of the contaminated bottles. Initially Coca Cola Company recalled
2.5 million bottles, and the product was banned from the Belgian market. At a later stage, also the
Netherlands, Luxembourg and France banned products from Coca Cola Company from their
market32. In overall Coca Cola Company had to recall about 30 million cans and bottles33.
Providing the consumers/customers with a replacement product was, in the case of Coca Cola
Company, a rather difficult issue. The only replacement option would have been to provide soft
drinks from a different batch unit, but as the products were banned from the market temporarily it
seemed that production of sales was also temporarily put on hold.
Bottles with this particular batch were identified and as follows removed from the shelves and
vending machines. When the Flemish commercial TV station VTM misunderstood the crisis, and
mixed up that cans were contaminated instead of bottles, it lead to a forces recall for cans as well.
In cooperation with the Belgian Minister of Health, Coca Cola Company withdraw all of its
32
http://prpretaporter.wordpress.com/2012/09/07/case-study-coca-colas-belgian-crisis/ -accessed the 18th of Dec. 2012
33
http://prpretaporter.wordpress.com/2012/09/07/case-study-coca-colas-belgian-crisis/ -accessed the 18th of Dec. 2012
80 products from the Belgian market34. The withdrawn products were bottles and cans of Coca Cola,
Coca Cola Light, Fanta, Sprite, Nestea, Aquarius lemon, orange, and grapefruit, Bon Aqua,
Kinley Tonic and Lilt.
Ones the recall was successfully carried out, Coca Cola Company was in the position to come
back to the market. Before production in the bottling plants started again, Coca Cola Company
went through a big cleaning process in the bottling plants. When production started again, heavy
marketing activities were applied to re-launch the products back to the market. Coca Cola
Company promoted their products through for example attendance and sponsorships at major
events. It was noticeable that the crisis had not affected the intend-to-purchase level.
6.5 – Image Restoration & Communication
After seeing all the leading theories especially on restoring positive image and on
communication, an analysis is conducted about the strategies used by the two companies – The
Coca Cola Company and Johnson & Johnson.
In this post crisis analysis, we will firstly direct the analysis to which role communication with
the media played and thereafter direct our attention towards how the companies dealt with image
restoration.
Communication
As mentioned earlier, communication can be considered as an activity that generates an
information stream from one side to another. In times of crisis, communication with the media
becomes one of the important parts to climb out of a crisis. But like all tools, it is necessary to
know how to use it properly to achieve the desired outcome. Johnson & Johnson’s Tylenol case is
a good illustrative example.
Johnson & Johnson
34
http://www.hs-fulda.de/fileadmin/Fachbereich_SW/Downloads/Profs/Wolf/Studies/belgians/belgians_crisis_management.pdf -accessed the
18th of Dec. 2012
81 Johnson & Johnson is a responsible and trusted company with a strong positive image and good
relations with the media. For decades, they have upheld four principles in their company credo:
the consumers, the employees, the communities and the stockholders.
In September 1982, a journalist called the company to get information as several deaths related to
the Extra Strength Tylenol were reported. Subsequently the information went upwards in the
chain and to the vice president of Johnson & Johnson named Lawrence Foster. Foster was on a
holidays when he learned what had happened, though Foster returned and took charge of the
public relations activities and the formation of a crisis communication team (Fearn-Banks, 2007:
88).
As seen earlier in the crisis recognition & crisis containment by Coombs (2007), there must be a
rapid response to a crisis (responding quick and immediacy). The fact that the information was
propagated very quickly within the company and that the people who had become affected were
informed very quickly (by immediate meetings) added positive points to reduce the negative
effects of this crisis.
The other major positive communication with public relations was the designation of a person
and who had the oral skills to express himself on behalf of the company and to explain exactly
what was happening in the company. As seen previously with Coombs (2007: 109) and his notion
of credibility, the expertise is expressed through the speaker’s knowledge about the crisis and the
trustworthiness is expressed through the speaker’s goodwill or concern for the receivers. The fact
that Lawrence Foster, the vice president, acted so promptly and took lead of communication with
the media therefore contributed to the sincerity of the organization's concerns for the people.
At that time, few companies had developed crisis management plans, but despite the gravity of
the crisis, the organization executed optimal procedures and acted like a plan had already been
established as they quickly founded a crisis team and continuously updated their personnel on the
progress of the crisis (Fearn-Banks, 2007: 88).
82 Another positive point in the resolution of this crisis was the openness. As said before, openness
means availability to the media, willingness to disclose information, and honesty (Coombs 2007:
133). From the beginning, the primary goal of the company was to warn consumers.
“The company did just that by being completely open and cooperative with the media in getting
the news out. Foster said he believed that three points marked the reason Johnson & Johnson
was successful in coping with the crisis:
1. The company was open to the media
2. It was willing to recall the product no matter what that meant to the company
3. It appealed to the American sense of fair play and asked for the public’s trust. ” (Fearn-Banks,
2007: 88).
To achieve this goal of warning the consumers, Foster decided to talk about the crisis through the
media and even appeared as a guest on a TV show named the Phil Donahue Show, to avoid
confusion and negative rumours about the company. At that time, the program was rather popular
and consequently watched by many Americans.
To conclude, we could say that Tylenol took advantage of the crisis to bounce back and managed
to do so with prompt and effective communication. Indeed, despite a wave of panic, the company
was able to act well and did everything in the interest of consumers, even to withdraw products
from stores. When we look to the best practices in a crisis response by Coomb (2007), we can
notice that the company used a lot of these steps and it could therefore be argued that Coombs
(2007) theory proved success in this aspect.
Unfortunately, recalling products alone does not automatically imply successful crisis
management. The Coca Cola Company had also recalled its products, but the communication
around the crisis was not the same as for the Tylenol case.
The Coca Cola Company
83 Like the Tylenol case, there was a problem with the contamination of the product and several
people who consumed Coca Cola felt ill - even people who did not consume the contaminated
products. The Coca Cola case is a “good” example of what not to do concerning the
communication when a crisis occurs.
During the crisis the organization refrained from the media as they were trying to figure out what
was wrong and what happened. This can be considered as a mistake, as the media could think the
company is hiding something or was not prepared for this kind of event and did not know why it
happened. We know that the media have a lot of power; they can spread negative aspects
(Dobbelaere Bart, 2000).
The article Ice-cold Coke reacts calmly to crisis35, as it states: “(…) a terse statement and
apology appeared only eight days after the first reports of illness.”36 It could therefore be argued,
that they did not respect the basics principles of communication during a crisis like for instance in
the best practice in a crisis response by Coombs (2007), "(…) be quick and try to have initial
response within the first hour."
Strategies used to face the crisis
Tylenol
In the Tylenol case, there was no evidence that the capsules had been contaminated during the
production process in the production plan. “The FBI and the FDA never found any evidence of
tampering at the two Johnson & Johnson plants.” (Fearn-Banks, 2007: 88). Instead, an unknown
mad person was blamed, which exempted Johnson & Johnson from being held responsible for
this accident, even though they did not proactively try to use this as an excuse.
The strategy for Johnson & Johnson chose itself, as the tampering of the product occurred
externally from the production process. According to Coombs (2007) the classification of this
35
http://www.guardian.co.uk/business/1999/jun/25/20 -accessed the 18th of Dec. 2012
36
http://www.guardian.co.uk/business/1999/jun/25/20 -accessed the 18th of Dec. 2012
84 strategy would be the scapegoat strategy, similar to Benoit's shifting the blame which implicitly
also means that they made use of Benoit's denial strategy (Benoit & Lindsey, 1987: 161).
We can also say that Johnson & Johnson used the Hearit's (2001) differentiation strategy. To
recall, differentiation is used when the organization attempts to distance itself from guilt in a
crisis. "There is an admission of responsibility, but factor are identified that limit the
organization’s responsibility" Hearit (2001). As seen in the communication media section of this
project, the chief executive officer of Johnson & Johnson went public and appeared as a guest at
a TV show to talk about the crisis the company was fcing and said that “the company has nothing
to do with the poisoning incident” (Ulmer and al, 2007:51). Also in the Tylenol case, real factors
of illness are not really identified, we just know that it’s not the fault of the plants, so we may
assume that the crisis exceeded the limit of the organization’s responsibility as it was a victim
and remained powerless from what happened.
After the crisis, legislation was passed for producers of medication to insure a sealing of their
products from potential contamination. Lastly, the government together with U.S Food and Drug
administration (FDA) improved the regulation about the packaging, after the death of the seven
victims of the tampering case. In the year 1983, the Federal Anti-Tampering Act passed in. This
act made a law that it is a crime to interfere with packed purchaser products. The packaging
should have one or more barriers to open it, in case of a breach, it will be expected that consumer
could see that package was already opened; tampering of the product will be visible for the
consumers eye. This gave Johnson & Johnson a great advantage among competitors due to the
reason they were the first one on the market who reacted to the national regulations for tamper
resistant packaging. Johnson & Johnson won the silver award for the public relations for how it
handled the crisis and also regained its market shares very fast (Regester & Larkin, 2008: 158).
Coca Cola
The Coca Cola Company used the rebuild strategy from Coombs and Holladay (2010) to deal
with the crisis. First of all, they used the subcategory apology as “the Chairman of the Coca-Cola
85 Company published full-page apologies in the newspapers” (Nemerya, et al, 2002). Douglas
Ivester, chief executive officer of The Coca Cola Company, also made an explicit apology to
customers and consumer in Europe by saying he “(…) deeply regret any problems encountered
by our European consumers in the past few days”37.
The Coca Cola Company then used the second subcategory named compensation: used when
presents or money are given to the victims. In this case, “(…) all the Belgian families received a
voucher for a free bottle of Coke” (Nemerya, et al, 2002). Tylenol acted in a similar way; they
offered “availability of coupons that could be used toward the purchase of any Tylenol product”
(Fearn-Banks, 2007: 95). This strategy was applied in order to re-establish their reputation and
get a better image with the customers and consumers in caring for them.
After the crisis had passed, the two companies chosen to change the packaging of the related
product; a part of image restoration. The two companies were trying to change their products, in
order not be constantly associated with this passed crisis event. The Coca Cola Company changed
the caps: "the new bottles and cans of Coca-Cola products received green caps and lids"
(Nemerya, et al, 2002) and Tylenol decided on repackage the product by adding a triple-seal
safety as mentioned earlier.
Depending on the situational crisis, different strategies can be applied to minimize the effect of a
crisis, and the communication between the company and the media must be well prepared.
Organizations must pay attention on how to behave with the media and. The Coca Cola Company
did not understand and see the importance of this in advance. Therefore they did not act in the
best way with the media. Johnson & Johnson used the communication with the media as a tool to
take advantage and control of the crisis.
37
http://www.nytimes.com/1999/06/17/business/international-business-coke-s-chief-apologizes-for-response-on-contamination.html -accessed
the 18th of Dec. 2012
86 7 – Conclusion
We have in this project uncovered the dominant understandings of crisis management. We have
done so by working our way from the bottom up, through explaining the relationship between the
definition of crisis and crisis management theory. The current dominant theoretical
understandings of crisis management are rooted in three different definitions of crisis.
We have explained how scholars within the field of have spread themselves in three dominant
definitional camps that Forgues & Roux-Dufort (1998) describe as the events approach, (Coombs,
2007; Barton, 1993; Fink, 1986; Lerbinger, 1997) the process approach (Pauchant et. al, 1991;
Pauchant & Mitroff 1992) and the systemic approach (Perrov, 1984 in Forgues & Roux-Dufort
1998).
The events approach understands crises as sudden and low probability events that pose financial
and reputational threats to an organization. Crisis management based within the events approach,
have a more reactive and tactical approach to crisis management of crisis, such as Benoit’s image
repair theory (1997), Pauchant and Mitroff (1992) also calls this crash management, due to its
particular interest and focus on what to do in the heat of the crisis.
The process approach does not understand crises as events, but as something extended in time
and space consisting of a period of warning signs. It also argues that organizations have the
possibility to implement activities to identify, divert, control or avoid a crisis in the first place. As
explained earlier in this project, Coombs (2007) definition of crisis is leaning more towards the
events approach however Coombs’ (2007) crisis management theories can be considered as a
process approach with his recognition of warning signs through the division of crisis in stages;
pre crisis, during crisis and post crisis. It is however slightly contradictory to how Coombs (2007)
himself defines crisis, namely as a sudden and unexpected expected event.
The systemic approach understands crisis as a natural outcome of combinations of failures in
87 complex and tightly coupled systems. Crisis is here understood as part of a larger web of
interrelations with having an effect that goes beyond the organization. The systemic approach to
crisis management therefore understands crises as part of a larger framework, and focus on the
interrelation between technical systems, humans, organizations and stakeholders.
The cross-disciplinary approach in this project is rooted in both the systemic and process
approach’s definition of crisis.
The context theory can assist in gaining an advantage in crisis management by looking beyond
the crisis itself and understanding the physical, cultural, social and political environment of the
crisis. Looking at the context provides a better understanding of the crisis and its stakeholders,
which can help avoiding further escalation of the crisis. A good example of how the context
theory could have proved to be beneficial, is exemplified through the escalation of The Coca
Cola Company’s crisis in Belgium, where the organization failed to recognize the gravity of the
political involvement, and the health scandals that had taken place before the Coca Cola crisis.
The cultural theory can assist in gaining an advantage in crisis management by providing an
understanding of how the culture and structure of an organization could become a hindrance for
the execution of efficient crisis management. The distance in hierarchical levels in regards to the
decision-making processes and flow of information, is both a possible means of control but also a
possible hindrance for the fast response time that is needed in effective crisis management. A
good example here is how Johnson & Johnson reacted promptly and effectively to the Tylenol
crisis supported by an organizational culture that made it clear to everybody to whom their
responsibilities lied.
The psychodynamic approach can assists in gaining an advantage in crisis management by
shedding light upon possible psychodynamic dysfunctions of an organization that may be one of
88 the contributing factors to the creation and/or escalation of a crisis. A psychodynamic approach
provides an analytical tool to diagnose an organization, its management and culture’s influence
on crisis management, but it also provides a theoretical cure for overcoming organizational
dysfunction by obtaining the attitude of a learning organization. For example, a psychodynamic
analysis of The Coca Cola Company’s crisis in Belgium shows how the neurosis of the top
management had spread to the rest of the organization, the company diagnosis is intoxicated,
through denial and refusal to accept alternatives views on the crisis, hindered them in
understanding the gravity of what was going on.
This project has not been set out to replace current understandings based within the events
approach; on the contrary we believe that a cross-disciplinary approach provides an added
dimension to understanding crisis management. A single unified definition is in this case not
necessarily desirable, or possible, as each definition provides its focus and approach to crisis
management. We simply wish to add a cross-disciplinary approach to the pallet of theoretical
tools available to scholars who wish to pursue empirical research in the field, as well as provide a
theoretical guideline for practitioners.
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APPENDIX
Table 1 : Corporate apologia crisis response strategies
Table 2 : Image Restoration Strategies
Table 3 : SCCT conceptualization crisis response
Table 4 : SCCT crisis response strategy recommendation
Interview of the communication manager of Coca Cola Company
Table 1 : Corporate apologia crisis response strategies
•
Denial: the organization denies any wrongdoing.
•
Counterattack: the organization denies wrongdoing and claims the accuser is
the one at fault.
•
Differentiation: the organization attempts to distance itself from guilt for the
crisis. There is an admission of responsibility, but factor are identified that
limit the organization’s responsibility
•
Apology: the organization accepts responsibility and promises not to do it
again. This is a form of dissociation.
•
Legal: the organization allows the legal team to handle the crisis and avoids
public statements.
Source: PR Strategy and Application: Managing Influence by T. Coombs and S. Holladay
Table 2 : Image Restoration Strategies
Denial
Simple denial
Shifting the blame
Evading of Responsibility
Provocation
Defeasibility
Accident
Good intentions
Reducing Offensiveness of Event
Bolstering
Minimization
Differentiation
Transcendence
Attack accuser
Compensation
Corrective Action
Mortification
Source: Accounts, excuses, and apologies: A Theory of Image Restoration Strategies
by William L. Benoit.
Table 3 : SCCT conceptualization crisis response
Deny strategies: seek to eliminate crisis responsibility
• Attack the accuser : confront person or group claiming a crisis extra
• Denial : claim there is no crisis
• Scapegoat : blame someone else for the crisis
Diminish strategies : seek to minimize the crisis responsibility
• Excuse : deny any intent to do harm and/or claim inability to control the event
• Justification : seek to minimize perceptions of damage from the event
Rebuild strategies : seek to repair the reputation
• Compensation : offer gifts or money to victims
• Apology : accept responsibility and ask for forgiveness
Reinforcing strategies
• Bolstering : remind people of past good works by the organization
• Ingratiation : praise people who help address the event
Source: PR Strategy and Application: Managing Influence by T. Coombs and S. Holladay
Table 4 : SCCT crisis response strategy recommendation
1- All victims or potential victims should receive instructing information, including
recall information. This is one half of the base response to a crisis.
2- All victims should be provided an expression of sympathy, any information about
corrective actions, and trauma counseling when needed. This can called the “care
response”. This is the second half of the base response to a crisis.
3- For crises with minimal attributions of crisis responsibility and no intensifying
factors, instructing information and care response is sufficient.
4- For crisis with minimal attributions of crisis responsibility and an intensifying factor,
add excuse and/or justification strategies to the instruction confirmation and care
response.
5- For crisis with low attributions of crisis responsibility and no intensifying factor, add
excuse and/or justification strategies to the instructing information and care response.
6- For crisis with low attributions of crisis responsibility and an intensifying factor, add
compensation and/or apology strategies to the instructing information and care
response.
7- For crisis with strong attributions of crisis responsibility, add compensation and/or
apology strategies to the instructing information and care response.
8- The compensation strategy is used anytime victims suffer serious harm.
9- The reminder and ingratiation strategies can be used to supplement any response.
10- Denial and attack the accuser strategies are best used only for rumor and challenges
crises.
Source: PR Strategy and Application: Managing Influence by T. Coombs and S. Holladay Interview. Communication manager Coca Cola Steve
Leroy
“The Cola crisis woke us up”
Saturday April 1, 2000
Author: Bart Dobbelaer
BRUSSEL: “Last summers crisis of Coca Cola was a wake up call. It taught us that
communication is executed best when it’s local. Even though it’s respected as mass hysteria,
it’s still Coca Cola who made the mistake.”
1/4/000 Colacrisis was mass hysteria
Coca Cola may triumph. The crisis was more related mass hysteria then it was related to
bad tasting soft drink.
“No, we’re not pretending to be euphoric. The committee clearly stated something was wrong
with our product. Which simply is not a possibility. Of course we are satisfied that all doubts
have cleared out. And that the health complaints were less severe then they appeared to be.”
There was something wrong with some drinks. But there were many issues with the
crisis communication.
“Correct. Firstly we responded well. Immediately the 20-centiliter bottles were recalled in
Bornem. When afterwards more complaints were still coming in, we wanted to investigate the
case thoroughly. We kept quiet for a while. And that was our mistake. The customer
perceived our taciturnity as: they conceal something, there is something wrong.
The taciturnity also had to do with internal shifts. Our crisis department was without staff
when the crisis occurred. Moreover our General Manager (CEO) was absent due to illness.”
What did you learn from the crisis?
“The crisis was a wake up call for the entire organization. Until the crisis, Coca Cola was very
centralizedf arranged/managed. When your expending (business’), it is easy to work. But in
times of crisis it appeared that the communication lines with Atlanta were too long. Moreover
it is better to let locals take care of communication, even though our American colleagues
were trying hard. The level of sensitivity is different.”
The crisis cost you four billion. Was the reaction of the then minister of Health, Luc van
den Bossche exaggerated?
“He had to work with the information available to him. Moreover he was new on the
department, and the context of the dioxinecrisis was familiar. No, we’re not blaming anyone.
But we cannot help not feeling bitter after the crisis.
Has the crisis been processed?
“We’ve run tests. In the heat of the crisis, 54 percent encountered Coca Cola as reliable. Four
months later it was again 80 percent. In the heat of the crisis, only half of the respondents
were convinced of the quality of the soft drink. In October, it was 85 percent again. I assume
the percentages are currently even higher.