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THEOIS

This is to certify that the

thesis entitled

A model in crisis communications management

presented by

Alfonso Gonzalez—Herrero

has been accepted towards fulfillment
of the reduirements for

M.A. ‘ ,. Public Relations
degree in

 

 

 

 

Major professor

Date 3121/1994

7

0-7639 MS U is an Affirmative Action/Equal Opportunity Institution

 

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TO AVOID FINES return on or before date due.

DATE DUE DATE DUE DATE DUE

 

 

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MSU Is An Affirmative Action/Equal Opportunity Institution
end ems-M

A MODEL IN CRISIS COMMUNICATIONS MANAGWT

By

Alfonso Gonzalez-Hermie

A THESIS
Submitted to
Michigan State University
in partial fulfillment of the requirements
for the degree of

MASTER OF ARTS

Department of Advertising
(Major in Public Relations)

1994

ABSTRACT
A MODEL IN CRISIS COMMUNICATIONS MANAGEMENT
By

Alfonso Gonzalez—Herrero

This thesis reviews published literature on crisis management and provides
lessons that can be learned from past experiences. It establishes the origins of crisis
communications management, defines the terms crisis and crisis management, and
identifies the common denominators of most of crises as well as the types of crises an
organization might confront.

Based on a situational theory of publics and several frameworks relevant to
crisis management, the author proposes a long-term management approach that
incorporates the concepts of proaction and symmetry as well as the early identification
of issues. Such approach is summarized in a model that shows the stages at which
management intervention is more crucial. The thesis, then, concludes by giving some

tips to the practitioner.

Copyright by
Alfonso Gonzalez-Herrero

1994

A mis padres,

Lourdes y Virgilio.

iv

ACKNOWLEDGEMENTS

A la Fundacidn la Caixa,
sin cuya beca no hubiera sido posible

la realizacion de esta tesis.

A mi "adviser," Cornelius B. Pratt,
por su apoyo a lo largo de estos dos

afios en Michigan State University.

TABLE OF CONTENTS

LIST OF FIGURES

CHAPTER ONE: INTRODUCTION

1.1.

1.2.

1.3.

1.4.

1.5.

1.6.

Origins of crisis communications management.
Definition of "Crisis."

The negative and positive side of a crisis.
Crisis management: A definition.

Common denominators of crisis.

Types of crisis.

CHAPTER TWO: LITERATURE REVIEW

2.1.

2.2.

2.3.

2.4.

2.5.

2.6.

2.7.

Planning: A decisive stage.
The planning process.

Top management, strategic planning,
and crisis management.

The role of the CEO in crisis management.
The effect of crises on management behavior.
The crisis management team.

Crisis management and organizational culture.

vi

viii

10

13

17

17

19

24

26

27

29

31

2.8. Crisis management and corporate image management.
2.8.1. GM vs. NBC.
2.8.2. The facts.
2.8.3. Considerations.
2.9. Media Relationship.
2.10. Crisis recovery planning.
2.11. A classic in the management literature: Tylenol.
2.12. The crisis life cycle and issues management.
2.13. Stages of the crisis life cycle.
CHAPTER THREE: A MODEL FOR CRISIS MANAGEMENT: THEORETICAL
FRAMEWORK
3.1. A situational theory for crisis communications management.
3.2. Crisis management models.
3.2.1. Meyers and Holusha’s model.
3.2.2. Pauchant and Mitroff’s model.
3.2.3. Westley and MacLean’s model.
3.2.4. Grunig and Hunt’s model.
3.3. A proposed model.

CHAPTER FOUR: CONCLUSION

4.1.

Who is responsible for crisis communications management?

BIBLIOGRAPHY

vii

33
39
39
41
43
47
48
50

52

56
56
59
59
63
65
66
67
74
80

84

Figure 1:

Figure 2:
Figure 3:
Figure 4:

Figure 5:

LIST OF FIGURES

Corporate identity, corporate communications, and perceived corporate
image.

Two matrixes for the diagnosis of crises.

The five essential phases of crisis management.

A model in crisis communications management.

Development of issues with and without management intervention.

viii

CHAPTER ONE: INTRODUCTION

Business crises occur daily. News coverage of business crises in the United
States jumped 45% in 1992 compared to 1991 ("Crisis news coverage," 1993). Nike’s
footwear, Pepsi’s needles, Jack in the Box’s meat, GM’s trucks, and AT&T’s African
monkeys, are just a few of the most recent examples. Some others have become
virtually synonymous with a specific type of crisis. Johnson & Johnson’s Tylenol,
Nestle’s infant formula, Union Carbide’s Bhopal, NASA’s Challenger, Perrier’s
sparkling water, are classic examples crises managers have confronted.

Nevertheless, as Meyers and Holusha (1986) indicate, most organizations are
unwilling to plan and prepare for adversity. In today’s organizations, the aggressive
and successful executive is required to think in terms of success, plan for success,
nurture no negative thinking, relate with positive people, and emphasize
accomplishment and cast off losers.

In fact, in a study published by Fink (1986), 89 % of the chief executive
officers of the top Fortune 500 answered that a crisis in business today is almost
inevitable, but 50 % admitted that they did not have a crisis management plan. Yet
97 % felt either very confident or somewhat confident that they could respond
adequately to a crisis.

In the best of the situations, when a crisis plan exists, it is usually filed away,
outdated, unwieldy to use, and doubtftu useful in a crisis. It may have been

constructed several years ago, may have never been updated, and may consist of page

2

after page of ponderous policies that require subsequent layers of approval for any
decisions or actions taken (Gottschalk, 1993).

The "Oh-my-gawd-experience," as Berge (1990, p. 1) has called it, can be
avoided by identifying potential crises. Certainly a crisis is, by definition, surprising
and sudden, but scanning what happens outside and inside the organization can help
management to anticipate a crisis. Besides, planning for the type of crises that are
more likely to occur in the firm’s industry helps also to minimize the hurt in case the
crisis cannot be avoided.

As Hearle (1993) illustrates, medical science concluded that high levels. of
cholesterol were bad for people. Obviously, this was a warning to the egg producers,
but also a sign to other industries like the manufacturers of egg cartons. The
cholesterol finding eventually provoked a change in all these markets and altered the
way in which business were done. However, this sign was not initially seen as a
threat with the exception of the egg producers.

In most crises, there are signals that indicate future trouble. And management
has available a number of tools to identify such problems: crisis and risk assessment
audits, issue tracking, public opinion tracking, etc (Berge, 1990). This has been
described as "proactive crisis management" (Nudell & Antokol, 1988) consisting of
anticipatory measures "that enable an organization to coordinate and control its
responses to an emergency" (p. 20).

However, companies seldom learn from the mistakes of others and they

frequently disregard early warnings (Nolan, 1984). Many managers recognize that a

3
crisis might happen in their industry but they are unable to consider the possibility of

similar crises happening in their own companies. Besides, the everyday requirements
of the job leave less available time to consider such possibility.

This being so, the purpose of this thesis is to summarize the lessons learned
from past organizational crises and evaluate whether an improvement in the way
companies manage crises communications can be achieved. A four stage conceptual
model based on proactive communications will be proposed in order to manage

effectively a crisis.
1.1. Origins of crisis communications management.

The history of crisis communications management is parallel to the history of
public relations. Certainly, crisis management is a phenomenon of the 20th century.
Nevertheless its origins could be tracked in the history.

Noahl was probably the first crisis manager. He made use of a privileged
warning system directly connected to God and his planning for the impending
catastrophe exemplifies the role modern management should play in a crisis. Noah did

not wait until the first rain began to fall to build his ark. His contingency plans to

 

1

Personage of the Old Testament. His legend narrates how, the
earth being filled with violence, God resolved on its
destruction, but Noah, the just, He purposed to save alive.
God advise him to build an ark and take with him.a pair of
animals of every race. "Whilst Noah was building his ark,
all those who passed by mocked him (...)" and ignored his
warnings (Baring-Gould, 1885, p 110-118).

4

confront the announced "crisis" were made well in advance, and it was this fact what
saved him while the rest of the humanity died in Floods.

Historically, however, the role of the public relations practitioner in a crisis
has consisted in justifying the situation (to avoid major problems for the organization)
more than in preventing it.

At the beginning of this century, there was a tendency among corporations to
disregard the public interest. As Moore and Kalupa (1985) indicate, the theory behind
this trend was that the less knowledge the public had about a company, the better the
company fared. Crisis management, therefore, consisted of secrecy and had an
internal orientation based on the company’s interest. This began to change with the
emergence of the fast public relations counselors such as Ivy Lee and crises began to
be successfully managed. Lee intervened in the anthracite coal strike of 1906 and
issued a "Declaration of Principles” stating the determination of his company to
inform the public openly and accurately. Effectively, he opened the channels of
communication with the reporters and provided them with punCtual information about
the strike.

At this point, however, public relations’ role was largely reactive and
measures were usually taken just during the life crisis.

Later, in the years of the World War I, the role of public relations developed
fast and helped government agencies and businesses to create a favorable climate
toward them and their goals.

In the 19203 and 19303 incipient research of the public opinion provided tools

5

to the practitioner to execute a more systematic and scientific approach of public

relations. It 13 the time for Edward Bemays and George Gallup. In his book

‘—

”Crystallizing Public Opinion, Bemays asserted that corporations could no longer

_,.._ -,...- -.-- “u—
“hummus.”

iv“ HF‘ "“

 

mum-n.—

deny the existence of public opinion and that the responsibility of a corporation was to
understand the pulse of its constituencies to be prepared for crisis and public
recrimination (Barton, 1993). Yet, publicity, press agentry and mass propaganda still
dominate public relations practices, although a new group of ethical and sociable
responsible professionals are emerging.

Bemays’s suggestions of the role of public relations in modern society
developed and, in the 19703 and 19803, public relations became the menagemeet"ef
communism We“ 9! 0W6“ and its rubles" (Gwnig. 6% @1339!“
the late 19803 and early 19903 persuasion is substituted by understanding, reaction by
proaction, and the concept of two-way communication by the one of symmetrical
communication. Corporate social responsibility acquires relevance as opposed to the
classical economical corporate responsibility and organizations are more than ever
interested in avoiding conflicting situations with the court of public opinion.

Today, a new subspecialty, issues management, provides the best preparation
for organizations because of its characteristics of anticipation, proaction, and
monitoring of issues that could affect the company’s operations in the future.
Sophisticated methods have been developed for situations when business disruptions
are inevitable and technologies provide management with appropriate tools to handle

crises more efficiently than ever.

1.2. Definition of "crisis."

Defining the word ”crisis" is fraught with difficulties. Every discipline and
subdiscipline offers its own definition of crisis and, even within disciplines, the
definitions present important differences depending on the authors’ perspectives.

In the management literature, scholars and professionals have attempted over
the years to reach a consensus on the term ”crisis" (Pauchant & Mitroff, 1992). For
example, Hermann (1963) defined it as "an event surprising individuals, restricting
their time for developing a response, and threatening their high-priority goals, " but
this definition has been criticized by later researchers because, in their opinion, a
"crisis" does not always contain those characteristics (Billings, Milbum, &
Schaalman, 1980). i

From a practical, business-oriented point of view, Fink (1986) embraces
Webster’s definition of ”crisis”: "a turning point for better or worse, " ”a decisive or
crucial time, stage, or event.” He concludes that a crisis is:

Any prodromal situation that runs the risk of. l) Escalating in intensity. 2)

Falling under close media or government scrutiny. 3) Interfering with the

normal operations of business. 4) Jeopardizing the positive public image

presently enjoyed by a company or its officers. 5) Damaging a company’s

bottom line in any way. (pp. 15-16)

A similar classification of "turning points” has been later adopted by other

7

authors such as Gigliotti and Jason (1991) who distinguish among ”emergencies, "
" contingencies, " "crises, " " catastrophes, " and "disasters. "

Following Perrow (1984) and Habennas (1973), also Pauchant and Mitroff
(1992) indicate the possibility of distinguishing among ”incident, " "accident, "
"conflict," and "crisis."

Distinctions among preceding terms are, however, beyond the scope of this
thesis. For our purposes all these terms will fall under the general category of
" crises. " Thus, we will look at the word " crisis " (and the term "crisis management")
in a very general sense.

In fact, the differences among "extraordinary events, " like those mentioned in -
preceding paragraphs, are not as important as the planning stages to avoid them. In
Gigliotti and Jason’s (1991) words, ”For all practical purposes, planning for
extraordinary events includes certain generic elements or components since the basic
difference between extraordinary events is intensity" (p. 4).

This thesis adopts Slatter’s (1984) definition of crisis: ”A situation that
threatens the high-priority goals of the organization, (. . .) restricts the amount of time
available for response and surprises decision-makers by its occurrence, thereby
engendering high levels of stress” (p. 6).

Consequently, and based on this managerial definition of crisis, the term crisis
can be defined from the communications perspective as: a situation that threatens the
goals of the organization, altering the relationships among the organization and its

publics, and requiring extraordinary intervention from the communications managers.

8

Because of its surprise a crisis restricts the amount of time available for response for
the communications practitioners, producing levels of stress not present in normal

circumstances.

1.3. The negative and positive sides of a crisis.

It has been observed (Meyers & Holusha, 1986) that it is an error to think of
crises only in negative terms. Usually, critical events also present a positive side.
”Crises present opportunities as well as challenges, opportunities that are not available 6
at any other time" (p. 27).

These authors identify several potential positive consequences in a crisis such
as that heroes are born, change in the organization is accelerated, latent problems are
finally faced, people can be changed, new strategies evolve, early warning systems
develop, or new competitive edges appear.

For example, in the insurance business recent disasters have served to magnify
the importance of public relations planning and further integrate the practice into
industry management (Gore, 1993). This change is a positive consequence of crises.

In the same line, Fink (1986) points out that a crisis in business is not
necessarily bad news but merely reality. In Fink’s (1986) opinion, with proper
planning there can be a positive side to a crisis. He writes, "The Chinese have

embraced this concept for centuries. The symbol for their word ”crisis" -called wei-ji-

9

is actually a combination of two words, ’danger’ and ’opportunity’" (p. 1).
Thus, contrary to the popular belief, a crisis is not necessarily bad. It is
simply characterized by a certain degree of risk and uncertainty. Controlling this risk

and uncertainty will allow the manager to make use of the positive aspect of a crisis.

1.4. Crisis management: a definition.

Having defined "crisis, " a clarification of ”crisis management" is now
necessary.

Gigliotti and Jason (1991, p. 13) define it as ”the ability of an organization to
deal quickly, efficiently, and effectively with contingency operations with the goal of
reducing the threat to human health and safety, the loss of public or corporate
property, and adverse impact on continued normal business or operations. ”

More generally, Fink (1986, p. 16) defines "crisis management" as the act of
planning for a turning point -a crisis-; as "the art of removing much of the risk and
uncertainty to allow you to achieve more control over your own destiny. "

Based on both definitions, this thesis will adopt the following definition of
crisis management: the ability of an organization to plan for a turning point in order
to prevent negative consequences from occurring and enable itself to deal quickly,
efliciently, and efi'ectively with contingency operations if necessary.

Those organizations unable to do so are what Pauchant and Mitroff (1992) call

10

" crisis prone” organizations. Those others that, "while not totally immune, have at
least done everything possible to prevent major crises from occurring in the first place

and to better manage those that do occur" are denominated "crisis prepared" (p. l).

1.5. Common denominators of crises.

Apparently, each crisis that arises seems to be unique and distinctive.
Nevertheless, if we examine the roots and the evolution of the different crises, we can
find many common elements. This pattern of predictability is the key to forecast
business crises and to avoid or moderate their negative effects (Meyers & Holusha,
1986).

This does not mean that two crises are exactly the same, but that, even when
many things can differ from one company to another (the culture, the corporate
mission, the organizational structure, etc.) the common characteristics found in
different crises will serve as a guide to prepare the organization’s crisis plan.

Consequently, a review of the crises common denominators discussed in the
management literature is essential to build a conceptual model that helps decision-
makers in understanding such crises.

As Smart, Thompston and Vertinsky (197 8) indicate, the organization’s
susceptibility to a crisis is determined by some common variables: a) competitive and

environmental variables (product-market decisions, business cycles, etc.); b)

ll
managerial characteristics, such as individual capabilities and management styles; and

c) organizational attributes, such as resources and structures.

Additionally, in most crises certain characteristics (Berge 1990) are present.
First, we find a need for quick decisions. The spwd with which events typically
happen provokes an escalation of the intensity of the crisis. Time is not on the
organization’s side and the decision-maker Ins to act and has to do it fast. If this is
not done, rumors and speculation will tend to be uncontrolled (with the consequent
risk of baseless speculations).

Second, inaction or inappropriate decisions may have far-reaching implications
and are likely to produce undesirable consequences: mistrust among customers,
demotivation with the employees, etc. To avoid this, it is not enough to assure the
public that everything is OK. To be credible management must provide details of how
that conclusion was drawn.

A third characteristic of most crises is that the news media are highly
interested. Media scrutinity is a fact of business life whether the organization likes it
or not. Silence in the midst of a crisis implies guilt, whether justified or not and
reporters face deadlines hour by hour. Control of the situation requires that the
‘ company controls the message. Therefore, nobody better than the organization itself
to answer quick and effectively to all media inquiries.

Some other denominators of crises are that management has just a limited
number of options to act; that the organization has to deal with groups with

conflicting objectives; or that the chief executive officer usually becomes directly

12

involved.

Finally, the way managers react and behave in a crisis tends to be very similar

(Berge, 1990; Luzaszewski, 1987). Surprise, panic, frustration, narrow-minded focus,

disbelief, siege mentality, and especially- defensive avoidance when first confronted

with a crisis, seem to be usual common reactions.

But not only crises share common denominators. Also successful crises plays

 

seem to contain common elements.

Regarding this common requirements needed in a crisis plan, we find the

following generic requirements (Berge, 1990; Luzaszewski, 1987 ; Nudell & Antokol,

1988; Meyers, 1993):

*

It must state the organization’s policy on the issue/s and have the approval of
key players.

It must assess the threat to the organization of the different possible crises.
It must identify the organization’s resources.

It must identify the potential crisis team members and assign them specific
responsibilities. Spokepersons must be identified.

It must establish the procedure to quickly notify the government agencies,
manufacturers, vendors, etc. about the situation.

It must contain the location of the crisis management center.

It must indicate the equipment needed at the crisis center.-

It must contain training programs for the crisis team personnel.

It must include a test program and emergency procedures.

1.6.

13
It must establish how the organization will deal with the media.

It must consider how the organization’s normal work done will get done
during the crisis.

It must provide procedures to deal with the possible victims and their families
as well as with the other affected publics.

It must establish the way the organization will return to normal after the crisis

(both operationally and in human terms).

In addition, any crisis plan should (Meyers, 1993):

Be flexible: it should consist of guidelines, rather than details tied to specific
disaster situations.

Contain a maintenance process, so that the plan can be updated.

Be cost effective.

Provide for an organized response: the plan should provide a checklist of

issues that need attention immediately following a crisis.

Typesofcrisas.

When we talk about crisis management we tend to think in Tylenol type of

crises, but maybe we should also think in' terms of managing some other kinds of

uncommon events that require immediate action like a hostile takeover or a strike

14

(Garcia Galera, 1992). This is, managers might confront a wide variety of crises.

Furthermore, there seem to exist currently a surge of crises on a scale not
previously encountered. Crises now are certainly more varied and diverse than those
of past decades. Today most of crises are human caused. "Increasingly, modern crises
are due to criminal human intervention (such as product tampering), errors in design
and systems maintenance, mistakes in operation, or faulty values and culture (as when
bad news is deliberately kept from company leaders)" (Pauchant & Mitroff, 1992, p.
10). In principle, all human-provoked crises can be prevented. Regarding acts of
nature such as hurricanes, all the organization can do is to get ready to mitigate their
negative consequences.

Along these lines, there is a tendency among scholars and researchers to
Wfinflggmeu eature. Some of them take a simple and global
approach such as the one which divides crises in (a) financial, (b) reputation, and (c)
outside forces. This is the case of Gottschalk (1993).

Other classifications are, however, more in detailed (Berge, 1990; Meyers &
Holusha, 1986) and include natural and outside events in their classification of crises.
Under this point of view, situations calling for implementation of a crisis plan may
include, among others, product tampering or failure; systems malfunctions disrupting
the normal course of business; accidents; natural disasters, such as floods, tomados,
fires, and explosions; civil disorders, such as riots and sabotage; death of an
executive; misuse of funds, and scandals in top executives’ private lives; major

litigation against the company; a hostile takeover, etc.

15

A third way of classifying crises is by their degree of urgency, this is, by the
time available to management to respond to the crisis (Berge, 1990; Reinhart, 1987).
Depending on this, crises will fall under the categories of ”emergencies" (explosions,
accidents, etc.) or "non-emergencies" (protest demonstrations or the release of
sensitive data).

More specifically, Reinhardt (1987) identifies the next types of crises
depending on their time constrain: A) W: there is no time for

L,

researching the problem or developing a detailed plan of action (this should have been ‘\ ,4 A." .3 '\
done in advance). Examples would be natural disasters or an airline crash. These \\ ( I
crises could be fueled by an adversarial relationship with the media, a negative image A \
among the publics, or disagreement among top management on how to act. B) i
W: while some time for research and planning is available, practitioners .3
cannot be sure when or how the crisis will hit. Example: public-health issues. And, J
C) W: these are crises that last for months or even years. Spin-off ’
stories in the media keep the crisis alive. Example: the periodic rumors of the recall

of the GM pickups.

But maybe the most original classification of crisis is the one implied by Berge
in his book on crisis communications (1990). According to Berge, every crisis would
fall into one of these two categories: chronic or acute. In a W
every decision is taken in light of former misconceptions. The organization has gone

so far that it certainly cannot go back. A chronic crisis situation can last for a long

time sometimes even years, wearing everyone out in the process. In an M

16
Mon, "the damage has been done and the highest ranking person will need to step

in and personally minimize the loss. You have to do something and you have to do it

right now" (pp. 11-12).

CHAPTER TWO: LITERATURE REVIEW
2.1. Planning: a decisive stage.

Planning enables an organization to avoid crises or, when this is not possible,
to prevent any damage to the organization and/ or its publics. Being prepared enables
an organization to avoid the most common, most devastating mistakes and
misjudgments in times of crisis, which usually are a consequence of precipitation and
lack of time to decide. Preparatory measures can save the organization not only
problems but also great amounts of money.

rA crisis management plan has to be ready in advance to the crisis. There must 6
be no waste of time. Much of the thinking work can be done ahead of time.
Establishing the most important publics, determining the lines of communications for
internal as well as external contacts, or obtaining the chart of the organization and
decision-making structures, for example, can be done in advance. 4

However, as Berger (1990) observes, some companies believe that they can
improvise a crisis plan from scratch during the initial time period of the crisis. They
do not realize that one of the key words in crisis management is ”planning” -the other
is "communication. " They do not realize that the surprise itself is the first damaging
factor in most crises. The immediate period of time following the emergence of a
crisis is critical in configuring the external perceptions in the pubiicsT Once these

perceptions are formed it is extremely diflicult to change them. Thus, whether the

17

18

organization gains control over the situation is determined within a very short period
of timej

The starting point in any crisis plan (after gaining top management support)
should be establishing the objectives of such a plan. To prevent misunderstanding,
provide focus, and facilitate implementation of the crisis plan it is important to define
the object of the plan (prevent crisis from occurring; contain the impact of a crisis if
one does happen; provide an organized response to a incident, etc.). Crisis planning
means different things to different people (Katz, 1987; Myers, 1993).

We must remember here that protecting people must be the top objective of the
organization and its crisis planning effort. Protecting property and assets must always
be secondary to protecting people (Gigliotti & Jason, 1991). Nevertheless, it is
common that organizations reverse these priorities. The results easily result in deaths,
victims, and the subsequent sanctions for the company involved.

Some authors believe the crisis plan should be as detailed as possible (Nudell
& Antokol, 1986). Under this perspective, the more detailed and comprehensive the
planning, the easier the decision-making process. The purpose of such a planning
' would be to have as many decisions as possible already taken and ready for being
implemented.

Some others (Myers, 1993; Gigliotti & Jason, 1991) defend a different
approach. For Myers (1993) the crisis plan is intended to be used only as a guideline.
For Gigliotti and Jason (1991) both a general and an specific plan have pros and cons.

A general plan is versatile and can be adapted to a wide variety of crises, although it

19
will be somewhat lacking in details. An event specific plan, while not generally
adaptable to a wide variety of situations, is generally the consequence of a great deal
of pre-event planning, which hopefully will have taken into consideration all probable
(and perhaps some improbable) contingencies and have detailed procedures for dealing
with each of these probabilities.

If the organization whose task is to implement the emergency plan is small and

the number of personnel with whom it must deal is similarly limited, then a

general plan is perhaps the best choice. (. . .) An event-specific plan generally

works well in very large organizations (. . .) where the personnel staffing and
available resources can adequately support a complex operation. (Gigliotti &

Jason, 1991, pp. 27-28)

Nevertheless, when things go smoothly crisis planning is the last thing on the
list to do; when bad times come and profits are low, crisis planning is an excellent
candidate to be cut from the budget. This means that the more expensive a crisis plan
is, the more likely it is that it will not be approved by top management (Myers,
1993).

To avoid this, Myers (1993) proposes two areas on which to focus in such a

planning: (1) keep costs at a minimum by using a plan development methodology

designed to yield cost-effective solutions and (2) minimize testing requirements.

2.2. The planning process.

Any crisis plan should include the steps to follow before, during, and after a

crisis.

20

Scholars and practitioners seem to coincide in the basic steps necessary to
develop the organization’ 3 crisis plan. Basically, these include: identifying the types
of crises that have occurred or are susceptible to occur in the company’s industry;
determining those that could affect the organization in the future (and which scenarios
are possible in each situation); and establishing liaisons with the mass media,
governmental agencies, external consultants, and other constituencies that could play a
relevant role in a crisis. Once the plan is completed, simulations to know whether the
plan works and would be effective in the case of an emergency play an important
role.

Once the first crisis plan is developed the organization must review it
periodically to detect any possible gaps. This being so, many emergencies can be
prevented completely while others can be anticipated.

However, senior management often thinks that devoting time to such low-
probability events is a waste of the organization’s most valuable resources, and the
time of senior management. As Myers (1993) puts it:

The problem is that cost-conscious executives are reluctant to commit

substantial resources to develop a detailed plan for an event, the scope and

dimensions of which are unclear, such as a disaster. This is because a plan
implies precise logistical and procedural commitments that translate into high

costs for development, maintenance, and testing. (p. 2)

The organization, therefore, has to look for a solution to achieve an
equilibrium between the need to take some reasonable preventive measures and the
low probability Of a crisis. This solution should consist in the development of a

We...
,—_.__-

methodology that balances both of these factors so thatzl—a) preventive measures to

21
reduce the possibility of a crisis are taken, b) an organized response if a crisis does

happen is available, and c) business continuity during a crisis recovery period is

possible (Myers, 19935
Most writers on crisis management provide a list with the steps to follow when

preparing a crisis plan (Berge, 1990; Brewton, 1987; Carney & Jorden, 1993;

Gigliotti & Jason, 1991; Hearle, 1993; Katz, 1987). These steps are summarized in

the following list:

1 Spot crisis indicators.

2 Delimit the risk that a specific issue might escalate. Provide an inventory of
company vulnerabilities. Determine the potential effects of any incident.

3 Develop different scenarios of how a crisis might progress.

4 Anticipate for each scenario possible questions and the ramifications.

5 Establish the alternatives and select a course of action. Prepare formal plans
that address all potential crises that the organization could suffer.

6 Identify the organization’s most important publics.

7 Analyze the importance of various audiences and translate this into corporate
policy decisions.

8 Know in advance which are the most appropriate ways to address each of the
publics.

9 Establish a Crisis Management Team with members from different areas with
power to make decisions.

10 Involve top management in the planning process.

ll

12

13

14

15

16

17

18

19

22
Establish clear lines of responsibility and authority among the members of the

Crisis Management team.

Pay attention to details in developing any contingency plan.

- Have checklist of things to do and people to contact available.

- Designate a place where would be established the control center should
a crisis occur.

- Make sure the center is well equipped.

- Establish a formal method of emergency notification.

Appoint an official company spokesperson.

Become acquainted with the media and the trade press people before the crisis

occurs:

- Ensure the managers are trained to deal effectively with reporters
during a crisis.

- Have written material with facts about the organization available.

Identify employees who can handle the stress of a crisis by performing

simulation games.

Identify outside experts who can work with the company’s people in the event

of a crisis.

Ensure that everyone in the organization knows about the crisis plan.

Have regular drills and rehearsals. Test a portion of the plan periodically,

involving CMT members.

Establish contingency plans and budgets.

23

20 Review and evaluate periodically the crisis communications plan.
21 Update and modify the plans as required following each exercise.

Three of these authors (Berge, 1990; Gigliotti & Jason, 1991) coincide in the
methodology to develop the crisis plan, and take into account the principles of "iesue

tracking, " "scenario developmerrt, " and "action 91219:."

”mp... ._....

 

Under their perspective, the planning process begins with the development of
an "issue analysis" procedure which helps the organizations to find indicators that
give an early warning of a crisis. After that, the first thing to do is to make a
comprehensive list of all possible types of events that could occur. Then break the list
into events that are the result of actions initiated by people or natural events. The next 6
step would be to rank each item on the list from 1 to 10, with 10 being those
incidents that have the highest degree of probability of occurring and 1 the lowest.
This would include the company’s vulnerability to: security concerns, product
recall/ban, employee morale problems, community unrest, bad publicity, major news
coverage, new legislation, supply problems, activist concern, etc. Once this list has
been completed, the concrete plans to deal with each contingency can commence.

Based on this information, the decision-makers can now go on to the next
steps. These include: "an issue statement to describe the scape, intensity and direction
of an issue; a strategy to spell out the course of action; (and) a company position
paper to define the company’s response and policy on the issue” (Berge, 1990, p. 39).
The use of "issue tracking" and "issue analysis" on a regular basis helps the company

to think more in terms of vulnerabilities (see also Myers, 1993).

24

In addition, the crisis management plan should be written. A written plan
establishes clear lines of responsibilities and can be helpful even when the manager
who has the knowledge to handle the crisis is not available.

Finally, training sessions and tests should be conducted within the
organization. The purpose of such simulations is that everyone in the organization
knows his or her role in the event of a crisis, as well as to integrate lessons learned
into more cost-effective solutions (Berge, 1990; Gigliotti & Jason, 1991; Katz, 1987;
Myers, 1993). Ideally the individual responsible for evaluating an existing plan should
not be the same person who was initially involved in its development.

These tests are, however, not always done, and after an initial reading of the
crisis plan, this is normally relegated to a drawer where it remains waiting for the call
to action that may not come for many years (D. A. Haynes, personal communication,

October 5, 1993; Gigliotti & Jason, 1991).

2.3. Top management, strategic planning, and cr'mis management.

Several authors (Caywood & Stocker, 1993; Katz 1987 ; Pauchant & Mitroff,
1992; Pinsdorf, 1987) point out the importance of getting top management early
involved in crisis communications planning. A serious dedication by top management,
preferably by the chief executive officer, seems to be essential to achieve a good

outcome from the planning process.

25
However, as Pauchant and Mitroff (1992) report, executives, when asked to

indicate the effectiveness of various strategies for convincing top management to

adopt a program in crisis management, say that thenember one strategy is theiuecflt‘,

p-Jp‘I-m.»
5‘...‘ r

personal experience of a repeated series of major crises. It is after the organization
\mxxxl ”fl ...... “E ‘‘‘‘‘‘‘‘‘‘‘ _.

, _,..-r-
‘h-M"

has suffered a crisis when top management realize about the importance of its
involvement in planning.

Even if this particular management activity only occurs once in a company’s
lifetime, the existence and the proper execution of the crisis plan can be just as
important, or more, to the functioning of the organization as it is admitted to be the
marketing or financial plans (Caywood & Stocker, 1993). Therefore, crisis
management should be as much a part of modern management as the more traditional
business functions.

And, what is more, crisis management should be extended to the whole
organization. As Pauchant and Mitroff (1992) puts it,

Effective crisis management is no longer just a matter of managing crises. All

the concerns and questions we have considered up to this point are equally

applicabletotheskillsandstrategiesthatallorganizationsneediftheyareto
survive in today’s highly competitive global economy. The same basic set of
processes are involved in both crisis management and strategic management.

Managers in crisis-prepared organizations have learned this fundamental

lesson: crisis management concerns the totality of their organization as well as

their relation with their environment and is an expression of the organization’s

fundamental purpose or strategic vision. (p. 126)

In certain industries top management is certainly aware of the need of using
public relations as a necessary strategic management and crisis anticipation tool. This

is the case of the insuranee PESWS. where crises and impending disasters are

 

26

everyday fare. As a result, public relations practitioners are involved in creating and

maintaining the corporate business plans of most insurers (Gore, 1993).

2.4. The role of the CEO in crisis management.

It is important to determine the role of the CEO should a crisis hit. Of course,
we are talking about crisis where the top manager is not part of the crisis itself.
Today, the number of lawsuits, for example, against top managers are increasing
(Dunn, 1987) and CEOs become part of the crisis.

In this section, however, we refer to those crises were the CEO is not the
problefir. Some questions arise. For example, Which should be the role of the Chief
Execuiive Officer in a crisis? and, Does the CEO have to be the firm’s spokesperson?

In Berge’s (1990) opinion, the CEO’s role is to control the situation, stay
involved, and stay visible, often being the leader of the crisis management team. This
does not mean however that he also has to be the spokesperson. Everyone in the
organizationhasaroleandtheCEOhastocoordinateandmanagethecrisisteam.

What is more, there are certain instances when the best thing a CEO can do is
stay away from the main scenario. As Pinsdorf (1987) comments, although everyone
initially praised the concern that Warren Anderson, CEO of Union Carbide,
demonstrated in 1984 by flying to the scene of the Bhopal tragedy, others question

now whether it was in the best interest of anyone -Anderson, who was arrested by

27
Indian authorities, or Union Carbide, which linked its corporate presence directly to

the disaster rather than localizing responsibility in its subsidiary.

Certainly, some crises may better be handled by a subordinate. This is the case
when the role of the crisis management team is intentionally limited to one of
technical and/ or logistical support and planning for recovery operations (Gigliotti &
Jason, 1991). The team leader must delegate tasks. He has to ”manage," and this
mean to set goals and priorities as well as selecting the right people for the different
tasks (Nudell & Antokol, 1988).
and the degree of delegation required. Delegation means assigning tasks to
subordinates but in no way means not to be involved in the crisis operations. In
September 1985 , the hurricane Gloria hit Long Island leaving with no power to
thousands of Lilco customers. Even as late as ten days after the hurricane about a
thousand customers still lacked electricity. The utility’s Chairman, William J.
Catacosinos, remained vacationing in Europe until a week after the catastrophe, and
attempted to justify the situation at a press conference upon his return (Pinsdorf,

1987). Too late.
2.5. The effect of crises on management behavior.

Slatter (1984) describes a "crisis situation" as characterized by: surprise, short

decision time, and a high threat to important values.

28
As a consequence of this, the stress on both the organization and the

individuals increases.

It is generally recognized by organizational behavior theories that seme degree
ef’sgess is an essential prerequisite for problem-solving, and that without it there is
no motivation to act. This is, a crisis causes stress, which, in turn, affects managerial
behavior (cognitive performance) affecting the quality of decision-making. Related to
this, Holsti ( 1978) has indicated that the major effects of stress provoked by a crisis
are a reduction in management’s span of attention, an increase in their managerial
inflexibility, and a reduction in their time perspective.

Organizational behavior findings also indicate that there is a an @9599 IL
relationship between 39933 and the performance of individuals and groups. This is,
some stress is positive for problem solving but after a certain point stress produces
negative results (Murphy, 1959).

In addition, Slatter (1984) defends that an intense and continuous stress tends
to make individuals extremely inflexible, and to reduce their ability to cope with
complex problems. Stress makes the individual to focus his/her attention on the
present and immediate future rather than on long term factors. Also the perceived
time pressure may adversely affect decision-making.

This being so, Barton (1993) indicates the need to include a consultant in
psychology in the crisis planning process and in the post-crisis stage to help managers
and personnel to plan or to recover from an stressful situation.

Policymakers cope with these time limitations, lack of knowledge and other

29

pressures which provoke stress, by using a simplistic strategy for arriving at a
decision. They rely on a few simple decision rules which enable them very quickly to
arrive at a solution that seems to be satisfactory, instead of approaching a crisis as a
problem to be worked on by engaging in a careful information search, deliberation

about alternatives, and contingency planning (Janis, 1989).

2.6. The crisis management team.

Crises are better solved by a specialized task force than by individuals alone.
This is the conclusion that can be drawn from the literature review conducted to
elaborate this thesis. In fact, one of the first things to do in crisis-prepared
organizations is to create such a task force (Pauchant & Mitroff, 1992). It can be
labelled "crisis management unit, " "crisis management group, " ”crisis management
team," etc., and depending on the size of the organization it can be just a simple
committee or a whole department headed by a vice president of crisis management or
similar title.

An interdisciplinary task force is especially productive when the crisis requires
measures to be applied to different areas of the organization. The disciplines included
should represent all possible areas relevant to a crisis. Once a certain crisis occurs the
task force can be redefined including just those people relevant to the particular crisis.

In the planning phase, however, the list should be large enough so that every function

30

of the organization is represented. An alternative to this would be to include a core
group of people to any crisis and some other interchangeable depending on the
specific crisis. The core group could for example include the CEO, the senior
communications officer, an expert lawyer, etc. (Fink, 1986; Hearle, 1993).

The appointment of this task force or crisis management team (CMT) has to
take into account that while these executives will have the responsibility for managing
the erisis some others need to run the normal operations of the company. Some
executives simply do not belong on a crisis team because they can make greater
contribution by running the normal operations of the company (Hearle, 1993).

The crisis task force must be invested with the power to make decisions (and
not just recommendations) to be effective. This is why it is an advantage to compose
the task force with people from senior and upper management.

The role and responsibilities of each of the components of the task force must
be clearly specified in writing. Too often the chain of command is not defined enough
so that decisions in the organization are subject to internal disputes that make the
crisis itself worse.

In some other organizations where the reporting relationships are well known
sometimes these do not coincide with the formal organization chart (Myers, 1993).
This can provoke problems among members of the organization if not considered in
advance.

11“? lfidcr of the crisis management team will be in charge of controlling all

the group activities and implementing the decisions taken. He or she needs to have

31
sufficient authority so that he can make on-the-spot decisions within the framework of

overall organization policies. When _mn_ggement_ is not directly involved in the
CMT, the team leader must have access to top decision-makers, and the ability to
recognize which decisions to make independently and which to refer to upper
management (Nudell & Antokol, 1988).

Likewise, is essential to carefully consider where the crisis management team
is going to develop its job. "TESPhYS1C31199ti993951.9.‘luij’1’l939f, the Crisis
Management Center are considerations which are too often overlooked until an
incident occurs. At that time, the Crisis Action Team is forced to utilize whatever

available space is at hand" (Nudell & Antokol, 1988, p. 56).

2.7. Crisis management and organizational culture.

The pattern of basic assumptions invented, discovered or developed by a given
group as it learns to cope with its problems of external adaptation and internal
integration that has worked well enough to be considered valid, and to be taught to
new members as the correct way to perceive, think and feel in relation to these
problems (Schein, 1990) is what we call organizational culture. More simply, the
term organizational culture refers to the convictions of the company: its values,
beliefs andrideology. The culture is usually portrayed in the credo or philosophy

statement of the firm. Every company reflects a different organizational culture.

32
The concept of culture is important to the study of crises for three reasons:

1- Slatter (1984) has shown how some cultures are more susceptible to crisis than
others (although no single cultural configuration leads to crisis). "Exhibiting
power" cultures (the-one-man—bands) and "bureaucratic" cultures (firms
governed by rules and procedures) appear to be the most susceptible to crises.

2- A crisis action plan must be writtean line with the principles of the
organization’s culture and philosophy. This indicates the importance of
communicating clear organizational policies and procedures well in advance of
any possible emergency (Nudell & Antokol, 1988).

3- May (1950) defends that a eneis is exactly what human beings need in order to
challenge their basic assumptions. This is, crises can precipitate changes in the
corporate culture.

iii-The specific culture of the organization is one of the elements (the other is

individual ability) that determines the degree of success of the public relations
professional to influence strategic planning and, therefore, to help the CEO to avoid
the crisis rather than just handling the emergency when it happeney

While handling a crisis is a hallmark skill for seasoned practitioners, helping

management avoid the crisis in the first place is a far more valuable talent to

the organizations we represent. And the most effective way to exercise that

talent is to gain a seat at strategic planning sessions, where the opening moves

are mapped out. (Kinkead & Winokur, 1992, p. 18)

Sometimes a crisis provides the opportunity to change the basic assumptions on
which the culture is based. This is what happened at John Hancock Mutual Life

Insurance Co. (based in Boston). The company had to face a crisis period in 1990

33
after two well-regarded insurance companies failed and public confidence on insurers

decreased. Because the public relations director had a well prepared crisis plan to act,
the company was able to maintain customer and employee confidence while other
firms were under fire. Since then, public relations has won strategic planning
privileges at John Hancock (Kinkead & Winokur, 1992).

In some other cases the public relations practitioner is so enthralled in its new
role of strategic manager that he or she gets blinded and can be unable to serve as a
counselor of his of her organization due to a lethal absorption of corporate culture

(Hicks, 1987).

2.8. Crisis management and corporate image management.

Communication practitioners know the importance of/cbvrrpdr‘atefiimage: it is the
key to generating public support as a step toward attaining an organization’s healthy
bottom line, among other things. Communication practitioners know a number of
strategies by which corporate image can be both nurtured and sustained.
Communication practitioners whose corporate images have been besmirched know a
number of image-restoration strategies that can turn around a sullied reputation. And
communication practitioners know the factors that canlmake or break corporate
image) The way a crisis is handled is one these factors.

Effectively, a crisis affects (positively or negatively) the company’s most

34

valued asset: its credibility and reputation. This is, a crisis can undermine the
company’s corporate image.

There are times when the publics question the authenticity and legitimacy of a
message because of an unclear perception of who is sending it (Windahl, Signitzer, &
Olson, 1992). Some other times, however, the problem is not an unclear perception
about the sender but a clear negative perception about the sender.

This idea is illustrated by the following example described by Gwin (1990):
residents close to nuclear plants responded to the emergency warnings depending on
the attitudes they have formed about the plant. " People who believe that a nuclear
plant is being operated safely appear more inclined to take an appropriate first
response in an emergency than people who do not believe the plant is operated safely"
(p. 148).

EEEEQHQM perceive the organization as straight forward and honest.
Gwin (1990) points out how people must believe in the disseminator of the
information before they will accept that information. And this is specially true in a
crisis situation.

Therefore, creating strong links with constituencies seems to be critical for a
successful crisis communications program. It should be subject to systematic planning
(Berge, 1990) and, as the various publics of the organization are not entirely
independent of one another, a company must present a " consistent corporate
viewpoint” across the whole range of audiences.

However, as Dickson (1984) says:

35

Companies still expect that PR can work miracles and that it can produce a

positive response even when the company has done something that is obviously

stupid or wrong. (. . .) Companies have not learned the lessons of the past very
well. Many still react to the public in a negative way, that is, not by telling the

truth or doing good works, but rather by being suspicious of the public’s *

motives, trying to manipulate opinion rather than understanding and profiting

from it, and simply using public relations to cover up mistakes. (p. 4)

Bernstein (1984) indicates how the different publics of the organization join the
different impressions (emitted voluntarily or not, directly or indirectly) received from
the firm and shape a corporate image. This image about the company will coincide
with management’s vision of reality or not, but it always will be the public’s reality.
A corporate image, therefore, consists of the essential qualities attributed to the
corporation. A corporate image is a composite of people’s attitudes and beliefs about
that corporation (Gray, 1986).

It is easy to understand an immediate consequence: the company cannot
My modify its image. This modification is dependent 09/ public perceptioris and,
therefore, it corresponds to the publics to change their image about the company. The
only thing the organization can do isjntervene in the two factors that precede and
provoke the corporate image: corporate identity, and corporate communications.

A prerequisite to a cohesive corporate communications program is a
harmonized corporate identity (Gonzalez Herrero, 1992). The corporate identity can
be defined as "theprojection of a clear idea about what the company is and what it
”aimsto be" (van Riel, 1992). It consists of_ three main elements (Figure 1): the

corporate mission, the corporate behavior, and the corporate visual identity. A fourth

element, included by van Riel (1992) might be added: the corporate communications

36

per se. Nevertheless, this thesis simply considers corporate communications as a
linking element which serves as a bridge between the organization’s identity and its
projected image.

The corporate mission is, in Garbett’s (1988) words, "analogous to the product
positioning statement used in product marketing. Its importance lies in developing
communication that is consistent over time and among the many voices emanating
from the corporate body" (p. 18). Therefore, establishing the firm’s mission is an
essential first step in establishing a successful corporate image.

The- corporate behavior (where crisis management is included) and the visual
identity should both emanate from the mission, which is also a reflection of the
corporate culture, but, unfortunately, this does not always occur.

Corporate behavior has been defined as the policies and behavior patterns that
guide how the company operates (Campbell & Tawaday, 1990).

These elements (mission, visual identity, and corporate behavior) also explain
the ”corporate culture" (already defined in preceding pages).

As shown in the figure, the culture of an organization serves to identify the
organization and distinguish it from other organizations. This "identity” will be
transmitted to the publics through corporate communications (any form of
communication emitted, voluntarily or not, from the company) and the corporate
image will be formed. The corporate image, therefore, is a reflection of the corporate
identity (van Riel, 1992).

At the same time, the corporate image might influence the corporate culture by

37

Corporate Identity

 
   

Corporate Culture

 

SymbOISI
Visual identity

  
   
 
 

    

   

Corporate

Corporate
Behavior

Misr'on

    

   

 

 

 

 

 

  
  
 

Corporate Communications

 

Perceived Corporate Image

Figure 1. Corporate identity, corporate communications, and perceived
corporate image.

38

altering, for example, the corporate behavior. If this occurs over time, and a change
in the corporate culture occurs, the organization will project a different identity and,
consequently, a change in the corporate image will also occur.

The corporate image frequently not only determines the rentability of the
commercial actions but also prevents crisis from occurring. A well planned and
managed corporate image attracts top-notch personnel, it attracts customers, and it
attracts investors. It improves employee morale, customer and community relations,
and corporate/ government relations (Bernstein, 1984; Garbett, 1988; Gray, 1986; van
Riel, 1992).

Tejada Palacios, Sanz de la Tajada, and Echevarn’a (1991) distinguish three
different levels in the corporate image: a) the image as a result of a series of
omissions from the company; b) the image as a result of a series of non voluntary
actions from the company; c) the image as a result of a series of voluntary actions
from the company.

It is true than an important number of the actual corporate images aroused
spontaneously without any kind of planning fiem the management (and this is also
true in what we can call traditional successful companies like IBM, Procter &
Gamble, etc.). But, it is also certain that these organizations currently have an
extraordinary carefulness about their images, and this through a programmed and
planned intervention.

Such an intervention has the next characteristics: foresight of actions; foresight

of ways to execute these actions; existence of a logical sequence of operations; it

39
gives an steady and progressive effect to the corporate image.

It is clear that planning, again, is the key word.

2.8.1. W.

In February 1993, GM accused NBC of rigging a test crash of a pickup truck.
Public attention focused on the apparent ethical repercussions for the journalistic
profession. However, neither GM nor NBC were primarily concerned with moral
considerations. They were for the most part interested in the consequences this crisis
implied for one of their most valuable assets: their corporate image.

This example serves to illustrate how crises influence public opinion and
conform people’s attitudes, beliefs, and, ultimately, their image about a corporation.

General Motors is the focus of my attention.

2.8.1.1. The facts.

In February 1993, General Motors Corporation launched a major legal and
public relations campaign against critics who charged that it had manufactured
millions of unsafe pickups for more than a decade.

GM publicly accused NBC of rigging a test crash of GM pickup trucks on its

"Dateline" news program. NBC’s program showed plumes of smoke jetting out of the

40
bottom of the pickup before impact, suggesting that the subsequent fire may have

been caused not by the crash but by toy-rocket engines, which were detonated by
remote control. GM said that " Dateline NBC” produced a horrifying picture of a
burning truck that unfairly damaged the company’ s reputation (Kolbert, 1993).

For some days, GM management canceled all advertising on NBC News and
even wanted to cancel its entire $160 million-plus ad budget on NBC. Finally they
were convinced that this move would hurt GM more than it would help and postponed
such a decision. GM was NBC’s largest advertiser.

At the same time, NBC admitted that "sparkling devices" had been used in the
test, and read on—air an extraordinary apology. This being so, GM agreed to drop the
lawsuit against NBC that had been announced.

Some people thought GM ’3 movement had been just a maneuver to distract
attention from a recent unfavorable verdict. A jury in Atlanta had awarded $105
million to a family whose son was killed when his truck exploded in flames in a
traffic accident.

The legal costs, however, are irrelevant compared to the company’s image and
what it might mean to sales. As an example, after the sentence in Atlanta, in heavy
trading on the New York Stock Exchange, GM shares fell $1.125 to $38. The I
publicity surrounding the pickup case also could hurt future sales of a key vehicle.
Large pickups were GM’s best-selling vehicle and one of its most profitable
(McCarthy & Lavin, 1993).

In the background, the National Highway Traffic Safety Administration is still

41

investigating whether to order a recall of the pickups, and critics remind us that for
years GM has fought against mandatory installation of seat belts and air bags and that
it once hired a detective to follow the activities of Ralph Nader, the consumer

advocate (Bryant, 1993).

2. 8. 1 .2. Considerations.

Modern corporations have observed that a good ”company reputation" among
their publics simplifies most of their marketing problems, and that all actions, all
products, all pronouncements of the corporation convey signals and generate messages
that contribute to the public perception.

Consequently, it is not strange that GM took great efforts to defend its image.
Positive beliefs and attitudes toward its trucks were crucial to sell them and to sell
other GM products. In the decision making process consumers evaluate alternatives in
terms of expected benefits and narrow the choice to the preferred alternative (Engel,
Blackwell, & Miniard, 1993).

Nevertheless, GM maintained that they had done nothing wrong and that the
company’s trucks met Federal safety standards. As Robert C. Stempel, GM’s former
chairman, said in a trial "We don’t have any problem.”

GM executives defended that the Insurance Institute for Highway Safety had
found that GM’s pickups statistically were neither safer nor more dangerous than

Ford’s or Chrysler’s overall (Treece, Kerwin, & Yang, 1993). They insisted that,

42

however, media and consumer groups’ focus was usually narrowed to fiery side-
impact collisions, the kind of accident that had led to the Atlanta verdict, where GM’s
trucks had a measurably higher rate than similar vehicles.

Regardless of this, Mr. Stempel and the rest of the GM staff should have
considered that from a consumer behavior perspective it doesn’t really matter whether
the trucks were objectively safe or not. The fact is that they were perceived as
dangerous by the public.

GM hoped that their public presentation accusing NBC would let them regain
the initiative in this particular crisis and in defending its corporate image. However,
some analysts indicated G.M. was taking a significant risk by aggressively defending
itself and attacking its critics. ”A successful rebuttal won’t make anybody go out and
buy the trucks” said an analyst. "The publicity can’t do anything but hurt them"
(Bryan, 1993).

GM tried to justify its behavior by accusing NBC (which certainly did not act
properly). Media ability to exert informational influence is affected by its credibility,
and, when, as in the NBC case, this credibility is called into question corporate
chances to gain the public trust are increased.

Nevertheless, GM could have limited public relations damage by quietly
acknowledging problems and moving on, as other cases show how difficult is in
certain cases to change public attitudes.

For example, Ford Motor Company in the 1970’s strongly defended itself

from charges that it had been aware that the gas tanks on some of its models were

43
hazardously vulnerable in rear-end accidents, but did nothing to rectify the problem.

The charges resulted in lasting damage to Ford’s corporate image.
Similar problems confronted Audi in 1986 after a CBS’s "60 minutes." Some

analysts think Audi has not yet fully recovered from the incident. The company’s

sales dropped alarmingly.

2.9. Media relationship.

An important part of the literature on crisis communication management is
dedicated to establishing the principles that should guide the organization’s relations
with the mass media.

Dealing with the media is an important component in crisis planning since in
most cases communication with the publics is going to be conducted through the
media. The crisis plan must include steps to deal with the media both before and
during a crisis.

Before the crisis, any crisis plan should inelude an evaluation of media
relationships and if they are not sound, steps need to be taken to improve them
(Gottschalk, 1993). The idea is being accessible to the media also during the good
times. Mass media are one of the most important publics involved when a crisis hits

because they influence public opinion. Therefore the company should not wait for a

44
crisis to acquaint itself with local media (Berge, 1990). Newspapers, TV and radio

stations, must be clearly identified in the crisis plan and a detailed list of telephone

and fax numbers included.

Also during the good times is the moment to provide media training to the top
executives of the organization and especially to those designated as spokesperson.

During the crisis, the task of the communicator is to make the job of the news
media easier, keeping them informed and being honest. At this stage "truth" and
"honesty" are the key words to handle any situation as well as to obtaining favorable
publicity (Burton, 1966; Fink, 1986).

Eight principles should characterize the organization’s relations with the media
(Berge, 1990; Bird & Yutzi, 1984; Gottschalk, 1993; Katz, 1987; Nudell & Antokol,
1988):

1. The company has to inform the media no matter the information it has
available. Usually, there is a lack of information coming out from the crisis
scenario, especially in the earliest stages of the crisis, and companies delay a
press release until they have complete information. The problem is that the
press cannot wait. They have deadlines and time pressure. They do not have
always time to verify the facts. For these reasons they will use any available
information they can get (from facts, speculations, and suppositions).

Therefore, to avoid invention and rumors the company must give as
much information as it is possible. The total story can wait until later. Besides,

public’s fears are minimized when they are informed.

45

The organization’s silence during a crisis often will be interpreted by
the publics as: guilty. It gives the impression that the organization has
something to hide.
The organization has to communicate the bad news quickly and at once. By
doing this, the organization avoids the continuing-story effect and regains
control over the situation instead of being pushed to react to the media
information. Being proactive instead of reactive is critical to successful crisis
communications.
If the company does not talk about bad things somebody else will. The publics
have different information sources but the most competent people to speak
about the crisis is the company itself. If the company does not do it some other
source will and the public could be misinformed.
Urgency does not mean improvisation. Even when there is a lot of pressure, it
is advisable to take the time to” properly prepare media communications
whether a release or a press conference.
It is advisable to limit communication with the mass media to one
spokesperson to ensure that the company speaks with one voice. Everybody in
the organization must understand that any inquiry from the press should be
referred to the designated spokesperson (Nudell & Antokol, 1988).

The spokesperson needs to be trained for the job (especially for media
interviews and governmental testimony) and be kept completely informed.

Besides, an ideal spokesperson for one kind of crisis is not necessarily the

46

right one for another kind, so several of them should be on the resource list
(Gottschalk, 1993; Katz, 1987).

Sometimes the nature of the crisis demands a spokesperson specialized
in a certain field. This is the case of takeovers and lawsuits related crises
where the role of legal and financial experts is crucial. However, when the
crisis has no technical details involved and is of considerable importance (like
in the Tylenol case), the best person to convey the organization’s message is
usually the CEO.

In cases where more than one spokesperson is required, communication among
them must ensure that the company is saying the same thing, all the time, to
all the different publics” (Berge, 1990, p. 66).

For example, Florida Power & Light’s crisis plan is based in the
realization that a centralized control of communication is not adequate in this
kind of industry. In opinion of the company officials what is nwded is a)
centralized coordination, b) authority to communicate to field and customer
service workers, and c) training on how to communicate (Ingredients of a
crisis plan, 1993). In 1993 the company won PRSA’s ”Best of Silver Anvil"
for its comprehensive public relations campaign after Hurricane Andrew.
FP&L kept up a constant stream of communications with its employees,
customers, government agencies and the media (Florida utility wins, 1993).
The company "empowered" its staff to make decisions on-the-spot while

maintaining one clear voice. Training received in advance by the employees

47

made this possible. The communication greatly contributed to maintaining
safety and calm and after the crisis surveys showed that public’s satisfaction
had increased by 20 %.

7. The mass media have a legitimate interest in the subject. The organization
must avoid thinking in terms of "us versus them” (Berge, 1990). The interests
of the mass media are different from those of the organization but that does
not mean that they are against the company.

8. Public Relation officials should have clear knowledge of thrgauthority they
have to release information without previous authorization from top
management. A study by Bird and Yutzy (1984) shows how public relations
directors are not always sure whether they have the authority to release
information or not. In some companies public relations shares this
responsibility equally with other departments. In others there are no clear
procedures. When this occurs public relations people tend to protect
themselves. As a result, the public relations department becomes a closed door
instead of a window to the public and creates ill feeling instead of goodwill.

The authority of public relations officials should he therefore clearly stated.
2.10. Crisis recovery planning.

After the crisis stage ends, the preparation for the next one begins (N udell &

Antokol, p. 126). At this stage it is the time to (Berge, 1990; Nudell & Antokol,

48

1988): A) Carry out an internal critique of the organization’s performance (evaluation
of plans, procedures, equipment, personnel, etc.). B) Identify problems in the
execution of the plan and its strengths. C) Examine the effectiveness of the
organization’s liaison(s) with external constituencies such as government agencies,
customers, and the media. D) Try to reduce the long term damage that can follow the
crisis. E) Assess the public’s attitudes towards the organization. F) Update the current
crisis plan -if it exists- incorporating improvements learned from the recent crisis. G)
Thank those who have helped or assisted the company during the crisis stage. H)
Oversee the assistance victims might require in certain crises. And, I) Elaborate an
archive to record the previous plans and emergency actions to avoid reinventing the
wheel.

Specifically, in the communications arena, this post—crisis analysis can produce
the following advantages for the communications department. It can elevate the public
relations function in the organization; it can focus public attention on matters of
critical concern and reaching audiences otherwise unavailable; it can build credibility; I
it can force an organization to review all policies relating to social responsibility
(Pinsdorf, 1987).

2.11. A classic in the crisis management literature: Tylenol.

There are certain instances where events are so atypical and unpredictable that

49

improvisation is the only conceivable action. This is the opinion of a considerable
number of authors when they approach the Tylenol poisonings of 1982. In that case,
Johnson & Johnson’s credo worked when planning couldn’t.

Effectively, a classic in the crisis communication literature is the 1982 Johnson
& Johnson’s Tylenol poisonings (Berge, 1990; Fink, 1986; Meyers & Holusha, 1986;
Gottschalk, 1993; Pauchant & Mitroff, 1993; Pinsdorf, 1987; etc). It is difficult to
find a book on crisis management ,with no reference to this case.

For many, the Tylenol crisis exemplifies one of the most grotesque aspects of
being the market leader: the product can be used as a vehicle to cause the greatest
hurt to the greatest number of people (Pauchant & Mitroff, 1993). For some others,
the Tylenol case set the guidelines for modern crisis communication management:
high visibility,-imegrity. and honesty. A brief review of this case seems, therefore,
advisable.

In fall 1982 seven people died in Chicago after taking Tylenol capsules
poisoned with cyanide. Within hours the chairman of Johnson & Johnson, the
manufacturer of the product, formed a seven-member crisis team to manage decisions
and coordinate all company actions. A national withdrawal of every capsule was
ordered and the entire stock of capsules destroyed on 1&1 ’s own initiative.

Johnson & Johnson was trying to do the best it could, and the public perceived
the company as the unfortunate victim of a terrible crime.

The company established toll-free consumer and media lines, halted

production, held several press-conferences from the crisis headquarters nationwide via

SO
satellite, prepared a group of executives to appear on television shows, and elaborated

a employee relations program to obtain support from inside the company. Managers
didn’t try to deny any connection between the company’s product and the murders.

To take decisions, J&J executives relied on research. Telephone surveys and
focus groups were conducted by independent research firms hired by J &J to secure
feedback on company actions and be informed about the public’s opinions and
attitudes.

At the same time, 1&1 officials visited about 160 congressional offices in
Washington to treat several issues regarding the come back of Tylenol capsules to the
market and were in permanent contact with the medical community.

Four years later, in 1986, the company decided to leave the capsule business
and promote pills in its place after another person died in New York after taking

Tylenol.

2.12.5 "The crms life cycle and issues management. 7

V The so—called life cycle, in which a crisis passes sequentially through phases of
birth, growth, maturity, and decline, has been observed in many crises. This concept
of "crisis life cycle" is drawn from the biological model of living organisms being
born, growing, reaching maturity and then dying (Urban & Star, 1991). An analysis

of the different crises effectively suggest some correspondence with this analogy. This

5 1
model can be used to describe the outcomes that should be expected from each stage

of the cycle.

Under proper management intervention, however, a crisis might not reach its
growing and maturity stages. In fact, it could not even be born. This is, management
can avoid crises even before they are born.

This being so, the pattern of a crisis being born, growing, reaching maturity,
and declining would just correspond to those cases where management did not handle
the crisis until it effectively threatened the organization’s interests.

The concept of crisis life cycle is related to that of "issue life cycle.” An
important number of crises is associated to issues that could have been detected by the 1
organization. Buchholz (1988), Hainsworth, (1990), and Meng (1992) indicate the
stages an issue might go through before and after provoking an organizational crisis.

Issues management, therefore, is related to the notion of crisis management. In
fact, issues management is so related to crisis management that, sometimes, it is
found in the same department as the crisis management function. Kasser and Truax
(1988) describe how, in certain cases, both activities are together in the corporate
communications department (the same department where the crisis communications
function usually is). In the same line, as Hainsworth and Meng (1988) report, many
public affairs specialists view public affairs/public relations as synonymous with
issues management.

The fact that both activities seem to be found together, especially under public

affair departments, is the reason why it is not uncommon that both functions are

52
executed in a parallel way (overlapping one each other) and that it is difficult to

differentiate the forecasting stage of crisis management from the issues management
function.

As Hainsworth and Meng (1988) conclude in their study, "the generally
understood purpose of issues management is to afford the organization early
identification of issues which may have an impact on its wellbeing" (p. 26) , which is
also one of the objectives —not the only one- of crisis management as defended in this
thesis. This is the reason why this thesis includes the concept of issues management in
its proposed model. The crisis management plan must include an independent issues
management program to anticipate, identify, and address issue related problems

before they become crises (Katz, 1987).

2.13. Stages of the crisis life cycle.

Several authors (Fink, 1986; Kharbanda & Stallworthy, 1986; Myers, 1993;
Nolan, 1984; Nudell & Antokol, 1988) refer to the concept of crisis life cycle.
Meyers and Holusha (1986) incorporate the steps of most of the others.

1. W: at this stage the crisis begins to give its first warnings. It is
also called the "prodromal" (Fink, 1986) or "dormant" (Nolan, 1988) stage.

This should be the time for planning, for considering all potential scenarios

and its consequences, establishing contacts with key subjects, training, testing

53

and evaluation of the crisis plan, etc.

However, the crisis at this stage is still recognized by relatively few
and the early warnings are usually ignored by management. It is still a "hidden
crisis" (Kharbanda and Stallworthy, 1986).

W: at this phase the crisis has already been scrutinized by the news
media and governmental agencies are likely to appear on scene. It corresponds
with the ”opinion development" and "institutional” phases described by Nolan
(1984). The key at this point is to retain the public affairs initiative as well as
keeping records of the flow of events. At this stage, however, some companies
tend to deny the crisis; management does not act and the crisis is explained
away. As a consequence the organization begins to disintegrate. Some action
occurs then, but too little and too late (Kharbanda and Stallworthy, 1986).

This is, in Fink’s (1986) view, the point of no return. At this point the
warnings have ended and some damage has been done. The role of the
manager is now to avoid further damage.

W: phase of getting back to normal. Some damage has been done
and the organization has to confront a recovery phase. It is time for evaluation
and analysis. Rewarding would also occur at this stage if the crisis was
managed properly. It is time for further crisis management planning -analyzing
what went right or what went wrong and taking appropriate actions. Also at
this stage Congressional investigation, or an audit, or a newspaper expose can

take place (Fink, 1986).

54
Recently, also Myers (1993) has written about what he calls the "disaster life

cycle." In his book "Total Contingency Planning for Disasters" Myers describes and
explains how to use a copyrighted plan development process (the Myers Plan)
designated to generate contingency planning solutions that are both practical and cost
effective. Although Myers’ book focuses on specific contingency plans for specific
business functions, his concept of disaster life cycle can be applied to a more general
notion of crisis. Myers’ model describes four stages in a disaster: (1) normal
operations, (2) emergency response, (3) interim processing, and (4) restoration.

The key word in the crisis management process is (proaction and should be
initiated at the pre-crisis stage. However, as Nudell and Antokol (1988, p. 14) point
out "most of what passes for crises management is reactive and ad hoc. Often, there
is little (. . .) planning, or what planning there is consists of untested assumptions filed
away (. . .) until an emergency occurs." The same opinion is maintained by Pauchant
(1988) who affirms that most of the articles written on crisis management are of the
"what-to-do-when-the-worst—happens" school, and that most crises management
programs in organizations are reactive in nature.

Effectively, most firms have initiated their crisis management efforts either in
reaction to a particular crisis (what Pauchant & Mitroff, 1992, label "crash
management") or by focusing on a specific and technical area ("security
management").

However, an effective program on crisis management must include not only

crash management plans -what to do when a crisis happens— but also understand why

55
crises happen in the first place and what could be done to prevent them. This view

requires that top management sees crisis management as a total necessary activity as it
is for example marketing.

And this is precisely the major difference between crisis-prone and crisis- _
prepared organizations.

, What fundamentally distinguishes crisis-prepared organizations from crisis-
\ prone ones is the overall mood from which they view crisis management.

i} Managers of crisis-prepared organizations do not consider crisis management a
. cost; they view it as a strategic necessity for ensuring the reliability of their

.1 products and production systems and for providing. competitive advantages.
(Pauchant & Mitroff, 1992, pp. 151-152)

(‘ Through proactive crisis management an organization is able to maximize its
opportunities and minimize the dangers it could confront in a crisis. Thus,
organizations that have developed capabilities in crisis management understand that
most crises and disasters have a history that can be studied with the appropriate
process. For these organizations, detecting a crisis in its early stages is the main
objective of the crisis management process. It will provide the manager with the

opportunity to avoid the crisis and/ or to orient further crisis management activities.

CHAPTER THREE: A MODEL FOR CRISIS MANAGEMENT:

THEORETICAL FRAMEWORK

The foundation for a crisis management model must rely both on
communication and organizational theory. Similarly to the work of the public relations
practitioner (Prior-Miller, 1989), much of the crisis manager work is based on
interpersonal and mediated communication. At the same time, his or her activities are
inherently organizational and focus on the relations that the organization has with its
publics.

Since such relations with the publics are usually assumed by public relations
(or equivalent) departments, it seems logical that public relations managers play an

important role in determining crisis management policies and strategies.
3.1. A situational theory for crisis communications management.

Grunig and Hunt (1984), Grunig (1992), and Grunig and Repper (1992) have
proposed a 3.12993"?le to identify publics that is useful for crisis
communications management.

According to Grunig (1992, p. 13), "when conflict occurs, publics ’make an
issue’ out of the problemééf the organization waits for these issues to occur before
managing its communications with its publics, the organization will have to confront a

crisis and to appeal to short-term crisis communications. However, if the organization

56

57

uses issues. management to identify and anticipate potential issues before they reach a
threatening stage, then long-term symmetrical2 communications can be planned and
crises avoided J

Grunig (1992) distinguishes several steps to achieve this. They include: a) the
identification of potential problems in the relationship with the organization’s
stakeholders; b) meseggggoniofmbhcs, that respond differentially to those

problems; c) the identification efebjecfltivesmforflgommunicationsplanmningg; and, d) the

 

 

evaluam the effects of those communication programs.

The situational theory of publics, first proposed by Grunig and Hunt (1984), is
especially useful in the second of the stages. According to this theory, and based on
the work of social scientists Dewey (1927) and Blumer (1966), Grunig and Hunt
(1984) 9911023ng meagre; similar 99:)ng (for example.
pollution, product tampering, or illegal hiring practices). Publics, however, differ in
the degree to which they are awareof/theexistenceofrhepmblemmdoganimdflto
<19 somethineaboutit

Egg of these _ differences among publics, the situational theory .
distinguishes: "non-publics" (people who do not share any problem), "latent-publics"
(people who face a similar problem but do not recognize that the problem exists),
{'aware-publics" (people who recognize that the problem exists but do not organize to
solve the problem), and "active-publics" (people who organize to do something about

the problem).

 

2
The concept of symmetry is explained later in section 3.2.4.

58
Furthermore, publics can also be categorized by its level of "activity" (Grunig

and Repper, 1992) and feur rypes. of active publics distinguished: l) All-issue publics:
publics active on all of the issues; 2) Apathetic publics: publics indifferent to all of
the issues (non-active); 3) Single issue publics: publics active on one or a small subset
of the issues that concerns only a small part of the population; 4) Hot issue publics:
publics active only on a single issue but which involves almost everyone in the
population (usually with extensive media coverage).

The crisis communications manager should be informed of the state of the
different publics. Grunig and Repper (1992) indicate how organizations can

communicate more easily with active than passive publics. Active publics, however,

 

are also more difficult to persuade (because they seek information from many
sources). Short-term crisis communications deal almost exclusively with active publics
and generally involve media coverage, while long-term crisis communications
strategies also deal with passive publics and with less or without media coverage of
the issue.

Passive publics can become active, and the organization should not ignore

them. The purpose of _a__we_ll-planned crisis communications strategy is to build a

 

positive relatitfirrrsg~ yith both passive and active publics. This being so, passive
publics will not need to become active and those that are already active will
participate in a‘1 symmetrical dfli‘alyefiggé yith the organization. From this dialogue both,
the public and the organization, will benefit. The crisis situation is, then, averted.

Artwo-way-symmetrical communication approacejas defended by Gruning

r'I—q

59

(1989) seems, therefore, adequate for crisis management.

As the proposed model will show, a proactive approach to crisis
communications instead of a reactive one must be applied. This means to be open to
‘the publics, cooperative, and responsible rather than a close system with an internal
orientation. And this should be the policy to follow not just in a crisis situation but
always. Wgnpany is clearly viewed as proactive and two-way symmetricalfiby

its constituencies it__cen minimize the risk of getting involved in a crisis and of

__._ __._...___..-__ .._.—-.-..

 

seeming guilty if a crisis mgursAs Burger (1984) puts it, the organization must talk

from thexviewpoint of thepublic’s interest, not the company’s.

3.2. Crisis management models.

The model this thesis proposes incorporates the ideas developed by Meyers
and Holusha (1986), Pauchant and Mitroff (1992), Westley and MacLean (1957), and
Grunig and Hunt (1984). The relevance of such models reside in that they are one of
the few frameworks practitioners can use to understand crises and manage

communication programs strategically.

3.2.1 MW.

Among the models that provide a partial insight on the understanding of crisis

management is that proposed by Meyers and Holusha (1986).

60

This model, applied recently by several authors (Barton, 1993; Brewton,
1987), is based in four major considerations: a) Bimegsigg: the size of the crisis; b)
M: the ability of the organization to influence the environment; c) Time: the
time the organization has to manoeuvre; and d) ngierrs : the number and quality of
the options of the organization. The way in which these factors relate indicates what
management tools should be applied.

The four dimensions can be combined in two four-square matrixes (Figure 2).

By assessing where the company is situated in both matrixes, the manager will be able

to take the adequate corrective actions more confidently.

- Low dimension, high control: represents a crisis situation that is not very
serious for the company and over which management has control. Strikes
usually fall under this category.

- Low dimension, low control: the situation is not severe for the company and
the outcome does not greatly depend on how management acts. A temporary
shortage of _ power could be an example.

- High dimension, high control: the situation is now more serious but the
company is still able to manage effectively the crisis. However, a wrong action
in this situation could put the company at risk. A takeover is an example.

- High dimension, low control: this is the most dangerous quadrant. The

61

DIMENSION-CONTROL MATRIX

 

 

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High control High control
'3
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I..OW COHU'OI [0w control
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Figure 2. Two matrixes for the diagnosis of crises. Based on "When it hits the fan:

Managing the nine crises of business." (pp. 207-216) by CC. Meyers & J.
Holusha, 1986, Houghton Miffin Company. Boston, MA.

62

situation is really threatening for the organization and t0p management has little
control over the outcome. A small company facing the costs of a massive recall is an
example.

Depending on the quadrant where the crisis is situated, the organization will

have different options to act. For example, in the Low dimension/High control and

High dimension/High control quadrants, top management has options to be proactive ,

and solve successfully the cris§.__However, in the Low dimension/Low control and

 

60.} “JR

High dimension/Low control, contingency and post-crisis plans will become the only

f

p ,
option of the organization since it has a lower control over the crisis.
I] . . . :

- Little time, a lot of options: the organization has a short period of time to
react to the crisis. Reaction measures are inevitable as a first step in containing
the crisis. However, management counts with a good range of options to
choose from. Example: impending shortage of raw materials due to the strike
of one of our main suppliers.

- Little time, a few options: the worst of the situations. The crisis stage is
impending and the organization has almost no courses of action to take.
Example: a product tampering story which is going to appear in the media
next day.

- A lot of time, a lot of options: the least severe of the situations in this matrix.

63
The company has enough time and options to plan ahead. Proactive

man/agement can be applied and hopefully the crisis can be avoided or at least
its negative consequences minimized. The neighbors’ concern about the
increasing of violence in their city could be an example.

- A lot of time, a few options: the organization has some good paths to follow
and try to avoid or minimize the consequences of the crisis. Proactive
m:n_a_g_ement can still be applied. An example here could be the neighbors ’
concern about the construction of a prison in their neighborhood.

Time constraint is, therefore, an important characteristic to take into account
when planning for a crisis. When the crisis will start and how long the crisis will last,

determines the time the organization has to manage the situation.

322. W.

A second framework relevant to our model is the one developed by Pauchant
and Mitroff (1992). In their book "Transforming the crisis prone organization, " they

propose a model based on the steges through which crises move andmon the types of

.W—k .-

 

crisis ement. In this model (Figure 3) the boxes labeled "signal detection" and
"preparation/prevention" constitute proactive types of crisis management and will
avoid many crises from occurring. "Containment/damage limitation" and "recovery"
are the reactive activities done when or after a crisis has happened to contain its

damage or recover from its effects. The box named " learning" corresponds to the

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65

interactive type of crisis management. It can be a part of the crisis plan in the

absence of a crisis or a result of the experience of a crisis.

3.2.3. WWW.

Westley and MacLean’s model of mass communication (1957) unfolds the
process through which an organization communicates with its publics. This model
serves to Warmthgglapiaehip-2W9‘3:m9d§?fl"¥bfi°s and, “Pedal”, the We
mass media play in short-term crisis communications.

Westley and MacLean’s model is based on Newcomb’s ABX model (1953).
The ABX model introduced the concept of efieflflen: the way people feel about other
pegple,,_queet_s»3_ infigthrachoncepts. This concept is similar to the concept of [emerge
discussed in chapter two.

Based on this model (see Wahlstrom, 1992), Westley and MacLean elaborated
a model for mass communication. In their model, two subjects (A & B) communicate
about a topic or object (X) with the mediation of a third subject, the mass media (C).
A could be an organization involved in a crisis situation, X could be the crisis itself,
and B could be the publics of the organization.

A’s purpose is to modify B’s perception of X. C’s role in the model is to
provide A with access to the channel reaching the B audience. C’s intent is to meet
B ’s nwd for adequate information. This model also provides for a variety of

feedback from all three subjects to the others.

66

Whaltstrom (1992) points out how both Newcomb’s and Westley and MacLean
models ignore, however, the issue of gr and assume that the goal of the
relationship depicted is to achieve a system that is FEWMXEPEEEQ- This is not
always the case since political relationships (between A and C) will determine which
messages C will select to send to the audience (B). The degree of criticism of C
towards A’s posture will depend on this factor. Besides, the message A selects to send
to B is characterized by the intended effect of changing B’s perceptions toward X.

Westley and MacLean’ s model emplafrees the role of the media in the

-———<——..— .____._ __ _._ _r_f__. K

_ ~— #.,

Qnfiflrmvtien of attitudes of the receiver. The model proposed in this, however,

 

maintains that, in certain cases, organizations should not be that much concerned
about media coverage. If the organization solves its external problems before its
publics make an issue out of them, the role of the media will be minor: publics will
not need to use the mass media to bring attention to their cause (Grunig, 1990;
Grunig & Repper, 1992; VanLeuven & Slatter, 1991).

Nevertheless, crises are not always avoidable and, in these cases, the relevance

of the media is unquestionable.

3.2.4. Simmuudfiunt’unfll

Grunig and Hunt’s (1984) two-way symmetrical communiCation model

incorporates the concept of " symmetry" to the Westley and MacLean’s model of mass

67

communication.

Grunig’s two-way symmetrical model is what Cutlip and Center (1985) call
" open systems mode " of communication. Both of these models defend that the
communication process must ensure that both the organization and its publics get
more correct pictures of one another. The effect sought is to achieve goals that are in
the organization’s and the public’s Mintergsts. Those goals found to be in
conflict with mutual interests are modified or eliminated. Proactive action may be the
main and most valuable element of the open systems model of public relations. Steps
taken in advance reduce both the amount of effort required and the trauma associated
with crisis-oriented reactive public relations (Cutlip & Center, 1985).

Grunig and Hunt’s (1984) ideas have, however, also been criticized
(Mallinson, 1990; Pavlik, 1989; Rakow, 1989). As Grunig and White (1992)
summarize, the two-way-symmetrical model presupposes that the organization has
motivation for reciprocity. Nevertheless, while organizations feel that they have more

power than publics, the two-way symmetrical model is unlikely to be applied.
3.3. A proposed model.
Based on the previous concepts, and taking into consideration the ideas

discussed along the earlier chapters, this thesis proposes the next model for crisis

management.

68
Four boxes (Figure 4) represent the main four steps that should characterize

the crisis management process. In the figure, time goes from left to right, beginning

the process at the ”issues management" stage and ending at the "post-crisis” box.

I-

The box labeled "1539?EE%E§Q‘" corresponds to the stage where the
organization scans the environment looking for public trends (or issues) that
may affect it in the future. Detected issues are collected and evaluated in an
issue statement by the issue managers. At this stage management concentrates
its efforts in preventing the crisis to occur (impeding the issue to arise or
redirecting its course). Successful issue management allows the organization to
avoid the crisis stage as shown in the figure. At this point it has not been

necessary to elaborate any specific contingency plan since a "no crisis"

situation has been reached.

The box labeled "annmg-premnuon" shares with the issues management
stage the characteristic of environment monitoring (in search for further
warnings). It also makes use of information, warning, and internal
communications systems.

However, while in the issues management stage the two key elements
are identification and influence (Hainsworth & Meng, 1988), in the planning-
prevention stage a third element is added: prevention. In the previous phase
the issue had been detected and some actions taken to influence the

development of the issue. However, since issues managers work on issues out

69

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70

of the scope of the current year (Ewing, 1987), planning-preventive measures take
more relevance at this stage. Planning is also more relevant here because a crisis
is more likely to occur if management does not handle properly the situation.

The idea here is to show that, once an issue is perceived to have passed
the limits of issues management, when it is recognized that a crisis might happen
suddenly, or when an issue might scale quickly in intensity (e.g., an accident), the
organization has still to monitor it through its information and warning systems at
the time that prepares itself in case the crisis hits.

Now it is the time to set a policy on the issue, analyze the organization’s
links with its constituencies, prepare general or specific contingency plans, and
accomplish the other steps of the crisis plan.

It is also at this stage when management must assess the dimensions of the
problem, the degree of control the organization has over the situation, and the
different options the company can choose from in developing the crisis plan. Like
in the rest of the model, research plays here an important role. The organization
has to make sure that its plans are in tune with the publics’ attitudes and respond
to reality. Subsequently, this feedback will allow the company to acquire new
knowledge about its constituencies and about itself (learning) which, in turn, will
serve to improve the quality of the crisis plan or update it according to the new
beliefs of the different publics. Besides, research serves the purpose of evaluating
the situation, since the assessment of the characteristics of the possible crisis must

be done repeatedly.

71

If this stage is effectively managed, the organization will be able to
avoid the crisis (and a "non-crisis" reached) or, at least, minimize its negative

consequences in case the crisis could not be eluded.

Thefcfirisis’: At this point, the organization might have lost all proactive
initiative. Should a crisis plan not exist the organization’s response will be in
reaction to the events and limited to contingency measures that limit the
damage. When a plan exists, proactive measures are still possible.

This is the time to definitively designate the members of the Crisis
Management Team (according to the particular characteristics of the situation) ‘
among those that were preselected. It is also when the individual in charge of
representing the company, the spokesperson, must be appointed. In addition,

the media programs, the rumor control mechanisms and the rest of the
\_____ r.._

“A. .- H-_--—~'-—-—

 

measures contained in the crisis plan are implemented at this point. Previously,
the real situation should have been reassessed again to see whether it certainly

responds to the situation depicted in the crisis plan or not.

The post-crisis stage: once the crisis hits, some damage is inevitable. In the
best of the situations the organization will be able to limit this damage to the
minimum. In any case, however, crisis management does not finished when

the crisis ends. In every crisis there is a "post-crisis” stage where the company

is aimed to recover its previous state.

72

The organization must still pay attention to the affected publics and the
media must be informed. Now it is also the moment to evaluate how the crisis
plan (if existed) worked and how management and workers responded to the
situation. This feedback must be incorporated to the crisis plan in order to
improve it and prevent or avoid future potential crisis. Management must
realize that the end of one crisis is the beginning of the next one. The process
starts again and the issues management and planning mechanisms are newly
activated to prevent future negative situations.

Successful crisis management takes effective action primarily during stages I
and 11 (issues management and planning-prevention boxes), with the presumable
consequence that stages III and IV (crisis and post-crisis) will never occur, or would
do 'it with the company situated in the best of the positions to confront them (Figure

5).

73

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CHAPTER FOUR: CONCLUSION

This thesis has shown how crisis management must be part of a systematic
approach put into place before a crisis hits. Knowing the common patterns and stages
of most crises and following certain steps, the manager will be in a better position to
handle any "turning point" (using Fink’s, 1986, terminology).

This thesis has also indicated the role communications should play in
preventing crisis from occurring as well as the keys for successful crisis
communications in those cases where crises cannot be avoided. This is, speed,
accuracy, credibility, consistency, and thoroughness as well as management control of
the information (Berge, 1986; Carney & Jorden, 1993; Katz, 1987).

With these ideas on mind, the public relations or public affairs practitioner has
the responsibility of developing communication strategies for the different publics of
the organization. Public relations practitioners must identify, analyze, and understand
the interests of the different publics and translate them into the organization’s

communications policy.
* Know your publics.

As Grunig & Repper (1992) point out public relations seldom will be effective

if it directs its messages to a mass audience. The reason is simple: marketing and

74

75

communications research has shown how mass audiences (general publics) consist
primarily of the most passive and unresponsive publics where significant cognitive
effects are unlikely to be achieved. Certainly, mass audiences also have active publics
but the cost of reaching these publics through unsegmented communication will be
generally much greater than if targeted through segmented communication (which, in
addition, allows the manager to "personalize" the message).

This is specially true in crisis communications where the concerns of the
different current or potential active publics must be attended separately.

Therefore, even before considering whether the emphasis must be placed in
either external or internal communications, the first step in developing a
communications action program is to define the objectives and the target audiences
that need to be reached to solve the problem (current or potential). Once these factors

are clear, the message and the different media to be used must be determined.

* Be proactive: Pepsi’s needles.

Today’s managers are not used to open communications. In fact secrecy is a
common characteristic in crisis situations (Slatter, 1984). Crisis management,
however, calls for proaction and openness even when the organization finds itself in
the center of a sudden crisis.

An excellent example of open and proactive communications is the crisis faced

by Pepsi in 1993. In June of that year, consumers from all around the United States

76
reported to have found different items (from needles to bullets) inside Pepsi’s cans.

Suddenly, Pepsi-Cola found itself in what promised to be its worst crisis ever.
After an initial confusion, the company took command of the situation by

Win most parts of the country and producingvideo news
r~ele__a_s_es which sent up via satellite to address its publics. The first of these videos was
viewed by more than 182 million people (more than the audience of the 1992 Super
Bowl). At the same time, the company’s‘CEQ, Craig E. Weatherup, participafltefidfir‘n
TVflta_lkmsh_oyvs, and other Pepsi officials actively collaborated with the FDA in order
to protect consumer interests.

A few days after the first needles were reported, twenty people were arrested
accused of making false claims. With public sentiment finally in its favor, Pepsi used
the opportunity to pitch its planned summer promotions. Rebecca Madeira, Vice
President of Public Affairs of Pepsi, said that a crisis can only be in control when
cooperation with the media exists, and the company invites and furnishes reporters
with facts. ”Your only defense when your company is on trial is to be a participant of

this trial” (Greenberg, 1993, p. 13).
* Don’t be reactive.
On the other extreme, a recent example of closed and reactive crisis

management is the one experienced by Sears, Roebuck and Co. in l992 about the

controversy over its car repair operations.

77

The company’s commission system in its auto centers was being investigated
by the California Consumer Affairs Department. In responding to the investigation,
Sears’ first action was to appoint a lawyer as its spokesperson, which automatically
put the organization in a defensive position. Once the company turned into the public
relations experts, the firm righted its wrongs and abandoned the quota system and
invited the media into stores. The lesson here is that a proactive plan could have
avoided the first false steps in responding to the crisis. This is extremely important
since the first impressions are generally lasting impressions and can cost the

organization millions of dollars (Carney & Jorden, 1993).

"‘ Control your message.

Another lesson Pepsi learned was that "direct communications" are sometimes
essential to get the message across without the filter of the TV stations. The same
happened in the case of the Convention and Visitors Bureau (Arkansas) when facing
floods in 1990. Similarly to the Pepsi case, the Bureau did not rely on the mass media
to reach key audiences, and tourism rates remained steady (Mitchell, 1993).

Any company should know the ways to produce such direct communications in
a promptly manner. Suppliers with fast tum-around times, etc. must be included in

the crisis plan (Katz, 1987).

78

* Rely on research.

The model proposed in this thesis emphasizes that crisis management decisions
must rely on research and that, therefore, a mechanism to know the public’s attitudes
and opinions must be part of any crisis plan. Research will avoid the firm to have to
retract or alter initial statements, at the time it serves to identify the publics affected
by the crisis. It will also allow the public relations practitioner to develop accordingly
the message to be communicated.

How the message is communicated is as important as the message itself.
Meaning is shaped by audience and situation (Fielden, 1988). Therefore, to select the
appropriate way to put the message (the way it is going to be presented or encoded),
crisis communicators are advised to rely -as always- on research. The message must
be adapted to each audience as well as to each medium (Carney & Jorden, 1993;
Fielden, 1933)- Sometimes giggle fogrsfigroups can give to the practitioner the key
for a more effective communication:

Too often, risk communicators are more concerned with educating the public,

rather than first listening to them and then developing communications

programs to provide critiques and feedback to their designers. Using feedback
from focus __groups, researchers can gain qualitative insights on how people

the nsk information format. such feedback rs crucial to communrcatrng risk
more effectively. (Desvousges & Smith, 1988, p. 479)

This is an example from the nuclear industry but it can be applied to any other
industry. Feedback is essential to know the way the key message should be developed

and through which media it should be communicated.

79

* Communicate internally.

Good internal communications are also crucial for successful crisis
management. The crisis plan must contain mechanisms to coordinate communications
inside the organization and filter the information coming from different departments
or functional areas. By doing this, the organization will avoid to suffer from
information overload:

The beginning of crisis usually results in a faster pace of activity as individuals

begin to realize something has to be done about the threatening situation. In

many firms, particularly larger ones, the effect of the faster pace is to increase
the volume of communications, resulting in information overload. (Slatter,

1984, p. 67)

To get things done, the crisis manager has to ensure a constant and precise
flow of information_ and irrgtruflctionsthrough the crisis management team and the rest
of the organization’s workforce. In spite of this, the skills of most managers regarding
effective internal communications seem to be poor indeed. Drucker (1977) maintains
that poor communication is the direct result of ignorance, and indicates that managers
do not know Wfliggr, @9919”! it, 139‘! to say it, messy-1.95“) “-

Also, communication technologies are playing an increasing important role in
internal crisis communication management. "In the United States, for example, some
firms have created a network of toll-free emergency lines. With these lines they can

Mufiflmflw

instantaneously track the physical location of the calls received and establish an

ongoing ’map’ of the crisis" (Pauchant & Mitroff, 1992, pp. 159).

80

"‘ Balance your communications.

The composition of the publics most affected by the crisis influence the way

practitioners should act (Reinhardt, 1993).

- When the crisis implicates product recalls, public health issues, or
environmental cases affecting the general public, the company is morally
obligated to disseminate information to a broad audience. External
communications are crucial.

- When the crisis is of a more internal nature such as employee safety or a
merger of two companies, internal communications will probably be paid more
attention than external ones.

- When issues affect both internal and external constituencies, a combination of .

internal and external media must be used.

4.1. Who is responsible for crisis communications management?

What department is responsible for crisis communications management? In
practice, modern companies do not have a clear answer to this question; every case is
different and this function is performed depending on the specific company needs and
its structural organization. We can distinguish the next situations:

1- Assignment of this responsibility to a person in charge of concrete aspects of

81

the corporate communications.

- to the director of the Public Relations Department.

- to the director of External Relations/ Affairs.

- to the director of Consumer Affairs.

- to the director of Investor Relations.

2- Assignment of this responsibility to an expert (individual or group) staff of top
management.

3- Assignment of this responsibility to external consultants. This is a frequent
case since the process that a company must undertake to organize its crisis
plan requires a great doses of experience that only in a few cases can be found
inside the organization.

Whether external consultants should be hired or not entirely depends on the
expertise of the company’s professionals. It should be especially considered in
companies with limited personnel or with personnel with no significant experience in
crisis situations. External consultants are not substitutes for management commitment,
but they can represent an important contribution when time is short and the
organization’s talent is limited.

Fink (1986) indicates how 70 percent of the companies he studied reported that
they have turned, or would turn, to outside help during a crisis. "Such help included
firms specializing in crisis management, law, investment banking, public relations,
and/ or media consulting" (p. 69).

A possible explanation for Fink’ s results is that, in the real world, only large

82

organizations can afford a full-time internal public relations or public affairs executive
who can perform at top management level. Sometimes external consultants can also
do a better job than internal executives because they are able to look at the company
from an outsider’s point of view and this allows more objectivity (Berge, 1990).
Pauchant and Mitroff (1992) still give another reason to include outsiders in

the organization: it constitutes a means of challenging the organization’ s basic

 

 

assumptions.

 

A company in the chemical industry has recently include two environmental
activist on its board; another in the oil industry has hired key executives with
no backgrounds in the industry or in technology in general; other firms have
also hired outside consultants as "insultants," to use Peter Drucker’s term, in

the attempt to challenge some of their basic assumptions. (p. 153)

And, finally, another two reasons to bring outside specialists is that while
everything goes normal in the organization no one has the time to devote to
developing a crisis plan, and that the external consultant usually has a special
problem-solving process in which no one in the organization is trained (Myers, 1993).

In any case, once the crisis communications plan has been developed by the
consultants and assimilated by the organization’ 8 decision-makers, internal executives
are usually more appropriate to manage and control the firm’s crisis plan.

Thus, this thesis proposes that the main responsibilities are set in the public
relations or public affairs department, but under the guidance and supervision of top
management in the adoption of key decisions affecting corporate policies and
strategies. And, although attention must be paid by public relations executives to the

functions of "research" and "planning, " they should be primarily concerned about the

83

"communications" role. Unfortunately, as Garbett (1988) cites, "today’s management

considers corporate communications too important to leave to public relations people"

(p. 86).

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