By Lunice Johnston
“What’s the biggest mistake you can make in a crisis?
Not knowing you’re in a crisis…..”
Olivia Pope, The Fixer, S7 E12
In recent weeks South Africans have suffered yet another shock when nationally beloved consumer brand, Enterprise, was found to be the source of what the United Nations has called the “worst outbreak of listeriosis recorded globally”.
A lot has been said on social and mainstream media about the inappropriate way Tiger Brands has managed this crisis. And it’s not pretty. In fact, the company’s handling of the crisis has been cited several times as a lesson in “how not to handle a crisis”. How then, did global giant Tiger Brands, find out too late that its reputation management strategy was wholly inadequate, further worsening what was already a terrible situation?
I believe that Tiger Brands did not fully understand the gravity of the situation when it began engaging with the public and the media. Perhaps like my fictional heroine Olivia Pope from the TV series “The Fixer” says, they did not realise they were in a crisis. Or if they did, perhaps they discovered too late that their plan of action was inadequate and there was no precedent on which to draw from. Failing to plan for a reputational crisis happens more often than it is comfortable to think about. Depending on who is in charge, companies often “wing it” and pull in the big legal guns to protect themselves once the news has broken in the public domain. And it shows. It’s obvious that Tiger Brands has been taking its legal counsel in isolation of brand and reputation strategy.
The cost of this approach has been high for Tiger Brands. The immediate fallout of the crisis has been the destruction of consumer trust with nationwide product recalls making headlines, closely followed by erosion of the company’s market cap, profits and stature as one of South Africa’s leading listed companies. The Financial Mail reported on 8 March 2018, that “the scandal has wiped off R4.4bn from Tiger’s market cap – considerably in excess of the contribution made by its value-added meat products division. Of its R27bn in sales recorded for the year ended September, value-added meat products accounted for R2.24bn in revenue.” Ouch!
Tiger Brands has remained defiant in their infrequent communication and uncoordinated engagement with stakeholders and consumers, attempting to distance themselves as much as possible from the accusations that they are responsible for this outbreak of Listeriosis, and the resulting deaths of over 180 people.
The company appears to be following a line of protecting itself from potential class action lawsuits, and the narrative being developed appears to be driven by legal counsel, evidenced by the lack of sincere and open stakeholder engagement, lack of demonstrable sympathy with victims’ families and poor relationships with the media. The result is that Tiger Brands is being perceived as arrogant, unsympathetic and more interested in protecting its profits than the safety of consumers. I believe that even if legal counsel is advising caution with public statements of admissions of guilt, it should not be done at the expense of engagement and open communication with affected stakeholder and the general public.
How it could have played out differently
The text book version of “how to manage a crisis effectively” is the often-cited Tylenol case study < hyperlink to https://en.wikipedia.org/wiki/Chicago_Tylenol_murders> from 1982. While in “simpler times” without the immediacy of social media, Johnson & Johnson followed some fundamental principles to manage their crisis, which also involved loss of life, and is still relevant in today’s fast-moving communication world.
The Tylenol case was one of deliberate poisoning of a product, that the company categorised as a “Terrorism” threat. What set Johnson & Johnson apart is that they sympathised with families who had lost loved ones and did not consider their sympathy as an admission of guilt. Furthermore, they focused all their energy into what is termed a “Forgiveness strategy” to generate understanding and goodwill from their stakeholders. Johnson & Johnson also demonstrated how critical it is for the company to maintain a good relationship with the media, before a crisis develops, and to keep channels of communication open during the unfolding of a crisis.
Back in 2003, Pick ‘n Pay’s then chief executive Sean Summers adopted a similar approach when dealing with the poison threat in the company’s no name brands. Summers was known to have engaged with everyone on an ongoing basis, also employing a “Forgiveness strategy” in the face of fierce criticism <hyperlink to https://books.google.co.za/books?id=HVp0LtlQ_gIC&pg=PA132&lpg=PA132&dq=pick+n+pay+poison+scare&source=bl&ots=jaDAzaz575&sig=hACdEoMG-NgNIRGhjGZbkoV0VHY&hl=en&sa=X&ved=0ahUKEwj39piPg-_ZAhVjKcAKHUMmCCEQ6AEISTAH#v=onepage&q=pick%20n%20pay%20poison%20scare&f=false>. Despite a serious threat to the company, its brand and customers, goodwill in the brand and the share price grew in the face of this crisis, rather than eroding its value.
Steps to successfully handling a reputational crisis
Warren Buffet said “If you lose money for the firm, I’ll be forgiving. If you lose reputation, I’ll be ruthless.” I understand this perspective, because I have seen how the price for reputational damage often far exceeds the value on the balance sheet.
To avoid a situation like Tiger Brands is in, where managing the crisis becomes the crisis, I believe in taking a long-term, strategic approach.
I am a strong believer in planning for the worst and hoping for the best. In reputation management, companies need to plan for every scenario and have a robust reputation management and crisis communication strategy in place together with risk management and risk mitigation strategies, with clear plans and areas of responsibility in place. Tiger Brands never acknowledged the seriousness of the problem to begin with, and thought it was an operational hiccup that would pass, hoping that the damage could be contained locally. This was not to be, and the brand giant was caught unawares.
Once a crisis breaks, it’s essential to acknowledge it for what it is, categorise its level of severity appropriately, and activate the most suitable plan with the right level of resources to support the activities required to address the challenges adequately. Companies must act quickly, but with facts. Critical decisionmakers must convene to agree the strategy and leaders with the appropriate profile and media experience should be appointed to share information on a regular and ongoing basis. Having an open line of communication to the media is key to this approach.
This requires a robust reputational crisis management plan. Without it, companies could find themselves exposed in the most unflattering light, and inadvertently be unprepared to make the best of a bad situation.
How we can help
As reputation management specialists, Lunice Johnston Communications will provide you with the strategic and operational support you require to build and manage your company’s reputation for optimal results. Contact us for an informed discussion.