Dr Benedetta Crisafulli is Senior Lecturer in Birkbeck’s Department of Management with expertise in crisis communication. She shares insights from her research on how to plan for and handle a crisis.
No organisation is immune from crises. While in an ideal world crises would be avoided altogether, in practise that’s not always possible. Invariably this means that it’s essential to have a plan for situations when things go wrong.
In the literature, we tend to distinguish between three main types of crisis:
- Corporate Social Irresponsibility – when an organisation is affected by a scandal due to disregard for the environment, employees and/or community at large.
- Service Failures – when an organisation fails to deliver on its brand promise.
- Product Harm – when products are suspected to be dangerous to customers and have to be withdrawn from the market.
The way companies handle a crisis determines their reputation, sales and ability to recruit top talent. Much of my research in collaboration with top scholars including Paolo Antonetti, Jaywant Singh and Stan Maklan examines the response of various stakeholders when crises occur, and what happens when organisations and their brand representatives do something in an attempt to overcome such events.
What are the most important PR actions for an organisation facing a crisis?
If you find yourself failing to deliver upon your brand promise in a way that causes customer dissatisfaction and anger, a very important step to revert the situation is to fix the problem. A very recent case in point in the UK concerns Heathrow baggage crisis last summer. In such circumstances, an offer of compensation is somehow futile unless the problem is fixed and any compensation is provided in a timely manner, by an empathetic and polite brand representative. The empathy, concern and politeness of the company, or its representatives, does matter regardless of the channel of communication – it matters even in technology-mediated interactions, as our research shows.
Crucially, we should remember that customers are not always complaining with the aim to gain some form of compensation. Customers often seek reconciliation to be able to re-use the company services, and are not always ready to take revenge. In our research on anger, we could identify not only a vindictive form of anger, but also a supportive form of anger following service failures. Supportive anger can be beneficial to companies as signalling consumers’ willingness to find a resolution to the problem and show continued patronage. If anger is not always negative, as we find, then companies should be ready to listen to customers’ complaints.
Do some organisations weather crises better than others?
It is important to note that not all crises are the same: if there is no attribution of responsibility to the company, customers tend to be more tolerant. For example, if a flight is cancelled due to extreme weather conditions, customers are unlikely to blame the company. That’s quite intuitive.
When it comes to crises exposing companies’ social irresponsible practices, however, market leading companies tend to be somehow less affected. Such companies still suffer, but less so when compared with smaller companies. With Prof Paolo Antonetti at NEOMA Business School, and Aybars Tuncdogan from King’s College London, we addressed this specific question in our published research in the Journal of Business Ethics. In particular, we were interested in job seekers’ reactions to corporate social irresponsibility events concerning dominant companies, which are leaders in an industry. Our research shows that dominant companies are comparatively less negatively impacted than non-dominant companies, especially so when job seekers feel very certain about their attitudes towards the organization.
While market dominance does not give companies a license to do what they want, investments in building a dominant brand can have a return in being able to navigate crises more easily.
What mistakes have organisations made in the face of crises?
The case of BP managing a crisis is exemplary. In 2010, the Gulf Coast was hit by a huge oil rig explosion – the biggest oil spill in US history. BP failed to report the facts with transparency and good intentions, stating that the oil rig was leaking 1,000 barrels of oil a day. That number was in fact closer to 5,000. Being perceived as dishonest in responding to the crisis would have most likely further damaged BP’s reputation.
Another example of a questionable crisis response is the case of United Airlines, when a guitar owned by the band Sons of Maxwell was broken during baggage handling. After being frustrated by repeated failed attempts to get compensation or reach a resolution, singer Dave Carroll took to YouTube to publicly shame United Airlines through a series of songs, which went viral.
Is there any way to turn a crisis into a positive story?
In service failure literature, there is some evidence to support what is called the Service Recovery Paradox, wherein customer satisfaction after a failure and subsequent recovery is even higher than satisfaction prior to the failure. In practice, the evidence assumes that crisis response of companies is exceptional (not simply good enough), yet that’s costly. It also assumes that the failure is low in severity and unlikely to happen again in the future.
Pepsi successfully bolstered their reputation following a consumer backlash when a needle was allegedly found in a drink in Washington. Pepsi produced a number of videos demonstrating the way the drinks canning process is carefully managed, thereby reminding consumers of the brand’s excellent production standards and goodwill.
What kind of preparation can organisations do to support the handling of future crises?
There is no one size fits all approach for crisis communications, but there are some guiding principles:
- Companies should try their best to behave ethically and responsibly to avoid crises to start with.
- Make sure there is a plan in place for crises that commonly occur in your industry. For example, customer service industries can measure consumer sentiment via historical data or social media listening to identify the kinds of crises they should plan for.
- Have a crisis communication plan detailing what steps you will take if a crisis occurs. The plan should include fixing the problem and communicating empathetically with customers in a way that conveys genuine, not manipulative, motives.
- If a customer asks for compensation, it is usually because they deserve it, so don’t be parsimonious!
- Work on building, maintaining and reinforcing market dominance as that can somehow attenuate the negative effects of crises, and still make you attractive to job seekers.
