Corporate Crisis Communication

Responding to a crisis can be a corporation's worst nightmare.

In an era of bailouts and corporate scandal, a company's ability to effectively manage its image and reputation in the midst of a crisis has become synonymous with success. Corporate crisis communication is the internal link to effective image management. When executed correctly, consumers are rarely aware that it is taking place at all. However, the intricacies involved in such a process seldom go unnoticed by professionals in the industry.

Definition

Corporate crisis communication refers to the messages sent and channels used by corporate entities to pass along information to internal and external sources while in the midst of some form of emergency. Emergencies could include financial difficulties, a product recall or some other form of scandal. Corporations may choose to use digital, viral, press-related or interpersonal communication channels to pass along information.

Important Components

Effective corporate crisis communication rests on two key tenets: timeliness and transparency. Initially, communication must be timely. If a corporation fails to address a major environmental mishap for more than a week, or even 24 hours, the company may look apathetic toward the problems they have created. It is critical that the company immediately express understanding of the problem at hand and a willingness to fix it.

Second, the company must be transparent about the problems taking place. If a company tries to cover up its faults, and the cover-up is exposed, there is no going back. Thus, it is incredibly important that corporate crisis communication be as honest as possible if the company seeks any form of forgiveness from the public, its employees or its shareholders.

What Good Corporate Crisis Communication Looks Like

Corporate crisis communication has existed to some degree for decades. However, as globalization has expanded the reach and power of various corporations, corporate crisis communication has taken center stage in the international public's eye.

One of the first instances that required effective corporate crisis communication was in 1982, when a group of individuals began replacing Tylenol with cyanide-laced pills. The crisis created a massive public outcry. In response, Jonson & Johnson, Tylenol's parent company, issued a public apology, and immediately began taking steps to prevent further harm from being done, including a complete recall of the product and new tamper-proof packaging production. Since then, the Tylenol response has been used as a model for corporate crisis communication around the world.

Consequences of Poor Crisis Communication

Corporate crisis communication failure can create dire consequences for the company in question. Take, for example, the recent Toyota scandal. In 2009, reports began to circulate that several makes and models of Toyota vehicles were experiencing dangerous unintended acceleration. Initially, Toyota only recalled floor mats on select models. However, as reports continued to come in, Toyota was forced to recall entire lines of vehicles.

Amplifying the problem were a series of unearthed reports that revealed Toyota may have had knowledge of the defect since 2004. Months after the crisis hit, Toyota began to air ads in the United States, apologizing for its lack of quality, thanking loyal customers, and promising better in the future.

Although some people have called the entire crisis overstated, Toyota's response was too little, too late. In a matter of a few months, the resale value of Toyotas dropped hundreds of dollars, and the company reported its first loss for a quarter. Failure to communicate effectively in the midst of a crisis can cripple a corporation.

Who Handles Corporate Crisis Communication

Corporate crisis communication is handled by a variety of actors, depending on the company in question. In most cases, the corporation is big enough that it has its own public relations (PR) department. Unless the scandal is too deeply embedded in the company itself, the PR department will handle the crisis communication.

However, in instances where the crisis or scandal has to do with a personnel issue, or is simply so large that the PR department cannot handle it, corporations will contract out private public relations agencies to handle the issue in the short term, and develop long-term strategies for the company to handle it on its own in the future.

References

• "Business Week": The Real Scandal Behind the Toyota Recall
• University of Oklahoma: Case Study: The Johnson & Johnson Tylenol Crisis
• "Slate": Toyota Faces a Cover-up Scandal
• Washington University- St. Louis: Communication plan is the key in a corporate crisis
• Levick Strategic Communications: Corporate Crisis Management