IKEA CRISIS COMMUNICATION PLAN PRESENTATION ANNA KOZHEMYAKOV PBRL

IKEA CRISIS COMMUNICATION PLAN PRESENTATION ANNA KOZHEMYAKOV | PBRL 425 -F 1 WW (F 16)

IKEA’S CURRENT CRISIS Accusations that IKEA benefited from forced labor in the former East Germany to manufacture some of its products back in the 1980 s. News media reports in Germany and Sweden. Auditors at Ernst & Young confirmed the practice of forced labor. Both political and criminal prisoner were forced to make IKEA’s furniture without any compensation (Kulish & Werdigier, 2012).

WHAT PR HAS BEEN DONE TO DATE • IKEA was the first company to bring the public’s attention to the forced labor in East Germany issue, even though other companies are guilty of the same practice. • IKEA hired auditors at Ernst & Young who completed the following steps: • Examined 20, 000 pages of internal IKEA records; • Examined 80, 000 pages of documents from federal state archives; • 90 people were interviewed (current and former IKEA employees and witnesses from East Germany) (Kulish & Werdigier, 2012).

WHAT PR HAS BEEN DONE TO DATE • “Even though Ikea Group took steps to secure that prisoners were not used in production, it is now clear that these measures were not effective enough, ” IKEA said in a statement (Kulish & Werdigier, 2012). • IKEA said sorry about the episodes and pledged to donate money to research on forced labor in East Germany (Kulish & Werdigier, 2012). “Even though Ikea Group took steps to secure that prisoners were not used in production, it is now clear that these measures were not effective enough, ” IKEA said in a statement (Kulish & Werdigier, 2012). IKEA said sorry about the episodes and pledged to donate money to research on forced labor in East Germany (Kulish & Werdigier, 2012).

ANALYSIS OF WHAT HAS BEEN DONE Taking on the pioneering role in helping to bring the public’s attention to the issue of the forced labor the 1980 s is a very smart strategy. • IKEA should have brought the attention to the issue before this information appeared in the media. Hiring independent auditor was the right decision. • Choosing Ernst & Young was an oversight due to the lack of experience with research into dictatorship (Kulish & Werdigier, 2012). Not being transparent enough with the results of the investigation was a mistake. The fact IKEA did not release the entire report to the public partially negated their effort to hire the investigators.

ALTERNATIVES AND RECOMMENDATIONS FOR THE FUTURE 1 • “The best type of crisis communications is that which avoids the crisis all together” (Paine, 2002). • Coming forward with the information about the forced labor use before it became public would allow avoiding the crisis the company is dealing with today. • The importance of Proactive Phase in the conflict management process.

ALTERNATIVES AND RECOMMENDATIONS FOR THE FUTURE 2 • During the Reactive Phase, a few improvements could be applied. Accountability and disclosure are the principles that could be improved: The accountability principle: a company should always accept responsibility for a crisis even if it is not their fault (Paine, 2002). IKEA was quick to blame the lack of a "well-organized control system. ” The Disclosure principle: not being transparent enough during the investigation was a strategic mistake of IKEA.

ALTERNATIVES AND RECOMMENDATIONS FOR THE FUTURE 3 The importance of checking the ultimate impact the crisis communication had on the business and its relationships with the consumers (Paine, 2002). The benefits of setting up a measurement program (Paine, 2002). Recovery Phase and taking further steps to improve IKEA’s reputation (Posey, n. d. )

RESOURCES: • Kulish, N. & Werdigier, J. (2012, November 16). Ikea Admits Forced Labor Was Used in 1980 s. Global Business. Retrieved October 28, 2016, from: http: //www. nytimes. com/2012/11/17/business/global/ikea-to-report-on-allegationsof-using-forced-labor-during-cold-war. html? _r=0 • Paine. K. D. (2002). How to Measure Your Results in a Crisis. The Institute for Public Relations. • Posey, M. (n. d. ). Crisis Communication. PBRL 425. Franklin University.