Public Relations in Crisis Management ATM Semester 2

Public Relations in Crisis Management ATM Semester 2 Lecture 6 By Sanemkhan Nurillaeva

Agenda • Public Relations • What is Public Relations? • Public/Stakeholders for PR activities • Ryanair case • Developing PR Key Messages • Crisis Management • Definitions and Examples • BP Crisis Case • 7 Rs of Crisis Management

Definition of Public Relations “Public Relations is about reputation - the result of what you do, what you say and what others say about you. Public Relations is the discipline which looks after reputation, with the aim of earning understanding and support and influencing opinion and behaviour. It is the planned and sustained effort to establish and maintain goodwill and mutual understanding between an organisation and its publics. ” The Chartered Institute of Public Relations (2010)

Ads vs. PR

Publics -Stakeholders • “Publics” of an organization is preferable to “stakeholders, ” especially in case of publicly-traded companies. • Example: Ryanair stakeholders of PR activities to improve company reputation

Power/Interest Matrix • Power/Interest Matrix for Stakeholder Prioritization • Step 1 – Identify Your Stakeholders • Step 2 – Prioritize Your Stakeholders • Power – the influence level of a stakeholder group over the certain issue • Interest – the level of perceived interest of a stakeholder group to the given issue

Ryanair Traditional Stakeholder Matrix

Ryanair New Stakeholder Matrix

Key Messages Stakeholders Key Messages Desired Response Shareholders Ryanair is changing tone of voice and increasing profits Increase of shareholders confidence in their investment choice in Ryanair Customers and General Public Ryanair is not only affordable, Positive WOM, Customer Acquisition and but also caring airlines Retention Employees Appreciation of employees’ work; Employees need to be trained that customer care is central in Ryanair business. Media Ryanair is changing its tone of Increase in positive media coverage that will voice and increasing result in improvement of company reputation. concentration on customer care Etc… Employees feel that their work is appreciated and they treat customers with extra care and respect.

Crisis Management

Definitions • Crisis – A state of affairs in a business where in the leadership (owner, CEO, or Board of Directors) must take urgent and unprecedented action to try to save the business from failure—with the distinct possibility of a highly undesirable outcome. The companion term that comes to mind is "emergency intervention. “ • Crisis Management – The coordination of efforts to control a crisis event consistent with strategic goals of an organization. • Crisis Communication – All means of communication, both internal and external to an organization, designed and delivered to support the Crisis Management function.

Examples of Crisis 1. Enron-"Off balance sheet" actions to hide poor results 2. Catholic Church - Accusation of sexual abuse by priests and failure to correct over many years 3. Malaysia Airlines- Missed Plane 4. Tesco accounting scandal

BP Case • Oil spills occur with some regularity worldwide. • They are usually contained quickly, causing little long-term damage. Oil spills seldom reach the crisis level. • In BP’s case, however, the amount of oil spilled created a heightened threat level. Ultimately, the crisis became the largest environmental disaster in U. S. history.

BP Oil Disaster

Disaster Consiquences • The Gulf oil spill is recognized as the worst oil spill in U. S. history. • Within days of the April 20, 2010 explosion and sinking of the Deepwater Horizon oil rig in the Gulf of Mexico • 11 people killed, • Underwater cameras revealed the BP pipe was leaking oil and gas on the ocean floor about 42 miles off the coast of Louisiana. • By the time the well was capped on July 15, 2010 (87 days later), an estimated 3. 19 million barrels of oil had leaked into the Gulf.

BP Criticized • BP was criticized initially for not communicating and responding more quickly to the crisis. • In addition the company was criticized for not having clear risk and crisis communication provisions in place for a disaster of this magnitude. As a result, after the explosion, the crisis appeared to be beyond BP’s control as oil rapidly gushed into the water. • Tony Hayward, the CEO of BP at the time of the crisis, was regularly criticized for minimizing the scope and intensity of the crisis and for lacking compassion and empathy in his initial post crisis responses.

Misbehavior of CEO • In his later interview Tony Hayward, the CEO of BP said: I’d like My Life Back! • No mention of 11 workers who lost their lives in BP catastrophe • What’s more, he was later spotted in England, participating in yacht race, while their oil still flowed

Awkward Quotes of BP CEO

Drawings of BP CEO

3 Main Mistakes in Crisis Managers of deeply troubled companies repeated three fatal mistakes. 1. They failed to recognize that the seeds of crises are sowed long before they reach headline proportion. 2. They did not calculate the real cost of their troubles as part of crisis decision-making. 3. Finally, they opted for self-defense rather than brand defense. Caywood and Englehart (2003)

7 Rs of Crisis Management

CEO and managers ought to say and do something in crisis

7 Rs: 1. Respond Rs Communication Message Behavior Action 1. Some communication, even limited, is necessary: "Today, we were told that the company would be…" Most responses to most types of crisis can be anticipated and pre-checked within the company hierarchy for permission to release in advance of the emergency. Not responding is a response that communicates as a failure to act. "No comment" or "The company was unavailable for comment" are unacceptable messages that communicate indifference. e. g. Martha Stewart initially failed to respond Respond

7 Rs: 2. Regret Rs Communication Message 2. Regret Some form of human concern must be communicated with or without accepting responsibility if the facts are not fully known: We regret the harm caused to our customers and their families by our product…. " Behavior Action At a higher level of it may be necessary to express "outrage" as a stronger act. "If the facts are as they seem, we will not tolerate any error that could cause injury to…" e. g. R. Kelly attacked those who accused him

7 Rs: 3. Resolution Rs Communication Message Behavior Action 3. Some promise to insure that the specific or general event is being investigated and some action is being taken to solve a problem. "We are shutting down the plant…" Identify experts inside and outside the company who are cooperating to resolve the problem. Announce when more detailed information might be known, e. g. Andersen sought outside third parties to lend credibility to their firm. Resolution

7 Rs: 4. Restitution Rs Communication Message 4. Restitution As the crisis unfolds and facts are known; the message must be conveyed that the organization is able and willing to "make good" to those harmed even if the promise is simply one that meets the normal warrantee and guarantees of the products or services. " Behavior Action Any early and rapid support for victims (flying of family members to an airline crash site) must be planned and initiated. Conditions of the restitution may not necessary commit the company, but again speak with actions the best behavior possible, e. g. the Catholic Church settled with some victims.

7 Rs: 5. Reform Rs Communication Message Behavior Action 5. Reform As the facts are gathered and known, some honest promise of action that will prevent any reoccurrence must be stated. "We have found that currently accepted industry and regulatory standards are not sufficient to protect our employees; we are improving our program…. " Take actions that demonstrate commitment to the long-term relationships you wish with stakeholders. Meet and exceed expectations by creating for the firm standards not yet required by law. e. g. the Catholic Church initiated new global plans for protection of children.

7 Rs: 6. Responsibility Rs Communication Message Behavior Action 6. Responsibility At sometime in the midst or after a crisis someone (a person) and the company must accept responsibility for either the specific event or for a management process that failed to prevent the crisis. "As CEO of this firm I accept that it was my responsibility to ensure that the investors of this company were protected…" In older terms "the buck stops here" must be stated. Beyond reform and restitution the organization must establish and follow the highest standards of transparency. Accountability and responsibility must be understood as the daily actions of any organization that can and may have caused harm in its role as a company existing with the permission of society, e. g. The Catholic Church did accept responsibility compared to other crises.

7 Rs: 7. Reputation Rs Communication Message Behavior Action 6. Reputation/ To reestablish the reputation of the organization and its employee; the management must reaffirm it’s intention to be considered a premier company among leaders in the industry. "Our reputation, will depend on our ability to promise and deliver the safest…" A thorough audit of the activities of all stakeholders relevant to the strengthening of the reputation and corporate brand must be undertaken to identify other weaknesses or stress points in the organization. Again, the Catholic Church and the NYSE are rebuilding their reputations. Brand Rebuilding

Reading • Caywood and Englehart (2003), “CRISIS MANAGEMENT: THE MODEL UNCHANGED BUT THE COSTS ARE SKYROCKETING”, JOURNAL OF INTEGRATED COMMUNICATIONS, Available from: http: //www. beaconadvisors. us/news/articles/JICArticle. pdf • Robert R. Ulmer, Timothy L. Sellnow, Matthew W. Seeger (2010), ”Effective Crisis Communication: Moving From Crisis to Opportunity”, SAGE Publications, Chapter 1, Available from: http: //www. sagepub. com/sites/default/files/upmbinaries/37705_1. pdf