Companies Blunder Under Pressure 1

Companies Blunder Under Pressure

Melanie Randels

BCC320. 040 Public Relations & Media Communications Instructor: Cheryl Snell April 16, 2013

Companies Blunder Under Pressure 2 The way a company responds to the media and consumers during a crisis can have a long term affect on its reputation and credibility. Society tends to feel that the quicker a company responds to the concern the sooner the issue will go away and we can all resume our regularly scheduled program. However, the truth seems to be that there are many facets of effective communication other than just timing. Consumers want to feel as though a company is responding quickly, accurately, and honestly with no spin on the facts. BP, Toyota, and Goldman Sachs all faced calamity within their organizations forcing them to face the media and customers head on without a much needed effective protocol in place.

Beyond Petroleum had revamped their image and mission to become the most environmentally friendly petroleum company since established under a different name in 1886. Nearly 3 years ago on April 20, 2010 an oil rig on the Deep-water Horizon exploded killing 11 workers. 36 hours later the rig sank and toxins leaked into the Gulf of Mexico according to the BP website. The company failed to ensure that the well had been sealed to reduce the risk of further explosions or more leakage. During the peak of this crisis BP stepped up right away to take at least partial responsibility for this explosion. They opted to place partial blame on Transocean who owned the offshore rig that exploded and Halliburton who worked with BP on the drilling of the rigs as well. The problem with BP was that they were busy apologizing but not fully disclosing all the facts about the severity of the spill. The New York Times article explained that BP had experienced and explosion at a refinery in Texas in 2005 that killed 15 workers and another the following year where an oil pipeline leaked in Alaska. These 2 incidents alone cost the company over 70 million dollars so it is amazing that the company seemed to not have an effective crisis protocol in place for such a repetitive chain of events. The company began to lose credibility when they attempted to downplay the leak stating that only around

Companies Blunder Under Pressure 3 1,000 barrels of oil a day was trickling out. The one thing about making a statement is that the audience can fact check the information that was given. There was really no need to try and give a figure without it being accurate because in the end consumers just want the mess cleaned up without all of the lies in between. The CEO Tony Hayward who was very corporate seemed to be out of place at the Gulf making statements in a British accent which did not necessarily comfort the American public. According to the New York Times article he stated that the amount of volume of oil and dispersant we are putting into it is tiny in relation to the total water volume. This statement negatively impacted the company image because they tried to make it seem like this situation was not a big deal even though 11 people died, the ocean was poisoned with oil, and wildlife was severely affected. The CEO also made a very selfish statement along the lines of him wanting this to pass more than anyone in the world. Where they went wrong is by speaking up to fast without a resolution or accurate facts. BP began to communicate a little better with the commercials displaying workers cleaning up the Gulf while showing pristine water and smiling faces. The BP website today does an excellent job in exposing the facts of the crisis from then up until now. The website offered many apologies and even a specialized section just for this situation where consumers can get many answers regarding the spill then and now. Although BP has a long uphill journey to restore their reputation, it is certainly possible considering their current openness, restoration projects, and campaigning for tourism to the coast; the company can surely rebuild and gain respect again.

In August of 2009 the beginning of a catastrophe began to unfold as a family of 4 driving a Lexus manufactured by Toyota was killed in a car accident. The incident occurred due to what appeared at the time to be faulty brakes or floor mats causing the car to accelerate and crash. Toyota had made a name for itself for being the worlds largest automaker, with

Companies Blunder Under Pressure 4 reasonably priced cars that delivered excellent gas mileage and performance as indicated in the New York Times article. However, they began to discredit themselves by attempting to cover up their downfalls rather than expose and confront them. Unlike BP, Toyota had gained internal knowledge of the fact that there were defects but continued to dismiss them publicly. The motortrend website provided an extensive timeline of the events date by date that concluded that this ordeal continued from August 2009 to January 2010 when they finally decided to complete a major recall and fess up to most of what they knew. Even after several strings of accidents and deaths the company still struggled with knowing how much information to expose about what they knew. At this point what should have been communicated is honesty. They should have apologized for the trauma this has caused and immediately issued a recall until the situation was truthfully contained. A similarity between BP and Toyota during these stressful times is that the CEO was not necessarily the best candidate designated to speak out so freely to the press. His image appeared uncomfortable due to his heavy accent and nervous expressions of condolences. Mr. Akio Toyoda lead the media to believe that if they removed the floor mats from the vehicle everything else would be fine. These claims were later dismissed to be false and misleading. In the meantime as the CEO vowed that the issues had been contained another 4 passengers died in a collision on December 26, 2009 with the floor mats in the trunk in. Even after this calamity Toyota still did not announce the final major recall until January 21, 2010 according the mototrend website. This alone speaks volumes on their credibility, integrity, and overall reputation. Actions like this may leave a consumer to wonder how Toyota could ever be trusted. Over time Toyota announced that the root cause of the malfunction was an error in the mechanisms on the accelerator pedal. If they had been upfront from the beginning and worked actively to recall and correct the issues efficiently they could have possibly maintained their

Companies Blunder Under Pressure 5 positive image. The statement from the article People are reasonable. They know companies make mistakes, and people will forgive an honest mistake. They will not forgive a dishonest cover up. Even today the Toyota website seems to display an image of vagueness. Both the BP and Goldman websites display information pertaining to how their situation was handled and explained the current state of the company as a result of the circumstances. The Toyota website does not offer any information on their crisis at all which leads one to believe that if they had the opportunity to react more openly, they probably wouldnt.

Goldman Sachs faced heavy scrutiny for their devastating actions during an investigation into their firm in 2010. Their story was more difficult to uncover due to the type of business, but was even more controversial due to the financial burden their actions caused. In the midst of a global economic crisis this trusted company took advantage of their customers by profiting first at a time when the consumers were losing major money. Much of society was already upset because the Federal Government had provided an $85 billion dollar bailout to the already wealthy American International Group contracted for insurance policies and mortgage investments through Goldman. To make a long story short a company that people trusted with their money benefitted from taxpayer money to bail out AIG. We make money for ourselves first and our customers second was the epitome of my thoughts as well after reading the news article. The sad part is that when visiting their website the caption who we are indicates 14 principles that they pride themselves on. The very first statement says Our clients interests always come first while the last one says integrity and honesty are at the heart of our business. Really? After all of the heartache and financial loss imparted on their clients they still have the audacity to have enough pride to make those types of self assessments. This situation differed from BP and Toyota because the deception was not as visible with the eye. We could see

Companies Blunder Under Pressure 6 the oil spill into the gulf from the BP disaster, Toyota and their vehicle issues were at the frontline full of undeniable evidence. Sachs on the other hand involved lots of paperwork, wealthy business talk, and legal matters which can be very hard to dissect for ordinary people. When involving finances things can turn ugly really quickly forcing people to ask questions and be angry at whoever they feel is at fault for them losing what they worked so hard for. Like BP and Toyota the CEO of Goldman, Lloyd Blankfein did not make the situation any better with his comments. According to the New York Times he stated banking is Gods work almost as if this occurrence was an act of God in which they had no control over. The bottom line is that this company which was supposed to protect consumer assets and investments, actually deceived them and profited under the table which speaks volumes for their credibility.

Overall all 3 of these companies handled their crisis in a different manner. One thing that all 3 lacked was certainly honesty and integrity which are major characteristics for trustworthiness. If there was a crisis plan in place for BP and Toyota there would not have been so much conflicting information being provided. The reality is that we can see the oil spilling into the gulf, we heard about the deaths involved with Toyota vehicles, and the people had a loud outcry regarding the scandal at Goldman Sachs. With that being said there should have not been any cover ups or running from the issues at hand. As supporters of a company we just want to know they will be truthful and fix the problem so that we can all move forward. We all make mistakes but how we handle them during times of adversity exposes our true character and intensions.