Business people shudder at the thought of their companies replicating what happened to Peanut Corporation of America in 2009. The company’s product recall and subsequent criminal investigations and bankruptcy are a textbook example of a crisis gone awry.
Given that the U.S. Food and Drug Administration recalled more than 9,000 products in 2011, those PR crises happen on a somewhat frequent basis.
“Recalls happen now all the time,” said Steve Kluting, corporate and food law attorney at Varnum LLP. “Some of them big time, some small time.”
Kluting attributes this uptick in recalls to increasing sensitivity to allergens, the rising impact of social media on businesses, more stringent product testing procedures and an increase in media airtime dedicated to product recalls.
With all these factors in play, it is becoming increasingly important that companies, especially in the food and pharmaceutical industries, manage the impact that crises like product recalls can have on their brand.
According to Tara Powers, managing director of Lambert, Edwards & Associates’ consumer practice, companies ought to have their public relations person on speed dial for such a circumstance.
“If you have a situation that requires you to call a lawyer, then you should (also) call ... someone like me,” Powers said.
The most important thing a company can do, according to both Powers and Ginny Seyferth, president at SeyferthPR, is have a plan on the books for such an occurrence. Seyferth likens this plan to just another part of a business plan: It should be written out clearly and effectively.
“The really best companies have procedures in place to deal with that sort of situation,” Seyferth said. “It’s a part of your business plan like anything else.”
Powers recommends developing a plan that clearly identifies a “crisis team” that involves employees from all areas of the company so the company can develop a unified response that is integrated into the entire organization. The task of that group is to identify the appropriate response and to quickly inform employees of exactly what is happening and the appropriate action to take.
“The consumer is accepting that things happen. They are not accepting of it taking seven weeks to address the problem,” Seyferth said. “The best product recalls are the ones that quickly identify the problem and scope, and effectively communicate to the consumer the action that is being taken.”
For companies subject to recalls, part of their action must go to ensure that the employees understand who is the designated company spokesperson so they can direct any media inquiries to that individual instead of answering questions themselves. Also, at this time, Seyferth recommends bringing regulatory agencies into the loop.
“You need to call the regulatory agency proactively and bring them in as a partner, immediately,” Seyferth said. “Immediacy of getting to the root of the problem is crucial.”
The next important step is to inform the media. According to Powers, the crisis team should carefully consider the proportionality of the company’s response to the situation and listen to the company’s legal team, bearing in mind that lawyers typically act in defense of the company while a PR crisis is not helped by “hunkering down.”
Powers said the worst-case scenario for any size company can cause serious harm to its reputation, both internally and externally, and can be more devastating than simply losing a lawsuit in court.
“Losing in the court of public opinion is much more damning for your company because, if you don’t protect your reputation and you don’t get sales back, then your company will suffer,” Powers said. “One option for companies is to try to ride out a crisis, which will ultimately end badly. The other option is to turn the crisis into a triumph, and that is just another case of when a good defense is a good offense.”
This offense takes the form of a clear information dissemination plan that begins with informing employees, business peers and customers, then continues on to web and social media channels and culminates in a general press release and, if need be, a press conference. For each audience, the message should be customized to meet the needs of its recipient, be clear and succinct, and focus on known facts and not speculation.
“Contrary to what some might think, a crisis is not a time for spin,” Powers said.
Sources tell MiBiz the most important action a company can take is planning for the unexpected. They recommend planning for potential crisis scenarios by establishing general guidelines for responses, designating and training a spokesperson, laying out “if-then” procedures for each scenario and reviewing the plan annually to keep it up-to-date.
“We can’t live in a real world that produces as many foods and medicines and not expect problems,” Seyferth said. “The most important thing that businesses forget is to talk about it ahead of time. Don’t wait ’til it shuts you down.”
According to Seyferth, the same basic principles also apply to any small businesses. For example, Seyferth sees organic, “farm to fork” restaurants as being inherently susceptible to the issue of product recalls. Her recommendations to those businesses are the same: develop a plan in advance, proactively call appropriate regulatory agencies and have backup sourcing for raw materials like ingredients that may turn out to be contaminated.