After the spilt milk, what do you do?

Organisational crises are a little like spilt milk. Most people simply want to swish away the spill and move on. But that could be a costly mistake. Handling the ‘crisis after the crisis’ successfully can be even more important than managing the immediate crisis response.

One reason is that crises often reveal policy and procedural missteps that staff have allowed to happen, sometimes over a lengthy period. “She’ll be right” is still a Kiwi mantra. But the deviations need to be brought back on track, and that can take time.

There’s another reason. As a rule of thumb, all crises, no matter how well handled, do some reputation damage, even if only in the short-term. Reputation repair also takes time and is no light matter, as studies show reputation influences purchase decisions.

A good reputation does exert some shielding effect when a crisis strikes: Customers are more likely to give you the benefit of the doubt, and to think that a nasty event was a one-off rather than evidence of a systemic problem. But reputation "capital" in a "goodwill bank?" Forget the notion – reputation is so dynamic you can’t safely assume today’s positive stakeholder evaluation will last.

Spillover effect
There’s another point, and it’s a crucial one. Your company’s crisis management will be judged not only on how the short-term crisis response was handled but also on how the post-crisis period was addressed. After the massive 2010 BP oil spill in the Gulf of Mexico, the US Environmental Protection Agency temporarily banned the company from bidding on new federal contracts because of its post-spill conduct.

BP’s spill-related dilemmas highlight more than the unprecedented direct costs of the Gulf of Mexico crisis: They also show that mishandled crises can lead to significant opportunity costs, whether imposed by regulators or by unimpressed members of the public.

A New Zealand example is the 2013 false botulism scare, prompted by Fonterra’s announcement that some whey protein could be contaminated by the bacterium. While the announcement triggered a global response (including from Russia, which had not imported any of the suspect product), the initial post-event response from those most immediately involved created confusion and trenchant criticism, especially when it was revealed that the potential product pollution had been the focus of extended debate within Fonterra.

Timely disclosure became an issue, attracting commentary from Prime Minister John Key and a raft of others. As a result, the reputation of a whole key industry sector, not just that of a company, was placed in question. Overseas media expressed doubts in no uncertain terms about whether New Zealand’s 100% Pure branding matched the facts. This ‘reputation spill’ from an initial protagonist to others not directly involved is a risk every time a significant crisis occurs.

Restoring your image
So what do you do beyond cleaning up the spilt milk? Scholar William Benoit came up with a set of "image restoration" strategies often used by crisis managers who may never have read his seminal work.

There is no one-size-fits-all evaluation of which one works best: That will depend on the situation, both inside and outside the organisation, and be governed by the way the organisational leadership views what’s happened and their own responsibilities in relation to it.

There are five broad categories. The first is either a simple denial or shifting the blame to someone else. The “it wasn’t us, the supplier let us down badly” is a version of this response. We’ve all heard versions of that – and sometimes it works. Then there’s “evading responsibility,” which is not the same thing as blame-shifting. Often, publics – who, of course, aren’t stupid, cotton on to this and don’t like it very much so use with caution.

The second is to suggest that you either didn’t have the knowledge you needed to be able to act, or the freedom of movement to do so. That’s the “I couldn’t do a thing because the boss told me not to touch it” justification. Then there’s the assertion that “it was all an accident” or “we were trying to do the right thing.” Again, good intentions don’t necessarily cut it, especially if the crisis involved injury or other serious consequences.

Admitting responsibility
The other categories are “reducing offensiveness” (which can include attacking one’s accusers, or paying compensation); taking corrective action, or “mortification” (echoes of penance here): humbly admitting responsibility and asking for forgiveness. Kiwi managers may not like the idea of such an ego-denying response but it is sometimes what the media and public expect before the organisation is allowed to move on.

This is simply a structured way of looking at what organisational leaders do in practice but what it underscores is the need to strategise image recovery every bit as much as physical, infrastructural rebuilding and the much-talked-about resilience.

Of course, many public relations advisors position themselves to offer this kind of strategy development. Valuable as that input can be (and often is), you may not need it if you invest time in thinking hard about what to do once the spilt milk is mopped up.

Dr Galloway teaches public relations at Massey University. His lecture, Public Relations: The Science of Spin, will be held as part of the Big Issues in Business series in Auckland on July 6 and Wellington on July 7. Details here

Tune into NBR Radio’s Sunday Business with Andrew Patterson on Sunday morning, for analysis and feature-length interviews.