Crisis Management

‘The phone in our pocket is our portal to the world’ (Bell, 2016)

Yes, that device in your pocket – now commonly referred to as a ‘smartphone’ – is now the number one choice of digital device when it comes to accessing social media networks and the news according to a Deloitte Media Consumer Survey (see videoclip below).

Sensis Social Media report provides further evidence of the massive popularity of the smartphone, and explains why Samsung’s recent recall of its Galaxy Note 7, was a major blow for a company that is the global leader in a fiercely competitive industry.

Released in August this year, the flagship phone received rave reviews for its capabilities. However, by September there were reports of the phone catching fire and in some cases exploding.

The company announced a replacement program,  but was forced to issue a recall by the US consumer product safety commission.  The drama surrounding the phone soon turned into what Hern describes as a ‘fully-fledged crisis’.

Coombs (as cited in Coombs and Holloway, 2010, p. 238) defines a crisis as, ‘…an unpredictable event that threatens important expectancies of stakeholders and can seriously impact an organisation’s performance and generate negative outcomes’.

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A crisis can place enormous stress on a company’s finances and reputation (Johnston & Sheehan, 2014). Samsung had already produced 2.5 million phones, and 1 million of these had been sold, only few weeks after its release. It is estimated that the financial fallout will cost them $3.9bn over the next six months, but an even greater concern, is what impact it will have on the their reputation moving forward.

The ramifications of a crisis highlights the importance of organisations having a crisis management plan to ensure they maintain relationships with stakeholders (Johnston & Sheehan, 2014). In a crisis, stakeholders are very vocal and are seeking information quickly and truthfully (Johnson & Sheehan,  2014) . Disgruntled consumers can use social media as a forum to very quickly spread news of their dissatisfaction, which can have serious consequences for a company’s reputation. As stated by Johnston and Sheehan (2014, p. 323), ‘social media platforms breathe life into issues. Viral videos, rumours, misinformation and gossip can quickly spread world wide, providing the organisation with an unprecedented threat’.

Coombs and Holladay (2010) say that a response to a crisis needs to be quick, accurate and consistent, with most experts recommending a response within the first hour. Samsung’s initial handling and response time has been widely criticised. Rather than issue an immediate recall, the company offered a replacement, but these phones also malfunctioned.

Devereaux and Pierson-Smith (2009, P.113) say there are three guiding principles when facing a crisis. They are: (1) show concern about the situation (2) tell people what you are doing to resolve the situation (3) tell people what you will do to avoid it happening again.  A spokesperson for Samsung has since come out and said, ‘Putting consumer safety as the top priority, we have reached a final decision to halt production of the Galaxy Note 7s’ (Hern). In terms of rectifying the situation, they have advised that customers can apply for a full refund or swap it for another Samsung product (Hern). They have also set up a webpage dedicated to providing consumer guidance.

When it comes to crisis communication, PR practitioners need to implement  strategies that aim to ‘…reduce uncertainty, maintain the the support of stakeholders, protect the organisation’s reputation and work towards rebuilding the organisation to a stronger position than it was in before the crisis'(McLean & Power as cited in Johnston & Sheehan, 2014 p.333).

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Johnston and Sheehan (2014, p.342) emphasise the importance of the recovery phase of a crisis, saying it is just as important as the other stages of crisis management. It involves the company ultimately asking itself, ‘what have we learned from the crisis?’ It can do this by addressing questions such as, what caused the crisis? how effectively did we communicate with stakeholders? what steps were used to manage it, and were they effective?, and what can we do better in the future?

 

References

Coombs, W & Holladay, 2010, PR strategy and application: managing influence, John Wiley & Sons, UK.

Devereaux, M & Pierson-Smith, A 2009, Public relations in Asia Pacific : communicating effectively across cultures, John Wiley & Sons (Asia) Pte. Ltd. Singapore.

Johnston, J & Sheehan M 2014, Public relations theory and practice, 4th edn, Allen & Unwin, NSW.

 

 

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