When Crisis Strikes: Ten Rules to Survive (and Avoid) a Reputation Disaster

By Francis Herd and Nicola Kleyn

In the past few years, so many scandals have rocked corporate South Africa that crises seem to be the norm rather than the exception. In the glare of the public eye, with cameras, microphones and cellphones in their face, many leaders who excel in organisations suddenly become scared, confused and can even appear shady.

When Crisis Strikes looks at a variety of crises in the age of social media in South Africa and abroad, with examples of who got it right, who got it wrong and how they could have done better. The organisations range from schools to local companies to multinationals caught up in state capture claims and giants such as Boeing and BP.

The book provides ten simple and effective rules to help manage crisis situations. The practical advice in each rule is backed up by academic research that draws from public relations, marketing, management, leadership and psychology. It combines insights from a seasoned journalist and an accomplished academic to give you the advice and tools to ward off a crisis before it strikes and, if it’s too late, to resolve a situation quickly and with integrity.

• Language: English
• Publisher: Pan Macmillan South Africa
• Release date: May 1, 2020
• ISBN: 9781770107137

Francis Herd

Francis Herd is a journalist and television presenter with nearly two decades of experience working for South Africa's top broadcasters, including 702 Talk Radio, eNCA and the SABC. She has interviewed well-known local and global leaders, including Cyril Ramaphosa, Howard Schultz and Bill Gates.

Book preview

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Francis: To my ‘book baby’, my daughter Celine,

who was born while we were writing. May life bring you much joy

and no crisis you can’t handle.

Nicola: To my parents, who instilled the importance of ethical values

and a love for learning.

When Crisis Strikes

Ten Rules to Survive (and Avoid)

a Reputation Disaster

Francis Herd and Nicola Kleyn

MACMILLAN

First published in 2020

by Pan Macmillan South Africa

Private Bag X19

Northlands

Johannesburg

2116

www.panmacmillan.co.za

ISBN 978-1-77010-712-0

e-ISBN 978-1-77010-713-7

© 2020 Francis Herd and Nicola Kleyn

All rights reserved. No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of the publisher. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages.

Editing by Sally Hines

Proofreading by Wesley Thompson

Design and typesetting by Triple M Design, Johannesburg

Cover design by publicide

Contents

Introduction

Polony and the Balony of Tiger Brands

Rule 1: Stop the Harm

Frankie’s, My Dear, Woolies Doesn’t Give a Damn

Rule 2: Respond Quickly and Conspicuously

KPMG: Rogue Reports, Dead Cows and State Capture

Rule 3: Match the Crisis Response to the ‘Crime’

Vicious and Sweet: Comparing Tiger Brands to Maple Leaf Foods

Rule 4: Apologise If You’ve Messed up

Connect the Dots: Big Corporate Culpability in State Capture

Rule 5: After Ethical Breaches, Excise

‘I’d Like My Life Back’

Rule 6: Be Human

St John’s College: A Headmaster Schooled on Air

Rule 7: Make Decisions You Can Defend

Bad Blood Flying SAA into the Ground

Rule 8: Respect the Power of Relationships

Pick n Pay and Poisoned Tins

Rule 9: Be Accessible to the Media

Caught on Camera: Sober as a Judge (Not)

Rule 10: Plan While Living ‘Live’

Postscript: A Word on COVID-19

About the Authors

Acknowledgements

Introduction

The reasons for this book are simple: the nature of the world we live in means crises are striking with more frequency and intensity. And yet, so many leaders are getting crisis management horribly wrong.

Organisations spend years trying to gain the attention and trust of customers, donors or investors, some with teams of public relations (PR), marketing and corporate social responsibility experts. But when companies become vulnerable, it only takes a few bad interviews, a leader who says ‘no comment’, or becomes defensive and arrogant, to jeopardise years of hard work, put jobs in danger and send investors scurrying. On the flipside, if leaders can keep their heads when crises strike, there is a remarkable opportunity to build reputations and deepen trust. Leader attitudes to crises make a substantive difference. Studies have found that leaders who think of crises as threats react more emotionally and are more constrained. But when leaders see crises as opportunities, they become more open-minded and flexible, and more effective in picking up the pieces.¹

The general view is that a crisis is a sudden, unexpected event that poses a major threat to an organisation (or a person).² But there are other takes as well. Academics Paul Frosh and Amit Pinchevski have argued that, given the explosion of smartphones, cameras and social media, everyone can now record or report on crises so they are no longer moments of interruption, but increasingly part of the very fabric of life.³ Others, who reject the idea that crises just appear out of the blue, argue that crises are linked to the behaviour of managers who deal with them.⁴ That’s why the involvement of top managers is essential in planning (only when leaders lead, will others follow), preventing, pre-empting and managing crises. Accountable leaders are now generally viewed as the main spokespeople in a crisis, especially if the whole organisation is under threat.⁵ If you are that accountable leader, this book is for you.

Who we are writing for

This book is for leaders of organisations from multinational companies to small and medium enterprises, non-governmental organisations, schools and just about any organisations you can think of, as well as would-be leaders, practitioners and anyone interested in the theories behind crisis management. It will also be of interest to anyone who finds themself in the glare of the public eye, with television cameras, radio mics or cellphones facing in their direction. Given recording technology, social media and the speed at which audio and video recordings can travel around the world, this now means basically everyone.

As a journalist who has watched reputations being ruined live on air, and a dean of a business school who is often asked to discuss the ramifications of corporate crises, we have both been struck by a dearth of practical advice to help leaders make decisions in an era when crises are playing out daily and crisis management is being earnestly studied across various fields of academia. We collaborated to write this book together but you’ll also find anecdotes from each of us peppered throughout the text.

It’s simply too late to understand crisis management when crisis strikes; when investors or donors and regulators are breathing down your neck, journalists come knocking and you wake up to find a most unflattering picture of yourself on the front pages. You may get some good advice from subordinates or PR companies, but, if you’re not prepared, the voices of lawyers and insurers telling you about the dangers you face will always sound louder. We hope this book will help you to decide, when the pressure is on, what type of leader you will be, and give you the knowledge to assess advice and the tools to make tough decisions. You might be a regular winner of boardroom battles, but this is about preparing for the reputation wars.

What’s inside

This book presents a cross section of global and local crises involving companies, partnerships, a judge and a school. We have not focused on one of South Africa’s biggest corporate scandals, the collapse of Steinhoff, for two reasons. Firstly, the main concern has been evidence that fraud was committed at the very top. Our remit is not to discuss strategies for dishonest leaders to better manage a crisis, but rather to help honest leaders represent themselves and their companies better. Ethical leadership underpins all our advice. Sometimes the lines are blurred, and there are some good people left in companies affected by the actions of a few. That’s why we’ve devised ‘Rule 5: After Ethical Breaches, Excise’. Secondly, although new leadership is now in place at Steinhoff, we don’t have enough information to assess their recovery efforts and whether they will work or not.

Many of the organisations featured here have aptly displayed what not to do. But we’ll also show you examples of companies and leaders that have emerged from crises not only with the same trust and loyalty, but, in fact, with enhanced reputations. Crises can be complicated, and there may be a backstory. However, because crises unfold publicly and because perceptions are formed based on publicly available information, this informs the content we have used. When planning the book, we made a conscious decision not to speak to any of the corporates involved.

Each case study is followed by analysis and advice drawn from our own experience and research. We’ve sourced academic literature to bring you the most interesting theory from the fields of PR, corporate marketing, leadership, management and psychology. We’ve used endnotes to provide full references for anyone who wants to access these studies. While best practice in crisis management already exists, we have combined ­theory with real-world cases and devised ten rules for guidance.

The rules, of course, can be broken, and frequently are. There are some companies that seem to get away with anything and everything, and we’ll look at the reasons why. But the fact is that while some companies don’t get punished for bad behaviour, many companies do. For many organisations, breaking the rules can have dire consequences. We’ll also show that reputation is a finite resource. You can draw on it when times are tough as long as you have saved in the good years. Some companies can make withdrawals and weather a crisis, but, as crisis after crisis hits, you’ll eventually have nothing left.

From behind the mic

From the dean’s desk

James and colleagues in Jonathan Bundy, Michael D. Pfarrer, Cole E. Short and W. Timothy Coombs, ‘Crises and crisis management: Integration, interpretation, and research development’, Journal of Management 43(6), 2016: 1661–92, https://doi.org/10.1177/0149206316680030.

See Bundy et al., ‘Crises and crisis management’; W. Timothy Coombs, ‘Protecting organization reputations during a crisis: The development and application of situational crisis communication theory’, Corporate Reputation Review 10(3), 2007: 163–76, https://doi.org/10.1057/palgrave.crr.1550049.

Paul Frosh and Amit Pinchevski, ‘Crisis-readiness and media witnessing’, The Communication Review 12(3), 2009: 295–304, https://doi.org/10.1080/10714420903124234.

See the ‘process approach’ to crises in Tony Jaques, ‘Crisis leadership: A view from the executive suite’, Journal of Public Affairs 12(4), 2012: 366–72, https://doi.org/10.1002/pa.1422.

Fifty per cent of C-suite executives surveyed by Jaques believed that they, rather than PR professionals, should take the main responsibility for crisis management (see Jaques, ‘Crisis leadership’). See also Leslie Gaines-Ross, ‘Damage control’, Leadership Excellence 26(3), 2009: 8; Stephen A. Greyser, ‘Corporate brand reputation and brand crisis management’, Management Decision 47(4), 2009: 590–602, https://doi.org/10.1108/00251740910959431.

Polony and the Balony of

Tiger Brands

In early 2018, South Africans were freaking out more than usual. At dinner tables, we weren’t only discussing the high crime rate, but the fact that food was killing us too. Towards the end of February an outbreak of listeriosis, a foodborne disease, had claimed more than 170 lives.¹ Pregnant women, and babies, were particularly vulnerable. Parents were scared they could kill their children by putting the wrong thing in a lunchbox. The outbreak had started in the previous year but the source of it was still hiding in plain sight. The National Institute for Communicable Diseases (NICD) believed it could be one food ­product or range of products – but it didn’t know which one. Ready-to-eat meats, such as polony, were being investigated.

Tiger Brands is named and shamed

The puzzle was solved when, on Sunday 4 March, the Health Department released a statement saying that the source of the deadly strain of listeria had finally been found:

The outbreak strain, ST6, was confirmed in at least 16 environmental samples collected from [the Polokwane] Enterprise facility. THE CONCLUSION FROM THIS IS THAT THE SOURCE OF THE PRESENT OUTBREAK CAN BE CONFIRMED TO BE THE ENTERPRISE FOOD-PRODUCTION FACILITY IN POLOKWANE.²

The Health Department, in conjunction with the NICD, the World Health Organization and others, had just laid the blame for the outbreak firmly at the door of a factory belonging to Enterprise, a subsidiary of Tiger Brands. The statement left no doubt, but, from the start, Tiger Brands was loath to accept responsibility. It released a statement that same day, showing a slight disconnect from reality, saying that its own tests were still pending:

The company proactively amplified its testing for Listeria and can confirm that we had found a low detection of a strain of listeria in some products on 14 February but the presence of the ST6 strain has not been confirmed by our tests.³

While trying to defend itself, Tiger Brands had just admitted it had found the presence of listeria weeks before. Rather than issuing a recall when it was potentially involved in the outbreak, Tiger Brands had opted to send the same samples for further testing for the deadly ST6 strain.⁴

The next day, Tiger Brands executives held a press conference. The then CEO, Lawrence MacDougall, seemed determined to diminish the company’s culpability and avoid taking responsibility for the deaths.⁵ Here’s one of the exchanges:

Journalist: ‘So, today, on the 5th March, you take no responsibility for those who died?’

MacDougall: ‘There is no direct link with the deaths to our products, that we’re aware of at this point. Nothing.’

MacDougall claimed the company had acted with ‘speed and urgency’. He emphasised several tests that Tiger Brands had done and how inconclusive they had been, but said Tiger Brands was still going beyond the requirements of the recall to ‘protect the consumer’.

It begged the question though: how did a company that was ultimately confirmed as the source of a listeriosis outbreak not find the problem itself if it had been testing ‘proactively’? The listeriosis outbreak was being tracked by health authorities in 2017.⁶ Even if Tiger Brands only realised that it was happening when the Department of Health alerted the country in early December, it still had to be told what was going on in its own factory, after three months had passed.

The press conference was dotted with confusing, surprising and ­farcical moments.

MacDougall and the executives flanking him were asked when they had last eaten Enterprise polony. It was the perfect opportunity to say that eating Enterprise products was the last thing anyone should be doing at that time. Instead, MacDougall smiled and another executive implied that it was a sensible thing to do. ‘Polony, I’m not sure,’ said MacDougall, pondering the question. ‘I’ve had sausages and Viennas … probably four or five weeks ago.’ When asked: ‘What brand?’ he lifted an eyebrow and replied, ‘Enterprise, no doubt.’

‘Yesterday I had pizza with chopped ham,’ interjected the chief corporate affairs officer, Mary-Jane Morifi. ‘And if you looked in my fridge right now you would see an eaten polony, Enterprise polony. I’m good,’ she added, and again, ‘I’m good.’

When a journalist asked MacDougall if he had been consulting lawyers ahead of the press conference, he responded, ‘No. Doing the right thing and saying the right thing doesn’t need legal prep.’ It was good PR-speak that rang hollow