From classroom to boardroom – crisis management lessons from the auto industry

aaron-shardeyAaron Shardey gained a first class honours degree in public relations at London College of Communications this Summer with his undergraduate dissertation offering case study research into crisis management in the automotive industry.

Given the topicality of the VW crisis, PR Conversations asked Aaron about his research and the lessons he would take from the classroom to the boardroom:

One of the things you quickly realise when you study crisis management is that there are numerous examples in the literature that are held up as either good or bad practice. More recent ones show the effect of technological innovations, (including emergence of social media), that have increased the global reach and potential magnitude of many crisis situations. Examples include the 2007 US subprime mortgage issue which rapidly escalated into a global financial crisis; images from the 2010 Deepwater Horizon accident in the Gulf of Mexico that were broadcast live through global media creating an international crisis for BP and, more recently, Toyota being forced into a global recall of 8 million vehicles after a customer issue in the US escalated across the world. We can now add VW to this list.

These all support the argument by Coombs and Holladay that “globalisation increases an organisation’s vulnerability to crisis. As a result, crisis communication becomes international”. That’s what interested me, because although such major disasters are relatively rare, it is now possible for a single social media update (Tweet, photograph or video) to cause a global crisis for any organisation. I decided to focus on the automotive industry, which is where ultimately I’d like to develop my career, and applied the global theory of generic principles and specific applications developed by Grunig and colleagues to see if it offered a best practice approach to crisis communications.

My study had three research objectives:

  1. To examine whether established recommendations for crisis management are relevant in global situations
  2. To determine whether the generic principles of public relations are relevant to the management of global crisis situations
  3. To determine whether contingency factors, including the specific applications of public relations are relevant to the management of global crisis situations.

Existing literature falls into two main practice-oriented themes: (a) guidelines and best practice, and (b) case studies.

There is a lot written around methods that should be avoided and methods that are essential to effective crisis management, with various forms of phased models (steps involving crisis avoidance, preparation and management typically).

The literature also regularly features real-life case studies, deemed to be examples of best (as epitomised by the Johnson & Johnson Tylenol crisis of 1982) and worst (illustrated by the Exxon-Valdez crisis of 1989) examples.

My critique of these themes is that they are often Anglo-American centric and show little consideration of the specific applications necessary to take account of local communications needs, within an increasingly global context in which crisis situations play out.

The generic principles and specific applications model does consider global and local dimensions of PR practice. It has been developed, adapted and questioned over the past 20 years, with those such as PR Conversation’s own Toni Muzi Falconi, suggesting the model remains important. Contrastingly, Kent and Taylor argue that more understanding of PR in other nations is required rather than applying a ‘single grand theory’.

My research involved understanding the views of PR practitioners into the relevance of the generic principles and specific applications model for public relations practice within multi-national organisations operating in the global automotive industry. I was fortunate that five senior practitioners agreed to be interviewed. Obviously I am not at liberty to share specific findings, but my main observations and recommendations can be summed up as follows.

Preparation for situations that could occur: This was deemed vitally important, with tools and processes in place to monitor and record issues that could potentially escalate into a local and/or global situation. I found support for the four-step process proposed by Jaques (2007). However, as the interviews illustrated that issues and crisis situations arise in specific contexts, generic case studies of good and bad practice, are of limited value. Instead, the value of reflection and evaluation after an incident was emphasised.

Organisational structure: Cross-departmental communications within and across national and global operations were revealed to require two-way processes rather than a top down one. The importance of public relations as an integrated, strategic function operating as one department globally was reinforced. This included ensuring internal communications were not neglected.

Cultural sensitivities: The impact of how people communicate and deal with problems in different cultures was considered, including how a corporate head office culture needs to recognise the local needs within the mainstream and digital media system, and the political and legal system.

Common planning approaches: The results showed that global and local crisis management plans were deployed from global headquarters for regional operations to adopt and adapt. The necessity of a global plan is essential given the speed at which a local crisis can quickly become global, yet challenges remain in the values and cultures of specific countries. The status of the organisation – and its brands – within individual countries and globally was also felt to be a key factor in local adaptation.

To conclude, three lessons that I would take from the classroom to the boardroom to guide crisis management in any global organisation, are to:

  • Ensure a global plan is in place that respects local cultural sensitivities and allows for adaptation by PR experts in national markets
  • View crisis planning as a circular process where research, reflection and action are fed back after a situation occurs to improve future performance
  • Take a two-way, integrated approach with information going both from the global head office to the regions and vice versa, and across departments.

One final observation is that what we’re seeing with VW and many other crisis situations currently is that they have a relatively short ‘buzz-period’, when they are front page news and trending through social media. The hyper-reality of this acute phase seems to dissipate and if not resolved (as remains the case with the VW situation) lingers but without the initial amplification unless new information emerges to create a further spike. Whether and how this pattern relates to the global-local dimension would be a great topic choice for a student dissertation, if any PR Conversation readers are up for the challenge.


Aaron Shardey graduated with a first class honours degree in public relations from London College of Communications. He is now an Assistant Account Executive at a major PR firm. Aaron can be found via Twitter: @aaronshardey and LinkedIn: https://uk.linkedin.com/pub/aaron-shardey/64/561/316.

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5 Replies to “From classroom to boardroom – crisis management lessons from the auto industry

  1. I wanted to pick up on your point about ‘organisational structure’. Coming from a different angle, Lord Brown, ex of BP, has been arguing that PR departments need to be scrapped. I wrote a post on that myself, that though I believe him to be incorrect in his conclusions his analysis is right: PR is too locked away and irrelevant to those within a business.

    Instead it needs to be understood and techniques and approaches adopted and integrated across the organisation. So your point, albeit in the context of crisis management, is a good one, that ‘The importance of public relations as an integrated, strategic function operating as one department globally was reinforced. This included ensuring internal communications were not neglected.’

    Cheers.

    1. Kevin – thanks for the comment. I think this relates to ideas around PR shifting its focus to being a facilitator – or indeed an agent of change – in supporting communications, relationship building, reputation management and crisis preparedness competencies throughout the organisation. Another idea is about ensuring PR is institutionalised (horrible word though) i.e. the mindset becomes part of the organisational culture or DNA. This approach of course, should reinforce the internal communications perspective where both being a change agent and facilitator are important IMHO. Would you agree?

      1. Heather, I can’t claim to much of an internal communications expert, but in terms of PR becoming something that is part of the mindset of institutions, companies and organisations, yes that’s very much what I believe. It is hard then to work out just where PR ‘belongs’ – it’s a bit free-floating, ethereal even. I can imagine it’s always very easy for it to end up either being an extension of the CEO, or worse still, seen as a marketing tool.

  2. Hello Toni,

    Thank you for your kind words and may I just say a big thank you to the work you have done in developing this fascinating yet essential model.

    In my opinion I do think that reputation is a form of social control. However, I also believe that the majority of this control comes directly from the consumers due to the increase in social media and the importance of honesty and transparency that is demanded from these stakeholders. We are continuing to see this in the industry and from CEOs. Whereby the onus of solving the crisis quickly is diverted to building the trust and reputation back of the consumers that have been affected. It’s a pyramid structure. The control comes from the bottom, the consumers (stakeholders) and it is their reactions that cause a ripple affect throughout the pyramid if something goes wrong.

    I completely agree with you, organisations are not more reckless they are just not listening. They are not listening in a sense where the decisions made at board level to either cut-costs, increase production/sales etc. are often those decisions made by the executives who are driven purely by the financial benefit opposed to reputational benefits. It’s these decisions made at the top that usually create the issue at large. It’s only then when the management wake up and realise they have a problem.

    About a year ago I wrote an article that was about the ‘social CEO’, a CEO who listens to their stakeholders, responds to their needs and communicates with them is a CEO responsible for running a successful organisation with a positive reputation.

  3. Very interesting and well written post.

    Allow me please to expand on one aspect and also to suggest a different angle of observation related to the issue of reputation and crisis management.

    1. If we postulate that specific applications is the first generic principle and that the latter is the first specific application, we overcome the potential ‘ethnocentric’ bias of the paradigm.

    Make sense?

    Mind you: this is not a ‘gimmick’ to justify insistence, because I am positive that whatever ‘ethnocentric’ bias is detectable in the work of Jim, Bob Wakefield, myself and others who have written about this, certainly we did not have it in mind… and most of the criticisms received were useful to clarify this point.

    Overall, this thinking mode about global PR policies (and, may I add, its application to any private, public or social organization relationship policy, where the generic principles are its own epigenetics plus its specific applications), in my day-to-day practice. is a formidable guiding conceptual framework.

    2. And now a second thought that I wish to pose:

    In your opinion and in those of other PRC readers and commentators, does it make any sense to consider reputation today (intended as what others say to others about you when you are not around?) as one form of ‘social control’ over organizations by their stakeholders, as my scholar friend Craig Carroll suggested to me in a conversation the other evening?

    I believe the implications of this can be far reaching from many perspectives and different schools of thought as well as social disciplines, and I am also sure that, in the mind of most colleagues, this is today hardly so and, even if it is, so what?

    Yet, I have the feeling that the recent intensification of crisis management events (not because organizations are more reckless but at least because: a) they do not listen to their stakeholders before acting and are therefore indifferent to their potential ‘social control’ function; b) because the media systems have so enlarged and globalised the instant spreading of crisis) not only calls for management to wake up and constantly learn to cope with this ‘social control’ function of stakeholders but enriches the cultural substance of our profession.

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