Tuesday, December 31, 2013

A Slightly Different Perspective on the Crises of 2013

With nearly 25 years of “in the trenches” crisis management experience, the staff of the Institute for Crisis Management has nearly seen it all!

Add the 20 years I’ve been a part of ICM with my previous 30-years of newspaper, radio and television news experience and I can truthfully say it’s been a long time since an organization or the people in an organization have surprised me.  Disappointed me, yes, but not surprised me.

We used to compile a list of the top ten crises each year.  We still publish the annual ICM Crisis Report which includes the top ten most crises prone companies and industries, but that’s a little different from the lists that typically pop up at this time of year.

Professor Daniel Diermeier at Northwestern University’s Kellogg School of Management publishes his annual Top Ten Reputational Crisis List and Bloomberg has its list.  I would not argue with any of their findings.

Where we might disagree is in the assessment of each event’s long term damage and the public’s interest and attention span.

Would you ever have thought we would be talking about Paula Deen and JPMorgan Chase & Co. in the same sentence? As the year came to a close Chase had a tentative $13-billion settlement pending with the U.S. Justice Department over the company’s handling of mortgage bonds and Paula Deen started the year with a Food Network show, restaurants carrying her name, books and endorsements and ended the year with almost no credibility and no income and no prospects for either.

In the last week of 2013 Wells Fargo agreed to pay $541-million to Fannie Mae to settle bad home loan cases. All combined, Fannie Mae has reached settlements of about $6.5-billion with eight banks over dealings that were questionable at best.

There was a Paula Deen Restaurant in a casino about two miles from my home and I did my banking with one of the eight banks.  I had never been to the Deen restaurant and haven’t missed it a bit. And I’m still banking with the same bank.

I have seen social media posts about what awful people manage those banks, and posts condemning and others agreeing with Paula Deen on her attitude toward racism and sexism.

The banks still are raking in the cash and their drive-up windows still have lines backed up every day.

Now, another example of the point I’m about to make.

On the last day of 2013 a Bangladesh court issued arrest warrants for two garment factory owners and four of their employees, charging them with homicide for the deaths of 112 workers in a fire in 2012. In April of 2013 an eight story garment factory collapsed killing 1,127 workers.

The second factory made clothing for Wal-Mart among other American outlets and for a short time there was criticism of stores that used sweat shops in other parts of the world, but those critics moved on to other issues and returned to the big stores to buy low priced clothes.

I cite these examples to make two points.

  1.  The same kind of crises keep making headlines, year after year, with the biggest difference in how fast we hear about them.  As social media usurp the print and broadcast channels consumers of news hear the gory details almost instantly and executives and managers must be prepared to respond ever quicker and more effectively.
  2. Whether organizations respond faster and more effectively, or not, the public and particularly the American public have a shorter attention span and in short order, someone or some organization will do something else to grab our attention for a few days.

Even high profile companies can have a crisis in public confidence or mismanagement, or something can disrupt their business and still recover in a relatively short time.

Boeing profits were up early in the year in spite of battery problems that grounded the company’s giant new 787 Dreamliner.  Sales of other models soared and so did the bottom line.

American Airlines faced a public relations crisis when more than 1,000 flights were cancelled or delayed in one day in 2013, and there were thousands of frustrated and angry customers.  But, when all those people completed their trips and went to the airport to fly home, they ultimately flew home on the same airline.

You still need to anticipate all the things that can go wrong in your organization, whether its manufacturing, healthcare, education, retail sales, food service, finance or not-for-profits. And with that knowledge prepare a plan to manage the most likely problems that can strike, practice with that plan and know what you can say, whatever goes wrong, and who will say it and when.

The Institute for Crisis Management can help you do all of that.




Friday, December 20, 2013

Merry Christmas From Target


Merry Christmas, and oh, by the way, if you used your debit or credit card at any one of the more than  1,700 Target Department stores in the US between Nov. 27 and Dec. 15 your personal credit/debit card information has been stolen.

About three weeks after the first data theft, a blogger “Krebs on Security,” wrote about the intrusion into your personal financial card data.  40-million customer records were compromised in that three week period, But that is not the worst credit card hijacking.  Six years ago hackers got into the T. J. Maxx system and got away with 90-million customer records, and in 2009 thieves made off with 130-million stolen card numbers from the Heartland Payment Systems computers.

The Privacy Rights Clearinghouse claims 621,955,664 credit card files have been reported stolen since 2005, and the group says that’s only the data reported stolen.  The experts say it’s probably many more than that.

There are a number of issues to consider – whether you are a customer of a store like Target, or an investor, or an executive or an employee.

Millions of customers have been potentially ripped off and it took almost three weeks before the company told anyone about it.  That won’t encourage customers to come back, or people to want to work there.

The company posted a formal “letter to customers” on its website, but you had to be alert to find it – the link to the “letter” is in the upper margin of the home page.  When you click on it this is where you end up:

Various so-called experts claim the hackers can sell those 40-million customer records for anywhere from a quarter to $45 each….multiply that by 40,000,000.

My advice to decision makers of retail outlets is to respond quickly if you are a victim.  Secondly you should find a common voice and insist American credit card companies immediately adopt the European “smart-chip technology” which has been spreading throughout much of Europe since 2002.

And every retailer should encrypt their credit card transaction process from the device on which the customer swipes his/her card, through the stores’ network, to their bank and credit card issuer.

And on top of that, every business, small or large, should anticipate what can go wrong and take steps to prevent the “wrong” and simultaneously plan for what you will do and say if it happens anyway.