 |
|
|
|
|
|
|
|
|
 |
 |
 |
 |
 |
 |
 |
||
 |
 |
 |
||||||
 |
||||||||
|
And professional baseball began a run of scandal news about steroid use. A federal grand jury heard testimony from several pro athletes in a case against Bay Area Laboratory Co-Operative (BALCO). New York Yankee star Jason Giambi admitted taking steroids and human growth hormones. In 1990, ICM began monitoring 1500+ print business sections of newspapers and magazines, business and financial wire services, regional business publications and industry and trade publications world-wide.
While the number of crises was down again in 2004, the most important statistics are still those that reflect the causes and types of crises that strike businesses and other types of organizations. On average, slightly more than
half of all crises that strike large corporations and small
and medium size businesses, as well as not-for-profits, are
caused by management, compared to 28-percent of all crises
caused by employees and 19-percent triggered by outside forces.
The type of crisis you are most likely to experience is important for your crisis planning purposes. When you talk about crisis management and planning, most people think about fires, explosions, natural disasters, workplace violence, even terrorism. But, based on the ICM Crisis Database, you are far more likely to experience a smoldering crisis than a sudden crisis. On average, 71-percent of all crises are the type that start out small and may take days, weeks or even months before they get out of control and draw public attention, while 29 percent of all crises are the sudden, unexpected type.
It was the 20th anniversary of the world’s worst environmental industrial accident in Bhopal, India. Forty tons of poisonous gas from a Union Carbide pesticide plant leaked and killed at least 10,000 people and affected more than 555,000 others. Dow Chemical Company bought Union Carbide Corp. in 2001 and was the target of civil-rights activists, survivors and other protestors on the December 3, 2004 anniversary of the 1984 disaster. News reporting of workplace violence was down 52% and accounted for far fewer events that caught the attention of business news editors. According to the United States Department of Labor, workplace violence kills about 700 workers a year in the US, and leaves an estimated one-million other workers emotionally or physically injured. Unfortunately the actual 2004 US Department of Labor statistics will not be available for months.
The biggest drop in negative news was in defects and recalls. But that doesn’t mean there were no recalls nor defective products in 2004. In fact, Bridgestone, the parent company of Firestone recalled 490,000 tires that had been linked to three fatal crashes. Just three years earlier, Firestone was forced to recall 14.4 million tires after at least 271 fatal traffic crashes in the United States alone. In fact, a Texas District Judge approved a $149-million nationwide settlement early in 2004 to resolve 30 class-action lawsuits. Product defects and recalls were up 18% and accounted for 14% of all crises that attracted major media attention in 2003. At least 10,600 customers of Marathon Ashland Petroleum pumped contaminated gasoline at filling stations in several states. Marathon replaced or repaired fuel gauges on all those cars. Saturn (246,433 cars), Chrysler (831,000 minivans), and General Motors (4-million pick-up trucks) were among the worlds’ vehicle manufacturers paying a premium for building defective cars and trucks. In June of 2004, Japan’s Mitsubishi Motors admitted it had hid 26 defects in its cars from regulators to avoid recalls, but now was “apologizing deeply for damaging public and consumer trust.” 160,000 cars were recalled, mostly in Japan.
According to court documents, Ford Motor Company ignored safety engineers who wanted to recall 4.1-million pick-up trucks and sport utility vehicles with substandard door latches. By mid-year, 2004, Ford faced at least 15 product liability lawsuits resulting from fatal accidents where vehicle doors flew open. Sears, Roebuck and Co. agreed to
pay $500,000 to resolve federal allegations it failed to report
known defects on riding lawnmowers. And Wal-Mart added to its most crisis prone year when a US District Judge certified a sex-discrimination lawsuit as a class action that could include up to 1.6-million current and former female employees. That would be the largest private civil-rights case in US History. Late in the year, Pfizer Inc. announced it would pay $430-million to settle all lawsuits against the company alleging injury from asbestos insulation products made by a subsidiary. Pfizer acquired Quigley Co. in 1968 and eventually faced 171,611 lawsuits claiming personal injury from exposure to asbestos, silica or mixed dust. The health care industry had its share of lawsuits in 2004. The Cleveland Clinic was sued for leaving a rolled-up cloth in Bonnie Valle’s chest during a procedure in 1995. She died in 2002 and donated her body to a University medical school. The towel was found behind her left lung during dissection. Her family filed the lawsuit in August. More than two-dozen lawsuits were filed against a hospital in Louisville, KY, alleging illness or death as a result of an infection caused by unsanitary hospital conditions. The suits allege poor patient care and gross negligence by Jewish Hospital. CEO Hank Wagner said the hospital would aggressively defend the lawsuits. And a federal appeals court upheld class-action status for a lawsuit by hundreds of thousands of doctors against several managed-care organizations. The doctors claim HMOs conspired to cheat them out of reimbursements for years.
White-collar crime continued to be the largest crisis category in 2004. Much of the negative business news was a continuation of the events that led to the corporate meltdown in 2002 and 2003. The six-month criminal trial of Dennis Kozlowoski, former chairman of Tyco International and ex-Chief Financial Officer Mark Swartz ended in a mistrial after a juror received a threatening letter. The two were accused of looting Tyco of $600 million. A retrial was scheduled for early 2005. At mid-year a jury found Adelphia founder John Rigas, along with his son Timothy, guilty of skimming $100 million from the cable TV giant, hiding the company’s massive debt and obscuring the company’s real financial condition. Former Wall Street banker Frank
Quattrone was sentenced to 18-months in prison and fined $90,000
on a conviction for obstruction of justice. Former Rite Aid CEO Martin Grass
pleaded guilty to conspiring to defraud and obstruct justice.
He will serve up to ten years for his part in a billion-dollar
accounting fraud at one of the largest US drugstore chains. Two former HealthSouth Corp. executives were sentenced to house arrest, probation, fines and forfeiture of “ill-gotten” gains. Katsuhiko Kawasoe, former president of scandal-plagued Mitsubishi Motor Corp. and five other Mitsubishi executives were arrested in 2004 on charges related to a cover-up of truck defects involving a fatal accident. Most Crisis Prone Industries in 2004
After dancing around the top ten, three out of the past four
years, the Pharmaceutical Industry moved into first place on
the most crisis prone list in 2004. And Merck was number one
on the Most Crisis Prone Business list. Almost instantly, Merck’s stock lost $28 billion of its market value and AstraZeneca began running full page newspaper advertisements claiming “patient safety is our number one priority” and urging Vioxx users to switch to Crestor. Before the bad news, Vioxx accounted
for $2.5 billion in world wide sales in one year and amounted
to 11-percent of Merck’s
revenue. By year’s end, Merck & Co. began cutting more than 5,000 jobs and slashing expenses. Merck’s crisis raised questions about other pain relief products including Naproxen and Celebrex. Most Crisis Prone Businesses in 2004
Wal-Mart has been on the top ten list two years in a row. There was a major sex discrimination lawsuit, along with headlines about communities that were fighting to keep Wal-Mart from building new stores in their towns. In Canada, Wal-Mart made frequent headlines over its fight to keep unions out of its stores. There is a web site called the Wal-Mart Litigation Project which tracks the thousands of lawsuits against Wal-Mart and offers help to plaintiffs by listing lawyers who have sued Wal-Mart in the past. The site claims there are 100 different types of lawsuits against one of the world’s largest retailers. In spite of all the bad news Wal-Mart was the top global company in Fortune Magazine’s 2004 Most Admired List. However, that same magazine publishes The 100 Best Companies to Work For and Wal-Mart does not show up on that list. Microsoft and Boeing continued to show up on the ICM top ten list. Microsoft has only missed the top ten list twice since 1997. Boeing has been in the top ten, four out of the past five years. The only newcomer to the top ten list of most crisis prone industries in 2004 was health services. Major supermarket chains struggled in 2004 to recover from extended strikes and worker lockouts in California and when that problem began to fade, Publix Super Markets and Winn Dixie made headlines when their systems double and triple billed credit card and debit card customers. There is Good News Among the Bad There is growing evidence that organizations can have bad days, even bad years, and still be successful. Microsoft and Wal-Mart, in that order, achieved the best reputation among the 100 largest US companies in 2004, according to the Delahaye Index, a quarterly assessment of how news media coverage affects corporate reputation. K. C. Brown, SVP of Delehaye, said both companies ranked so high because of their sheer presence in the marketplace. He added, Microsoft had the most negative news coverage, but it was “drowned out” by positive news, including strong financial results. And if you want an extreme example that you can recover from a crisis, consider Firestone Tire Company. After a government investigation in 2000, Firestone recalled 14.4 million defective tires and settled more than 500 lawsuits involving 270 deaths and more than 800 injuries. The brand was declared dead. But by 2004 it had quadrupled its ad budget, mounted its first advertising campaign in four years and begun to regain consumer confidence. Preventing crises is the first choice. Being prepared to manage those you can’t avoid, is equally important. Every organization should have a crisis operations plan, a crisis communication plan and a business recovery plan. Ideally those three plans should be integrated into one. But it’s not enough to have a great plan. A plan is only as good as the people that will use it, and they are only as good as the practice they get with that plan before they need it.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
President
Larry Smith brings more than 40 years experience in media, government
and public relations to help clients plan, train, and if necessary,
manage their organization's crises|
ICM Available 24 hours/day, Contact us for more information copyright ©
2008 |