Damage Control

Sayantani Kar, Mumbai
BUSINESS STANDARD

India Inc is learning the ropes of corporate reputation management the hard way.

Earlier this month, media baron Rupert Murdoch drew the shutters on the 168-year-old News of The World after the News Corp-owned tabloid was hit by a phone-hacking scandal that saw the media group’s shares drop in the market. Closer home, Prime Minister Manmohan Singh met five editors of different print publications last month in what was largely seen as part of an image makeover exercise.
In today’s formidably competitive marketplace, reputation management has become important more than ever before. While India is not new to political scandals, a series of corporate crises has brought the issue of corporate reputation management under the spotlight. Whether you are a public relations representative or a marketing manager of a corporation, the big question today is: What can one do to deal with a PR crisis effectively? The short answer comes from an old saying in journalism: “It’s not the crime, it’s the cover-up.” On a serious note, how one emerges from the crisis is determined by the way one goes through it.



Take the case of public relations firm Vaishnavi, which was in the eye of the 2G scam storm along with its founder Niira Radia. The firm chose to remain silent when the controversy broke. A senior official at Vaishnavi who did not wish to be named says, “While we advise our clients to talk to the audience during their crises, we chose to keep quiet. There was dissent within the company to this approach. But then we decided not to give in to the temptation of hitting back with a defence. We knew that the frenzy had to subside for the facts to come out. Our silence ensured it happened quicker. Those who opposed this now agree it was the right thing to do.”

But then Vaishnavi has to mollify primarily its clients in a B2B market unlike companies that have to deal with faceless and nameless end consumers.

Hard to handle

When a bush fire starts, it spreads with devastating speed. Supriyo Gupta, managing director, Torque Communications, says, “There are two aspects to business reputation. One is building it and the other is its management during a crisis. Indian companies must learn that handling bad publicity is not about networking with the editors of the main news vehicles. It is not about brokering a silence. How many news bulletins can you cork? Earlier there was only the word of mouth besides traditional media. Today, you have mobile phones and the Internet, so you wake up to stories even before you turn to traditional media.”

The first question before the company therefore is to decide whether to remain silent or come clean. Santosh Desai, managing director and CEO, Future Brands, “In a crisis, the first thing you do is centralise communication and decide who is going to be the spokesperson. Then you need to get out in the open quickly, without overclaiming.” The key would be to get back with one’s own version of the story. And, there should be no discrepancy or more than one version.

Gupta says, “Around 80 per cent of crises allow the company lead time to prepare for it — a court case, for example, or a business situation that had been expected to escalate such as bad financial results.” Gupta says early exposure could avoid disaster. “Revealing the real course of events and the company’s point of view early on in some news vehicles diffuses the impact of the bad news on the audience.”

Communication or a dialogue, according to Gupta, paves the way for the next stage. “It creates breathing time and space for you to act because it gives your audience something to wait for. Keeping quiet can work only if you have a plan,” points out Gupta.

Not everyone is so lucky. Sometimes a crisis can hit a company from nowhere. There can be an accident, probable but unpredictable, demands that the information is relayed across the ranks so that the senior management has an immediate visibility of the situation and react accordingly. It may demand a pharma company or an auto maker to withdraw entire product batches from the market due to faults and take a financial hit. But it helps to build the credential of the company as a responsible one that is willing to sacrifice and ready to make amends.

Consider the worm infestation controversy that tailed Cadbury India for much of 2003. A few days after worms were detected in its flagship chocolate brand Cadbury Dairy Milk in parts of Maharashtra, Cadbury went to work. While it squarely blamed retailers’ storage facility at the beginning, it quickly launched a dealer education programme and spent Rs 15 crore in revamping the brands packaging without hiking the product price. The investment was unavoidable, says an executive who worked on its communication at that time, because the controversy caught other Cadbury chocolate brands in its slipstream.

Abhijit Awasthi of O&M who heads Cadbury’s creative account says, “Once the changes were made, it was only right to highlight them. The communication had to be part rational and part emotional and it had to come from a credible source that the consumer would recognise instantly.”
Veteran actor Amitabh Bachchan was signed on as the ambassador and was taken to the factory first to see the change. Two ad films followed, one in which he explained the packaging change and another where he was cast in the role of a granddad giving his granddaughter a Cadbury chocolate. It helped that one of 2003’s sleeper hits was Bachchan-starrer Baghban, which proved the star was still capable of taking the crowds along with him, thanks to the goodwill he enjoys.

Events unfolded quite differently for Coca-Cola India when the Centre for Science and Environment (CSE) found pesticide in samples of Coca-Cola and Pepsi in 2003 and again in 2006. Coca-Cola General Manager (public affairs and communications) Kamlesh Sharma says, “We already had stringent checks in place checking every batch of every product at our bottling plants. We knew the only way to counter it (2006) was through scientific proof.” A joint media statement with Pepsi had failed to inspire confidence, according to experts and Coca-Cola’s sales had fallen in 2003. Even though CSE insisted that it was targeting the two companies only because of their huge shares in the soft drinks, it did lead to moves such as state-wide bans of the two drinks, which were later annulled.

But Coca-Cola had learnt from the 2003 spat to opt for a more collaborative approach.
In 2006, Coca-Cola sent samples to Central Science Laboratory, Britain’s largest lab with a sizeable pesticide detection centre and got a clean chit that it put up on its website. It also brought the scientists who headed that research to address the media and shareholders in India. The dealers were also briefed by the salespeople. Coca-Cola followed it up by opening its plants and helplines to queries from the public. Along with NGOs, it held press conferences in smaller towns as well. “Our sales grew in that quarter and more importantly, we were able to work with the government to come up with standards for beverage products which had not been stipulated before,” says Sharma. It meant no one could level allegations out of the blue anymore since there was now a definite reference point.

Rebuilding trust

Says Desai of Future Brands, “As you move forward, it is vital to see from the other side’s point of view, rather than just try and plug your point of view.” The communication department at Satyam (now Mahindra Satyam) battled its leadership crisis in 2009 keeping the concerns of each of its stakeholders in mind. What started as a failed bid to acquire two family-owned companies by Ramalinga Raju went on to expose the audacious accounting fraud that he had pulled off. Billions in wealth were wiped off from shareholders, the founders were in jail, thousands of jobs were on the line and Satyam was staring at endless litigation.

“For about a few days, we had clammed up and shared information only on a need-to-know basis,” says Hari Thalapalli, chief marketing officer and chief people officer, Mahindra Satyam. “But then we realised that the media, in its anxiety to get information, was turning to all kinds of sources, credible or not. It was then that we did a volte-face.” Thalapalli and his team launched a daily communication platform that addressed every query/rumour and put up an update. “There was a mission control room which got to work at 5 in the morning, gathering the previous day’s news that had been reported and put the organisation’s responses to them up on the website by 7/ 8 am,” says Thalapalli.

This continued for three months. At the same time, the team came up with a newspaper, called News Today, and an in-house news channel, News Today TV, that replayed the news on Satyam and the organisation’s clarifications on every point raised that day. “Close to mid-February, we realised that News Today had become the primary source of information for reporters too,” recalls Thalapalli. He also invited reporters to talk to employees and partnered with them in obtaining information.
While the media’s point of view was taken care of, Thalapalli’s team went on to bolster its clients’ confidence. “The news of one client walking out would result in four others contemplating the same,” explains Thalapalli. The team decided to connect clients to other clients who committed they would stand by Satyam. “The latter reasoned with them saying, ‘Yes, we have put them on notice, altered the contract but we want to wait and watch rather than withdraw immediately’,” says Thalapalli. Clients such as Cisco and GlaxoSmithKline publicly endorsed Satyam at that time. Clients were also brought on the New Today platform to talk about how their projects with Satyam were progressing. The team also worked with the Indian government so the latter gave out timely assurances to the stakeholders of remedies being worked out.

Its employees are another set of stakeholders that a company in a crisis cannot ignore. Satyam’s Thalapalli, for instance, organised roadshows and held meetings in person to allay some of their fears. Both Vaishnavi and Satyam admit the decision of senior members to stay back to ride out the crisis acted as a glue for the lower echelons. A Vaishnavi senior manager says, “It helped to boost confidence internally. The senior team would come back and share the feedback they had gathered from the world outside, that were in contrast to the obvious virulence.”

At Satyam, senior officials pledged they would stay back and see the company through its hurdles till the formal takeover that the government was planning. Once Mahindra took over, the message changed to highlighting the conglomerate’s credentials, promising corporate governance, financial stability and the request for an extension from its various stakeholders. From 300 customers leaving in January-April, attrition was down to zero in September 2009.” Amid all that, we reiterated that our deliveries were undisturbed. We stabilised our critical resources with guarantees and they too had a sense of ownership,” says Thalapalli. For its audience abroad who were more active on the Internet, there was a team of 20 who scanned cyber conversations and were authorised to counter with Satyam’s clarifications.

This brings us to the issue of social media and how it has made things both easy and difficult for companies. Gupta who is also managing director of Digilogue, a digital reputation firm, says, “Online publishing does not call for due diligence that traditional media is supposed to follow. But the following is massive. The digital space can morph a crisis faster than ever before and even aggravate a small crisis.”

Given the changing nature of media consumption, there is a simultaneous outcry in the virtual world. But here people need to take a longer-term view not as places to launch campaigns when there is a problem. “Crowds, including those on the net, are rarely pro-corporation. They tend to work against them. Hence, if companies have brands, they should build them in a way to evoke passion,” says Desai.

According to Gupta, companies should turn their brands into mastheads online, so any searches of the brands can lead them to pages with information that won’t sound like PR-speak or sales-speak. A mis-step in crisis in the virtual world can be costly as the beleaguered BP found when it received heavy criticism for directing all Gulf oil related searches to its web-page.

Gupta cites the example of Dell. Five years back, videos of its exploding batteries went viral generating scathing criticism. A huge recall took care of the operational issues, but it left Dell with insights on how to address opinion on the internet. Its Ideastorm platform allowed users to give suggestions about what all they were unhappy about in their Dell products. Users voted on the ideas and the most popular ones were implemented by Dell.

Of course, there typically isn’t a pat rebuild process, but such crises can serve as effective learning experiences for smart corporations. Says Gupta, "Most businesses know the faultlines; so they map their probable crises. Most of all, a crisis seldom develops overnight. There would be cases of near-misses somewhere in the business which collectively snowball into a crisis, say contamination in branches of a food company. These details have to be ploughed back into the system for keeping tabs on.”

Coca-Cola, for example, put in place an incident management and crisis resolution cell with members from different functions, led by Deepak Jolly, head of communication, to review issues in operations every year, be they supply chain, manufacturing or marketing that need to be addressed through the year.

In the end, the overall reputation of the company or the group also plays a huge role when a crisis strikes. The 2G brouhaha did not harm the reputation of the Tata group simply because of its overall image as a high integrity business group. And that is far more important in the long run than any image management strategy during a crisis.