They’ve weathered the storms, but could their crises have been avoided altogether?
What lessons can crisis communicators draw from the recent VW “dieselgate” crisis and United Airlines’ spate of public relations disasters, most notably its violent removal of a passenger from one of its planes? These are crises where company wrong-doing was evident, yet any harm to their reputations was not as financially consequential as one might have predicted. We know what went wrong, but what went right?
First, a quick review of the wrong-doing: VW has admitted illegally programming 11 million cars — 600,000 in the US — with “defeat” software that would allow the car to emit pollutants uncontrollably while on the road, but would only activate the car’s pollution controls during regulatory emissions tests. Six VW top executives have been charged by the US Justice Department for their roles in the fraud. The company has already paid more than $22 billion in fines and settlements in the US alone. More hits are expected to come in Europe.
Related: What should media engagement look like in the first 60 minutes of a crisis?
United Airlines’ woes began last spring with the so-called “leggings gate” crisis where social media users hammered the company for denying boarding to two young girls wearing yoga pants. The girls were so-called “pass travelers,” meaning they were relatives or friends of a United Airlines employee, and therefore subject to the company’s anti-legging dress code. The social media firestorm against the airline was followed barely a week later by the widely viewed video of one of its passengers being violently removed from the plane by law enforcement because he refused to give up his seat to a United crew member. Then there was the lawsuit against the airline brought by the owners of the giant rabbit, Simon, that died during its transport.
So what were the upshots to the VW and United Airlines crises? Loss of customers? Lost revenues? Dips in valuation? No, no and no.
Here’s a July 31 article from Forbes on VW:
Volkswagen Overcomes Scandals With Strong Quarter
“Volkswagen’s operating profit more than doubled to €4.5 billion in the second quarter of 2017, mainly driven by a boost in its European sales. This strong performance came despite its “dieselgate” scandal and, more recently, the allegations of collusion with other German car makers. With this, Volkswagen rounded up the first half of 2017 on an extremely successful note.”
As for United Airlines, the NYT reported on July 27:
“Within days, the Twitter hashtag #BoycottUnited had been used over 3.5 million times.… So when United reported second-quarter earnings last week, many investors feared that the results might go off a cliff just as the peak travel season was getting underway. But they were surprisingly robust: Revenue rose over 6 percent and profits shot up 49 percent. There was no sign of any boycott: The airline said it had 71 million passengers in the first half of the year, 4.2 percent more than the previous year.”
Why didn’t these companies suffer financially from their misdeeds as one might expect?
As for VW, if the brand is strong to begin with, as VW’s brand undoubtedly is, it doesn’t seem to matter to customers that VW management knowingly duped regulators while damaging the environment. It also didn’t seem to bother most customers that they were being duped as well, led to think their cars weren’t polluting when they most assuredly were. Mechanically the cars worked fine and customer allegiance to the brand remains strong.
LESSON FOR CRISIS COMMUNICATORS: So long as customers can still enjoy the product, strong brands trump management malfeasance. Therefore, effective crisis preparedness must include nurturing the brand to maximize customer allegiance.
United Airlines presents a very different case. It had serious brand issues to begin with because of large-scale customer frustration with many airlines (with some notable exceptions). But after a few very ham-handed initial crisis communications (“re-accommodating” the forcibly removed passenger? Seriously?) United’s eventual responses to their crises were exemplary. They were able to effectively convey the many actions they committed to aimed at improving their customer focus.
LESSON FOR CRISIS COMMUNICATORS: It’s never too late to make things right and communicate those changes convincingly.
When you look at how both VW and United ultimately responded after some poor starts, you see a pattern of effective crisis responses:
1. They acknowledged the problems, communicated regret and apologized
VW: (from 2016 Sustainability Report)
“We deeply regret the behavior that gave rise to the diesel crisis. Such misconduct runs contrary to all the values that Volkswagen stands for.”
UAL: Statements from United Airlines CEO Oscar Munoz on United Express Flight 3411 April 2017
“The truly horrific event that occurred on this flight has elicited many responses from all of us: outrage, anger, disappointment. I share all of those sentiments, and one above all: my deepest apologies for what happened. Like you, I continue to be disturbed by what happened on this flight and I deeply apologize to the customer forcibly removed and to all the customers aboard… I want you to know that we take full responsibility and we will work to make it right.”
2. They took responsibility for their lapses and announced corrective actions
VW: (from VW’s 2016 Sustainability Report)
“We have taken significant steps to strengthen accountability, extend transparency and prevent something like this from ever happening again.”
UAL: CHICAGO, April 27, 2017 /PRNewswire/
“United Airlines (UAL) today announced 10 substantial changes to how it flies, serves and respects its customers. The changes are the result of United’s thorough examination of its policies and procedures, and commitment to take action, in the wake of the forced removal of a customer aboard United Express Flight 3411 on April 9.”
3. They made recompense
VW: (from 2016 Sustainability Report)
“As part of its plea agreement, Volkswagen AG has agreed to plead guilty to three felony counts under US law: conspiracy, obstruction of justice and using false statements to import cars into the US. The plea agreement, which is subject to US federal court approval, provides for payment of a criminal fine of USD 2.8 billion and the appointment of an independent monitor for a period of three years. The independent monitor will assess and oversee the company’s compliance with the terms of the resolution. This includes overseeing the implementation of measures to further strengthen compliance, reporting and monitoring systems, including an enhanced ethics program.”
UAL: April 13, 2017:
“We continue to express our sincerest apology to Dr. Dao (the passenger who was forcibly removed). We cannot stress enough that we remain steadfast in our commitment to make this right…”
April 27, 2017: “We are pleased to report that United and Dr. Dao have reached an amicable resolution of the unfortunate incident that occurred aboard flight 3411. We look forward to implementing the improvements we have announced, which will put our customers at the center of everything we do.”
4. They repeated their apologies and restated their values
“The trust of our customers, our shareholders, partners, employees and the general public is our most important asset. The Group has substantially elevated its commitment to working ethically and with integrity. Volkswagen can and will set an example in the years ahead as to how a large, global company embodies and takes its social responsibility seriously.”
UAL: April 27 release: Oscar Munoz:
“Our policies got in the way of our values and procedures interfered in doing what’s right. This is a turning point for all of us at United and it signals a culture shift toward becoming a better, more customer-focused airline. Our customers should be at the center of everything we do and these changes are just the beginning of how we will earn back their trust,” he added.”
LESSON FOR CRISIS COMMUNICATORS: The first crisis responses by both VW and United Airlines were great examples of exactly what not to do. In time the crisis communications, as excerpted above were finally effective. But they should have been developed in generic form well in advance of any actual crisis. By thinking long and hard about what types of specific crises could harm the company (mistreated customer, company malfeasance, etc.), crisis communicators could have generated responses before an actual crisis struck. When needed, these responses could then be quickly modified to address the specific crisis at hand and issued quickly. Having scenario-specific strategies and documents planned for in advance and practiced during a program of regular drills and exercises is essential to successful crisis preparedness.
THE MOST IMPORTANT LESSON FOR CRISIS COMMUNICATORS:
But the VW and United Airlines crises should never have occurred in the first place. Both companies’ crises resulted from dysfunctional cultures where employees were apparently never empowered to be the eyes and ears of their organizations. They should have been made part of the companies’ crisis early-warning systems, trained to be alert to crises and to any situations that could become a crisis, and to know how to report that situation to managers who are trained to respond promptly with mitigating measures.
As business guru Andrew Winston writes in the Harvard Business Review:
“Companies need to think carefully about their policies and their crisis communications, so they can quickly move from a defensive crouch to honest, heartfelt apologies — and to real changes in how they operate. But most importantly, they need to assess whether their cultures allow their own employees the power and safety to stand in front of the train of fast-moving stupidity and say, “You shall not pass!” And they need to have executives who will listen to them.”
LESSON FOR CRISIS COMMUNICATORS: As the VW situation shows, if yours is a strong brand your organization can weather even the worst kind of self-induced crisis. Shoring up your brand is a first step toward crisis preparedness. As the United Airlines crisis shows, you can get past the crisis by following the best practices in corporate apologizing and visibly committing to verifiable improvements. But creating a pervasive culture of crisis preparedness by empowering employees to be a true early-warning system and training managers to respond quickly and appropriately is the best way to identify and prevent a publicly viewed, self-inflicted crisis altogether.
Resource: Introduction to Crisis Communications Plans – eLearning Course
About David Kalson
David Kalson is an expert in issues and crisis management. He has more than 25 years experience providing strategic communications counsel, on-the-ground assistance and highly targeted media relations and “new media” programs to manage issues and crises as well as reputation enhancement for both profit and not-for-profit organizations. Business sectors he has counseled include energy, food and beverage, financial services, healthcare, consumer products and technology. He has designed and implemented communication / media relations programs, often emphasizing Web-based strategies, to address issues including data security breaches, environmental accidents, product recalls, financial problems, high-profile lawsuits, corporate governance issues, criminal behavior, attacks by opposition groups, government/regulatory challenges, competitive challenges and labor disputes. Companies he has counseled in relation to crisis drills, plans and crisis management include Cargill, Dunkin’ Brands, Cadbury Schweppes, Staples, Entergy, Eli Lilly, Canaport LNG and the American Automobile Association (AAA)
In the case of VW, I would argue that they have suffered considerable financial costs due to the scandal, including huge layoffs, fines and settlements, etc. in the billions of dollars. United’s costs for their crises are lower, in part, because they have fewer competitors in many markets, and often travelers have no choice but to fly United. The same cannot be said of automobiles.