How PR can defuse a crisis

Some years back, Metrolab Industries Inc. developed Block and White skin whitening lotion on the strength of a market research study that showed 60 percent of Filipino women wanted a fair rather than a brown skin. Metrolab had the product tested and approved by the Bureau of Food and Drugs (BFAD) and introduced it into the market with tri-media advertising. In no time the product became a smashing success, so much so that Metrolab was eyeing a conservative P250 million turnover sales by the end of the first marketing year.

And then without any warning a crisis happened. Apparently due to a smear campaign initiated by a corporate competitor, the media reported that the Philippine Dermatologic Society (PDS) had more than 100 documented cases of patients who suffered from skin rashes and lesions after using Block and White. For three unabated weeks the mass media exploited the story with ardent enthusiasm. On television, Mon Tulfo called the women who use skin whiteners "tanga" (stupid). Columnist Conrado de Quiros wrote that the Block and White advertisements "reeked of colonial mentality and racism". Entertainment editor Abe Florendo belittled the women who wanted a fair skin because "brown skin (kayumanggi) is better".

Even though the BFAD had found nothing injurious in Block and White and had approved its distribution, the agency succumed to the media pressure and ordered Metrolab to stop the product’s sale. President Gloria Macapagal-Arroyo, then the chair of the Senate committee on economic affairs and trade and commerce, called for a public hearing in the name of consumer protection. Sales of Block and White dropped to almost nil.

At this point our PR agency was tapped to manage the crisis. Our first task was to convince the BFAD to make further product tests and lift the sales ban. Then we held a press conference to correct wrong impressions that the product was unsafe. Later we arranged for radio and TV guestings, published "So the Public May Know" advertorials, and announced that Block and White was back on the store shelves. We even published a caricature of a Filipino housewife holding a Block and White bottle declaring hindi naman pala makakasama ng balat ito, e. We also called on then Senator Gloria Arroyo and persuaded her it was no longer necessary to call for a public hearing.

As a condition to lifting the sales ban, we produced remedial labelling on a neck tag with the words. "Use only as directed. Avoid overusage. If prone to allergies, consult a dermatologist before use. Not recommended for the face." We launched an education campaign to teach customers how to apply the product properly (some customers practically bathed with Block and White in an effort to have a fairer skin in the shortest possible time). Then we set up Block and White skin testing centers in malls and invited shoppers to have the color of their skin "evaluated". Today, Block and White has regained a respectable market share and has come up with a diverse product line.

What is a crisis and how does it happen? Simply put, a crisis is a bad thing that happens to a good company which could severely damage the firm’s reputation, erode customer confidence, lose market share and possibly cause financial ruin. The crisis may happen suddenly when it is least expected, or it may happen as expected even though all preventive measures have been considered. The role of public relations in a crisis situation is to prevent the crisis from happening, or if it happens nevertheless, to ensure that the client emerges from the crisis with its reputation in tact.

A crisis is maybe caused by an accident like a plane crash, a shipping collision, or a fire that destroys to the ground a crowded discotheque (like the Ozone disco). Or it could be brought about by careless corporate governance as in a bank run or a disastrous pollution of the environment. It could also be produced by a malicious rumor through text messaging or email, an orchestrated smear campaign, so-called white papers or even the accusing privilege speech of a senator. Other forms of crises are caused by sexual harassment, insider trading, financial absconding, investment scam, a plant shutdown, injury or death in the workplace, or simply by a bad press.

Can a crisis prosper without the media? Hardly. An individual or a company’ wrongdoing does not become a crisis until it is played up by the media and a large segment of the public becomes aware of it. However, before you become complacent, let me remind that in this country we have 32 broadsheets and tabloids in Manila, 89 publications in the provinces, 539 radio stations and 7 very high frequency (VHF) television stations with numerous relay stations all looking for a story to break. You cannot hide from the media. The chances are high that the media will hype your story into a full blown crisis.

Examples of local crises – Marcopper Mining Corporation had been carrying out open-pit copper mining since the 1970’s. In 1995 the company plugged an old pit with concrete so that it could act as a disposal pond for mine waste. It was discovered later there was a seepage in the pit’s drainage tunnel that ruptured, letting toxic material to flow out to the rivers and to the farms, killing animal and sea life that deprived Marinduque farmers of their only livelihood. Eight years after the industrial pollution accident, Marcopper Mining Corp and its Canadian mother company, Placer Dome, have not fulfilled their promise to rehabilitate the rivers and compensate victims of the mine waste.

In June 2001, the MIA-NAIA Association of Service Operators contracted our PR agency to expose the PIATCO Terminal 3 concession agreement as a lopsided, illegal contract that is totally disadvantageous to the government. With the frequent publication of full page advertorials that revealed shenanigans in the construction of Terminal 3, PIATCO must have seen the crisis coming and could have averted what happened to them eventually had they entered into a win-win dialogue with the service operators. In their greed to monopolize business opportunities in Terminal 3, PIATCO suffered a resounding legal and financial blow while DOTC Secretary Pantaleon Alvarez resigned "to go back to the private sector."

How to prevent a crisis. The first step in crisis prevention is to build an infrastructure of goodwill to protect the firm during bad times. Every company must consciously manage its reputation by projecting a strong, visionary leadership, respectable financial performance, innovative quality products, a model workplace environment and a deep sense of corporate social responsibility. Companies that have continued to manage their reputation well include San Miguel Corporation, WG&A Superferry, Shell Foundation, Malampaya, GlaxoSmithKline, Kraft Foods, ABS-CBN Foundation, the Ayala Group of Companies, Samsung Electronics and several others of the same caliber. These firms know that 75 percent of their company’s stock price is derived from their reputation. That it takes years to build a reputation but it takes only minutes to lose the same.

The reason why many companies are prone to crisis is that they do not devote any time worrying about their reputation. Their main focus is on sales and profits. They don’t think a good corporate image is necessary until they are faced with a crisis. And when a crisis looms, they think they can hire a PR agency for the duration of the crisis and junk the agency after the crisis seems over. As if PR is like a water faucet which you can open and close when you need water. They forget that companies with good reputations are those that sincerely engage in corporate social responsibility and embrace the practice of regular, open, and honest communications as one of the keys to building a winning brand.

The second step in preventing a crisis is to form a crisis team to address any eventuality. Let the team list down all the worst things that could happen to the company and gear their PR strategy to those eventualities. Make the team draw up a crisis manual and a crisis action plan. Rehearse the crisis team with periodic workouts and occasional "fire drills" to prepare for the worst scenario. Let all the top managers undergo a media training program to learn how to handle the media and how to formulate key messages. Designate primary and secondary spokespersons to face the media.

What if a crisis happens – The initial moments following a crisis are critical. Your actions and what you tell the media when you are interviewed cannot be withdrawn later. You should consult your PR agency who will prepare and practice you to answer questions like What happened? Was anybody hurt? Where and how did it happen? How much damages is there? What caused it? In the crisis team workouts and during your media training, you should have developed corporate messages to conveniently address these potential questions.

(Charlie Agatep is president of Agatep Associates and former president of the Public Relations Society of the Philippines. He has an M.S. degree in Communications Arts from Boston University under a Fulbright and Smith Mundt scholarship and taught journalism, public relations and advertising in UST, St. Paul College and Assumption College.)