Crisis situations often begin
as less threatening problems. Let’s
review a few examples as reported in the media to see what they have in common.
· An explosion and fire at Chevron’s refinery
in Richmond, California was apparently caused by the rupture of seriously corroded
pipe. According to the Chief of
Cal/OSHA, Chevron’s employees had recommended replacing that pipe several years
earlier. Chevron now faces almost $1
million in proposed penalties and litigation by the City of Richmond and
thousands of residents.
·
Despite objections from its safety engineers,
Pacific Gas & Electric cut tens of millions of dollars from its annual
budgets for natural gas pipeline inspections and maintenance. In 2012 a pipeline owned by PG&E burst,
causing an explosion that killed eight people and destroyed many homes. The company has paid tens of millions of
dollars in lawsuit settlements and is facing a proposed nine-figure fine by
the state Public Utilities Commission.
·
Johnson & Johnson’s McNeil subsidiary was
involved in a so-called “stealth recall” of tainted Children’s Tylenol in order
to avoid the adverse publicity of a public recall. This virtually erased the public goodwill Johnson
& Johnson earned by its exemplary response to the Tylenol scare thirty
years ago.
·
Ford Explorers equipped with Firestone tires
rolled over when the tires failed, resulting in more than 100 deaths and even more
injuries. An insurance company claims analyst
noticed a pattern of these accidents and notified the National Transportation
Safety Board. Firestone's CEO admitted
that the company did not analyze the claims data for several years. This crisis cost Ford at least $500 million,
seriously damaged the Explorer brand, and caused the stock price of
Bridgestone, Firestone’s parent, to drop by 60 percent.
These examples show that
problems seldom go away. If responsible
action is not taken promptly to address a problem at its source, it may develop
into a full-blown crisis that threatens the financial security and reputation
of the company.
I suggest the following
approach to problems that arise in a company’s operations:
·
Know the business inside and out, so you can
anticipate the areas where problems are most likely to occur. Those areas may include products that could
cause serious injuries if they malfunction, plant operations that could produce
significant environmental damage, financial transactions that could generate
large numbers of consumer claims, and regulatory developments.
·
Establish a process to monitor each of those
areas. The process may involve an
ongoing review and analysis of product complaints, periodic safety inspections
or routine audits.
·
When a problem develops, investigate the
cause of the problem promptly. Try to
figure out why the problem happened so it can be corrected at its source.
·
Take responsibility for correcting the
problem.
·
Consider making restitution.
·
Never cut corners with public safety.
This approach to problems should mitigate a crisis if one
develops and may avoid a crisis situation altogether.
No comments:
Post a Comment