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February 2010

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UST MBC Director’s Memo – 2.09

Every week it seems another major business crisis story hits the news, sometimes with a personal twist,. At the moment, the Petters trial is waning, the Denny Hecker trial just gearing up, and assorted other business communication crises continue to percolate, including the safety recall at Toyota. We spent some time recently in the UST MBC degree capstone course talking specifically about Toyota, and Hecker came up. The class discussion hovered for a bit on how/when/why Toyota leader Akio Toyoda, grandson of the firm’s founder, decided to make his first statements a week after the turmoil began. Hecker has long been quiet, then suddenly “broke his silence” and did the first press conference since the local media frenzy began around his corporate and financial issues.
If timing is everything, when is the right time to face the cameras? It depends.
(In the interest of full disclosure – right up front. I spent 10 years in the automotive aftermarket, managed public relations through three National Highway Traffic Safety Administration [NHTSA] recalls, served as a vice president of the Automotive Public Relations Council… and conducted marketing communications account service work directly for Hecker during the time he first started purchasing car dealerships in the late 1980s.)
From an ethical standpoint, when faced with risks of customer safety: disclose immediately and with momentum commensurate with the number of potential failures and risk to human life. Personal experience tells me that NHTSA will support such efforts, which effectively minimizes public exposure beyond what’s necessary for safety. When an organization hides things as long as possible (Remember Firestone tires and others?), regulators such as NHTSA may not openly fan the flames, but they certainly won’t dampen things. Some recent reports in the news suggest Toyota may have known about brake/accelerator issues for some time. Proof either way was immaterial once the story hit the news, yet Toyoda waited many days before making any public statements.
The class discussed a number of reasons for the delay, including speculation about cultural differences that may have influenced the decision to delay acknowledgement of serious product safety issues at Toyota. However, whether the barrier comes from attempting to save face or simply to avoid costly liability, consistently these situations prove best handled as quickly and frankly as possible (pre-eminent case being that of Tylenol in 1982 ).
So does that make Hecker’s decision to avoid microphones for many months bad public relations strategy? Probably not – Hecker’s case has gotten “personal” – even though many people may have been negatively impacted; no one is in immediate physical danger. So the timing was staged to coincide with the worst possible scenario – his indictment – delivering the message that their expectation in court would prove to be in Hecker’s favor. (I noted in the broadcast footage the word “innocent” was not used – a strategy that could be discussed at length as well.)
The bottom line: Disclosure of information important to customers and other stakeholders, good or bad, should be done in the most timely manner possible. Rule of thumb: If someone in the organization wants to hide the information, serious consideration should be made about whether and when it should be disclosed proactively.