in my opinion by tim luckett

Managing recalls and the threat to reputation

Consider the "three Rs" of readiness, response and rebuilding a best-practice approach to communication during a recall

ave you been tempted to order that sleek new Toyota this year? Even it you've never driven one, the sheer ., . number of vehicles recalled in 2010 and the vt-ay the Japanese auto giant has handled the crisis can't have escaped your attention. In todays 24-hour world of fervent consumerism and social networking, product recalls are bigger news than ever before. Toyota's response has been well documenteda slow drip of bad news, one of the key things to avoid.

with suppliers may avert the crisis. Response is the part most often associated with recalls because it's the part that's immediately visible to the public. A consumer learning of a product recall has three questions: Have you sold me a product of inferior quality, have you sold me a product that puts me or my family at risk, and how painless are you going to make this whole process for me? Managing recalls effectively has to be about addressing these concerns clearly, quickly and honestly. Of course, the most effective crisis manage- Customers need reassurancemixed messages ment takes place well before the problem esca- invariably lead to anxiety. The rebuilding phase becomes crucial to manlates out of control. aging a product recall because its The key to resolving negative success should be evaluated in publicity quickly and effectively is From the minute terms of the company's ability to to be prepared by developing, recover from the incident quickly. implementing and maintaining a a product fault is This means making a concerted plan for managing a product recall. effort to mitigate the lasting effects Companies that respond quickly identified, the a recall may have on a company's and openly in these scenarios recover or product's reputation. From the more quickly, and subsequently company is on a minute a product fault is identioutperform those that fail to fied, the company is on a journey respond effectively. As Rory R journey to rebuild to rebuild customers' trust. Knight and Deborah J. Pretty showed in their 1997 Oxford Research from rhe U.K. think customers' trust. Executive Research Briefing The tank Oxford Metrica shows that a Impact of Catastrophes on Shareholder Value., a crisis that strikes at the heart of brand values has company's ability to recover trom a public catas- the ability to do the most damage. For years, trophe is a key determinant of future share- Toyota had built its reputation on qtiality and holder value. In a report studying the impact of reliability, and anything that questions this is 15 major corporate catastrophes, incltiding six particularly threatening. Therefore, consider this highly public product recalls, the researchers advice: Undertake a product recall audit and put determined that in all cases the event had a sig- a contingency plan in place well before there is an nificant negative impact on shareholder value. actual or perceived problem. Identify and train a In my extensive experience working with companies to manage product recalls. Id highlight the "three Rs' ot readiness, response and rebuilding as a best-practice approach to ensuring proper communication. Readiness is about the basics ot good business and supply chain monitoring-for example, havuig a simple process for people to follow and a regular training program for any staff involved in a recall. This must cover communication with all potential stakeholders, because early dialogue
4 8 Communication World* July-AugJit 2010

about the author

Tim Luckett is managing director of issues and crisis management for Hill Si Knowlton in Europe, Middle East and Africa, and is based in London. A former tabloid journalist, he is a regular speaker and writer on crisis management and reputational issues.

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designated team to handle product safety issues. Always act honestly and transparently, and never attempt to downplay the seriotisness of the situation. Be quick to spread the word about the recall, using whatever methods are appropriate for example, point-ot-sale intormation or traditional and social media advertisements. Most important, rehearse and rehearse again. A recall is easy to simulate, whether through a desktop or operational exercise, but very hard to get right in practice.

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