The Friendly Skies Don't Look So Friendly Anymore

The airline industry may not survive its current crisis and look anything at all like it does today. The price of fuel may force airlines to raise ticket prices to unaffordable levels for most travelers. For a good article about this, see http://www.newsvine.com/_news/2008/05/22/1506653-airlines-ponder-how-far-they-can-push-customers by AP Business Writer David Koenig.

The price of oil has doubled in the past year and risen 13% in just the last month. Fares already have gone up about a dozen times this year. The airlines now charge for a second checked bag, and American plans to charge for all checked bags starting next month. Such a move, according to one analyst, could raise $320 million a year for American. The problem with that is the airline estimates its fuel bill has risen by $3 billion just since the start of this year. Active discussions about mergers in the industry are on hold because it's too costly to take on the expenses that are part of any merger. American, Delta, and United all have announced layoff plans and reduced numbers of flights. Less capacity will mean still higher fares. Herb Kelleher, the co-founder of Southwest Airlines who resigned as chairman this week, said flying could become something that only business travelers and the rich can afford, much as it was in the 1950s and '60s. I would question how many businesses will pay the kinds of fares we may see within a year or so, given financial conditions of so many.

I don't have any advice to the airlines about how to communicate through this crisis. Many other businesses will find themselves in similar positions, if they're not there already. We need to see more urgency on the part of our government leaders to find alternative fuels and drill into the large oil reserves in our own country.

Accusations of Illegal Campaign Contributions Have Far-Reaching Impact

The Atlanta Journal-Constitution Sunday carried an extensive article about a highly successful company whose leadership has created a crisis that has led to lost business. (You can read the article at http://www6.lexisnexis.com/publisher/EndUser?Action=UserDisplayFullDocument&orgId=574&topicId=100020422&docId=l:789427399&start=18.) Facility Group is a rapidly growing construction contractor in Atlanta. The company, along with its founder Robert Moultrie and two other Facility Group managers, has been charged with corruption based on some political donations in Mississippi. Moultrie has pleaded not guilty and awaits an August trial.

Prosecutors allege Moultrie and the others made illegal campaign contributions in 2003 to an unnamed public official to get a contract managing construction of a beef processing plant. Prosecutors say they then fraudulently billed work to retrieve that money. The company also is accused of reimbursing employees for their campaign contributions, a practice that is illegal.

“Innocent until proven guilty” is a good idea, but it doesn’t always work out that way. According to the news article, the accusations made in March already are hurting Facility Group’s business:

• In Chatham County, Georgia, officials abruptly dropped the firm as designer of a $110 million jail.
• Cobb County, Georgia, officials requested an audit of the $1.16 billion in school building projects Facility Group has managed over the past decade. Officials need to gain public confidence that a special sales tax is being well-spent on schools before asking voters this fall for a five-year tax extension.
• Madison County, N.C., commissioners have backed off naming Facility Group as the designer and architect of a jail there. Former County Attorney Larry Leake said, "It would be difficult for a government body to do business with them right now given their circumstances.”
  

I give CEO W. Ennis Parker Jr. credit for speaking to the Journal-Constitution reporter, Bill Torpy. Parker explained the company’s point of view and admitted that Facility Group has lost some clients because of this crisis. He responded to criticism by some of the way the company does business and bids on contracts. He even confessed to reimbursing employees for political donations, an act he called a “huge mistake.” Now he and the rest of his team face the huge challenge of rebuilding Facility Group’s tarnished reputation. Parker needs to conduct his business in a fish bowl if he wants clients to trust his company again.

It’s also interesting to see how a crisis over there can affect me over here. There’s the Cobb County example mentioned above. What poor timing to question spending tax dollars when in six months you’re going to ask voters to extend that tax! Then there’s the Senate campaign of Ronnie Musgrove in Mississippi. He was governor when those alleged illegal donations were made, and he appears to be the recipient. He claims he had nothing to do with awarding those beef plant contracts. We’ll see after the trial if any of this helps his opponent for the Senate seat.

Annual Crisis Report Reveals No Shortage of Business Crises In 2007

The Institute for Crisis Management each year produces an Annual Crisis Report. By scouring news coverage, ICM creates a useful tool to help communications people and other business leaders examine trends in media coverage of crises. (To view the Annual ICM Crisis Report, see http://www.crisisexperts.com/2007CR.pdf.)

The number of business crises in 2007 was down slightly from the two previous years, but still above the 10-year average. The past year brought us an array of well-covered stories: the Virginia Tech shooting, toy and pet food recalls, coal mine disasters, a tiger attack at a California zoo, and a series of mortgage foreclosures and troubled lending institutions, to name just a few.

ICM groups crises into 16 categories. Crises in just three of those categories increased last year. They were defects and recalls, workplace violence, and class-action lawsuits. If you think back over the big news stories from 2007, increases in those three categories aren’t much of a surprise.

Care to guess the most crisis-prone industries in 2007? Before you look at the list below, take a shot and see how many you get right. Before I share that list, let me tell you that over the past 10 years, two-thirds of all crises are of the smoldering variety. Sudden crises – fires, explosions, natural disasters, workplace violence – often get the most attention. They’re easier to plan for and recognize and are more visual for the news media. But it’s the smoldering crises that can be hardest to manage because, if not dealt with early, they can take on a life of their own. Smoldering crises are problems that start out small. Someone in the organization is aware of the situation but, for a variety of reasons, doesn’t react properly and fix the little problem before it becomes a big deal and a public issue.

Okay, do you have your guesses written down? Here are the 10 most crisis-prone industries in 2007 based on the number of database records:
1. * Software Makers
2. * Pharmaceutical Companies
3. * Petroleum Refining
4. * Natural Gas Companies
5. * Security Brokers/Dealers
6. * Banking
7. * Telecommunications
8. Automobile Manufacturing
9. * Airlines
10. * Computer Manufacturers
* In top 10 the previous year

Sudden Crisis Challenges the Horseracing Industry

I picked Eight Belles to place in the Kentucky Derby. My joy quickly turned to remorse when TV reporters confirmed she had been euthanized on the track after crossing the finish line in second.

PETA, as any on-the-ball activist group does, quickly jumped at the opportunity to deliver its message. PETA wants to ban whipping, prohibit training or racing until thoroughbreds turn three years old, and ban running on dirt. No dirt??? Come on, let's get the facts straight before you write your news releases. What about the way horses are bred? Do drugs that mask leg problems play a part? PETA even accused the jockey of intentionally running Eight Belles knowing she had a problem. That's irresponsible of PETA. No one can fix a problem until they know what the problem really is. For more opinion on the subject, see http://courier-journal.com/apps/pbcs.dll/article?AID=/20080506/OPINION01/805060345 and Eric Crawford's column at http://courier-journal.com/apps/pbcs.dll/article?AID=/20080506/COLUMNISTS02/805060449.

The horseracing industry recognizes it is facing a sudden crisis and must respond. Today's crisis lesson involves preparedness and anticipation. If you work with animals -- zoos, circuses, KFC, slaughter houses, commercial farms, etc. -- be prepared for PETA's attacks, whether they have some merit or not. (For a sample of the latter, read how well KFC responded to years of groundless campaigns against how it raises chickens.) A few tips to consider:

1. Make sure stakeholders (employees, shareholders, customers, regulators, etc.) are reminded regularly of all the ways you ensure that animals under your care or contractors' care are treated humanely.
2. Make visible donations to and alliances with credible organizations who can validate your concern for animals. Look into conservation groups who have a middle-of-the road political approach. Local humane societies would be a good choice. Be creative and be visible.
3. Make sure those who raise animals, contact animals, train animals, even slaughter animals know your policies and procedures so that your messages of humane treatment reflect the reality.

Along with preparedness is anticipation. Where are your greatest vulnerabilities? In the horseracing industry, it's broken legs and doping. In circuses, it's keeping "wild" animals in captivity and forcing them into unnatural behaviors. Include in your crisis plan how you will respond if PETA or another group goes after your soft spots.

I have been an active member of environmental groups and I've been on opposite sides from them during my years in the chemical industry. These groups, like PETA and all others, need controversy to raise money. And if there is no controversy this month they better create some before donations slow down. That's not a criticism, it's a fact of life. We need activist groups. But we need activist groups who tell the truth and deal in facts, not knee-jerk fixes. I'm betting on Churchill Downs and others connected with the industry to respond appropriately to this crisis.

Bank Teller Shot, Loses Twins, Blames Employer

A Huntington Bank teller in Indianapolis was shot in the leg during a robbery. She was five months pregnant with twins. She's going to be all right, but she lost the twins. A tragedy for sure and a crisis for Huntington Bank.

This branch has been robbed three times since Katherin Schuffield started working there in March 2007, according to an interview in the Indianapolis Star Sunday. (http://www.indystar.com/apps/pbcs.dll/article?AID=/20080504/LOCAL18/805040379/1310/ARCHIVE) She and her husband are understandably angry at Huntington Bank, headquartered in Columbus, Ohio, because they claim employees never received training in what to do during a robbery. Katherin also criticizes the bank for its poor security measures.

Then in the article come the words that all too often make me wince: "Huntington Bank contacts did not respond to phone messages Saturday." Maybe the reporter didn't try very hard. But I'm guessing Huntington was employing the ol' duck-and-run of crisis communications. Companies where I've been responsible for media relations always knew how to reach me or a back-up spokesperson. It didn't matter if it was Kentucky Derby Day or not. Huntington owes it to its stakeholders to find a way to provide appropriate comments when an employee is shot in the workplace. Maybe it didn't occur to someone at the bank that the death of twin fetuses during a holdup might be considered news worth covering. Or maybe the corporate attorneys stepped in first.

Two days have past and it's the start of the new business week. Perhaps Huntington has made some sort of statement today. But Googling the name doesn't reveal any news of interest -- except for there being Huntington teller jobs on CareerBuilder.com. I don't think I'll apply. Perhaps Huntington is busy today making safety and security policy changes and communicating directly with its stakeholders. If so, great. I see nothing this afternoon on Huntington's web site, so I don't know.

For now, the robber remains at large. So does Huntington Bank.

Idaho Governor Wants New Releases Cleared Through His Office

A bit of a controversy is brewing regarding the governor’s office in my beloved Idaho. Criticism seems more politically than philosophically motivated, but it’s worth examining here for the sake of media relations practices.

According to The Idaho-Statesman in Boise, Governor Butch Otter’s communications director sent a memo to department heads and others in state government warning them not to talk to the news media without clearing it through the governor first. You can read Communications Director Mark Warbis’s memo at http://www.idahostatesman.com/idahopolitics/story/367403.html. It says in part: “Unfortunately, a number of you either are not getting word from your PIOs or field people when your agency receives media inquiries, or your PIO is not following through with those reports to me. This has resulted in a number of instances of the Governor’s office finding out about agency representatives’ interactions with the news media from the newspaper clips. In some cases those media reports actually have involved what amounts to public disagreements between state agencies over a point of policy. That is entirely unacceptable, and something we must address.”

Some around the state are seizing the opportunity to criticize Ott, who promised after his election to give department heads more authority. The Statesman article posted online has received many posted comments charging a crackdown on information and whitewashing the truth.

What is your organization’s policy on talking with the media? I’m not aware of any company that says, “Sure, all department heads are free to talk to reporters anytime. I’ll catch what you said on the news tonight or in my paper tomorrow. You know I love surprises!” The flow of information must be “managed” without being “controlled.” Most if not all the companies and non-profits I know work that way. The best ones provide media training for those in key positions who the media manager might be likely to trot out under the lights when the need and opportunity arise. But I think Governor Ott and Warbis are entirely within their rights by ensuring messages from state government are clear and consistent. Be sure your organization has well-understood policies in place for talking to and not talking to reporters. It’s simply what every communications manager Ott to do.

Don't Be All Shook Up

We've felt several small earthquakes in the Louisville area since one early Friday morning created a tidal wave in my water bed. There's been no real damage, even around the epicenter in southern Illinois.

I suggest you use this earth-shattering event to learn about your preparedness for a major quake or other natural disaster. Such natural crises are different from your average, everyday crises in an important way: In the event of a substantial earthquake, tornado, hurricane, flood, or brush fire, emergency response agencies, assistance agencies, and local clean-up contractors and equipment probably will be unavailable to your organization for quite some time. Resources pour in when there's a fire at a single facility, an explosion, or a workplace shooting. But remember that you won't be at the top of everyone's assistance list if a community, a county, or even a region of the country experiences injuries and significant damage.

Does your business recovery plan tell you how to be self-sufficient in case assistance is delayed days or months or even years (see also Hurricane Katrina)? How will you minimize your losses? How will you shorten production downtime? Where else in the country can you go to get equipment and workers to clean up and make repairs? Dust off that emergency binder on the bottom shelf and see if your plan prepares you for "the big one."

Your crisis communications plan also should prepare you for how to respond to employees, shareholders, donors, neighbors, reporters, and other stakeholders. If your company handles or stores hazardous chemicals, if your clients are vulnerable populations like the very young or very old, or if you are a highly visible employer in your community, your company may be a popular destination for reporters who are combing the area looking for good stories. Will you be prepared to say the right thing when the cameras are rolling? An example of the importance of being media-ready occurred after Friday's earthquake. It seems the only visible damage to take pictures of throughout the Midwest was a building facade that collapsed in downtown Louisville. Those bricks laying in the street were on the news coast to coast. What if that was your business? What if those bricks had hit some passers-by? How would you handle the swarm of reporters wanting to know how you could have ignored maintaining your property in a safe manner?

I know the economy stinks right now. But preparing for a crisis shouldn't be deferred to better times.You need to be ready today. If you don't have in-house staff to create and revise crisis plans, bite the financial bullet and hire someone. Or at least hire someone to get you started and review your final product.