Sunday, October 31, 2010
Chief Executive William Weldon told members of the House Committee on Oversight and Government Reform he was sorry his company had conducted the secret recall. J&J hired who-knows-how-many shoppers to go from store to store, buying all the defective Motrin on the shelves. Weldon testified that "the company 'made a mistake' in conducting the 'phantom recall,' one of many J&J problems that have drawn congressional scrutiny. At the same hearing, the FDA's deputy commissioner, Dr. Joshua Sharfstein, said his agency should have acted sooner to halt J&J's plan. At the same time, he stressed that regulators were not aware of the deceptive nature of the recall." (http://seattletimes.nwsource.com/html/nationworld/2013042420_congress01.html)
This was the second hearing about J&J's many recalls. The largest, 135 million bottles of infants' and children's Tylenol and other medicines, is what triggered this hearing. Problems with products "ranged from too much active ingredient to tiny shards of metal."
"We recognize that we need to do better, and we will work hard to restore the public's trust and faith in Johnson & Johnson," Weldon told lawmakers.
Therein lies the impact an ongoing crisis can have. The Tylenol recall in the '80s is still used as an example of how to communicate with the public to save trust in the brand to retain sales. What happened? Now the same company is conducting clandestine operations so no one will know that yet one more product is defective. I haven't heard a lot of news about all these recalls and the hearings. But all it takes is for an enterprising reporter to put all this together. If that happens, Tylenol sales will suffer, the company will lose revenue, and stock prices could drop.
J&J needs to be working right now (maybe it is) to plan a proactive communications program to ensure that people still trust and will buy Tylenol. Remember, transparency. The communications folks there should start by studying their own company's splendid job in the '80s, and then become that company again.
Do you remember Massey Energy, owner of the coal mine in West Virginia where an explosion in April killed 29 people? CEO Don Blankenship's approach to dealing with the media was to tell a reporter to get off his property or else he would shoot him.
A Business Brief in The Courier-Journal in Louisville today carried this item: "The comments (on a telephone conference) seemed to acknowledge that as long as the current management and board are in place, government scrutiny will weigh more on the company than on its competitors, said Jefferies analyst Brett Levy. Massey President Baxter Phillips said in the call that 'management focus and attention continued to be distracted as the management team supported the federal investigation.'" (http://www.courier-journal.com/article/20101030/BUSINESS/310300070/1003/Business+Briefs+%7C+Massey+Energy+stock+rises+on+speculation+about+sale)
When developing a crisis plan, your CEO or top leader needs to be supportive and understand the importance of such a plan. Show him or her the quote from Phillips and say you're trying to protect top management and the organization's asset. Most say, "But it can't happen to me." It can and it does.
Saturday, October 30, 2010
Richie Farmer, commissioner of the Kentucky Department of Agriculture, doesn't lead a non-profit organization, but his budget and salary come from the pockets of taxpayers. Kentucky, like all states, has had a hard time the past two years, cutting education, services, and staff. According to The Courier-Journal in Louisville, Farmer bought eight vehicles in October at a cost of $176,000. He has bought a total of 27 this year, including a $35,000 Chevy Suburban for himself, for a total of $621,000. Agriculture now owns 188 vehicles.
In an weekly editorial column called "Good moves bad moves," today's Courier-Journal takes Farmer to task. "Mr. Farmer's department seceded from the state fleet in 2007 and seems to have different values about replacements. Consider, for example, that the eight vehicles most recently replaced had an average mileage of 98,448. Contrast that to the Beshear administration's purchase of vehicles this month for the seven electrical inspectors in the Department of Housing, Buildings and Construction. The replaced vehicles had an average of 227,000 miles." (http://www.courier-journal.com/article/20101030/OPINION01/310300014/1055/OPINION/Forum+flashes++Good+moves++bad+moves)
One scratches one's head to understand how Farmer could do something so selfish and irresponsible, especially as he runs for lieutenant governor.
Every once in a while, however, politicians take the high road. Today's Courier-Journal carries a front page story about the University of Louisville's offer to pay the premium seating fee in the new basketball arena for state legislators from private funds. That's a $500 - $1,000 value per ticket.
"Last week, in response to complaints about the premium seating fees from some lawmakers, U of L President James Ramsey sent a letter to lawmakers in which he said the university would use private funds from the U of L Foundation to pay the fees for any legislators who decide to buy U of L basketball tickets for the upcoming season.
Perhaps the politicians were paying attention when Dismas Charities, funded almost entirely by taxes, bought luxury suites for both football and basketball and leased a facility for tailgating. It later returned them after public pressure.
"No state lawmakers have taken the University of Louisville up on its offer...according to university officials.... In a response Friday to (an) open records request, the university said 27 lawmakers have purchased tickets, and none of them are asking the university to cover their seat fees."
Wise political move. Richie Farmer should watch and take note.
Friday, October 29, 2010
McDonald's is often villainized, sometimes deservedly, sometimes not. For example, Morgan Spurlock directed and starred in a documentary called Super Size me in 2004. He chose to eat only McDonald's for 30 days, three meals a day. If he is asked by the clerk if he would like the meal super sized, he has to say yes. And by the end of the 30 days, he has to eat every single menu item at least once. Spurlock gained 24½ lbs plus suffered from other health problems. (http://www.imdb.com/title/tt0390521/plotsummary) (This reminds me of the experiment many years ago with rats and saccharine.)
I blogged below on October 4 about a proposed San Francisco city ordinance that would ban McDonald's from putting toys in Happy Meals unless it adds fruit and vegetable portions and limits calories.
The latest attack came in Sao Paulo, Brazil, where a former franchise manager gained 65 pounds while working there for 12 years. He sued McDonald's. A Brazilian court ruled this week that McDonald's must pay him $17,500
"The 32-year-old man said he felt forced to sample the food each day to ensure quality standards remained high, because McDonald's hired 'mystery clients' to randomly visit restaurants and report on the food, service, and cleanliness. The man also said the company offered free lunches to employees, adding to his caloric intake while on the job.
"'McDonald's also noted that it offers healthier food choices. 'The chain offers a large variety of options and balanced menus to cater (to) the daily dietary needs of its employees,' the company said in the statement." (http://www.google.com/hostednews/ap/article/ALeqM5jeDzLPZuA51JwxTzhbaNx5WUJz4g?docId=5315f53d4e884a5db82579bd808540a2)
Try telling that to the kids who find carrot sticks instead of French Fries in their Happy Meals.
Thursday, October 28, 2010
Eddie Merlot’s Prime-Aged Beef & Seafood is going to move into the space in the Starks Building. The 14th floor is the home of the Institute for Crisis Management, so I walk by this seemingly unchanging work site regularly. The Courier-Journal in Louisville today ran a story that said the upscale restaurant is delaying its opening until probably January. (http://www.courier-journal.com/apps/pbcs.dll/article?AID=2010310270090) I looked: there's a long way to go.
This is a bit of a crisis. ICM defines a crisis as "A significant business disruption that stimulates extensive news media coverage. The resulting public scrutiny will affect the organization’s normal operations and also could have a political, legal, financial, and governmental impact on its business." The restaurant's loss of several months of business is -- well, a borderline crisis.
According to The Courier Journal, "(Bruce Kraus, director of operations for the Platinum Restaurant Group, Eddie Merlot’s parent company based in Fort Wayne, Ind.) said some of the delays related to renovating '100-year-old space and dealing with unknowns behind the walls' that were discovered. Mendel Hertz, who heads the group that bought the Starks Building about four years ago and renamed it Hertz Starks, said the renovation is costing about $3 million, with Hertz’s company and Platinum sharing the cost. He said construction should be completed by the end of the year. Hertz said delays are related to what he called 'a very challenging project,' including adhering to historic-preservation detail in the renovation and installing energy-efficient windows."
Adding to the turmoil: "Picketing at the project by representatives of the Indiana-Kentucky Regional Council of Carpenters over the use of some non-union labor has not had an impact on the work, Hertz said. But he said the loud daily protests 'have destroyed my tenants’ peace of mind. It is a terrible thing.' Carpenter council spokesman Larry Hujo didn’t return phone calls seeking comment."
Incidentally, it isn't members of the Council of Carpenters making all the noise. These are minimum-wage professional protesters who are hired to be a nuisance throughout the city. They will be marching and chanting someplace else next month.
I wasn't upset about the delay until I looked at Eddie Merlot’s website (http://www.eddiemerlots.com/About-Us-3.html) If you want your mouth to water, check it out.
Monday, October 25, 2010
New York City and the hotel industry know bedbugs exist and seem to be on the increase. "The Bloomberg administration and the city's tourism agency, NYC & Company, say there's no evidence that our bedbug epidemic is scaring tourists away from New York. But that doesn't stop the Associated Press from publishing a thorough report under the headline "Bedbugs Keeping Tourists Away!" (http://gothamist.com/2010/10/25/is_bedbug_scourge_hurting_nycs_tour.php)
This doesn't sound like much of a crisis yet, but hotels and motels beware. This is a smoldering crisis and you need to be prepared to deal with it from a communications standpoint. Of course if bedbugs are a problem, you have to fix the problem. Then you need to be sure guests and potential guests know they can stay with you, spend their money, and check-out without bites from parasites.
"Indeed, two recent reports of bedbug scares at the Waldorf-Astoria show that no matter how much you spend on a hotel, you could still end up on the bedbugs' menu. And it's not just visitors to New York... the international capital of bedbugs."
Better have a solid crisis communications plan in place. Meanwhile, don't let the bedbugs bite.
Saturday, October 16, 2010
"This is very worrying and could have a negative impact of Bali's tourism," said Bali health chief, Nyoman Sutedja.
This crisis goes far beyond tourism dollars lost. It includes all organizations dealing with pets (Balinese are known for their love of dogs), employers, nonprofit service providers, and more. Chances are that the rabies epidemic has spread beyond dogs to include bitten wild animals. This is a crisis that will be difficult to contain.
"Cujo," an '80's suspense movie, featured a rabid dog. An episode of "The Office" featured a tongue-in-cheek run to benefit rabies research. In this country, rabies exists pretty much in Hollywood. "The World Health Organization estimated that more than 40,000 people die from rabies every year. Most deaths occur in developing countries."
The 101st death in Bali was a 50-year-old man who "showed clinical symptoms of rabies such as fear of water, light intolerance and restlessness."
While your organization may never face an epidemic of rabies, there are many other ailments -- like cold and flu -- that could affect your bottom line. Your crisis plan needs to include media and messages to keep your workforce and other key stakeholders informed.
Friday, October 15, 2010
Compare that with MAL Hungarian Aluminium Production and Trade Company. (I find it ironic that "mal" in Spanish means "bad.") This is the company that had the spill of red toxic material that killed nine, injured more than 100, and forced evacuation of two villages. CEO Zoltan Bakonyi said in an interview, "It's said I should be responsible although I don't feel it." Whoa, even Tony Hayward didn't say anything that insensitive.
"He insisted that MAL was in compliance with all Hungarian safety regulations and pointed out that he has only been CEO for two years. Bakonyi argued that the problems presented by the reservoir and the accumulation of toxin in it stretched back 25 years or more." (http://www.cnn.com/2010/WORLD/europe/10/15/hungary.sludge.ceo/) But it's not his fault because he has only been behind the wheel for two of those 25 years? Unacceptable. Bakonyi probably is trying to wash the blood off his hands because he was arrested for public endangerment and harming the environment. He was just released from jail and is awaiting trial. "But he added that his 'moral duty' is to 'help.'"
No comment from me is necessary on that quote.
The company's website is just as defensive. (In addition to better environmental oversight, the company needs a better translator.) "The management of MAL Co.Ltd. definitely refuses all kinds of communications and statements, according to which there might have been springs under the deposit No X. earlier or the deposit might have been overfilled. The company has strictly observed the technical regulations.... The regulations have always been literally observed and everything has been executed according to the prevailing regulations." (http://english.mal.hu/engine.aspx?page=showcontent&content=20101011_munka_EN)
Meanwhile, evacuees were returning to their homes today -- or what's left of their homes. "Jozsef Holczer said his house had to be demolished to make way for the new dyke and so he would at least be compensated for that. 'I am going to get some money for my house they demolished, but I am not sure if I get anything for the rest of the things I have lost,' he said, while waiting for a lift back to the village." (http://www.google.com/hostednews/afp/article/ALeqM5iKKDMlYrs9dNoPqYoCmgXaTok4TA?docId=CNG.72886c63295599c50945f4a794c53e14.121)
It seems to me that even in different cultures, companies that cause such huge disasters have an obligation as human beings to make things right. But in this case: the CEO is going to "help;" villagers don't know if they will be reimbursed for destruction to their property or lost income; MAL isn't expressing regret to the villagers and employees, but merely it's-not-my-fault. Keep an eye on the villages of Kolontar and Devecser. Watch how MAL responds in the coming weeks to the mess it caused -- and then do the opposite.
Wednesday, October 13, 2010
The government probably doesn't have a crisis plan for dealing with such incidents. Either way, it is doing a fantastic job of communicating. It is using social media to keep the world up to date and is displaying emotional photos. President Sebastián Piñera is there to greet the miners as they arise. According to CNN, his approval rating has risen from 50% to 70%. Compare that to President Obama's ratings as the gulf oil spill dragged on. CNN said 1,500 reporters from around the world are there covering the story. It seems information is readily available to all those reporters. I'm not sure Ive seen such a good, transparent effort by government in U.S. crises.
I can't be so complimentary of the mine's owner, Codelco. Its web site's mission statement says nothing about safety or employees. (http://www.codelco.com/english/la_corporacion/fr_memorias.html) But worse than that, 70 days into this crisis, the company has no mention or information about the cave-in or rescue on its site. Codelco is a company owned by the Chilean State managed by a board of directors: "three directors directly appointed by the President of the Republic; four directors appointed from a shortlist selected by the Council of Senior Public Management; one director selected from a shortlist presented by the Federation of Copper Workers (FTC), and one director chosen from a shortlist presented by both the Federation of Copper Supervisors (FESUC) and the National Association of Copper Supervisors (ANSCO)."
The fact that this is a government-run company is no excuse for the poor response on the web site. However, the Chile web site has information and photos. (http://www.gobiernodechile.cl/)
As I write this, the 18th miner is on his way. Tears again. "Chi-Chi-Chi le-le-le!!!"
Monday, October 4, 2010
"A proposed city ordinance would ban McDonald's from putting toys in Happy Meals unless it adds fruit and vegetable portions and limits calories. The proposal would apply to all restaurants, but the focus has been on McDonald's and its iconic Happy Meals.
"Supervisor Eric Mar said he proposed the law to protect the health of his constituents, but McDonald's has waged an aggressive fight to block the measure. A battery of McDonald's Corp. executives showed up at city hall to argue that the legislation is a heavy-handed effort that threatens the company's decades-old business model and the free choice of its customers." (http://www.google.com/hostednews/ap/article/ALeqM5iBb7X2Q_WifG6kJPh585IEUxnGCgD9IJN2080?docId=D9IJN2080)
Most kids I watch end up throwing away the fries because the burger or McNuggets are too much to eat. What do you think they would do with the fruit and vegetables? And to ban the toys? That's why kids want the meals to begin with.
This effort to over-regulate is just the latest in a series of goofy laws in San Francisco. "The proposed Happy Meal law is just the latest in a string of San Francisco ordinances aimed at regulating public health. The city recently expanded a law banning tobacco sales in pharmacies to include grocery stores and big-box stores that also have pharmacies.
"Mayor Gavin Newsom signed an executive order earlier this year banning sweetened beverages like Coca Cola and Pepsi from vending machines on city property. Local leaders considered but ultimately abandoned laws recently that would have imposed a fee on businesses that sell sugary drinks and alcohol."
I'm all for good health, but I'm also in favor of consumer choice. The good news in San Francisco comes only through political motivation. "Newsom has slowed down in his support of some health measures after he was attacked by his opponent in next month's lieutenant governor's race, Lt. Gov. Abel Maldonado, for being the 'food police.' Newsom vetoed the alcohol and soda fees, and he's indicated he'll do the same for Ronald McDonald. The Board of Supervisors could overturn a veto but needs the votes of eight of 11 supervisors to do so."
Friday, October 1, 2010
Kentucky Department of Human Services Allows Foster Children to Live in Homes With Convicted Child Predators
A check by Kentucky auditor Crit Luallen found that the department responsible for children's services had at least a dozen instances of children living or being cared for in state-regulated homes where sex offenders lived.
"The report, released Thursday... compared the addresses of registered sex offenders with those of foster homes; the residences of other children under state care; and homes that provide state-subsidized day care for low-income families. It initially found 30 matches, and a follow-up investigation by the state agency overseeing the programs confirmed 12 of them, Luallen said in releasing the audit. 'Any time the state is charged with the placement and protection of our most vulnerable citizens, in this case children, every step possible should be taken to guarantee they are secure.'" (http://www.courier-journal.com/apps/pbcs.dll/article?AID=2010309300044)
The (Louisville) Courier-Journal reported today, "Department for Community Based Services, should undertake stronger screening and monitoring — primarily by making the same check of the sex offender database that the auditors did. Such checks should be done during the application process and for any renewal or reassessment, the audit said. Department Commissioner Patricia Wilson said the agency would follow the recommendations.
"She also said the department investigated each instance in which a sex offender was found to be living with a child under the state's care, and “'we do not believe those children were harmed and they are currently safe.'”
Feel any better?
Here is what I don't understand: "The Kentucky sex offender law makes it a crime for a sex offender to live within 1,000 feet of a licensed day care facility, school, or public playground." But the state doesn't look into the offenders who live under the same roof?
This could well blow up to be a crisis for the Kentucky Department of Human Services. We'll see how Kentucky state government deals with this mistake.
That will be a great comfort to the family of Jerry King, 42, who died due to complications from the burns he suffered on 60 percent of his body, according to the Fayette County coroner's office. Still, the websites of Kingsford (Kingsfordhttp://www.kingsford.com/) and owner Clorox (http://www.clorox.com/) make no mention of the accident on their websites. Three more employees remain hospitalized. (http://www.kentucky.com/2010/09/30/1458381/man-injured-in-pulaski-county.html) You can bet the lawers are burning up the phone lines. Don't let this be you.