Crisis Communication: A case study on Volkswagen emissions scandal

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(Ref: – https://www.rockdovesolutions.com/blog/3-crisis-management-case-studies-we-can-learn-from)

In September 2015, the Environmental Protection Agency accused Volkswagen of manipulating its engine controls to be able to pass laboratory emissions tests. Not only was the company violating the Clean Air Act by selling vehicles that didn’t meet environmental requirements, but it was also violating its customers’ trust by making its cars seem more environmentally friendly.

Unfortunately, the way the company handled the scandal made things even worse. As the story continued to evolve, the company’s response was seen as inconsistent and, at times, contradictory to previous statements. Executives claimed they didn’t know about the cheating, only to reveal they did just a few days later. Meanwhile, the company’s  PR and social media teams struggled to keep up. As the company set out to recall millions of vehicles, officials promised to reimburse some, but not all, customers for their troubles.

All the while, consumers reported that the company seemed to be handling the crisis in a dishonest way by not fully “owning” its role in the scandal.

The brand likely would have fared better through this crisis if it had taken a few key steps:

  • the company has been upfront and honest as soon as the story broke.
  • Kept its response consistent, with an empathetic and apologetic tone.
  • Reimbursed all affected customers the same amount
  • Demonstrated a commitment to change in some way (e.g., by setting new emissions goals or partnering with an environmental organization to help combat air pollution).

Introduction:-

Crisis Communication can be defined as “the collection, processing, and dissemination of information required for addressing a crisis situation”. (Coombs and Holladay).

Crisis communication is also defined as “the flow of information during a crisis among an organization, its employees, the media, the government, law enforcement and the general public. (Roos).

In general crisis communication is a process of information by a crisis communication team for decision-making purposes. It can be divided into three categories:-

  • Pre – Crisis involves an organization to communicate with audiences in advance before the crisis occurs to create a positive image and credibility. It is important for an organization to accept honestly if, in future, they understand that there is a crisis going to occur. Rather than defending their position, they should come upfront and communicate to the audiences about their challenges.
  • In-Crisis – when company is in crisis, the key crisis management team, should consistently get in touch with their audience and try to repair the image.
  • Post-crisis – post-crisis, it is again important for an organization to focus more on building a positive relationship and accordingly start initiating the relationship with key officials of different departments.

Impact of Crisis:-

Crisis management is a critical organizational function. Failure can impact on company reputation, revenue and future drastically. Public relations practitioners are an integral part of crisis management teams. There are many research articles have been written about crisis management by both practitioners and researchers from many different disciplines making it a challenge to synthesize what we know about crisis management.

A crisis not only affects a system as a whole but also has a threatening effect on its basic assumptions, its subjective sense of self, and its existential core.

Human and Social:-

Employees who involve in crisis can suffer trauma, stress, depression, withdrawal and severe other health-related issues. The ability to deal with stressful situation varies. The emotional consequences of crisis can appear at any time during the crisis and it has an impact later on as well.

Financial:

When any company face crisis, there is always a threat for them to manage their finance as well. Finance is a very sensitive aspect of any organization and if any financial related matters happen, first it impacts on their employees, their wages get reduced and they have to work under utmost pressure. Besides this, the promotion also dims.

Tarnishing of corporate reputation:-

The crisis threatens the image of an organization as well. Recent scams of leading businessmen have not only demolished their image but the reputation of their companies as well. Therefore, it is extremely imperative for the representative of an organization to be sensible enough to take the right decisions and not to fall under any unethical considerations. The head of the organization should understand that they are the ones on whose trust many employees and stakeholders get to connect with businesses. Therefore, they should take the responsibility to build the positive image in an organization.

Role of Communication in Crisis:-

According to Benoit, there are certain communication strategies in crisis situations: the negation strategy (by rejecting accusations); the responsibility denial (by declining charge with regard to certain events); the lessening of the dangerous action nature (by trying to obtain support, by reducing the negative sentiments, by differentiating, by transcending, attacking or compensating); the correction strategy, and the humiliation strategy. According to Coombs, the communication strategies in crisis situations are classified into negation, outstripping, partiality, humiliation, and suffering. Once the action strategy has been established, the tactical steps need correlation with the action, based on logical sequencing; in other words, the solution to the problem (the analogical approach) must come into gradual steps (the digital approach), and respectively, for each of these steps, there must be specific objectives and action deadlines.

Therefore, the PR person has to take the following steps to meet the challenges of communication during crisis situation:-

  • Respond adequately at the moment of crisis.
  • The company should anticipate in advance that what media wants to know.
  • Use all the channels of social, print and electronic media to build the image of an organization and maintain good relations with its stakeholders and shareholders.
  • There should be an effective communication within an organization
  • The employees should be provided sufficient information on the matter concerned to them.
  • Effective media relation by PR personnel can help the company to convey its messages across to the target public.
  • Contacts can be any group that can be affected by the crisis including employees, customers, and community members. Crisis managers can enter short messages into the system then tell the mass notification system who should receive which messages and which channels or channels to use for the delivery. The mass notification system provides a mechanism for people to respond to messages as well. The response feature is critical when crisis managers want to verify that the target has received the message.

Guidelines for Handling Crisis:-

  1. Respect the Role of Media: – we have seen above and repeated many times that a strong PR team helps to get the right connect with media. They always prompt to share the right information with company backgrounds so that media should support them in the situation of crisis.

Tips for handling media in crisis

Ask journalist to clarify something you don’t understand Say no

Dos Donts
Prepare for interview Speculate about circumstances or facts. Tell the reporter everything and disclose information which might harm the organization reputation
Develop key messages and steps taken so far Repeat loaded words like Crisis or devastating
Anticipate journalist questions and keep answers ready accordingly Make off the record statements.
Be positive and show empathy Use jargon
comment on something you do not very understand Say no
Correct misinformation Lose your temper
Make yourself accessible Try to stop journalist for writing a story

 

  1. Communicate, communicate, and communicate: – the rule of crisis management is to communicate. When any crisis happens, it is essential to give the detailed information of all WH-type questions (where, what, why, how, etc.) it is always better if the masses get the information about any crisis from the respective organization which helps them to not to form any negative image about an organization.
  2. Take Responsibility: – A company should always take a prompt action if someone is a reason for occurring of any crisis or misinformation. Taking responsibility means communicating what an organization is doing to remedy a situation that the media and the public have determined involve that organization in some way.
  3. Centralize Information: – PR department should be centralized and they should be only responsible people to disseminate information about organization among masses.
  4. Establish a crisis team: – A small team of senior executives should be identified to serve as your organization’s Crisis Communications Team. Ideally, the organization’s CEO will lead the team, with the firm’s top public relations executive and legal counsel as his or her chief advisers.
  5. Establish notification and monitoring systems: – Today, the whole world is full of technological advancement. A smart PR team should be tech savvy, and aware of all the technology-related advancement and system so that they can handle external communication effectively.
  6. Develop holding statements: – “holding statements,” messages designed for use immediately after a crisis breaks, can be developed in advance to be used for a wide variety of scenarios to which the organization is perceived to be vulnerable. An example of holding statements by a hotel chain with properties hit by a natural disaster, before the organization’s headquarters has any hard factual information, might be:

“We have implemented our crisis response plan, which places the highest priority on the health and safety of our guests and staff.”

“Our thoughts are with those who were in harm’s way, and we hope that they are well.”

“We will be supplying additional information when it is available and posting it on our website.”

The organization’s Crisis Communications Team should regularly review holding statements to determine if they require revision and/or whether statements for other scenarios should be developed.

Trust Building:-

Rousseau and her colleagues offer the following definition: “Trust is a psychological state comprising the intention to accept vulnerability based upon positive expectations of the intentions or behavior of another.” Similarly,

Lewicki and his colleagues describe trust as “an individual’s belief in, and willingness to act on the basis of, the words, actions, and decisions of another.”

A trust is a key element to resolve conflict and it is associated with enhanced cooperation, information sharing, and problem-solving. A company should take the necessary steps to build trust and loyalty among customers.

E.g.  Lexus Builds Trust Through Conversation:- In 2011, Lexus Sweden was the first automaker in Europe to provide customers with a voice through the use of reviews and incorporated them into its overall marketing and branding strategy. Since then, Lexus has relied on reviews as a major component of creating and building consumer awareness. This has proven to be a successful strategy, with  99 % of reviewers saying they would recommend the automaker to friends and family. Among those reviews, the average customer rating is 4.7 out of 5.

The Takeaway

Reviews work because they bring credibility to the brand and promote engagement within the domain of Lexus. Passionate customers become vocal brand ambassadors. That benefits both the brand and the resellers because Lexus can get a better idea about their customers’ needs and then act upon that feedback.

References:-

  1. https://www.ducttapemarketing.com/focus-on-building-consumer-trust/retrived on 24th February 2018
  2. https://www.beyondintractability.org/essay/trust_building/retrieved on 24th February 2018
  3. http://conference.dresmara.ro/conferences/2008/10_Lesenciuc_Adrian.pdf/retrived on 24th February 2018 / retrieved on 24th February 2018
  4. https://www.omicsonline.org/open-access/the-role-of-corporate-communication-in-handling-organizational-crisis-with-case-studies-from-the-petroleum-and-natural-gas-industry-2165-7912.1000173.php?aid=23717 / retrieved on 24th February 2018
  5. https://instituteforpr.org/crisis-management-and-communications/ retrieve24th February 2018
  6. https://www.fastcompany.com/3062710/the-three-kinds-of-crisis-companies-face-and-how-to-pull-through / retrieved on 24th February 2018
  7. https://www.rockdovesolutions.com/blog/3-crisis-management-case-studies-we-can-learn-from) / retrieved on 24th February 2018

 

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Kavita Mishra Pandey

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