Real-Life Lessons in Crisis Management
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Do’s and don’ts in crisis management from some of the world’s biggest brands
Crisis management involves any process of preparing for and managing sudden, unexpected situations that impact a business, shareholders, employees, customers, or revenue.
The coronavirus pandemic has illustrated the immense value of such plans, yet less than half of company leadership teams have a playbook for potential crises. This puts organizations at extreme risk of handling things poorly when a situation arises.
Here are some recent examples of crisis management do’s and don'ts involving major brands:
Crisis management do’s
Starbucks
In 2018, two black men were arrested while waiting for a friend in a Philadelphia Starbucks. The situation resulted in an extreme backlash and accusations of racism towards the coffee giant. Starbucks issued a statement days later accepting responsibility for the incident and committing to take action.
Five days later, Starbucks announced it would shut down its 8,000+ locations to train employees on racial bias. The company also offered to pay for the victims’ full tuition at Arizona State University.
Although there were mixed reactions to the company’s response and the contents of the training curriculum, the grand gesture of closing all stores and sacrificing over $16 million in revenue did not go unnoticed. Accountability and action are cornerstones of a great crisis management strategy.
Southwest Airlines
In 2018, a passenger was killed aboard a Southwest Airlines flight when an engine exploded. Multiple passengers recorded and shared footage of the traumatic incident.
Upon arrival in Philadelphia, passengers already had travel and lodging accommodations, as well as access to trauma counseling. Within two days, Southwest's CEO issued a personal statement to the family of the victim and the passengers. Social media advertising was completely paused company-wide. All passengers received personal outreach support, $5,000 to "ease the burden," and $1,000 in Southwest travel vouchers.
While Southwest cannot erase the trauma of that day or the anxiety it may cause future passengers, the airline addressed the situation by putting its customers first.
Crisis management don’ts
United Airlines
Speaking of airlines... in 2017, United Airlines made headlines when video surfaced of a passenger being beaten and dragged from a flight for refusing to give up his seat upon request. It turned out the passenger was a doctor going to see a patient the next day, and the seats were being repurposed for United employees to use.
In contrast to the two incidents above, United's CEO issued a statement defending and downplaying the flight crew's actions. The statement did not acknowledge the complete version of events or include an apology to the passenger.
Within 24 hours, United Airlines Holdings had lost $800 million in total value. Only after this revelation did the CEO and the airline release sincere apologies and promises to do better in the future.
Volkswagen
In 2015, the Environmental Protection Agency (EPA) revealed that Volkswagen manipulated vehicle performance to pass emissions tests. The automaker simultaneously misled customers about its environmentally-friendly cars and violated the Clean Air Act.
Initial statements from company leadership were confusing and claimed not to know about the cheating, and were followed by comments days later that proved otherwise. VW didn't hire enough PR and social media personnel to handle the flood of incoming traffic, which resulted in a perceived lack of public response. On top of that, the company planned to recall millions of cars and reimburse some of them, but communication about this was muddled—which led to confusion and frustration for customers.
If VW had owned the mistake upfront and taken swift action to rectify the situation, the results might have been very different. Although the brand is in the middle of a renovation to produce all-electric vehicles, it’s still associated with cheating and corruption.
Plan and prepare
Crises come in many different forms, and it’s impossible to prepare for everything. However, companies can plan for the unexpected by outlining messaging, choosing spokespeople, and having a response plan. Deployed effectively, these tools help organizations minimize any damage— and bounce back faster and stronger afterward.
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