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Coombs (2007) defines a crisis as “The perception of an unpredictable event that threatens important expectancies of stakeholders and can seriously impact an organisations performance and generate negative outcomes. ” (p. 3) Coombs goes on to explain how crises in organisations should always be expected and there should be a certain expectation to how the organisation should act. Woodyard (1998) describes the universal characteristics of a crisis, “they are surprise; insufficient information; escalating flow of events; loss of control; intense scrutiny from outside; siege mentality; panic; and short term focus.
“(p. 10) James Hardie Industries had a major weakness of not having a crisis communication plan already prepared for the organisation prior to the crisis occurring to turn a violate disaster into a positive reinvention opportunity. Before a crisis occurs, warning signs should be identified and acted upon in order to prevent a crisis from happening. James Hardie Industries ignored the warning signs which proved to be fatal to the organisation. When the company had a shortfall of funds for victims of asbestos, they pleaded that they were “fully funded” to provide for claimants and stakeholders.
Australia’s dominant asbestos producer used public relations in a negative way by limiting the media coverage, they were not able to completely manage their crisis when external stakeholders and the media became in the company’s agenda. The media therefore had to form their own opinion, and frame public perception of the company. Fink (2002) says Anytime. All the time. Be vigilant. Be Prepared. And if you operate in a prodromal, or vigilant, state, you may catch sight of something that needs to be addressed quickly, before it gets out of control.
Before it becomes an acute crisis. (p. 7) BACKGROUND James Hardie Industries (JHI) first identified a health risk to their workers in 1935, more than 37 years after the first known warning of health dangers of asbestos was introduced. Jones (2004) said that “JHI began manufacturing asbestos in 1917 and held an estimated 90% of market share in the growing Australian market. ” Being the market leader for asbestos in Australia JHI did not want to lose their position within the market and implemented some clever strategies in 2001 which gave them some advantage with their publics.
The company tried to strategise a way to spin out legacy issues that dealt with asbestos and initially created ‘Project Green’ initially set up to compensate victims that suffered in any way from the harmful asbestos fibres. Although the funding of this project was questioned by officials, JHI insisted to be “fully funded. ” JHI had suffered extensive negative media coverage and the company fought back saying the media was being too hostile towards the organisation. 2001 PROACTIVE PUBLIC RELATIONS
In 2001 the company was successful establishing the Medical Research and Compensation Foundation to cover the cost of any payouts and persuaded the Government to re locate in the Netherlands. The company then needed to control information that was being leaked out to their publics. The company had increased media coverage that was having a negative impact on their reputation, this is when the board chair main and chief executive stepped up and offered journalists individual interviews.
Coombs (2002) states that in the damage containment stage of a crisis the organisation should try to prevent the damage from spreading to any uncontaminated parts of the organisation. JHI moved to the Netherlands, to work under a less rigid legislation, attempting to rid the company of association to the asbestos subsidies. The company created a business story when they made announcements about the Foundation and the separation of their asbestos companies being timed to only target the business media.
They also restricted the time to digest any information between both announcements. Their initial communication strategy was initially successful in achieving their ‘Project Green’ agenda. The project started to spin out and there was much question and doubt about the funding needed. In 2003 the company cancelled $1. 9 billion in shares in the Australian company without mentioning this to the Australian Stock Exchange or any other stakeholders. This was scrutinised after the truth came out because the company was basically withdrawing money from asbestos victims.
The warning signs at this point were obviously when the commission impended the discovery of the shortfall of funds, David Jackson lead an inquiry examining the actions of the company in the funding to the compensation fund and the communication strategy devised to support the separation of the liabilities. Other warning signs at this point were the resignation of Hawker Britton the head of public relations for JHI and other executives of the organisation choosing to resign. A suggestion from Fearn-Banks (2002) is
If the situation is urgent, e. g. , the disaster has already resulted in death, injury, or poses a safety threat to people’s health, contact the media and let them know that you are working on the situation. This shows that you care about the people’s well-being and are aware of the media’s needs. JHI knowingly used a product that caused death; they were not in anyway sympathetic with victims, apologetic or even acknowledged their mistakes in anyway. This can be seen as an organisational misdeed which has a strong crisis responsibility on JHI.
There were a few trigger themes for JHI which included asbestos victims, managerial decisions, the Jackson inquiry, funding for compensation payouts and their organisational profits. The mass media isolated one of the most powerful trigger themes, asbestos victims. Bernie Banton an asbestos victim became an enemy for the JHI. He had verbal confrontations with the then health minister Tony Abbott as well as Joe Hockey, the then minister of Industrial Relations. Both confrontations received wide media coverage, Banton’s ability to capture public attention was vital to his cause.
This is how the media played with people’s emotions, by placing this victim in the public eye and JHI did not respond and therefore suffered in credibility. 2004 REACTIVE PUBLIC RELATIONS The key personnel of the company were a weakness to JHI; they were deficient in leading the organisation in managing the crisis. In 2004 a new public relations team was put together, however, this new team ignored the basic crisis communication tactics that should be used such as disseminating information and blaming others for their internal mistakes.
Hearit (2005) said that “Most crises are not the result of an external psychopath but instead are self-generated, the result of internal screw ups on the part of the companies. “(p. 2) However, major weakness of JHI was their initiative in communicating with their stakeholders. One of McLoughlin’s (2000) guiding principles for successful risk communications is “share information with key stakeholders- don’t hide information even if it doesn’t necessarily support your position. “(p. 34)
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