Fonterra's failures in the crisis

If Fonterra were a student in my communication and promotion class it would have failed the module on crisis management, writes Brendan Gray, a professor of marketing at the University of Otago.

In fact, its mishandling of public communications about the potential botulism contamination of some of its products would make a good case study of how NOT to manage a crisis.

An effective crisis management plan emphasises three main initiatives: Prevention, Preparedness and Recovery.

Prevention

Scenario planning can be used to identify possible problems and to minimise risks.

Potential risks can be prioritised and prevention strategies developed and implemented.

The very worst thing that can happen, though, is to dismiss some possible risks out of hand.

For example, Fonterra appears to have played down the likelihood that its equipment could become contaminated (a pipe has been blamed in this instance) and that this, in turn, could infect some of its food products.

It is even more disturbing to learn that tests originally identified the source and nature of the latest contamination a year ago, yet it was only a few weeks ago that senior decision-makers in the organisation were alerted about this.

Although the organisation appears to have some of the necessary technical procedures in place (e.g. raw materials and manufacturing quality management) Fonterra appears to have neglected relationship procedures (e.g. ensuring effective two-way communications with business customers, distributors and end-users or consumers so that possible problems can be identified and resolved quickly).

Preparedness

A responsible food company should ensure that crisis management procedures, protocols and manuals are in place and key people in the organisation are trained to implement these if a product recall should be needed.

Emergency communication channels need to be on standby and communication tasks assigned beforehand.

It is not unusual for food companies to simulate a product recall once a year to make sure all internal procedures will work effectively if the real thing strikes.

Fonterra's news media communication skills appear to be poor and its internal communications even less effective.

Its communications with customers, food safety authorities and government agencies also appear to be lacking.

From an outsider's view it seems that people inside the organisation, rather than alerting senior managers to ensure a quick response to the contamination problem, may have tried to hide the problem or at least played down its potential seriousness.

Recovery

The golden rule here is to act quickly to recall products that could be faulty, publicise this as widely as possible, and tell stakeholders what you are doing to isolate the problem and ensure products are safe in the future.

Compensating people who may have become sick - and, in the worst scenario, families whose children may have died from food poisoning - should be swift and generous.

Post-emergency or post-disaster communications need to be ongoing to ensure customers regain confidence and brands are not devalued.

Fonterra faces a huge reputation recovery challenge, as this is the third time in recent years that some of its products have been contaminated.

Both internal and external publics have to be satisfied that the organisation has improved its quality control, communication and crisis management procedures.

Customers and end-consumers also need to be confident their complaints about food product quality will be taken seriously and acted upon very quickly.

It is only then that many publics will believe you are sincere when you say ''I'm sorry''.