Effective Crisis Communication For Moving Crisis To Opportunity

Appropriate Case Identification

Discuss about the Effective Crisis Communication for Moving Crisis to Opportunity.

Crises management is a process through which an organization deals with a disruptive and unexpected event that can harm its image in public. Various multinational organizations face crises due to their bad choices. The three common elements to a crisis are threat to the organization, the element of surprise and a short decision time. Risk management involves management and assessment of potential threats and findings in order to overcome threats (Barrett, 2014). Organizations are focused on forming a robust framework to achieve sustainable growth. General Motors has faced crises in past years but the 2014 crises due to its vehicle malfunctioning greatly harmed the company’s image. The automotive company came up with a strategy under the guidelines of CEO Mary Barra. She helped them to systematically combat against the crises caused in 2014 due to newspaper report accusing  the company for road accidents and deaths. This particular incidence bought various regulatory authorities under question. The organization is still facing the consequences caused due to it (Maiorescu, 2016.).

crises are an inseparable part in an organization tenure and they occur at every place no matter how big or small the organization size is. The most important part of crises management is the ability to overcome the crisis situation and set an example for the rest of the world (Heineman, 2014).

The case is related to General Motors deadly ignition switch defect that caused crises of inattention, deferral of responsibility and lack of accountability. 13 people were killed due to the negligence of the company. The whole company came under criticism as it was reported that the company was already aware about the default in the engine. Customers across the globe lost their trust in GM which led to decrease in sales and hence affected the revenue (Booth,2015). 

An automotive  company knows that its products can cause harm to its customers should take appropriate measures to stop them. The necessary actions need to be taken under consideration while reporting issue to The National Highway Traffic Safety Administration (NHTSA) to derive an appropriate remedy. General Motors faced extreme crises in the year 2014 due to ignition switch recall (Cheng,2016).  The recall caused a long running internal cultural issue in the organization. The employees were discouraged to speak up and were instead asked to focus on the bottom line.  The automotive company faced a recall of 8, 00,000 GM vehicles. There were approximately 31 vehicle accidents and 13 deaths caused due to malfunction of engine and airbags. The company faced more recalls shortly after February 2014 which accounted 2.6 million. GM has faced more than 2000 compensation claims for the sufferers of faculty switch (Ulmer,Sellnow and Seeger, 2013). As per the internal investigation the company was aware about the defects since the early 2000s. The company faced multiple moral and legal obligations towards the families and victims. The automotive company went through serious issue which posed serious question on its goodwill. The new CEO Mary Barra helped the company to overcome the issue through its systematic strategies (Crandall, Parnell and Spillan,2013).

Analysis of Issue

General Motors has been in the headlines due to failure to fix an ignition switch problem in the year 2014. This particular situation gave an opportunity to all business leaders to review their strategies. It is providing them with an efficient tool to overcome the crises occurring in an organization. Business whether big or small needs a strategy to overcome crises if something goes wrong (McCarthy,2014). A small mistake can lead to inevitable crises in the organization affecting its goodwill. The company needs to identify the area of default in order to plan crises occurring in future. By having a proper planning mechanism the company can minimize the damage to the company’s goodwill. In case of General Motors, if the company has taken preliminary actions in advance over the information of release. The delay has badly affected General Motors worldwide (Lorsch and McTague,2016).

GM’S new CEO Mary Barra has proved that she is calm and confident under intense pressure. She has made clear that, there primary motive is to focus on customer culture instead of cost culture. GM in the press conference has apologized and left the impression that they are worthy to deal with such situations. In a statement to employees she has made clear that employee’s behavior will help in deciding the future of the organization. They focused on developing a systematic strategy in order to overcome crises (Coombs,2014).

During crises it has become important to determine a communication team in order to resolve customers query. A general motor during the crises has developed a toll free number to address customer’s complain. This has helped the company to register in record information related to malfunctioning. The crisis communication team has helped in addressing the individual issues. The company adopted a pro-active approach later calling vehicles having defects. They paid compensation to the families and victims for their loss caused due to default in vehicle. This approach has helped company to deal with every individual customer. This has helped them in regaining confidence of customers again (Walker, ET AL.2016).

It was essential at that time Select a spokesperson to represent the company’s point of view. Mary Barra represented her company well enough during the time of crises by addressing to each complaint. She has addressed every individual query made during the press conference. She made her concern clear during the press meet that the company is dedicated towards the commitment they have made to its people. General Motors has established a plan that focus on developing future venture.  This has become important for an organization to develop a better effective plan in order to inform people about faults. Marry apologized in public and mentioned clearly that the company will eliminate fault in overall mechanism (Groh,2014).

Application of Theories and Strategies

Media strategy helped GM to overcome the damage caused to their goodwill. A strong media relation helped in communicating the information to the public that has effectively helped to communicate information systematically to the public. The media strategy created by GM has made an effective impression in the mind of customers worldwide. The media strategy on a long  run helped in putting forward the company’s point of view. It is recommended to a company undergoing serious crises to strengthen media strategy by focusing  of managing Public relation. This will help in achieving long term goals (Mitroff and Alpaslan,2014).

GM’s CEO accepted their weakness and fault in ignition engine. While apologizing to public they accepted their fault and amounted compensation for the victims. The company is clarified its positions in front of all stakeholders. They even paid a fine of $ 35 million for risking life of people.

Barra took everything in her hand and at time when no one was ready to take responsibility she shifts the focus of the company from one on cost to customer safety. Since 1970s the culture of General Motor was like a sponge, it used to bounce back to its previous shape. Barra made her point clear while stating the strategies of the company by removing its bureaucratic culture. They rolled out their three core values which include: customer is their compass, relationship is important and individual excellence is crucial. General Motors has incorporated these values in order to achieve desired goal and to manage crises. They encourage employees to share idea inn company’s interest. They urged employees to speak up for safety issues and to come forward in case they find any issue. This culture in the organization will help in drifting the value. Efficient communication in between employees and management will help in achieving desired objectives. Employees were stuck in long standing culture shaped due to previous practices. The organization was earlier using traditional methods to interact with employees. Barra’s interaction with the employees through social media channel has helped in attaining attention. Social media websites have become an important tool for the companies to reveal their commitment (Harte,2014). The new commitment strategy has helped to remain committed to majority of goals. Staying true towards customers will help them to stay close to the objective. The social media center was opened at Detroit in the year 2013, April. There duty is to monitor enthusiast through 400 social media center. This helps in operating issues of customers as and when complain is being registered. Social Media helps in building reputation of the company. Barra is timely taking report from the social media team to understand the view of individual customer and stakeholder (Mukherjee, 2014).

Planning committee under the guidance of CEO Mary Barra has taken significant actions after crises. This has helped the organization to overcome situation aroused out of crises due to ignition engine. Under such a situation systematic planning has helped them to attain their objectives in order to achieve distinguished results in future (Shepherd and Vardiman, 2016).

GM faced allegation and accusations across the world due to the fault in ignition engine. The fault has affected the goodwill of GM and they are still trying to cope up with the situation. The accidents and death caused due to fault in the engine. There were 2.6 million recalls which has drastically affected the image of the brand.

PEST analysis helps in understanding the situation of the company due to crises. It helps in understanding the macro environmental factors to ensure the effects of external factor on the company growth.

Political

Members of the House committee asked General Motors CEO Mary Barra and a federal safety regulator over the death of 13 people due to fault in the engine. It created a fury in the market and has put different regulatory bodies under question.

Economic

The whole continent was facing recession in the year 2008. People around were trying to curtail their expenses in order to survive in the market. it deeply impacted the macro-environmental factors resulted in unemployment. As an automobile company te crises has deeply affected the economic condition reducing the revenue. The company had a huge burden to pay compensation to the victims.

Social

General Motors has been a global leader for almost seventy years. People across the globe trust them for providing efficient services to its customers. The incidence in 2014 has badly affected their image. They have lost a significant amount of market after 2014 but it is due to the efforts of Marry Barra, the organization is again gaining interest.

Technology

The company was previously at an advantageous place due to their high-end technology. The fault in the ignition engine has affected the brand image. They have started looking for other automobile brand that they can trust. Recall of 2.6 million vehicle caused harm to the brand image. They have made changes in the new model after the defaults were recognized.

Stakeholders

The stakeholders lost their faith in the company. Investors were under confusion caused due to the accidents. The reputation of company was under stake. They made huge losses due to the fault of the company. under such a turbulent situation Mary Barra held the company interest and helped in creating faith in the company. employees were directed to work in the faith of the company and to share every minor detail with the management.

Strategies

The major strategy of General Motors was to build customers faith. It was difficult for a company like GM to again rebuild the interest after such a huge incidence. But the CEO of the company has helped in reshaping the faith again. This has helped them to achieve desired growth even after continuous loss in 2014. They effectively worked together with the employees to understand the situation. Employees at default were suspended from the company.

Conclusion

Crises are an inevitable part in an organization though they affect the goodwill to a large extent. General Motors is a company working consistently in a good faith of its customers. The default in the ignition engine has affected the reputation of the company. However the CEO Mary Barra has helped the company in overcoming the situation by regaining the faith in both customers and employees. For a company like General Motors it has become important to build a good reputation in order to attain sustainable results.

References

Barrett,P.2014. Why GM Keeps Swerving From Apology to Aggression in Recall Crisis. Online. Available at: https://www.bloomberg.com/news/articles/2014-05-19/gm-strategy-amid-liability-crisis-ranges-from-apology-to-aggression Accessed on 19 January 2017.

Booth, S.A., 2015. Crisis management strategy: Competition and change in modern enterprises. Routledge.

Cheng, Y., 2016. Who Is Leading Whom in the General Motors Recall: Understanding Media Impacts on Public Relations Efforts, Public Awareness, and Financial Markets. Research Journal of the Institute for Public Relations, 3(1), pp.1-25.

Coombs, W.T., 2014. State of crisis communication: Evidence and the bleeding edge. Research Journal of the Institute for Public Relations, 1(1), pp.1-12.

Crandall, W.R., Parnell, J.A. and Spillan, J.E., 2013. Crisis management: Leading in the new strategy landscape. Sage Publications.

Groh, M., 2014. Strategic management in times of crisis. American Journal of Economics and Business Administration, 6(2), p.49.

Harte, J., 2014. Management crisis and business revolution. Transaction Publishers.

Heineman Jr, B.W., 2014. The Crisis Management Lesson from Toyota and GM:“It’s Our Problem the Moment We Hear About It”. Harvard Business Review.

Lorsch, J.W. and McTague, E., 2016. Culture is not the culprit. Harvard Business Review.

Maiorescu, R.D., 2016. Crisis management at General Motors and Toyota: An analysis of gender-specific communication and media coverage. Public Relations Review, 42(4), pp.556-563.

McCarthy,M. 2014. How GM Can Steer Through Crisis of Ignition-Switch Recall. Online. Available at: https://www.adageindia.in/How-GM-Can-Steer-Through-Crisis-of-Ignition-Switch-Recall/articleshow/45735763.cms Accessed on 19 January 2017.

Mitroff, I.I. and Alpaslan, C.M., 2014. The Crisis-prone Society: A Brief Guide to Managing the Beliefs that Drive Risk in Business. Springer.

Mukherjee, S., 2014. The Use of Twitter, Facebook, LinkedIn etc. as Strategic Tools for Crisis Communication. International Journal of Management and International Business Studies, 4(2), pp.175-180.

Shepherd, I.J. and Vardiman, P., 2016. The General Motors Ignition Switch Incident Viewed Through a Proposed Economic Impact Severity Index. Journal of Management Policy and Practice, 17(1), p.36.

Ulmer, R.R., Sellnow, T.L. and Seeger, M.W., 2013. Effective crisis communication: Moving from crisis to opportunity. Sage Publications.

Walker, S.M., Earnhardt, M.P., Newcomer, J.M., Marion Jr, J.W. and Tomlinson, J.C., 2016. Crisis Leadership During the Great Recession of 2008. International Journal of Leadership and Change, 4(1), p.9.