Mike Fernandez oversees public affairs and public relations as Cargill, the agribusiness giant that recently began the second biggest meat recall in US history, following a salmonella outbreak that has so far killed one person and affected 129 others.
Fernandez has held the role of corporate VP of corporate affairs at the privately-held company since last year, when he joined from State Farm. Recently named to the Holmes Report’s Influence 100 list of top global communicators, Fernandez is also overseeing an agency review to improve CSR and issues management counsel for the company’s food security initiative.
In a phone interview with the Holmes Report, Fernandez discusses the Cargill's ongoing recall crisis in considerable detail, arguing that the company's reputation has actually improved because of its response so far. He also explains why there are no excuses for poor corporate crisis management, regardless of the pace and scrutiny embodied by today’s always-on online environment, and the demands of over-zealous legal departments.
What are the lessons you’ve learned from the Cargill recalls of ground turkey?
What worked well is quickly getting to the facts, quickly making a decision that’s in the best interests of public health and our customers, sharing what we know when we know it, and trying to strive for transparency as much as possible. Take ground turkey. All we knew was that [on Monday 1 August] the CDC had posted a report that said there were some number of people ill due to salmonella, and that some fraction was due to consumption of ground turkey. Looking at where those locations were, and knowing that overall we have 60 percent of the ground turkey market, we made the decision and did some tests in our facility so by late Tuesday night, early Wednesday morning, we said we are going ahead with a voluntary recall, without government officials calling on us to do so.
One thing was trying to identify the problem, the other thing was not having everything perfect but having enough information to make the call. We also had management that stepped up and said ‘we know enough to go ahead and do this in the public interest’. Those are key learnings.
Have the rules changed as far as corporate crisis practices are concerned, and have expectations of companies changed?
If you go back to the Eighties with the Tylenol crisis, that’s when things began to change. It took them many more days to respond - today we have less time. The best rule of thumb to depend upon are the Page Principles: tell the truth, prove it with action, listen to the customer, manage for tomorrow and conduct PR as if the entire company depends on it. I think those things are important in any crisis. The idea that we have a lot of time to ponder and we need to be very exact before we take action is a very tough thing. Obviously there will be some companies that will be concerned about the bottom-line impact on the business if they pull something too soon.
In many recent crises it feels like the legal department is holding sway over the public relations team. Do you think there is a tension between the two sides?
I think that can happen but it’s also the reason why a good CCO needs to work very closely with the general counsel of the company. Especially in today’s world where companies are facing so much litigation. That said, I do believe companies are much too cautious. Some years ago I was hired by an insurance company [State Farm] in the wake of Hurricane Katrina. You had the seven largest insurers in Mississipi being sued by the state Attorney-General within 17 days of the hurricane hitting, and also by trial lawyers. No company could have possibly adjudicated all of its claims within 17 days, but what all seven companies did was they went quiet. That was a mistake because a very aggressive trial lawyer began to set the stage for the pursuits that were yet to come. Later a famous lawyer told the New York Times that these were not just legal battles, they are political and PR wars. It is all the more important that companies work hard to be transparent and provide information as soon as possible.
Do you think that it is becoming increasingly difficult for companies to emerge from a crisis with their reputations intact, or even enhanced?
I don’t agree with that. I do think it will take some time. The case I just described to you around Hurricane Katrina came when I was working for State Farm. Two things happened. One, there was noise created in the marketplace so that you had political players out there as well as legal players trying to set the tone. While State Farm took it on the chin for a while, it began to tell its story and share data and information around its claims. As they went through all of that and became more transparent, they actually grew market share in Mississipi. Two, the company had invested in research so we were able to track what had happened with public opinion around the State Farm brand, and that actually had improved and was stronger within three years after Katrina than what it had been before the hurricane hitting.
So there is proof for a company improving in the midst of a crisis. Similarly, I would argue that has happened with Cargill. An additional element is that you have to be authentic, you have to do it in a way so that people understand it and believe it. We can put out lots of information, but if it’s not understood in the right way and by the right parties, then it’s not really communicated. Whether you are talking about BP or Japan, there clearly were mistakes on the front-end based on how they decided to communicate, there were things they then did better but by then there was mistrust, so messages were never understood. It will take BP and Japan some time to get beyond those. In BP’s case it could even be longer because right now, that became the defining moment.
So there are no excuses for companies communicating poorly in a crisis?
I think you have to work hard to make good come of it. Even in terms of the challenges your company might face, you have to think through what kinds of risk do you have, and make sure you have relationships built with key publics so you can have an ongoing conversation. And not be afraid to have conversations with those that might be adversaries. I look forward to conversations we have with NGOs and government officials. My hope is through greater transparency I will better understand their position and they will better understand mine.