Paul Holmes 05 Oct 1992 // 11:00PM GMT
It is a fundamental tenet of the public relations philosophy that organizations can seize crisis as an opportunity, that an open and honest approach to a potential problem can be turned to advantage, and that an organization can thus emerge from crisis with its reputation not only intact, but possibly even enhanced.
While most PR people believe this to be true, however, there is hardly an abundance of evidence, which may be why every text book on the subject cites the same example: Johnson & Johnson and Tylenol. Yet, as experts point out, J&J's task was made easier—if not exactly straightforward—by the fact that they were the victim rather than the villain. Perhaps a better example of the phenomenon is Ashland Oil.
In January, 1988, a storage tank at an Ashland Oil terminal near Pittsburgh collapsed, and four million gallons of diesel fuel spilled into the Monongahela River. It was one of the most widely-publicized environmental disasters in this country. It could have created the same kind of stigma around the Ashland name that the Valdez spill generated for Exxon. Instead, Ashland came through the crisis better-known and better-respected than it went in.
The lessons to be learned from Ashland could apply to any organization in any industry. The oil and chemical company was able to benefit not only because of its crisis management plan, but because it had a culture and a leadership that was already attuned to the importance of all stakeholder groups, and because it built long-term upon the visibility of the crisis to become a real leader in its community.
"I think it was just a human reaction on my part," says John Hall, Ashland chairman. "Our attitude was: `Hey guys, we've made a mess here. We've got to clean this thing up and we've got to try to do anything we can to help the people who have been inconvenienced."
Roger Schrum, the company's director of corporate media relations, says that Hall had shown himself to be an chief executive with an uncommon understanding of the importance of reputation management long before the spill, ensuring that his senior PR counsel was also a member of the company's senior executive team. He had taken over when the company was financially troubled and apparently unfocused, and seen it through a hostile takeover attempt.
"What Hall did was take the company back to its roots, which was as a family-oriented firm in a small town,with employees holding about 25% of the shares in the company," Schrum says. "He was someone who instinctively understood the importance of good public relations."
It took Hall 36 hours to appear before the media in Pittsburgh—a delay he says is the only thing about the handling of the crisis he regrets—but when he did his performance was exemplary, telling the public in his soft-spoken, sincere southern voice: "I'd like to apologize to you for the inconvenience we've caused you."
Virgil Scudder, president of Virgil Scudder & Associates, a media training firm in New York, describes Hall's performance as close to perfect. "He was open, he was honest, he was believable, he was contrite," Scudder says. He still shows a tape of Hall to clients to show them how a skilful CEO can deal with the media with candor. Ashland also paid to have two air force C-130 transport planes fly in Coast Guard oil pollution clean up specialists from the Gulf Coast and within a week had presented Allegheny County with its first check for clean up expenses. "When I was just getting out of school, dealing with a crisis was considered a private affair,".Hall recalled recently. Information about the crisis was regarded as a weapon that could only do harm and increase liability. The lawyers held sway in the boardroom.
"No longer can a company hope to handle its affairs in private. No longer can a company afford to try to skirt responsibility for its mistakes, ignoring the potential damage to its reputation."
After its initial candor, the company went one step further and commissioned the Battelle Institite to conduct an independent investigation. It also made a grant to the University of Pittsburgh to fund a study assessing the spill's long-term environmental impact.
Dan Lacy, vp of corporate communications, admits the company was forced to admit some embarrassing facts. It did not have written confirmation of certain permits before it went ahead and built the storage tanks, normal welding and testing practices were not followed, and the steel used came from an old, used tank, moved and reassembled from a plant in Cleveland.
"But we decided we had to publicly admit every mistake," Lacy says. "What we didn't want to happen was for some outside investigation to reveal unpleasant information. Then, charges of cover-up could undermine the company's credibility."
Hall himself contacted Governor Casey of Pennsylvania to review the situation, while the com pany's Washington public affairs staff began briefing Congressional aides within 24 hours of the accident. Meanwhile, information was being provided to the company's 40,000 employees via E-mail and bulletin boards, while less urgent information was communicated through the Ashland News.
"This was critical," Lacy later told Industry Week. "Since informed employees could effectively spread accurate information and squelch rumors."
The reputational benefits translated into more tangible good news for Ashland. Only a month after the spill, Hall was called to Washington to testify before Congress, and found himself being praised by his questioners. On Wall Street, meanwhile, the company's stock price lost about $3.50 but was back to its year-opening level of $57 in less than four weeks and up to $72 by year end.
Ashland executives are convinced that the company's openness also helped when it came to legal action. Ashland took the unusual step of soliciting claims—"You know you're going to get them eventually," Lacy says, "so why not engender goodwill by encouraging claims and making advance payments."—and settling them as swiftly as possible, often attaching an additional $200 to compensate for inconvenience.
"Managing a crisis effectively can actually enhance a company's reputation," Hall says now. "A well-managed crisis shows the public that your company is competent, genuinely concerned about the public welfare, and deserving of the public trust. The role of top management is to turn danger into opportunity."
In the wake of the crisis, Ashland has continued to take a lead on environmental issues, guided by a philosophy that pre
vention is better than cure. At the company's first annual meeting following the spill, Ashland announced a program to review the permits and integrity of nearly 150 facilities to reassure the public that the incident would not be repeated.
Subsidiary Valvoline has sponsored pilot programs to collect and reprocess used motor oil, Ashland's Code of Business Conduct stresses compliance with all regulations, and the company is working with the Wildlife Habitat Enhancement Council to develop 800 acres of company-owned land in Kentucky and Louisiana. Its biggest program, however, is the annual Ohio River Sweep.
For the past four years, Ashland has been the major corporate sponsor of an event involving thousands of volunteers in collecting 24,000 tons of trash along the Ohio River.
"The bottom line is that the health and safety of employees, community and environment come first, and profits come second," says John Hall.
Ashland works with Edward Howard & Co., Akron, on environmental issues and that firm’s David Meeker says the company is among the leaders in that arena, demonstrating a genuine commitment to doing the right thing and often going beyond what it required by government regulations. Similarly, Michael Anstendig of Jay DeBow & Partners, a New York PR firm that works with the company on other issues, praises Ashland's work in the eductional arena.
"Few companies do as much as Ashland, or get involved to the extent Ashland is involved in the education issue," Anstendig says. Support for education has been a tradition since Ashland was founded in 1924, but over the past six years the company has devoted almost its entire corporate ad budget to education issues, while donating about $10 million to education. The program has targeted school dropouts, created materials to address the issue of self-esteem among high school students, and presented awards to the region's best teachers.
"In today's fiercely competitive environment, reputation is one of a company's most valuable assets," says John Hall, sounding like his own public relations expert. "The public has been empowered by the media, the courts and its own ability to organize. As a result, companies must keep the public trust or risk being driven out of business. And I believe that it's healthy for corporations to be held accountable, for their conduct to be held up to the scrutiny of a public forum."