Crisis Management Research Paper

Description of the company and the problem

Enron was one of the leading companies operating in the energy market of the US. The company was traditionally viewed as one of the industry’s leaders and investors believed the company was quite reliable. However, the reliability of the company was questioned when former officials of the company said Enron hid its gains during crisis in California. In fact, such accusations provoked serious suspicions among investors and clients of the company because the hiding of the company’s gains during the crisis in California cannot be interpreted otherwise as the deception of investors and clients of the company. In this respect, it should be said that the crisis in California was closely intertwined with the growing energy costs and companies consuming energy had to pay high price to companies producing the energy. In other words, they should pay to Enron which occupied the leading position in the energy market. In such a situation, the fact of hiding gains of Enron was of the paramount importance because, in case the true gains of the company were known to the public and investors, the company was likely to be forced to reduce prices in order to ease the tension in the energy market. This step would facilitate overcoming crisis and prevented companies from considerable financial losses provoked by high energy prices established by Enron. Therefore, the uncovering made by former executives of Enron put the company into a disadvantageous position because it undermined the positive image of the company and, what is more, Enron became a subject of a particular attention from the part of regulatory agencies.

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Memorandum
To workers of Enron
The current situation in the company remains stable though the rumors concerning our company and spread by mass media disturb you. Naturally, the negative image of the company which our former executives have created due to their fancied allegations of Enron, which presumably had hidden its gains during the California crisis, have nothing in common with reality. I am sure you know as well as I do that fairness is our major principle and we have never deceived neither our customers, nor our business partners, nor, what is more, our employees who are the main value of our company.

At the same time, the fact actions of our former executives cannot be justified. In fact, they are a disgrace for our company. These former executives have already proved their inability to manage effective and you, employees, have suffered a lot from their ineffective management. So, I believe you are not surprised with their fraudulent allegations. I am also sure that you feel the changes for better in our company and you know that we never hide any information neither from you nor from the public. This is why I would like you to continue you work and do not worry about the future of our company and your own future. I am sure it is perfect. So you can be certain in your future and you can inform the mass media that our company did not have and does not have any troubles.

Letter
Dear Mrs., Mss.
I am writing to inform you about recent events and rumors that affect the performance and public image of our company consistently. In fact, the entire matter is apparently misrepresented in the media which lack the objective and reliable information on the policy of our company and our actions during the recent crisis in California. Naturally, it is just a misinterpretation provoked by allegations of our former executives who informed the media and the public about our company hiding its gains during the crisis in California.

I would like to clarify the situation in order to avoid erroneous suspicions and further allegation of our company. Our company has always been open to the public eye and we will readily provide you with all the information concerning our policies and our actions during the California crisis but I would like to assure you that we did not violate any legal norms and all our actions were absolutely correct. Moreover, I should say that our company had suffered a lot from the recent crisis and our losses are quite substantial, though they do not threat to our marketing position.

Finally, I would like to underline that the allegations of our former executives are not grounded on real facts. In stark contrast, they are absolutely fake and provoked by the irresistible desire of our former executives to revenge on our company as they had lost justly their job.

To clarify the situation and our position I invite you to speak to our marketing department which will give you ample information on our actions and policies during the California crisis.


E-Mail
Dear partner,
I am sorry to disturb you during your vocations, but recent events force me to inform you about recent troubles which affected our company dramatically. I am not sure whether you heard about our former executives who informed the public about our presumable hiding gains during the California crisis. I am convinced that you would perceive this information as absolute nonsense. As you know we always provide the public and, above all, our partners with the precise information on our position and our gains. Moreover, in the course of our long-lasting partnership you had already learned that we had never admitted the possibility of fraud in relations with our business partners, investors or customers.

In fact, we share the same values as you do and we are unable to take immoral or, what is more, illegal decisions. I home that this stir in the media which began because of our former executives will soon stop because their allegations are ungrounded. As you know we performed well during the crisis but we remained fair. Moreover, we had hardly escaped crisis ourselves because of the poor management from the part of our former executives who are know accusing our company of hiding gains.

Thus, I would like to reassure you that our current position remains unchangeable, we are still performing well and there are no real threats to our partnership.

Hope you enjoy your vacation and our troubles will not affect you in any way.

SMS
Dear Customer,
Our company is sorry for the recent rumors that accompany Enron. I hope they did not change your attitude to our company and you will continue to use our services. In all probability, you have already heard about recent allegations of our company for our former executives said we were hiding our gains during the California crisis. It is a shame for our company to employ such executives because they are lying about our actions during the crisis. In addition, you should be aware of the fact that media had little information about the actual situation and actions of our company. In fact, they represented the version of our former executives only, while they totally ignored the position of our company. Soon, we will inform the media about the actual actions of our company during the California crisis.

However, before we would like to inform you that we had never undertake any unethical or illegal actions and we had always been open to the public and our fairness, especially in relation to our loyal customers, proves to be beyond a doubt. I hope you would not have troubles because of these unsubstantial rumors and we will keep working together. I hope you understand that we have just temporary difficulties with our former executives who just want to revenge on our company after the loss of the job.
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Essay on Crisis Management

This particular section will assess the role of Shell’s PR practitioner as a crisis manager. In the first part, we will consider the perception of this aspect at SML, how it is dealt with and then we will use the 3Ps: Prevention, Preparation and Provision as benchmarks for assessment purposes.

The Institute of Crisis Management (ICM) defines a crisis as a “significant business disruption, which stimulates extensive news media coverage.” (http://www.crisisexperts.com)

At SML, though, depending on the level of risk involved and the probability of occurrence (i.e., time scale), two different appellations have been given to such probable calamities. In fact, the ‘crisis management’ and ‘issue management’ concepts used at SML are just different words which bear the same meaning as Jefkins’ (1998) 2 kinds of possible crisis namely, ‘unlikely’ and ‘likely’ respectively.

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Thus, at SML, ‘crisis management’, as they understand it, is a rather broad and vague concept, which relates mainly to unlikely (but not impossible events). What they do cater for is the concept of ‘issues management’. According to Mrs Teeroovengadum, this appellation describes more likely crisis, which have a high risk of occurrence. Hence, at Shell, they consider this concept as being more focussed. However, as Ashcroft (1997) stated: “ Issues management is the latest American import, which, as yet, has rather a rather blurred division from crisis management. There are many similarities… an issue can develop into a major crisis”.

Whatever be the appellation, SML, does consider these probabilities. As a matter of fact, at SML, they have a crisis plan as to how to deal with any crisis situation or any major issue that may crop up. This is fully supported by Ashcroft (1997) who claimed that “an organisation’s reputation is as important as any other corporate asset, and many organisations have some kind of crisis plan intended to protect that reputation should something go wrong.” In addition, at SML, this plan is not rigid. Rather, it is reviewed each year to cater for unexpected changes. At SML, a crisis team has devised this particular crisis plan, which focuses more on issues management. The team comprises such people as the MD, the Brand and Communications Manager from the Department of Public Affairs and managers. Furthermore, all team members know specifically what their roles should be in such situations. In fact, each department has a plan, as to how to deal with a crisis situation, which is fully aligned and integrated with the overall crisis plan.

At SML, quite interestingly, not all cases related to the oil industry have direct repercussions for the Mauritius branch. For instance, major oil spills happening will not have so much impact on the local company, though publics may ask certain questions. Even, if a major international affair occurs in Mauritius, this becomes a Group issue, i.e., it concerns the whole of Shell Group and so, it is the Public relations practitioner at the international level, who tackles the problem.

Quite surprisingly, even the Iraq War is not a crisis, not even an issue, for SML. In fact, according to the Brands and Communication Manager, SML, is only a distributor of petrol in Mauritius. It is the government through the State Trading Corporation that imports this product, and so it is not an issue for the company.

Nevertheless examples of probable cases, as given by Mrs Teeroovengadum, that may affect SML are for instance, say, a Jet Al Lorry has an accident or there is the explosion of a gas cylinder while moving from depot to the airport. If ever, such likely issues are to occur in reality, well, SML is prepared to face the ordeal. In this connection, they have set down plans on how people should deal with it, i.e., who to contact and what to do.

Before the assessment part, let us consider one latest case considered under the issues management concept, rather than as a crisis management situation – the Leaded/Unleaded petrol issue.

The Leaded/Unleaded Petrol Issue
Regarding this issue, by virtue of its sense of social responsibility, there was a deliberate attempt on the part of SML, to launch a sensitisation campaign to inform its stakeholders, and this was done in collaboration with other oil companies and the Ministry Of Environment. In this connection, brochures (See Appendix…) were published on ‘ Frequently Asked Questions’. Also, to cater for other publics that might have missed the information campaign, they decided to train gas stations’ managers and pump attendants to respond to queries from clients. In this context, workshops were organised by Mr Gino Finette, Training & Marketing Manager and the main aim was to make the managers and attendants “ULG” Champions” (See ULG Champion Assessment).


Assessment Of The PR practitioner role as Crisis or Issue Manager
Based on what has been discussed, we can see that the 3Ps of crisis management namely Prevention, Preparation and Provision can be applied, to a certain extent to SML.

Prevention
The prevention procedure should be based on trying to anticipate what could go wrong. This is in line with the classic crisis management-adopting a “better safe than sorry” policy. Also, “…the thinking is to avert, rather than deal with, disaster by looking for issues that might arise over a set period – an issue audit.”(Ashcroft, 1997). The two lists under the appellations of crisis management (more unlikely issues) and issues management (likely cases) devised at SML, caters for this prevention aspect.

Preparation
As far as preparing for crisis is concerned, seconding Jefkins (1998) idea, we would say that “it is essential that any organisation should set up a permanent crisis management team.” Like the typical crisis management team of Jefkins (1998), SML basic crisis committee does comprise the MD, the Brands and Communications Manager from the Department of Public Affairs and other departmental managers. What is a shortcoming here is perhaps, the fact that there is no regular contact by meetings or correspondence to enable review and update of the crisis plan. At SML, the latter is reviewed only once per year. For more effectiveness and efficiency, this exercise should be done more frequently.

Provision
Besides, more emphasis should be laid on communication among team members so as to be consistent and agreeable on what and how to divulge to the media, hence improving even on the ‘provision’ stage of crisis management. The latter seems to be a real pitfall at SML and this should be counteracted since “communicating effectively was now more often seen as of the same importance as putting problems right.”(IPR Journal, 1995, p.14). It should never be forgotten that “effective management of information at a time of crisis is even more vital, when damage to an organisation’s reputation or damage to established goodwill can result in severe damage to operations.” (Ashcroft, 1997)

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