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Crisis management insights from horse meat: one year on

March 5, 2014 by Jonathan Hemus

More than a year on from the outbreak of the horsemeat scandal, the UK’s biggest crisis management challenge of 2013, it’s timely to consider the longer-term impact on so many players in the food and retail sector.  And this week I had the pleasure of presenting my insights and analysis at the International Crisis and Risk Communication Conference in Florida.

It’s clear that reputations were damaged, preserved and in some cases enhanced as organisations and individuals were challenged to successfully implement their crisis management planning and say the right things under intense stakeholder pressure.

Impact on reputation

Without a doubt, it has been a difficult issue for the entire industry and whilst some of the reputational impacts are already clear, the longer term ramifications will only be fully understood in another couple of years.

Recent research states that the ‘main issue for consumers seems to be a loss of trust in food producers and retailers, rather than in meat itself’ (Tom Rees, YouGov). Emma Gubisch at Leatherhead Food Research reinforces this:  “What consumers hated most was less the fact that they were eating horsemeat per se, and more the fact that they perceived companies had tried to pull the wool over their eyes.  We now see a more sceptical and wary consumer emerging. Companies will have to battle hard to restore trust in 2014”. 

This lies at the crux of the horsemeat scandal: trust is an invaluable commodity for all organisations. It is hard won and easily lost.

Restoring trust

Restoring trust in consumers will not happen overnight. In my view, Tesco‘s response to the issue continues to be an interesting one to watch.  As the market leader, Tesco took more heat during the crisis than any other retailer but as mentioned in an earlier post, it demonstrated a textbook example of effective crisis management in its response to the initial scare.

In the following weeks, they transitioned from pure crisis communication to pro-active reputation management having clearly decided to play the long game. It seems that they recognised the horsemeat scandal as an opportunity for organizational change and as a springboard from which they could alter perceptions of the business.

Pro-active communication

As a consequence, they have sought to play a leading role in the debate about food provenance and have communicated in a way they have never done before.  In the last 12 months, we have seen them adopt a more engaging and collaborative style in their communication as demonstrated by:

  • Using CEO Philip Clarke on YouTube to pledge his support to customers, suppliers and farmers
  • Speaking at the National Farmers’ Union Conference 2013 reinforcing their pledge to support British farmers
  • Creating a new section of their website to outline a new approach to ensuring food integrity
  • Publicly committing to three simple but effective promises
  • We’ll put in place better controls
  • We’ll bring food closer to home
  • We’ll build better relationships with our farmer
  • Reinforcing the message a year on at the National Farmers’ Union Conference 2014 which took place last week where Kevin Grace, Group Commercial Director spoke

Despite this, research conducted by Ipsos MORI in December 2013, shows that when asked whether consumers view Tesco more or less favourably one year on from the horsemeat scandal, they have a negative rating of – 18%.

Long term approach to crisis management

As market leader, it was almost inevitable that Tesco would be the most affected organization in the aftermath of the crisis.  More interesting to observe will be whether it has endured short- term damage for long-term benefit and more specifically whether a focus on your reputation three years ahead as part of your crisis management strategy today is indeed a wise approach. I hope so, as self-interested pragmatism is a dangerous alternative crisis management strategy.

Crisis management lessons

So, what can other organisations learn from the crisis management response to the horsemeat scandal?

  • Establishing business and operational procedures which demonstrate responsibility lend credibility in a crisis and a potential long term competitive advantage – Sainsbury’s earlier investment in their supply chain (and the fact that none of their products were affected) allowed them to communicate positively and grow sales whilst others faltered
  • Reputational risk assessment, scenario planning and a pre-prepared crisis management process are essential if businesses are to exert control quickly and effectively – brands like Findus which responded slowly apparently due to a lack of crisis management planning suffered much criticism
  • Reputational credit in the bank can make a significant difference during a crisis; your words and actions during the crisis will be perceived in the context of your broader reputation – the Coop’s longstanding reputation as a trusted brand helped to sustain it during this crisis
  • Stakeholder (media) attention and expectations will be shaped by market position; market leaders must expect to be “poster childs” – Tesco found itself in the centre of the media spotlight: market leaders in other sectors should expect the same fate
  • A media-friendly CEO can be a major asset or a significant hindrance – know which they are likely to be beforehand: Iceland’s Malcolm Walker is an opinionated and idiosyncratic spokesperson and his media interventions tended to make the situation worse rather than better. Crisis media training for all CEOs is a critical first step to avoid this.
  • A strong reputation can sustain an organisation through a single crisis; multiple issues in short succession pose a major threat: whilst the Coop’s reputation sustained it through horsemeat, financial problems at its bank and unsavoury revelations about its chairman within the same year have caused enormous harm.
  • Understand that successful crisis management is about playing the long game – it’s not just about today’s headlines and tomorrow’s receipts
  • Be sensitive to the Zeitgeist – understand that what was acceptable last year is not necessarily acceptable today. Food provenance has become a big issue: make sure that you recognise subtle changes in the public mood when doing your own crisis management planning

Recovery from a serious crisis

The runners and riders in the 2013 horsemeat crisis management stakes have risen to the crisis management challenge in different ways.  Whatever industry you work in, you could be affected by a crisis on the scale of last year’s horsemeat scandal.

Although crises of this scale can cause long term and significant damage, businesses can recover from them.  But it will take time and will only happen if you are prepared and engage in crisis management planning and training beforehand.  And lastly, remember that a crisis can act as a catalyst for organisational renewal as Tesco is showing.  No organization would welcome a crisis of this magnitude, but if it does come your way, there is potential to turn it into an opportunity.

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