Crisis Introduction to the topic 2. Literature review 2.1.

 

Crisis Communication Management: Lessons Learnt from the BP Oil Spill in Mexico

 

 

 

Amanda Petré

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1. Outline

 

1.      Introduction to the topic

 

2.      Literature review

2.1.    Corporate Identity

2.2.    Corporate Reputation

2.3.    Definition: Crisis Communication

2.3.1. Model 1: Coombs’ SCCT Model

2.3.2. Model 2: Benoit’s Image Restoration

 

3.      Analysis of the Case: BP Oil Spill in Mexico

3.1.   BP’s response

3.2.   The public’s response

 

4.      Recommendations on Crisis Communication Strategies

 

5.      Bibliography

 

 

 

 

 

 

 

 

1. Introduction to the topic

               Nowadays, we live in a globalized world, where ideas, news and knowledge are spread out quickly. Therefore, when a corporation experiences a crisis, there is no way they are able to avoid the consequences: the corporation will receive a negative impact, thus their brand image and reputation will be notoriously affected. In this paper, crisis communication techniques will be discussed. These will provide guidelines for companies to know how to communicate, remain quick, consistent and stay open, in order to obtain tenable relationships with their stakeholders.

               The purpose of this study is to analyse how two companies faced reputational crises. Contributing, in this way, to the examination of methods to reduce brand reputation damage resulting from environmental disasters linked to the petroleum industry.

               The structure of the paper is the following. Firstly, through the literature review a theoretical framework will be presented. The concepts of corporate identity, corporate reputation and crisis communication will be defined. Furthermore, two main models for crisis communication will be presented. Secondly, the methodology will be explained. Thirdly, a deep analysis will follow. Here, we will present the case of BP’s oil spill in the Gulf of Mexico and analyse its response to the media. At last, we will conclude the study with recommendations on corporate reputation strategies based on the findings.

 

 

 

 

 

 

 

 

 

 

2. Literature Review

               In the world today, it is essential for entities and organizations to be aligned to their identity, image and reputation, in order to be successful in the market and react accordingly to their market demands.

2.1 Corporate Identity

“… Corporate identity is considered as the self-presentation … of an organization that is based on the company philosophy, strategy, culture and vision; in short, its organizational identity. Making sure that the corporate identity is rooted in the organizational identity then not only offers a distinctive edge in the marketplace, but also ensure that the image that is projected is not cosmetic but authentic and actually carried and shared by members of the organization”. (Cornelissen, 2004)

               As a whole, this would mean, that corporate identity is the self-presentation through behaviour, communication and symbols, which will be later on reflected in the company’s strategy. Consequently, this will affect the marketing department of any organization. Rughase (2006) proposes that a company will project a certain kind of image to their audience “through visible graphic designs, such as logos, company house styles, and so on.”

2.2 Corporate Reputation

               Corporate Reputation is formed step-by-step, and it is built by the stakeholders’ first feeling of the organization.

“… it is viewed as a set of images created in the minds of stakeholders based on a company’s products/services, financial performance, leadership, workplace culture, innovation, governance and employees”. (Kaul and Desai, 20144)

               According to Gray and Balmer (1998) there are two types of corporate reputations, internal and external. Internal reputation is defined by the internal stakeholders such as the CEO or the workforce of a company. On the other hand, the external reputation is defined by the external stakeholders, the ones who receive the organization’s messages and build and impression of the organization itself.

 

 

2.3 Definition: Crisis Communication

               When a company is facing a crisis, it has to be prepared to communicate correspondingly in order to preserve their image and reputation.  As stated by Coombs and Holladay (2010) in their Handbook of Crisis Communication, companies often find themselves in circumstances known as crises. Accordingly, it is essential for them to obtain prior know-how on how and why crises happen, so that they can be anticipative. Nevertheless, not all companies prioritize crisis prevention, as it involves plenty of costs and energy waste. Frequently, communication managers suggest various reasons for the company not to communicate properly (Tench and Yeomans, 2009):

–       They need to assemble all the facts before it communicates.

–       The desire to avoid panic.

–       It does not have a trained spokesperson

–       It has had other problems recently and cannot talk about this problem because it will impact its overall corporate

reputation.

–       The issue of how to solve crises.

–       The fear of revealing proprietary information or revealing competitive information that may give the company new competitive problems.

 

 

2.3.1 Model 1: Coombs’ SCCT Model

               In the crisis communication field, the Situational Crisis Communication Theory (SCCT), developed by Coombs and Hoolladay (2010), is one of the most used theories. As stated by Coombs, there are three main clusters the victim, the accidental and the preventable cluster. Each of them consist of several sub-categories which defines the crisis type deeper (Annex 1). As a next step, the appropriate response strategy has to be established. These, are again separated into two main groups: primary crisis response and secondary crisis response strategies (Annex 2). It shall be noted, that the primary crisis responses strategies have to be prioritized over the secondary strategies. Subsequently, now that the crisis types and crisis response strategies have been defined, eight diverse guidelines will be presented to choose from (Annex 3-thesis text sonay).

2.3.2 Model 2: Benoit’s Image Restoration

               As a natural consequence, when the reputation of a company is being endangered by any means, the company starts acting in order to recover and strengthen it. Conforming to Benoit (1995), companies can take both preventive and restorative approaches to deal with reputation problems. In the case a crisis has already progressed and damage has already been done, the restorative approach may be the only approach applicable. Benoit presents in his work Accounts, Excuses and Apologies (1995), several strategies which can be applied when an organization is confronting a crisis. The five main strategies are (1) Denial, (2) Evasion of responsibility, (3) Reduce Offensiveness, (4) Corrective Action, and (5) Mortification. Within these main strategies, a total of fourteen categories may be found (Annex 4 from the text pg 22 thesis). 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3. Analysis of the Case

               This section of the paper presents the case of “BP Oil Spill in Mexico”. Firstly, the case will be introduced. Then, the company’ response and communication efforts will be revealed. Next, their social media activity will be regarded. And finally, the public’s response will be analysed.

 

Case: BP Oil Spill in the Gulf of Mexico

               BP, founded in 1908, is a global energy corporation which operates in more than 70 countries around the world. Since their early years, they sold their image as “environmentally friendly” and even received marketing prices for their green achievements. However, since the year 2005, BP was responsible for the following incidents. In March 2005, an explosion occurred in Texas City, in one of BP’s refineries, which left 15 workers killed and 180 injured. “BP admitted that safety procedures were ignored” (Telegraph, 2010). Later on, in 2006, two leaks occur in Prudhoe Bay oilfield in Alaska. As a consequence, BP had to pay a criminal fine of $12 million, additionally to $4 million (community service) and $4 million (criminal restitution to Alaska). Next, in November 2009, one of the pipelines of Lisburne’s field in Alaska, leaked some sort of oily material onto the land, “around 46.000 gallons of a mixture of oil and water on to the snowy tundra” (Telegraph, 2010).

               And just half a year later, on the 20th of April 2010, an explosion happened on the Deepwater Horizon oil platform in the Gulf of Mexico – one of the biggest oil catastrophes in human history. Consequently, it caused a substantial rupture from an oil well deep down from the surface, thus causing a massive oil spill. Moreover, 11 employees died, and 17 were injured. Two days later, the Deepwater Horizon oil rig sank, generating an unforeseen catastrophe for the US, specially affecting the coastal states of Florida, Texas, Louisiana and Alabama. The leak lasted for 86 days, letting the oil escape at more than 60.000 barrels per day. Livelihood, lives and property were significantly destroyed (Pallardy).

 

 

 

3.1 BP’s response

All in all, BP’s communication strategies were a complete failure. Firstly, as an immediate response, the company accepted to clean up the oil spill and act on some restorative actions. CEO Hayward said in an interview “we are responsible, not for the accident, but we are responsible for the oil and for dealing with it and cleaning the situation up” (Greenpeace, 2010). He furthermore stated, that they would pay compensation to the victims of the catastrophe, but that Transocean Ltd. (proprietor of the oil platform) and Halliburton (cement company) should likewise be regarded as responsible (Reuters, 2011). However, the US Government pointed out BP as the only responsible company for paying all claims for damages caused by the Deepwater Horizon.

               BP did not only have to handle an environmental crisis, but also a reputational one. For example, Hayward stated the following message to the BBC: “This was not our accident. This was not our drilling rig. This was not our equipment. It was not our people, our systems or our processes. This was Transocean’s rig. Their systems. Their people. Their equipment.” (The Telegraph, 2010). They were shifting their blame onto their partners. Announcements like this together with BP’s passivity to improve the situation, caused a lot of criticism.

               In order to restore their reputation, they immediately launched a marketing campaign in the beginning of June. The ads showed the CEO Hayward apologizing for the disaster and taking responsibility for the spill (Youtube). This marketing campaign received plenty of critics in return, as most of the stakeholders considered that the money should have been invested on cleaning up the ocean and on compensating the catastrophe victims.

 

               Social Media

Before the oil spill occurred, BP had a Facebook page, a Twitter and a LinkedIn account. Nevertheless, they were rarely updated. However, after the spill, the account would “serve as a communication hub for updates and breaking news pertaining to the spill” (Swain and Jordan, 2015).

               In the social platform Facebook, BP engages for the first time after the incident on April the 28th 2010, a week after the disaster occurred, “The Department of the Interior and Department of Homeland Security announced a joint enquiry into the explosion and sinking of the Transocean Deepwater Horizon on April 22” (Facebook – BP America, April 28th 2010). Furthermore, a month later, they posted: “There are over 90 companies working on the response just in the Houston office including: Industry: Petrobras, ExxonMobil, Shell, Chevron, Conoco Phillips, Anadarko, Marathon, Hess, ENI & others … (Facebook – BP America, May 20th 2010). These posts can be interpreted as the company BP trying to take away the blame from them, as the rig was owned by another company. However, on the 30th of April, BP releases several protection plans for the Gulf, as they shall remain active and responsive, “BP is mobilizing its full resources to fight the oil spill, which follows the sinking of the Transocean Deepwater Horizon drilling rig in the Mississippi Canyon 252 block” (Facebook – BP America, April 30th 2010).

               As expected after the incident, BP was experiencing difficult times financially, as their shares fell severely. As a consequence, their company reputation was going to be affected, so they put all their efforts and energy in sealing the well and cleaning up the oil spill as fast as possible. “We are taking full responsibility for the spill and we will clean it up, and where people can present legitimate claims for damages we will honour them” (Facebook – BP America, May 1st 2010), is one of the claims BP made in order to remain trustworthy to the public.

               However, at the beginning of May 2010, a noteworthy change in BP’s announcements could be observed. Since the incident, BP had received plenty of pressure from the US Government, as President Barack Obama had been highly committed to the case. Consequently, BP had to show unity and cooperation with the Government. BP published the following announcements: “I reiterated my commitment to the White House today that BP will do anything and everything we can to stop the leak, attack the spill off shore, and protect the shorelines of the Gulf Coast (Facebook – BP America, May 3rd 2010); and “Our teams are working hand in hand and we look forward to hearing more recommendations for action from the President’s visit today” (Facebook – BP America, May 3rd 2010).

               Two months after the sinking of the rig, BP stated its first official apology to the world through social media. It was Tony Hayward, BP’s CEO who announced the following words: “… the … oil spill in the Gulf of Mexico never should have happened – and I am deeply sorry that it did” (Facebook – BP America, June 17th 2010); and he also showed his concerns for the communities and the environment affected “I also deeply regret the impact the spill has had on the environment, the wild life and the ecosystem of the Gulf” (Facebook – BP America, June 17th 2010).

 

 

               3.2 The public’s response

Since the beginning, BP had to deal with plenty of criticism coming from their stakeholders. Their inconsistency, their absence of information and their disclaim of responsibility were some of the main reasons for the public to respond negatively towards the company.

               A month later, we may observe how President Obama stated in one of his conferences: “As far as I’m concerned, BP is responsible for this horrific disaster …. We will demand that they pay every dime they owe for the damage they’ve done and the painful losses that they’ve caused.” (The New York Times, 2010 – 1). We can see how deeply involved the US Government was, as they were clearly in charge of the situation. “From the very beginning of this crisis, the federal government has been in charge of the largest environmental cleanup effort in our nation’s history, …. And I’ve authorized the deployment of over 17,000 National Guard members along the coast. … (CNN Politics). Furthermore, we already know that BP was held accountable for paying out the corresponding damages. Nevertheless, the President did not want the fund to be controlled by BP. All claims had to be legitimate and paid out within a specific period of time, thus an independent legitimate third party would administrate this (CNN Politics).

               Other stakeholders, like the US Environmental Protection Agency (EPA), were discontent. At one of the conferences in May 2010, their administrator, Lisa Jackson, showed her dissatisfaction with BP’s response. “She called BP’s safety data on dispersants insufficient and said government scientists would conduct their own tests to decide which dispersant was best to use” (The New York Times, 2010 – 2).

               Moreover, the environmental NGO Greenpeace, had also been very active. In one of their blog posts, – One Drill Too Far -, they describe the situation and accuse BP for being unprofessional, “this accident shows that they BP have pushed it beyond its limits” (Greenpeace).

               Additionally, independent stakeholders in Twitter arised. While BP was working on their image, a fake account, @BPGlobalPR emerged and rapidly gained thousands of followers. By September 2014, it had 132.000 followers, 28% more than BP’s official account. Their goal was to publish sarcastic tweets, such as, “Yes, we disabled the alarms on the Deepwater Horizon. Oh, like you’ve never hit the snooze button?” (Swain and Jordan, 2015).

 

 

              

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4. Recommendations on Crisis Communication Strategies

               In this part of the study, we will propose several strategies on how to communicate during crises. Nowadays information is spread all around the globe in a fast pace, through the advancement of the Internet and the exponential rise of social media platforms, in where information gets shared. Therefore, it is indispensable for present companies to adapt to these trends, and use them on their favour – by being regularly active, creating meaningful content, engaging the community, etc.

Coombs (2007) affirms that companies shall respond quickly, be open and remain consistent. It is crucial that all the stakeholders remain knowledgeable about the situation at every moment and with every action. Furthermore, the way the stakeholders will discern the response will highly depend on their first impression. In the following, note the recommended strategies for successful communication.

              

Have a crisis management plan

From BP’s actions and response throughout the incident, we can assume that BP did not have a clear crisis management plan. Firstly, they responded inefficiently and late, posting on social media a week after the rig exploded. Secondly, the communication flow and information seemed unclear and vague from BP’s part, as they tried to limit the information in order not to appear guilty to the public. This of course, caused scepticism and distrust among the people. Then, from BP’s statements we could notice, that sometimes they shifted the blame to other parties, but at the same time wanted to show honesty and trustworthiness.

               For these reasons, I would recommend BP to build a crisis management plan based on the following steps: “(1) designating a crisis management team and spokesperson, (2) creating a detailed crisis management plan, and (3) setting up an effective communication system” (Daft and Marcic). This includes anticipating where a crisis is most likely to happen. Furthermore, the company should choose appropriate key messages and delivery mechanisms depending on the type of crisis.

              

 

 

Respond quickly

As we saw from the case, BP took one week to post a message on social media. Nowadays, to respond quickly is essential. Some experts claim that the response has to be within 15 after the crisis has occurred. Davia Temin states in one of her articles “those 15 minutes of a crisis your response must be exactly the right message, delivered in exactly the right words, to the right audiences, in just the right way” (Forbes).

              

Be Open

As mentioned above, BP was accused to withhold information since the beginning. Probably because of their incapability of taking control of the situation. As we assume, they did not have a crisis management plan. To keep information from the people is not the most efficient tactic, as later on, the truth will be come to light generating an overall anger. Therefore, a company’s representative should be capable of answering questions at once if the information is available at that moment, be sincere and give stakeholders the knowledge they deserve.  Furthermore, Coombs (2007) argues is his work that “in a crisis, the focus is on the media, but other stakeholders may ask or demand that their questions be answered, especially if social media is being used.” Here we see the power of social media as a communicating tool.

 

Remain Consistent

From the case we know that BP was inconsistent; one day they would take full responsibility, and a few days later they would shift the blame to other related companies. The cause for this, could have been the constant pressure they were receiving from the White House, which portrayed BP as the main culprit.  Nevertheless, they should remain professional and rational when communicating to the public.        

               It is crucial for companies like BP, to give rational and consistent information to their stakeholders; official company representatives should be coordinated and encouraged, as well as other company members should avoid talking about the organization in public (Coombs, 2007).

 

 

 

               All things considered, we could argue that throughout the crisis response phase, BP had plenty of complications when communicating to the public. Their social media activity was not excelling, either. They failed at responding quickly, being open and remaining consistent. Moreover, during the time BP was silent, social media platforms like Twitter and Facebook were collapsing with debates and conversations concerning the oil spill.

               The lessons learned from this study are three. Firstly, it is essential to anticipate a situation of crisis with a crisis management plan. Secondly, that the primary response during a crisis has the biggest impact on company image and reputation. And at last but not least, that organizations should regard stakeholders, like the Government, the media, or the public, as powerful allies when handling a crisis.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5. Bibliography

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