When corporations get a touch of the ‘Charlie Sheens’

PR experts emphasise that there are important differences between an issue and a crisis. But those distinctions tend to break down when issues are repeated or start to accumulate.

A celebrity example of the impact is Hollywood bad boy Charlie Sheen who is regarded as a “serial offender” when it comes to social and legal transgressions.  So when his latest misadventure hits the headlines it is seen not as a standalone failure but as part of a pattern of unacceptable behaviour.

In the same way, corporations can suffer a touch of the ‘Charlie Sheens’ – when problems accumulate and commentators and analysts begin talking about a pattern of behaviour.

The BP oil spill in the Gulf of Mexico in 2010 was undoubtedly a major environmental and commercial disaster.  What made it virtually indefensible for the company was the fact that it came so soon after the near collapse of the Thunder Horse drilling rig and the Texas City disaster in 2005, the Prudhoe Bay pipeline failure in 2006, followed by more safety violations at the troubled Texas City refinery in 2009, at a refinery in Ohio, and another massive pipeline leak in Alaska in May 2010.

Such serial problems are certainly not confined to the oil industry. For example, product recalls are sadly only too common, but for Johnson and Johnson repeated recalls in 2010 eventually involved about 288 million items, including about 136 million bottles of medicine for infants and children. And 2011 started equally badly in mid-January when J & J recalled 47 million units of Sudafed, Sinutab, Benadryl and other drugs, just one day after their company spokesperson said they would  “take whatever steps are needed to ensure our products meet quality standards, including further recalls if warranted.”  

Similarly, when Vodafone Australia had a worrying security breach involving personal data for up to 4 million customers, most commentators focussed on the fact that it came close on the heels of sustained customer service problems.  Even a fairly well-managed incident like the near-disastrous Qantas A380 engine explosion off Singapore last November was made worse coming amid a string of alleged maintenance problems. And those problems continued with a Los Angeles-bound flight diverted to Fiji on 18 January, 2011 – in itself a relatively minor operational problem, but just four days after yet another Qantas “safety scare” followed by another frightening midair incident a week later.

So what does this mean for executives and communications practitioners?  When an issue gets big enough it may become a crisis.  But sometimes it is not the size of the issue, rather than how many other issues have recently happened.

Reputation is often described as a bank account you build up in good times to draw on when things go bad.  A new paper by risk guru Peter Sandman  questions whether this popular metaphor is really as valid as it seems.  However it is certain that when problems are repeated,  the reputational withdrawals are not just dollar for dollar but multiply with accumulated penalty interest.

To return to Hollywood, Charlie Sheen may be America’s highest paid TV star, though his reputation bank account is deeply in overdraft.  More importantly, while every excess withdrawal for him might mean a blip in his career, for a corporation it could even spell the end.

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About managingoutcomes

Issue and crisis management expert
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One Response to When corporations get a touch of the ‘Charlie Sheens’

  1. J.D. says:

    Amusing link between Charlie Sheen and corporate reputation, Tony!

    To your point, it doesn’t matter if you define a situation as a recurrent, deep issue or a crisis…when events are reputation diminishers, they must be addressed.

    Cheers,
    J.D.

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