Study says class-action battles, recalls were biggest headliners

CLARKSVILLE, IN: Class-action lawsuits dominated crisis news coverage in 1999 - a clear signal that PR pros need to better prepare corporate executives for such events, according to Institute for Crisis Management president Larry Smith.

CLARKSVILLE, IN: Class-action lawsuits dominated crisis news coverage in 1999 - a clear signal that PR pros need to better prepare corporate executives for such events, according to Institute for Crisis Management president Larry Smith.

CLARKSVILLE, IN: Class-action lawsuits dominated crisis news

coverage in 1999 - a clear signal that PR pros need to better prepare

corporate executives for such events, according to Institute for Crisis

Management president Larry Smith.



In its just-released 1999 Crisis Report, the institute found that media

coverage of class-action litigation skyrocketed 122% last year compared

to 1998 levels. Class-action suits accounted for 30% of all crisis news

in 1999, compared with only 2.2% in 1990.



’It’s become an industry all its own,’ Smith said.



Smith believes that corporate PR pros should be checking regularly with

lawyers and other senior managers to spot potential trouble spots well

ahead of time.



’Companies have not been proactive enough in dealing with actions that

can lead to class-action lawsuits,’ he explained. ’You have to become

the national security advisor for the CEO. That’s a good way to head off

a crisis or prepare your CEO for one that’s coming up,’ he said.



The institute’s study also revealed that companies are doing a poor job

of communicating their positions during crisis situations. Company

executives were mentioned as news sources in only 6.5% of the coverage

of last year’s crises, ranking sixth among all sources. Government

officials ranked first, mentioned in 28.7% of stories.



’Government officials get quoted because the company isn’t speaking,’

Smith said. ’If you can’t get your executive to talk, someone else will

and they won’t necessarily be representing your point of view.’



Overall, the amount of crisis coverage fell 2.6% in 1999. In addition to

class-action lawsuits, recalls (15% of all crisis coverage) saw a major

jump in the media last year. Categories such as workplace violence,

environmental damages and casualty accidents continued to decline, which

Smith interprets as a sign that companies are doing more to prepare for

and head off such problems.



Medical and surgical manufacturers were the most crisis-prone industry

last year, accounting for 7.2% of coverage - the first time that

industry has made the institute’s list. The auto industry slipped off

the rankings for the first time in 10 years, but the recent

Firestone/Ford tire recall ensures that it will be on the 2000 list,

Smith noted.



Looking at individual companies, Smith found Waste Management getting

the most crisis coverage last year thanks to a score of class-action

lawsuits and an executive facing criminal charges. Boeing ranked second

because of rudder problems on its 737, a labor dispute and accusations

of racial discrimination. Compaq ranked third, owing to class-action

lawsuits concerning allegedly false financial reports and the departures

of its CEO and CFO.



For the study, the institute reviewed 5,891 news stories that ran in

more than 1,500 newspapers, business magazines, wire services and

newsletters last year.





NOT-SO-GOOD NEWS



Crisis-prone industries, 1999



1. Medical/surgical mftrs.



2. Software mftrs.



3. Pharmaceutical mftrs.



4. Telecoms



5. Computer mftrs.



6. Commercial banks



7. Solid waste disposal firms



8. Security, commodity brkrs.



9. Life insurance companies



10. Airlines





Crisis-prone companies, 1999



1. Waste Management



2. Boeing



3. Compaq Computers



4. Kaiser Aluminum



5. Newport News Shipbuilding



6. Synthes USA & McKesson



7. Columbia/HCA



8. Stewart Enterprises



9. Microsoft



10. CHS Electronics



Source: Institute for Crisis Management.



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