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,
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.
Crisis-prone industries, 1999
1. Medical/surgical mftrs.
2. Software mftrs.
3. Pharmaceutical mftrs.
5. Computer mftrs.
6. Commercial banks
7. Solid waste disposal firms
8. Security, commodity brkrs.
9. Life insurance companies
Crisis-prone companies, 1999
1. Waste Management
3. Compaq Computers
4. Kaiser Aluminum
5. Newport News Shipbuilding
6. Synthes USA & McKesson
8. Stewart Enterprises
10. CHS Electronics
Source: Institute for Crisis Management.