Corporations should be candid and communicate to multiple audiences
By Richard Levick
Regardless of what business you’re in, the toy industry’s recent ordeals concern you directly. The patterns and public challenges are broadly relevant, and the lessons to be derived are universally applicable to diverse professional and industrial pursuits.
First, a little background.
When Mattel recalled 18.2 million toys with potentially harmful tiny magnets, it was likely just the tip of the iceberg for the toy industry, and that should not be too surprising, if we remember that 80 percent of the world’s toys are manufactured in China. The world’s best-known toy makers outsource to some 10,500 toy contractors in China. Mattel alone uses 3,000 to 5,000 Chinese contractors, and 65 percent of Mattel’s toys are pieced together there.
Mattel issued 31 recalls from 1998 to 2007, according to the Consumer Product Safety Commission (CPSC). Yet “if we don’t see an [even further] increase of recalls in this industry, then it’s a case of denial,” a leading analyst said.
Dangerous toys are sold by companies noted for the toughest safety standards. Contractors have been known to put safety-tested batches in front of inspectors and, under pressure to contain costs, ship batches made with cheaper or illegal parts. Meanwhile, there are simply not enough inspectors to go around. The CPSC is under-funded, and Chinese inspectors are overwhelmed by the flood of exports.
No wonder the toy story has legs. While Mattel recalled more than one million Fisher-Price-brand toys because lead levels violated international law, Illinois-based RC2 recalled 1.5 million Chinese-produced toy railroad sets, also due to impermissible lead paint levels.
The stakes couldn’t be higher for the $22 billion toy industry. With the latest news reports from China, companies are under intense pressure to prevent a sea change in consumer perception of toy safety. Reputations can suffer, share prices fall, and potential investors get cold feet.
Chinese courts won’t likely compel Chinese companies to compensate American victims. The only recourse is to sue the U.S. companies that placed the toy order. Those companies are liable for upstream problems regardless of how far downstream they may be.
The toy industry is not, however, navigating totally uncharted waters, as there is solid crisis management precedent – both good and bad. When, for example, Mega Brands’ Magnetix toy killed a Seattle toddler in 2005 and injured 27 others, the company reacted quickly to guarantee safety by redesigning the product.
Mega Brands, however, failed to change the packaging and, as a result, the company did not drive home the message that it had indeed resolved its safety issues. Customers could not readily distinguish the new and improved version of the toy from the older one still on retail shelves.
The lessons to be learned from such past experience, and from the current crisis, are all about, first, ensuring safety and, second, credibly communicating that you have done so. And you must do so for multiple audiences, including retailers and regulators, as well as consumers and parents.
The lessons pertain equally to accounting firms and insurance companies, to auto manufacturers and pharmaceutical firms – to anyone who relies on public trust to stay in business. Consider:
Every day, these fundamental best practices get tested in a global marketplace where no one can promise absolute control. In the simplest marketplace, crisis communications are always more art than science, requiring experienced judgment as well as shrewd action. In a global environment, the complexities naturally proliferate.
In such a marketplace, corporate communicators need strategies and messages broad enough to resonate with just about everyone. But they also need to zero in on the specific concerns of specific audiences including consumers and journalists, shareholders and analysts. Respond respectfully and carefully to each new set of expectations.
Richard S. Levick, President and CEO of Levick Strategic Communications, which protects brands and reputations during high-stakes global crises and litigation. You can reach him at www.levick.com .