Can’t Run, Can’t Hide: New Rules of Engagement for Crisis Management

KNOWLEDGE@WHARTON—The corporate apologies are piling up. Mattel CEO Robert Eckert apologized before a Senate subcommittee on September 12 for lead paint found in millions of the company’s toys. On September 14, TD Ameritrade CEO Joe Moglia apologized for a database breach that compromised customer addresses, phone numbers and email addresses. Apple CEO Steve Jobs apologized on September 6 for cutting the price of the high-end iPhone to $399 just weeks after die-hard customers waited in long lines to pay $599. Dell executives apologized in August on the company’s corporate blog for delayed deliveries of certain laptop and desktop models. And in February, JetBlue apologized for canceling 250 flights during an ice storm and leaving some passengers on the tarmac for as long as 11 hours.

The common thread linking these apologies: Executives were moving quickly to stem damage to their companies’ reputations. And while not all corporate crises are created equal, there is a playbook to handle these events, according to professors at Wharton. First, a corporate response should take hours, not days. It should include a well-thought out apology delivered through multiple mediums and it should feature some remediation so that the event won’t happen again. Read article.