CEO.COM
April 2, 2014
5 CEOs Who Successfully Weathered A Crisis

It was the recipe for a perfect storm.

In 2014, Mary Barra was named as the company’s first female CEO. An electrical engineer who had been at GM for 30 years, Barra was more than qualified to take the reins from her predecessor, Daniel F. Akerson. The press gushed about the decision, praising Barra’s leadership style and her initiatives to promote women in engineering.

After Barra reached her two-month mark, however, the news hit that General Motors had put over 1.7 million cars on the road with an ignition switch defect that was responsible for more than a dozen deaths. With a massive recall on her hands, Barra was tasked with managing a PR catastrophe while still saving face.

To weather the crisis, Mary Barra took a risk and chose to address the recalls directly in a filmed statement. In front of millions of viewers, Barra personally apologized, admitting, “Something went very wrong…and terrible things happened.”

The media was impressed by Barra’s bold mea culpa, especially because CEOs have a reputation for keeping their heads down in times of crisis. One PR executive was quoted in The New York Times as saying, “She’s owning it,” while in Bloomberg a CEO quipped, “She showed a human side and that’s what you have to do.”

Leaders don’t always take ownership for disasters, but successful crisis management requires that leaders accept responsibility for their actions. Mary Barra proved her mettle by apologizing early and in a very public manner. Time will tell whether GM’s reputation will make a comeback, but either way it looks like Barra will come out on top.

Here are 4 other CEOs who saved their companies during a crisis:

Craig Weatherup, PepsiCo

When reports surfaced in 1993 that a syringe had been found in a can of Diet Pepsi in Washington state, PepsiCo found itself in hot water. More than 50 reports of Diet Pepsi can tampering were filed the following week, turning a PR hiccup into a full-blown fiasco.

Because PepsiCo and the FDA were confident that the can tampering claims were a hoax, the company came down hard on the accusations. With the FDA’s support, PepsiCo CEO Craig Weatherup appeared on national television with visual evidence that proved the reports were false. The most compelling piece of evidence was a surveillance tape showing a woman putting a syringe into a can of Diet Pepsi, but PepsiCo also produced a series of informational videos that showed how the soda canning process worked.

Because of Weatherup’s aggressive defense of his company during a time of crisis, the rumors were quelled and sales began to recover within several weeks.

David Neeleman, JetBlue

JetBlue prides itself on its reputation for outstanding customer service. When the East Coast was slammed with a deadly ice storm in 2007, however, JetBlue was forced to cancel over 1,000 flights as its operations collapsed.

The backlash from the catastrophe was enormous. Because JetBlue has a strict policy of never canceling flights, enraged passengers were stuck in airports for nearly a week. They took to the internet with their outrage and the company was thrown into a chaotic PR storm.

CEO David Neeleman acted swiftly to quash the uproar. Refusing to blame the weather for the disaster, Neeleman wrote a public letter of apology, drafted a customer’s bill of rights and laid out a plan for compensating the affected customers. He appeared on live television, YouTube and other shows to offer a sincere apology on behalf of JetBlue. The fiasco cost the company an estimated $30 million, but JetBlue recovered and is now one of the world’s best-rated airlines.

James E. Burke, Johnson & Johnson

Widespread panic roared across the country in 1982, when 7 people were killed after taking capsules of Extra-Strength Tylenol that had been laced with cyanide. Once people started questioning the safety of over-the-counter drugs, Johnson & Johnson CEO James E. Burke quickly realized that his company could face extinction if the crisis was not handled properly.

In a major news conference, Burke announced that Johnson & Johnson would stop selling over-the-counter products in capsules, which can be easily tampered with, opting for solid caplets instead. The company also adopted new triple-seal tamper-resistant packaging standards for its products.

Johnson & Johnson recalled more than 32 million bottles of Tylenol from store shelves at a major cost to the company. In addition, Burke offered the public an unequivocal apology as soon as reports of the deaths surfaced. When a reporter asked if he was sorry the company had not acted sooner, Burke responded, “Yes, indeed I am.”

Because of his actions, Burke gained a reputation for strong, decisive leadership in the face of disaster. Fortune magazine named him one of history’s 10 greatest CEOs and the Tylenol case has been cited in countless studies as an example of excellent crisis management.

Peter Bijur, Texaco

Nothing sinks a company more quickly than allegations of racism or homophobia. When a group of African American employees sued Texaco for racial discrimination in 1994, offering as evidence recordings of secret conversations between Texaco executives, it seemed as if the company was poised for a plunge. The Reverend Jesse Jackson was outraged and called for a public boycott of the company.

Luckily for Texaco, CEO Peter Bijur responded strategically to the public outcry. First, he suspended the offending executives before investigations were underway. Second, Bijur admitted embarrassment and apologized in a public appearance. The company launched a comprehensive campaign in which Texaco leaders visited all of its branches to apologize in person. Finally, Bijur implemented new discrimination checks for executives and managers that have prevented the problem from recurring.

Texaco would take a long time to recover from the fiasco, but Bijur’s actions helped steer the company back on track. Most notably, the Reverend Jesse Jackson softened his polemics after seeing Bijur’s response, speeding the company’s recovery.

There are countless examples of leaders who buckled under pressure when faced with a PR disaster. Look no further than BP CEO Tony Hayward, whose verbal gaffes after the 2010 BP oil spill are still used as an example of what not to say during a crisis. What sets these CEOs apart is their stunning management of situations that could have easily escalated into a full-blown PR storm. Good governance requires that leaders respond swiftly and decisively to a crisis.

 

Sources:

http://management.fortune.cnn.com/2014/03/21/gms-recall-scandal-a-scorecard-on-ceo-mary-barra/

http://www.businessinsider.com/pr-disasters-crisis-management-2011-5

http://eduniverse.org/5-pr-crisis-management-truths-tylenol-murders