The Role of Public Relation in Crisis Management in the Oil and Gas Industry - Research Paper Example

The Role Of Public Relation In Crisis Management in the Oil & Gas industry Considering the variety of crisis situations that may happen in a company or organization, there is a need for separate responses coming from different categories of people to be consequent. The operational group, responsible for ensuring that the disruption is under control, the management at the top, allocating the resources and making vital decisions required to provide a solution for the situation, and the public relations individuals, ensure that the stakeholders and the public are informed initially and kept informed until the incident has been handled are vital in crisis communication. Whenever a crisis happens, the management of an organization needs to proceed in a manner that would guarantee the most effective coordination of the three groups, which would ensure that public relations is used in the management of the crisis. The role of public relations in the management of crisis in oil and gas industry has been portrayed in a number of crises with some companies managing the crisis poorly and damaging the image of the company while others using public relations strategies to improve the company’s image. Union Carbide Chemical Factory Gas Explosion The oil and gas industry has experienced a number of crises with some generating good public response and others attracting a public outrage and rendering the company almost bankrupt. The response to the crisis of a toxic gas release, which happened on December 1984 at a Union Carbide Chemical Factory or Plant located in Bhopal, India killing over 2000 (3800) people formed one of the most effectively managed crisis in history. The team managing this crisis consisted of ten of the executives and managers of Carbide headed by the C.E.O and worked for several months in coordinating the management, operation, and communication response to the industrial accident. The public relation methods that were utilized in managing this crisis included crisis communication, consumer public relations, internal communication, and government relations. According to a report by Jackson Browning (1993), the then vice president of Union Carbide Corporation in charge of safety, health, and environmental programs, the team held its first press conference that took very few minutes. In the press conference, the team acknowledged that the serious disaster had happened in a factory owned by the Union Carbide where they had a 50.9% share. The team explained to the press some of the immediate measur5es that they were already undertaking in addressing the crisis. The company had daily briefings where they would answer the numerous questions coming from the public. While using the press remained the most visible audience and the most vital conduit to the general public, the management also paid close attention to the other interested parties. The employees, customers, shareholders, and the suppliers were reassured during the crisis period. The government relation was used by briefing the Congress members and the regulatory authorities. The application of accountability principle, disclosure principle, and symmetrical communication principle were well displayed in the role of public relations when managing this crisis. Exxon Valdez Oil Spill In comparison to the Union Carbide gas release disaster management, Exxon Valdez spilling oil disaster has been regarded as the worst managed crisis in history. In this crisis there was a complete lack of coordination between the communications, operations, and management. The Exxon Valdez oil spill that occurred in the year 1989 has been branded as a textbook illustration of a key PR (public relations) crisis or disaster communication failure. Having no efficient systems prepared to responsibly respond in the face or the occurrence of the environmental crisis/disaster that had ensued, the company’s delayed response completely destroyed their reputation for several years to come. The reputation of Exxon Corporation was bound to crumble or suffer following the company running aground off Alaska and dumping a total of 250,000 oil barrels into Prince William Sound. The situation of the public relations at the time of the crisis was that the environmental crisis continued as oil spill spread amid a scrutiny by the public and also an ongoing corporate confront from the legal problems happening amid another scrutiny of the world. An analysis of the disaster by Professor Ron Smith (2007) indicated that the problem was of an international scope and thus attracted intense scrutiny. The organization was a multinational corporation and the largest oil company then and a major blow to the public relations was due to the uncomfortableness of the C.E.O Rawl Lawrence with the public role. A look at the publics involved indicated that the government and the other government agencies wanted investigations to be done, regulation and restriction from the other agencies and probably a potential punishment inflicted. The industry (oil), on the contrary, was hoping to save its image and avoid jeopardizing its operations with the company stockholders continually demanding for a financial profitability. In the face of all the public eyes, the choice to decide not to follow the disclosure principle was a disaster in itself. The media were demanding for an immediate information, culpability, and full disclosure while the angry environmental activists seeking restitution and a participation of the company in the cleanup. The public relations methods applied by the company indicated that the organizations had failed to comprehend that it was a risky approach to hide the information. This is because the people would be more inclined to forgive an honest and naive mistake rather than a calculated and pre-planned lie. Besides, the period when the organization was inactive and not providing any information, would act as a better ground for spreading rumors based on everyone’s understanding (Seymour and Moore, 2000; Smith, 2004). The strategies that Exxon Corporation employed included the decision to handle the crisis response without any outside public relation being consulted, ignoring criticisms, dismissing the involvement or interest of the environmental activists, refusing to acknowledge the magnitude of the problem or sticking by the legal advice, rejecting the assistance from the environmental volunteers and local residents to assist with the clean up, fearing appeal, and shifting blame. In addition to the poor strategies selected, Exxon Corporation communication strategy showed that there was no assigned or designated company spokesman and an open refusal to give information or communicate (Smith, 2007). Public relations experts have argued that Exxon Corporation worsened the destruction of its image to the public seriously when it failed to capture control of the crisis development after the spill and consequently set up itself as a firm that is concerned with the problems or disaster it had caused. The company violated a number of cardinal rules regarding management of crisis. The major problem or disaster that happened to Exxon was that the tanker ran ashore and the attempts to stem the oil flow into the sea and control the spread of the oil spill were extremely slow. However, the way the company responded after the crisis heightened a lot of criticisms from the public and other stakeholders. An article by Holusha (1989) shared by Klein (2009) highlights the following as public relations expert opinions on the procedures that Exxon failed to adhere to. The major mistake was by the company’s C.E.O deciding to send a few lower ranking managers/executives to Alaska to handle the situation instead of going himself and assuming the control of the oil spill. The company concentrated its briefings in Valdez, the managers declined or refused to comment for an entire week after the oil spill had happened, and some of the public statements provided by the company in most cases contradicted the information obtained from the other sources. Texaco Company Legal Crisis Another case involving oil spills that can be compared the one of Exxon Corporation is that of Texaco Company. However, this case was regarding a legal issue, which in most cases has a potential to taint the image of the company if the public relations are not handled effectively. A disgruntled or dissatisfied employee in Texaco recorded a number of the company managers on a tape secretly having an inflammatory discussion concerning racial discrimination. When the dissatisfied employee gave the recording to the attorney of the plaintiff in a lawsuit filed against the firm, claiming racial bias in the company’s promotional practices, the tape was spread to the New York Times leading to an exponential increase in the level of crisis. The company responded decisively and quickly using crisis communication, consumer public relations, and internal communication methods of public relations. The responses involved the C.E.O acting as the principal company’s spokesman on the subsequent media onslaught, taking an action to discipline the involved employees, resolving the lawsuits, and stopping a boycott that had been called by Jesse Jackson. The dispute cost the company $175 million and almost a similar amount in addressing the internal costs. The situation could however, have been worse for the image of the company and damaging financially if it was not resolved decisively and quickly. BP Case A study by Heradstveit (2011) captures one of the recent cases involving the application of public relations methods in the management of crisis in the oil and gas industry. The study analyses the BP case- the oil spill in the Gulf of Mexico and two other cases, which are Chevron Corporation and the Ecuador lawsuit and the San Bruno gas explosion. The platform Deepwater Horizon was owned by a company called the Transocean limited though contracted to BP for drilling a well for exploration in the Gulf of Mexico. The explosion, which occurred on this platform on April 20th 2011 claimed the lives of 11workers and caused a massive oil spill. The oil gushed into the Macondo Gulf for about 86 days before the BP Company managed to cap it. Considering the public relations method of managing this crisis, it is interesting to point out that the fact that the spill of oil has been dubbed “the BP oil spill” is extremely dangerous and damaging to the brand of the company. The BP Company struggled with the response efforts and communication during the beginning critical or vital period after the disaster had happened. Initially the corporation had accepted to clear out the mess or contamination by the oil spill and fix things, but later it appeared constrained by the legal advice it got of not taking responsibility. The company did not only have a big environmental crisis at hand that it appeared like it had no idea how to handle, but also fumbling with the way it was applying crisis communication. This problem with communication affected the effective way of handling the crisis using public relations that the company attempted to put in place. BP had created a Twitter account in the year 2009, but the account was not active prior to the disaster of the oil spill. This applied top Facebook too, which prior to the accident had only been visited or used sporadically within a period of 5months. The poor management of the crisis by BP and poor handling of communication and applying of public relations methods led to the crisis lasting for five months and the reputation of the company taking a major hit, eventually affecting the company brand. PG &E Company Gas Leak In comparison to the BP case, the PG &E Company handled their crisis utilizing the public relations methods effectively. In September 9th the year 2010, the pipeline of the PG &E Company exploded in San Bruno neighborhood claiming the lives of 8individuals and injuring several people besides destroying heir homes. The company acted urgently given the significance of the crisis. Applying the principle of accountability and using the public relations methods such as Crisis communication, internal communication, financial public relations, consumer or lifestyle public relation, and government relations, the company took full liability/responsibility of the crisis right from the first day. Within the beginning vital hours and days after the occurrence of the explosion, the company PG &E was conveying or communicating the action steps it was taking publicly, having community meetings, and also created a fund of $100 million for the gas explosion victims. The fund was created to assist the people who had suffered from the gas explosion accident with their everyday needs and another $3 million for covering the accident expenses. The company, PG &E worked closely in collaboration with the voluntary organizations and community officials after the explosion to provide temporary shelters and emergency medicine for the individuals who had lost their residences/homes and also placed in a truck at the shopping area to supply water and food. Social Media And Public Relations The subject of social media has also become a communication channel that companies use to enhance public relations during a crisis. Desforges (2012) in her article argue that the difference between preparedness on social channels, which is important for the roles of public relations in crisis management, and unpreparedness can be depicted clearly between the BP case of Deepwater Horizon Spilling of oil and the Total Elgin leaking Gas incident . Despite having created a Twitter account, it took BP 3 days on top of the initial 4 silent days to post a communication on the medium with a simple pronouncement connecting to press release. The missing communication on BPs side, especially on social media, created a room for the other media channels such as NY Times to actually speak for the company, a dangerous thing for the company’s public relation. In comparison to BP company’s oil spill case, Total, when faced with a crisis was found prepared to react and speak to the general public where necessary. A severe gas leak that occurred on Sunday 25th Match the year 2012 about the Elgin platform, which is run by Total, found the company ready and transparent or open to the public regarding the incident. The company launched a dark site (microsite not visible publicly) that allowed the firm to keep its key audiences aware and updated. The site hosted or included press releases in a single place, made it simple to find videos and pictures, provided data about the progress regarding the monitoring section, and also gave links to the company’s social profile for the other ways of getting in touch. The quick and public response of Total Company and the allowing of public interaction enabled the company to prevent the full blowing public attacks that could have damaged its image. References Klein, R. (2009). John Holusha’s Article- Exxons Public-Relations Problem. Retrieved on 23 November 2012 from http://crisiscommunications.ning.com/notes/Exxon_Valdez Smith, R. (2007). Exxon Valdez Oil Spill. Retrieved on 23 November 2012 from http://faculty.buffalostate.edu/smithrd/PR/Exxon.htm Browning, J. (1993). Union Carbide: Disaster At Bhopal. Retrieved on 23 November 2012 from http://www.bhopal.com/~/media/Files/Bhopal/browning.pdf Heradstveit, M. (2011). Social Media: A Crisis Communication Tool. Retrieved on 23 November 2012 from http://studenttheses.cbs.dk/bitstream/handle/10417/2696/maren_loewen_heradstveit_og_kine_hagen.pdf?sequence=1 Read More