BOOK EXTRACT: ‘When Crisis Strikes’
How Tiger Brands messed up when a simple apology could have worked
Over the past few years, so many scandals have rocked corporate South Africa that crises seem to be the norm rather than the exception. When Crisis Strikes (Pan MacMillan) is a new book on crisis management by Francis Herd and Nicola Kleyn that looks at a variety of crises in the age of social media in South Africa and abroad.
Vicious and Sweet: Comparing Tiger Brands to Maple Leaf Foods
Tiger Brands was blamed for the worst outbreak of listeriosis in global history. The outbreak began in 2017. In the years that have followed, it has continued to claim that there is no “direct link” between its food products and the deaths, and it has refused to apologise.
The company has argued in court papers that it followed all the rules and took all reasonable precautions to keep its meat products safe. It also points out that the bacteria, Listeria monocytogenes, is ubiquitous, and its presence in small quantities in food products has been accepted by regulators. In a classic case of trying to spread the blame, Tiger Brands issued subpoenas against food-testing laboratories to find out the results of all tests from meat producers during the outbreak – a move that lawyers for the class-action claimants say could delay the case “for years”.
Instead of admitting that it had full control over the cleanliness of its facilities and the quality of its food, in other words that the spread of listeriosis from its factory was preventable, which it was, Tiger Brands acted like the helpless victim of invisible germs everywhere. It’s a cowardly strategy, and, if it works, it makes every South African less safe.
The less-travelled road of apology
There is a company elsewhere in the world that has shown that there is another way. In fact, a better way, both in terms of reputation and the bottom line. In 2008, there was an outbreak of listeriosis in Canada, which ultimately resulted in more than 20 deaths. The Canadian Food Inspection Agency zoned in on Maple Leaf Foods, and the company’s Sure Slice cold cuts tested positive. Maple Leaf launched a massive recall and a few days later it had to close its plant in Toronto.
Pretty quickly, the president and CEO of Maple Leaf Foods, Michael McCain, became the main spokesperson for the crisis and issued an apology. It was clear and unequivocal. Instead of trying to spread the blame, he took full responsibility for the situation on behalf of Maple Leaf, saying that “tragically our products have been linked to illnesses and loss of life”. McCain’s stance from the beginning was that, despite the regulatory environment, and regardless of whether inspectors were doing their jobs or not, Maple Leaf had breached its own standards and it was solely to blame. He was quoted as saying, “The buck stops here.” To help reassure the public, Maple Leaf later invited news crews into their processing plant to show how they were dealing with machinery that was linked to the outbreak
McCain was later quoted as saying: “There are two advisers I’ve paid no attention to. The first are the lawyers, the second are the accountants.”
Academics have labelled his rare way of handling a crisis “conspicuous apologetics”; and have likened it to the humble contrition of the old lords when they would take off their hats and give bareheaded bows. It is something very different from merely taking responsibility and saying a quick sorry.
McCain didn’t apologise just because he had been pushed into a corner. Instead, he took the initiative and acted with speed. He didn’t apologise just once, but over and over again across several media platforms. He didn’t make excuses, he didn’t distance himself or the company from what happened, he didn’t seek to justify or find scapegoats. Commentators were in awe as it seemed that he was genuinely putting ethical considerations before financial ones.
The irony is that once Maple Food was willing to confess so openly, instead of expending energy on attacking them, people started to defend the company and looked for others to blame, like government regulators.
Counting the cost of not saying sorry
Make no mistake – there were costs involved for Maple Leaf Foods. Recalls were estimated to cost between $25-million and $30-million. The victims did not give up their right to compensation simply because McCain was a nice guy, and a class-action lawsuit was set in motion with more than 5,000 complainants. This cost the company another $25-million in 2009. It was settled quickly though, arguably avoiding years of acrimony, bad news about the company and excessive legal fees. There was compensation on a sliding scale, according to whether someone died or just became a little ill.
What is remarkable, and stands in complete contrast to Tiger Brands, is the rate of the company’s financial recovery. There were market losses, but the share price had recovered within a matter of four months. McCain told analysts that sales fell by 30% to 50% after the recalls but they started to recover within just weeks. Maple Foods had to report a series of losses but by 2010, overall meat revenues had recovered to 95% of their former value.
For Tiger Brands, however, the costs are still stacking up. Between March and mid-August 2018, the company had to recall and destroy 4,000 tons of ready-to-eat meat products at a cost of R415-million.
In its last results presentation, neither the then CEO, Lawrence MacDougall, nor the financial director, Noel Doyle, who has since replaced MacDougall, even mentioned the listeriosis case – but journalists did. Market conditions affected the results and share price but there was no doubt that the handling of the listeriosis case was weighing heavily too. While Maple Leaf Foods’ share price recovered in just months, more than a year and a half after the crisis, Tiger Brands had lost 50% of its value or nearly R40-billion.
While this sounds devastating, it could have been even worse. The company’s range of brands is diversified and goes well beyond meat products (many South Africans may not know that when they’re buying Tastic rice, Beacon chocolates or Gill shampoo they’re supporting Tiger Brands). The contaminated meat products were sold under the brand Enterprise, while the negative publicity, in a country with low literacy levels in the first place, has focused on the holding company, Tiger Brands.
Consumer boycotts and activism are rare in South Africa where poverty levels are high, meaning costs affect behaviour much more than conscious consumerism. The crisis also happened at a time when media organisations were under-resourced, and, arguably, it got lost among many crises in South Africa. So Tiger Brands may have been spared the scrutiny and barrage of criticism it would have been subjected to at another time or in another market.
Still, while it’s impossible to know where Tiger Brands would be right now if it had chosen a more responsible and human approach, there can be little doubt that it would be better off. In the case of Tiger Brands, an early settlement with all the families of the victims – even the many thousands who became ill – would surely have cost less than the R40-billion in value lost. And, as the court case drags on, the reputational damage may continue. DM
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