Whilst it is obvious that a speedy recall is necessary when products are shown to be faulty and even dangerous, companies that ignore or try to evade public scrutiny will soon find that they suffer at the hands of their customers and lose business, affecting the financial performance of the company. But there is also the possibility that companies can use their approach to recalls to strengthen their brands as well.
Research conducted by the authors provides a useful set of guidelines, known as the "four Cs": be candid, contrite, compassionate and committed.
Companies may be intimidated by the sudden upsurge of media attention such as in the case of Exxon in the wake of the Valdez oil spill, but they must overcome any desire to keep things quiet and provide a quick and open line of communication with the media.
Being contrite was exemplified by the example of when the chief executive of Japan Airlines publicly apologised and tendered his resignation following a crash of one of the airline's planes in 1985 which caused 520 deaths.
Executives also need to show personal remorse or concern. Otherwise, they will not be seen as compassionate (witness the fact that Lawrence Rawl, Exxon's chairman, waited two weeks after the oil spill before visiting Alaska). A committed top team is needed to assess the 'source and potential impact of the crisis'.
Dell should listen - product recalls can be good
Nirmalya Kumar and Nader Tavassoli
Financial Times, Wednesday 16 August 2006
Review by Morice Mendoza