The Masters of Disaster


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As a struggling General Motors (GM) reported a surprising second-quarter profit earlier this week, recently crowned Tour de France champion Floyd Landis was suspended from professional cycling for failing a drug test during the race. While potential signs of a turnaround at the car company may finally put it on an upward trajectory after years of problems, the athlete on the brink of global celebrity could remain tainted forever even if he is cleared of the doping allegations.

It may have been just another news day, but in an era of 24-hour TV and Web coverage, damage to a reputation can occur almost instantaneously. For years after a debacle takes place, it can remain etched in public memory thanks to poor crisis public relations, while a successful effort can make the scandal soon forgotten. When time is limited and every move by a corporation or an individual faces close scrutiny, crisis PR specialists come to the rescue to restore faith in a brand or name.

EMERGENCY SPIKE."You can't hide anymore," says Jonathan Bernstein, president of Southern California-based Bernstein Crisis Management and author of Keeping the Wolves at Bay: A Media Training Manual. "Now if a crisis occurs in Biloxi, Miss., or Musquaka, Iowa, if it appears in the local paper, it is an international situation instantly because of the Internet."

Crisis management constitutes a growing niche of public relations, dedicated to mopping up the messes of household names while minimizing future brand or career impact. These gurus are behind the scenes of everything from how an indicted star dresses for court to a motel chain's counterattack against claims that employees have peeped on guests.

Kathy Cripps, president of the Council of Public Relations Firms in New York City, says although the council's member firms still receive 50% of their revenue from marketing, there has been a spike in crisis and preparedness spending by companies in the last two years. "CEOs have come to understand the importance of crises and protecting their reputation," she says. "I think with that understanding companies can act more quickly when problems or potential problems arise," such as product recalls or natural disasters.

NOT JUST FOR CEOs.Experts trace the practice of modern crisis communications to the Tylenol-tampering case of 1982, when seven people died from ingesting poisoned tablets. PR firm Burson-Marsteller leapt into action to help pharmaceutical giant Johnson & Johnson (JNJ) repair its reputation by recalling the medication and halting all advertising. The crisis remains a textbook example for the field, which now encompasses divisions of major firms such as Burson-Marsteller and Chicago-based Edelman in addition to boutique outlets and independent consultants.

Bernstein cites 9/11 and Enron as the two examples that drew nationwide attention to the need for crisis PR. But even though awareness and spending are greater than ever before, he says almost 90% of companies remain grossly underprepared or completely unprepared for crisis response.

Today's crisis counselors are not just limited to the boardroom. They also assist public figures, religious organizations, and governments that live under the media's microscope. Confidentiality agreements bar many of these reputation doctors from disclosing their client lists. But it is known that by helping those in crisis silence their scandals quickly and quietly these PR professionals can earn as much as top litigation attorneys.

FIRESTONE FOLLY.Mike Paul, president of MGP & Associates PR in Manhattan, tells clients a reputation that has taken a lifetime to build can fall into tatters in seconds. Although entertainers often bounce back more quickly from a scandal, businesses and nonprofits may never be able to recover completely. "When a CEO takes off his clothes in a sex tape, he's done, but for Paris Hilton it actually helped her," says Paul, who has counseled individuals, corporations, and governments on crisis and reputation management.

Dr. Ian Mitroff, a professor of business and communications policy at the University of Southern California, says the overwhelming majority of companies continue to prepare narrowly for high-risk events. Twenty years after the Tylenol case, the issue is still one of implementation, as companies hesitate to spend the money on crisis preparation and ignore early warning signals.

Mitroff believes every organization should have a group responsible for crises at all times so it can recover faster and with fewer injuries. He references the Ford/Firestone (F) tire crisis as an example of poor preparation on the auto maker's part that led to disastrous results: "Why they didn't have a 10-to-15-person team responsible for crises at all times is beyond comprehension to me," says Mitroff.

It's unlikely that companies will create those teams anytime soon or that crises will disappear overnight, so crisis public relations is sure to continue its growth. BusinessWeek.com asked Paul, who has nearly two decades of experience in the field, to name the biggest PR disasters in recent memory.

Click here to see whose reputations have taken the most serious hits.

Click here to see if you know when to call a public relations firm.


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