Recalling a Recall

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Keys to the Cobalt?

General Motors has a public relations problem. And someone needs to fix it, if possible. The ignition switch of 2.6 million vehicles appears to be faulty and must be replaced. As many as thirteen people may have died as a result of the part failure, and the defect may have been known as early as 2004. According to some reports, GM was aware of the mechanical problem and tried to replace the part on newer models without altering the identification number, which has prompted families of victims and a few members of congress to say the auto manufacturer needs to be investigated for criminal behavior.

Not a good situation.

GM has two significant issues in this screw up. The first is what happened internally and why, and the second is what to say about the situation to convince the public they are not really lying jerks that care more about profits than human life. And there is a very strong argument to be made that someone within the company needs to be held legally accountable for deaths caused by either negligence or deception.

Keys to the Cobalt?
Keys to the Cobalt?

Those two dynamics do not exist independently, and companies that have made big mistakes in the past have sometimes concentrated too much on the communications side of their problem rather than fixing the process or circumstances that led to the original issue. GM is not saying a hell of a lot about the recall, including in front of congress where the company’s current CEO Mary Barra, essentially, suggested she did not know much since the issue arose before she took over her job. An external, third party investigation, may be necessary to acquire the facts.

As for how to talk about it, GM has turned to a former Public Strategies, Inc. crisis expert. Jeff Eller spent a few years in the White House before coming to Austin and joining PSI. In the Clinton administration, he was closely associated with the “Travelgate” scandal, which was a scheme to fire staffers managing travel and assign the work to private companies, which were alleged to be owned by Clinton friends. According to a report in the New York Times, a grand jury investigation into the scandal resulted in Eller saying, “I don’t know,” about 200 times.

Kid Crisis
Kid Crisis

What he must know, however, is there is big money in crisis communications. The Times’ story says Eller left Public Strategies early this year to start his own crisis company. In 2000, he played a role managing the Bridgestone and Firestone controversy regarding exploding tires on Ford Explorers, which, according to investigators, caused around 200 fatalities. News coverage around the Ford and Firestone crisis does not reveal what role Eller played but the auto manufacturer and the tire company ended up paying out millions to quietly settle the cases.

Unless there is something to hide, managing a crisis is as simple as it is profitable for the communications consultant. There are just a few easy steps. The first is to apologize and tell the public what happened and why. Next, explain how the problem has been fixed so that it will never happen again. And, finally, offer detail on how things have been improved and why that makes the company even better in the future. Of course, there is nuance in all of this and apologizing often means opening up a company to liability claims. GM seems to be neither apologizing nor explaining, though they’ve now turned over 200,000 pages of documents to congress, probably hoping the feds can figure out how that ignition switch went to hell.

There will not be much for Eller to do, in terms of communications strategy, until the internal mess is figured out. However, he has to dig into what has transpired and understand it in an intimate way to be able to help communicate for the company and design its next messages. How much is that worth? Usually, quite a lot of money.

When I was running an office for a global PR firm, we were retained to manage a global product recall for a medical device manufacturer. Our first month’s retainer was $115,000 and we were billing our senior strategists, which included me, at $350 an hour. Support staff cost about $175 an hour and mid-level managers were $250. (Eller is probably billing at more than $500 hourly.)

The recall crisis was easily managed but the client decided they knew best, which led to a lively discussion or two. The problem was that an implant, which was manufactured in a nearly sterile environment, had become contaminated with oil. The company needed only to explain what happened, apologize, talk about the new manufacturing process that had been designed, and assure doctors and hospitals the implant was even more reliable than before the incident. The manufacturer had built a world-wide reputation for quality products.

But they did not want to talk to reporters. The CEO was angry because he was getting blamed for a failure to manage. Reporters kept writing negative stories. Lawsuits mounted, market value plummeted, and the CEO was bought out. In a matter of months, the company was out of business, shutting down a global enterprise. That will not happen to General Motors, of course, but it will be interesting to see if they are willing to be transparent, and apologize. There is, however, only one certainty in the case.

Jeff Eller is going to make some serious money.