Voluntary Recalls are Giving Toyota a Bad Name

The frequency of Toyota’s vehicle recalls and the way they are handled are making their reputation spiral downward.

Toyota has had plenty of experience in dealing with crisis situations after having to recall over a million vehicles for fuel leaks in January 2011, but critics say that they have not handled the situation very well.

It can be truly damaging to a reputation whenever a company produces a defective product and has to not only admit that it was not of good quality but also ask for those products back to be fixed. Toyota has had to deal with this situation several times. They have added a section of their website dedicated to informing people of the current recalls and safety issues going on. This was a good idea so that Toyota owners can make sure their vehicle is not the one being recalled, but the fact that Toyota has had so many recalls that they needed to make this addition is why so many people have been criticizing the company lately.

Koji Endo, the auto analyst with Advanced Research Japan Co. in Tokyo, commented, “But there is that perception of here we go again, and that hurts Toyota’s image, especially in North America.”

Endo followed by saying that Toyota is most likely just trying to get ahead of the issues and recall them before they can become a bigger crisis. This recall, like many others, has been voluntary recalls, but just the word recall does not sit well with consumers and can alter their opinion of the company.

Gene Grabowski, chair of Levick Strategic Communications, said in an interview about the Toyota crisis that he considers this to be “the worst-handled auto recall in history.”

Grabowski said that Toyota dragged out all the facts rather than just giving the public all the information at once, “which is one of the key things you always talk about avoiding in crisis management.”

The slow release of all the information can make the consumers feel as if the company is not being completely honest with them. When dealing with a crisis like this, it is best to just give the public all the information they need at once and in a timely manner, then stay tuned to the consumers and help with any questions or concerns.

Tiger Woods: The Reputation Crisis

Tiger Woods faced a ruined reputation when it became known to the public that he was having several affairs, but he is making a comeback.

Tiger Woods and the companies which represented him went into crisis management mode to try to figure out how to fix his severely damaged reputation when the infamous sex scandal involving golf’s most popular athlete hit the news in December 2009.

According to Bill Patterson, “‘Reputation management’ is the newest buzz phrase in the public relations field and for those of us long involved in crisis management, this new phrase seems likely to stick.” Crisis management is not only about handling the “uh-ohs” of big companies but also about dealing with the “oops” of big names that everyone knows.

Tiger Woods is an interesting case in that it was not just his personal reputation as an athlete that was damaged. Woods represented many big companies through sponsorship, including Nike. Woods was the face of Nike. Many worried that Woods would take Nike’s reputation with him when Woods’ reputation began spiraling down. Nike and Woods both began working towards their own comebacks and ways to recover from the incident.

Nike, as one of Woods’ biggest sponsors, took their own steps to respond to the situation. They released a video in which Woods’ deceased father is talking to him about making mistakes. Nike used this video as a way to say that everyone makes mistakes, including Tiger Woods. Nike was concerned that their reputation could be damaged through Woods’ action since he is such a big icon in their company. Although the scandal may have slightly impacted their overall sales, many fans and consumers still stayed loyal to Nike.

Woods made a public apology in Feb. 2010, but, according to CNN’s report on the event, it was small and private with only a select few people allowed to represent the media. Many people criticized the way the apology was set up because the few reporters allowed in were not allowed to ask questions and other reporters had watch the apology half of a mile away on television.

Woods took a bold step at this event to help improve his damaged reputation by going public about the situation. He took the time to admit to the public and most importantly his fans that he had made a mistake and was working to fix it. He returned to playing golf, most likely hoping that people would again begin to associate him with the game instead of the scandal. Apple has also released a new app in its iTunes store called “Tiger Woods: My Swing” to help golf enthusiasts better their playing skills. Woods is slowly moving back into a positive light in the public’s mind because he has been working to improve the public’s opinion of him.

Even a Fake Crisis can Hurt Like a Real One

False claims made against Wendy’s could have ruined their reputation, but they successfully fought to protect it.

In 2005, Wendy’s was faced with an all too common crisis in the restaurant industry when a woman made a fake claim that cost millions of dollars in sales and could have damaged their reputation severely.

Anna Ayala reported finding a piece of a finger in her bowl of chili from a Wendy’s restaurant in California and the company faced the threat of an extremely large lawsuit. Although the claim ended up being just a hoax in attempt to receive money, Wendy’s CEO Jack Schuessler reported that whole scheme still ended up having a significant impact on their sales, reputation, and employees.

In an interview with Ron Insana for the USA TODAY, Schuessler commented on their loss: “We’re figuring 2.5% of sales, or about $15 million from March 23 through the end of April. But besides that, it’s the pride you have in your company. These were independent franchisees that got caught in the middle. The employees had fewer hours because of fewer sales.”

Schuessler also reported that paying Ayala to keep quiet about the supposed incident was never an option.  The company focused more on upholding the reputation that they had already earned rather than giving in to what Ayala wanted. Although the claim could have been seriously damaging, Wendy’s as a corporation was open and honest with the public about the incident.

The corporation conducted a thorough investigation to ensure that the claim was a fake. Schuessler said that employees at the franchise where the finger was claimed to be found were tested via polygraph and the whole restaurant was thoroughly inspected. According to Schuessler, he knew it was obviously a fake claim when the polygraph results came back and it was clear that no one was missing any parts of their fingers.

Coming back from any crisis is always a challenge, especially when it immediately affects a company’s business. In response to this instance, several Wendy’s locations in the San Francisco Bay area spent a weekend in April after the incident giving away free frosties as a way to try to encourage customers to return to the restaurants. Because Wendy’s was openly honest about the situation with the public and the media, there was little damage done to the famous restaurant chain’s reputation.

Schuessler also took the whole thing to be a learning experience, which is the best thing that could be done in any crisis situation. “And the lesson is you’ve got to be on your guard, but even with that, this thing is so fragile that one has to be able to respond. One has to have a set of core values in order to respond, because there’s no playbook that’s been written for events like these,” said Schuessler.