When watching the evening news on TV or reading the morning newspaper, you can often find stories about two or three cases a day about corporate crises. Product recalls and defective items have been the biggest cause of crises this year. Secondly, there have been several leaks of customer data.
If you analyze the trends related to corporate crises in Korea, until a few years ago, common factors behind crisis situations were fierce market competition and illegal business activity. More recently consumer-related incidents have become more prominent. Although consumers have seen a steady expansion of their influence on Korean society, individual consumers remain vulnerable to the impact of business crises.
In this regard, it is noteworthy that Korea is moving forward with the introduction of a class-action lawsuit system related to consumer products, including food and beverage items. To Koreas corporate sector, consumer-related crises have emerged as serious management issues, which potentially influence their profitability and existence.
Above all, it will be worthwhile for foreign enterprises doing business in Korea to understand the Korean style of crisis management. Recently, it has been found that the effectiveness of globally accepted strategies and principles of crisis management has diminished, in large part due to a lack of consideration of domestic circumstances. Today, Korean society has shown a sophisticated approach to promoting and advocating consumer rights. Meanwhile, the domestic media has evolved in positive ways, although various peculiarities unique to Korea still exist.
Korean-type crisis management
So, exactly what does Korean-type crisis management involve? Over the past 20 years, I have provided crisis management counseling to over 300 businesses in Korea, both domestic and foreign. Overall, it might be helpful to point out several factors I believe are important for a proper understanding of Korean-style crisis management.
First, these days, practically all publicity of crises, and their related consequences, takes place on the Internet. In fact, the institutional media can be said to play a secondary nanny role, as a simple caretaker of a crisis situation, while the real discussion takes place onlin
e. Internet forums, blogs, portals, homepages, and message boards are invariably at the root of negative publicity in the case of a corporate mishap or blunder. As a result, any enterprise that fails to adequately address the online activities of a crisis will inevitably end up facing serious repercussions.
Second, it is essential for foreign businesses to adopt a Korean-style approach to the media, NGOs, and government. Although Western management consultants do emphasize a we mindset in regard to customer relations, it is rare to find an enterprise that applies a we approach for dealing with other parties. Foreign businesses do strive to build a we relationship with their Korean customers, just as Korean firms do. On the other hand, they do not implement this same approach to other interested parties, such as the media, NGOs, and government. Rather, they tend to consider this kind of genuine relationship-building as too much of a burden.
But all these players are important, in their own way, and the maintenance of a favorable relationship with them is necessary. If a business is satisfied with an us and them relationship with the media and other stakeholders during o
rdinary times, this same us and them environment will make it all the more difficult to deal with the adversity of a sudden crisis. Moreover, the big loser will always be businesses (us) and not the other organizations (them).
The need to localize the framework
Third, it is imperative for responsible PR staff members to receive in-depth training in the Korean ways. From my consultation experiences, I am well aware that most foreign businesses in Korea already possess a highly advanced crisis management system. However, aside from a handful of exceptions, the system is based on standard guidelines and principles developed by the head office. It is necessary to localize this framework for the Korean business unit. In particular, the staff in charge of controlling and managing the outbreak of a crisis must be well versed in the local environment and the relevant parties involved. In terms of minimizing the potential fallout, the ability of the PR team to communicate in a crisis is invaluable in determining the success or failure of the enterprises recovery. A
dvance investment in this area has been proven to pay off handsomely over the long term.
Lastly, crisis management efforts need to be implemented with flexibility. Here, flexibility must be clearly differentiated from being overly concessionary. In any market in the world, crisis management responses that are consistent with the primary mission of a corporate enterprise are bound to succeed. Additionally worth noting is how the global mission of a multinational corporation can be effectively communicated to a Korean audience in the case of a crisis. In terms of flexibility, the business must be aware of the messages that the local audience and related stakeholders would like to hear, along with being able to integrate the enterprises basic mission into these desired messages. Quite simply, for any multinational enterprise to believe that its global mission itself is enough to downplay the significance of a local crisis, this would naturally be interpreted as a sign of arrogance, especially in Korea.
Proactively pursuing localization
These days, a growing number of Koreas large corporations have developed a keen interest in reinforcing their crisis management capability. And they have been investing regularly and heavily in staff training and the development of comprehensive procedural manuals, in order to assure a fail-safe system that can deal with any contingency or emergency. Indeed, there has been steady advancement in their efforts to effectively interact and respond to consumers and stakeholders in the event of a crisis situation. Accordingly, this investment in crisis management is a reflection of the maturity of Koreas corporate sector, which has come to recognize that this kind of preventative effort can ultimately contribute a substantial reduction of the potential costs of an unexpected crisis.
As such, now is the time for foreign businesses in Korea to proactively pursue the localization of their crisis management systems. Related to this, what foreign companies should ask themselves is: How can foreign enterprises best adapt themselves to the Korean context? Or, from another perspective: Are you satisfied with the localization of your corporate practices, including the crisis management system?
Kim Kyong-Hae, a longtime PR professional and specialist in crisis management, is president of Communications Korea, a PR consulting group, and representative consultant at The Korea Institute of Crisis Management and Strategy. He has written four books on crisis management and marketing, including: Companies That Overcome Crisis, Companies That Crumble with It, Lets PR, Big Think PR and Live On-Site PR Story. He can be reacted at kyonghae@commkorea.com -- Ed.
By Kim Kyong-hae
