This is the second of a three-part series of contributions about dealing effectively with crisis management situations on the Korean scene. -Ed.
The number of foreign corporations doing business in Korea has increased by more than three-fold since 1997. In addition, it is estimated that more than 1,000 foreign enterprises are currently members of various industry and trade associations in Korea. Among these enterprises, the foreign businesses that rank among the top 100 in terms of revenue and asset scale are classified as corporations that need to maintain a formal crisis management system, with regard to the capability of their points of contact with the media and consumers.
As with any large-scale corporate enterprise in Korea, both domestic and foreign concerns are well aware that no business is completely immune from the sudden emergence of a crisis situation. And these businesses have put their utmost efforts into the preparations to manage such crises. I have been retained to provide crisis management counseling to over 300 clients in the past 20 years.
Thus, it might be helpful to identify the key factors behind the failure of foreign businesses to deal more effectively with a crisis situation. Indeed, there are valuable lessons that can be learned from these unfortunate mishaps of the past.
Failures of foreign enterprises
First, the primary reason why foreign enterprises experience failure in their crisis management efforts is the lack of a timely response. Due to the particular characteristics of a foreign firm in Korea, it can often react too slowly in terms of initial countermeasures as a result of its need to communicate with head office in order to reach certain management decisions. Clearly, this is a structural deficiency that needs to be addressed through careful coordination between the domestic unit and its home office.
In this regard, it is necessary for response measures to be agreed upon and established in advance, so that the "commander's intent" can be pursued in a more timely manner. This greatly reduces the time lapse of the initial response, which is often critical to minimize the resultant consequences.
Second, there are instances in which foreign corporations will raise the ire of Korea's media during the process of resolving a crisis. In any setting, if a business is blamed for provoking key stakeholders the crisis management efforts will be unnecessarily complicated.
In the case of a business crisis in Korea, the most common misstep of a foreign enterprise is related to its tendency to discriminate between first-tier and second-tier media firms. That is, when placing a notice of public apology or granting interviews a foreign business will often place a priority on the more influential media and ignore the secondary players.
But in Korea there is a unique press corps system in which each media, large and small, plays a role of its own. And because of this there have been several occasions in which a foreign business and CEO have been puzzled by a lingering negative attitude among various media, even after the issuance of a sincere apology and proper explanation. Treating the media with appropriate consideration during regular times will go a long way in assuring their objective views in the event of an unexpected emergency.
Foreign CEO's leadership in a crisis
Third, there are limitations to the effectiveness of a foreign CEO of a foreign enterprise to stand at the forefront of a related crisis. In fact, among Korean experts there is a broad consensus that it can often be disadvantageous for a foreign CEO to be the public face of his business at such times. Ordinarily, when a critical decision or statement is announced the CEO's presence is helpful and positive. However, in Korea this general principle needs to be balanced against a sensitivity of the particular circumstances. Many times it is advantageous to have a corporate spokesperson stand in for the CEO. Ideally, this individual should be Korean and a senior-level executive with considerable expertise in dealing with the media and communicating with stakeholders in public. Indeed, the most successful cases of crisis management have been handled in such a manner.
A final point is the extent of interest that a CEO pays to crisis management and the related preparations. Of course, crisis management is not the top priority of any enterprise doing business in Korea. Nevertheless, even a stellar reputation which has been earned by year upon year of successful customer relations can end up in ruins in a matter of days, due to an unfortunate crisis.
Similarly, the favorable image that a multinational enterprise has built up over decades of market success can be tarnished in an instant. A CEO naturally focuses his attention on ways to promote the sustained growth of his business operations. But this also requires a proper understanding of the potential risks that can undermine this process, including an institutionalized crisis management system and capable staff for professionally handling such contingencies. In this case, an ounce of prevention is worth a pound of cure.
After retaining me for consultation advice, the CEO of a large-size foreign corporation asked me the following question: "Mr. Kim. There are so many variables in the Korean market. How can I possibly succeed with my crisis management?" In response to this, I asked him: "What is the corporate vision of your business?"
With your corporate vision as a guide, you should then sincerely communicate your message to the related parties. Corporate vision and sincere communication are two pillars of a successful crisis management effort.
Above all, it can be said that foreign enterprises in Korea too often fail in crisis management due to a simple lack of preparation. A multinational corporation does not attain global success by accident. Still, an investment in the localization of its basic crisis management system is certain to pay off with huge dividends over the long term.
By Kim Kyong-hae
Kim Kyong-hae 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," "Let's PR," "Big Think PR" and "Live On-Site PR Story". He can be reacted at kyonghae@commkorea.com - Ed.
2008.06.06
