Defense against the Dark Arts


I wrote this for the Jakarta Post on July 28, 2004. A few weeks after that Newmont became my client and I consulted with them for six months but we parted ways by the begining of 2005.

Just suppose, for a moment, that you are the management of Newmont. And suppose that you have operated your mine in Minahasa in accordance with the strictest of environmental standards.

Then, out of the blue, an environmental group and some villagers file a police report and call in the media to accuse you of dumping highly toxic mercury into Buyat Bay, not only ruining the livelihoods of the fishermen and their families but causing a stranger disease. They ratchet up the emotional stakes by calling it Minamata disease, after the infamous mercury poisoning scandal of the 1950s in Japan.

Being media savvy activists they have leveled their accusations in the media, replete with graphic "results" of your irresponsible actions. As a result the media is now hounding you.

What would you do?

The knee-jerk reaction for most managers would be to hunker down and try to work things out with the authorities and all parties concerned away from the glare of publicity. This course of action would, however, invite an escalation of the crisis because you would have failed to grasp a basic fact of managing a crisis-like situation: Perception is as important, if not more so, than reality.

Manage the perception well and mitigating the crisis is easier. Manage it badly and you have a bigger crisis to handle than what you began with. At stake is the reputation of your company. If it takes a beating it will never be fully restored even years after the crisis. Freeport is a case in point.

To manage perception during a crisis like that of Newmont's a company needs to demonstrate several attributes if it hopes to emerge from this crisis with its reputation intact: A willingness to accept responsibility, empathy and openness.

A willingness to accept responsibility does not mean the company should admit to and apologize for anything and everything. Rather, it means that the company should communicate and act in such a way that demonstrates that it is not in denial, nor is it defensive.

To demonstrate that it is not in denial the company should convey the message that it is cooperating fully with the authorities to help uncover the truth behind the allegations. To avoid sounding defensive the company should never point the finger at other parties, especially if it cannot prove its allegations conclusively. Hence Newmont's claim that individual miners were responsible for the toxic waste only made things worse when it could not be proven.

The company has also to demonstrate openness. Like it or not, the world is skeptical toward corporations. It is not fair but it is a fact of life. Corporations have to try that much harder to diffuse this skepticism in moments of crises, when they become the center of attention.

It is also a good idea to rely on independent credible third-party individuals or institutions to provide evidence or information that supports the company's case to diffuse the skepticism of the media and public.

It is by demonstrating such attributes that companies can hope to manage perceptions and defend themselves against accusations assuming, of course, that they aren't guilty of the alleged wrongdoing.

If they are guilty, then the best option is to fess up, apologize and announce measures taken to ensure such incidents do not happen again.

Whatever the scenario, however, companies must realize that if they do not manage perceptions well they can easily lose control of the situation as the media and public turns against them. Managing perceptions therefore is a mandatory skill for companies to acquire.

This is especially so because companies are extremely vulnerable to a crisis in Indonesia. At anytime a disgruntled employee, institution or NGO can precipitate a crisis by leveling an accusation, whether justified or unfounded, against a company. The onus then is on the company to exonerate itself.

For proof of how vulnerable corporations are, you need only to read today's newspapers. The Bekasi environmental management agency is accusing two hospitals and 12 companies operating along the Kalimalang River of dumping toxic substances into the river. Some of the companies have denied the charges but the rest have kept silent.

If the media increases its interest in the story, or if other environmental groups take up the allegations of the Bekasi environmental management agency the issue may escalate to crisis levels for the companies involved.

In such situations truth is elusive, even to the journalists whose job it is to cover these issues closely. There will be claims and counter claims but the public will believe the party that is most adept at managing perceptions.

Environmental groups and NGOs have demonstrated time and again that they are media savvy. They call press conferences, stage demonstrations, parade witnesses and victims in photo opportunity sessions and stage iconic moments (remember the David-and-Goliath image of Shell using a water cannon to get rid of Greenpeace activists atop Brent Spar?).

The question is whether the corporate sector in Indonesia is any match for these groups?

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