Image Restoration and the Toyota Recall
The Toyota Motor Corporation is facing the most severe crisis in its history. At least a dozen of the company's most popular models, affecting over 8 million cars, are covered in a series of recalls involving floor mats and gas peddles. These parts are associated with sudden and uncontrollable acceleration that in some reported cases caused accidents and deaths. The crisis is costing the company millions of dollars in direct repair costs, millions more in lost sales, seriously damaging the company's reputation for quality, and undermining its credibility. The company also faces a number of potentially very costly lawsuits. The recalls have prompted close scrutiny that has uncovered yet more problems. And one of the most devastating accusations is that Toyota executives knew about the problems for some time but withheld the information and tried to limit the scope of the recall. Thus, the public was denied important information about their safety.
Organizations often experience crisis events that require that they offer audiences public messages that include explanations, apologies, and efforts to repair a damaged image. Ethical lapses, oversights, management misconduct, mistakes, and accidents can result in harm to employees, customers, communities, stockholders, and other stakeholders. The resulting public accusations of wrongdoing often have a very negative impact on the organization's reputation and image. Moreover, these crises and public issues often lead to protracted public arguments about cause, blame, responsibility, and, ultimately, liability. Top management is distracted, other problems surface due to media and regulatory scrutiny, and the organization suffers. In other cases, however, an organizational crisis can result in an opportunity for significant growth, development, learning and ultimately renewal.
More often than not, efforts to respond to a crisis and restore the corporation's image are not successful, such as the EXXON Valdez oil spill or the sex scandal in the Catholic Church. In other cases, such as the Tylenol product tampering case and the 1982 near bankruptcy of the Chrysler Corporation, image restoration efforts have met with success and, in some cases, led to a revitalized and renewed organization.
Toyota faces some very significant situational constraints in trying to respond effectively to the accusations and repair its badly damaged image. The accusations involve complicated issues of engineering and human factors and the cause of the problem does not appear to be entirely clear. In fact, some reports suggest that the repairs the company is making are not solving the problems. Federal investigators continue to probe engineering reports and company records and this will likely lead to additional revelations and potentially more recalls.
The company did not respond quickly or decisively, and, as a consequence, the public received a great deal of information about the problems before Toyota offered its side of the story. Thus, attitudes about the recall had already been formed. When an organization is able to quickly respond, ground its response in widely shared values, and indicate that it is taking very decisive and appropriate actions, it frames the event in a more positive, forward thinking way. In doing so, the organization often signals that its primary interest is in solving the problem rather than in avoiding legal troubles. Such organizations are likely to be viewed as ethical, responsible, and decisive.
And while Toyota had a very positive reputation and image before the crisis, the accusations were a direct attack on beliefs about the company's commitment to quality. Public relations researchers point to a company's history and suggest that a good reputation is an important asset during a crisis. The suggestion that the company withheld information is particularly damaging because many people bought Toyota vehicles specifically because of the reputation for quality. The media continues to report that the company is withholding information and Congress is calling for more openness and more testimony from senior executives.
One of the most difficult constraints the company faced concerned the CEO. In general, during a crisis leaders should be more direct and help other stakeholders understand the meaning of what has happened, why, and what is being done to correct the problems. Akio Toyoda is the grandson of the founder, and, on one hand, he was seen as carrying on the company legacy known as “the Toyota way”; on the other hand, he was seen as someone who got his position because of his family. Moreover, Toyoda came across as a very reluctant spokesperson and, at least initially, seemed almost unaware of the problems. At first, he declined the invitation to testify at Congressional hearings and some press reports in the US labeled him “no show Akio.” When he did appear, he testified in heavily accented English and repeatedly apologized. He also noted that he believed the company had expanded too quickly and lost sight of its core values. He specifically addressed those who had lost family members in crashes associated with the problems by saying “I will do everything in my power to ensure that such a tragedy never happens again.” Congressional testimony of this type usually creates a very negative image as executives are forced to respond to direct and confrontational questions with cameras running, while avoiding statements that might be used in subsequent lawsuits.
Akio Toyoda also faced conflicting cultural demands associated with the multinational nature of his company. Japanese corporate culture generally emphasizes harmony and tends to avoid publically addressing problems, preferring to manage them behind the scenes. Efforts at decision making and problem solving in Japanese firms often rely on more consensual processes as opposed to directives from top management. Consensus is a time consuming process and may slow an organization's response to a crisis. For the American public, this may create the impression that the company is not decisive. In addition, Japanese organizations generally have a different approach to public relations, tending to focus their efforts more on opinion leaders than on the general public. Some reports suggest that Toyota is concentrating its PR efforts on the US Congress rather than the general public as the primary audience.
An organizational crisis can result in significant learning, change, and renewal. In this case, Toyota faces serious challenges in repairing its badly damaged image, let alone capitalizing on the opportunities embedded in the crisis. The company is making some important efforts, including signaling a recommitment to its core values, appointing a credible advisory board of outsiders to address the quality issues, and aggressively moving to address consumer concerns. These are important symbols of change. The company has also mounted an advertising campaign, albeit low key, to address the crisis in a direct way by emphasizing the values of quality and consumer safety. Unfortunately, the company's very slow and indecisive initial response has resulted in a set of public attitudes that are largely already formed. The intercultural barriers create an addition set of serious challenges. It is also likely that more revelations will be forthcoming and the company will be forced to mount an ongoing campaign of public messages to respond to the bad news.