Companies Have E-Discovery Issues In Arbitration
Though changes in the US Federal Discovery Rules as well as case law such as Zubulake have escalated the Electronically Stored Information (ESI) costs as it relates to electronic discovery or discovery of ESI documents and information (E-Discovery) in the US, Korean companies have remained relatively complacent about it until the Dupont v Kolon case. (more…)
Arbitration- A Great Dispute Resolution Tool in Korea
Korea, like other countries has acknolwedged the concerns its companies have over international litigation. And Korea, like other countries has jumped on the arbitration bandwagon. Arbitration is a contractual mechanism that parties use to avoid litigation. As it is a contractual mechanism, the parties are free to determine the procedural requirements, number of arbitrators, governing law, and other key provisions, etc. (more…)
You may already be in a crisis and not know it----One of the main problems with managing a crisis is that the crisis event may have occurred long before a company realizes it is actually in the middle of a crisis. Companies tend to disregard the warning signs of a crisis up until the very end, leaving very little room to maneuver and limiting a company’s options. If you scratch the surface of a corporate crisis you will find the signs were there months in advance. Yes, there was indeed trouble but departments don’t like to raise red flags. People don’t want to lose out on bonuses-it human nature. Who wants to rock the boat and get blamed ? That is precisely why you should think of your company as already being in a crisis or in a pre-crisis stage. Because, it probably is.
When talking to your staff or to other departments, how often have you heard the phrase “That the way we have always done things.” Just because corporate processes have been done one way doesn’t mean that the best way or even in todays’ fast changing world- the right way. Even after 2008 many companies continued to use the failed metrics that got them into trouble in the first place. Even the credit markets haven’t changed as much as you would think after 2008. Why?
I truly believe that once processes are created in a corporate or bureaucratic environment, it is as if the processes have been set in stone. They are very hard to change. Even if the world around the company has changed. It is human nature to accept what has been done in the past. Few people want to “rock the boat” even if the proverbial boat is actually sinking. Companies get into real trouble because of this. What happens if the company’s business model actually is out of date and is no longer viable? Just because it worked in the past doesn’t mean it will work in the future. What about your company’s products and services? If your company relies too heavily on a particular product and that product is found defective or non-conforming that could spell catastrophe. Has your QC department verified all production protocols have been met? What about sub-components? Does your company rely on third parties to provide key components? Have you outsourced your service department to a third party service provider? Are you monitoring your third party suppliers?
I therefore caution everyone not to blindly accept the status quo even when it appears things are humming along. What about your company’s risk management processes? Are those up to date? Risk managers as well as in house counsel and other managers should be challenging risk management metrics on a regular basis. Counsel should be auditing departments on a regular basis. Does your compliance program really work? Maybe it did 5 years ago. But what about today
If local or national laws have changed maybe the current manufacturing processes are out of date. If the products that your company manufactures or the services it provides have changed maybe the internal processes surrounding the review of those products and services are out of date. What about the current social environment? When reviewing your current product liability review processes have you factored in the new risks created by the Internet of all Things? These risks are real. Are you ready for them?
It is a fundamental truth that all things change. Some change faster than others. Regardless, don’t rely on your old or standard risk management processes to continue to provide the same level of comfort they did in the past. Continue to review and to modify them if necessary. Dont rely on your manufacturing processes- they could also be out of date.
Remember; whether you know it or not, your company might already be in a crisis. Maybe it is time for a crisis management review.
Companies that fail to recover from a major crisis exhibit certain signs before and during the crisis. Some of them are as follows:
A crisis is not the time for a company to finally understand what regulations it must follow or what insurance coverage it has or doesn’t have. A crisis is not the time to come up with a communications plan or a legal analysis of corporate governance responsibilities. A full blown crisis must be met head on with a crisis management plan that covers operational, legal and communication issues. It is where the rubber meets the road. To manage a crisis a plan needs to be in place that addresses all aspects of a crisis. Is your company ready for a crisis? Can it handle one? Do you have a plan?
On July 7 in Seoul, Korea the KBLA is sponsoring its first Crisis Management Seminar covering all aspects of crisis management. For those interested, please go to the following link: http://kbla.info/index.php/crisis
In Order To Suvive A Crisis A Company Must Have An Effective Communications Strategy
The principle focus of any crisis management strategy, especially in an international contest, is communications. All crisis management plans call for effective crisis communications, which many times are not always executed. Inadequate or failed communications lead to bad publicity, unhappy stakeholders, and potential disaster. An effective crisis communication strategy is necessary for any international crisis. It should be noted that a number of companies failed to defuse an international crisis because of poor communications.
An ineffective crisis response caused by a failed communications strategy can significantly harm a company’s reputation, operations, and even its position in the marketplace. Whether a company survives a crisis or not is determined less by the severity of the impact than the response to the crisis. A company that responds effectively with a clear communications strategy will not only survive but find that its reputation has been enhanced. A company that does not respond with a clear communication strategy may not survive.
Look at some of the crisis in the past which were not defused properly because of a lack of attention to communication- Toyota, perhaps being one of the more recent. Though Toyota spent time and money to find out the issue surrounding the brake issue, its failure to communicate in a timely fashion lost the goodwill of many customers and hurt the brand.
An effective crisis communication strategy is necessary when dealing with an international crisis. In order to implement an effective crisis communication strategy, a number of processes must be implemented such as::
Though companies try and resolve the crisis at hand and spend significant sums of money to do so, if they fail to properly communicate to the media and the public, they in effect have lost and can expect outrage and consumer dissatisfaction to such an extent that the very existence of the company can be threatened. This is particularly true for cross boarder crisis as the failure to manage international communications can lead to cultural issues which play out in the press or on social media. So remember, a company doing business internationally has to plan for an eventual crisis which may pose a potential threat to the company. If it fails to handle communications properly, it faces not only a potential loss of business but a negative impact on its brand and reputation.
The 6 Common Mistakes Or 6 Best Practices That Will Hurt Or Save A Compnay
A crisis happens quickly. Speed, knowledge and communication are vital if a crisis is to be handled correctly with minimal impact on a company’s bottom line or reputation. Unfortunately, some companies fail to resolve the crisis and fall into the trap of the 6 deadly mistakes. Those that successfully resolve the crisis instead, follow the pattern of using the 6 basic crisis management steps. In essence, it is 6 behaviors or steps that will dictate how a company reacts to a crisis and whether it emerges unscathed or mortally wounded.
There are 6 basic common, predictable and avoidable mistakes that companies or organizations make during a crisis that will have a major negative impact on the company’s reputation or brand. The mistakes cause negative effects including making the crisis worse and failing to solve the crisis which in turn has major legal and reputational implications. The 6 common mistakes are:
Other companies, that don’t fall into the trap of 6 common mistakes, survive an international crisis situation by following the 6 basic steps for crisis resolution- or the 6 best practices of crisis management. The 6 steps to a successful resolution are:
An example of a crisis that involved most of the 6 basic or common mistakes centers on a recent acceleration/gas pedal recall involving a car manufacturer. The manufacturer was apparently put on notice of a large number of complaints involving acceleration/gas pedal problems. However, it did nothing to thoroughly investigate the issues or communicate to the public that it was seriously investigating the issue (It ignored the problem). It denied such problems were due to mechanical issues. Several years after it first became aware of the potential acceleration issues, it was forced to seriously investigate the matter because of several fatal car crashes potentially involving unintended acceleration. The car crashes were widely reported in the media. Because it failed to handle the crisis properly at the beginning, the car manufacturer was severely criticized in the media for its lack of response and apparent disregard of its customers' safety (Management had become paralyzed). The public became outraged when it learned the car maker began investigating the acceleration problems in earnest only after the fatal car crashes- 2 years after numerous reports had been made ( It didn’t tell the whole story). The US Congress then got into the act holding hearings on the acceleration issue.( It didnt understand the cross border issues). The company ended up recalling over 8 Million cars worldwide and finally appointing a safety officer, etc. in the US. Though it began to communicate more effectively, the car maker's penchant for secrecy, failed communications and lack of a crisis management plan at the beginning severely impacted the company (It didn’t reach out to its Stakeholders).
In the end, the company was hit with over 130 class action lawsuits in the US. Billions of dollars in share value evaporated due to its stock's decreased share value. Because of its failure to properly manage the crisis, it lost almost 6% market share in the US - reflecting a tarnished reputation. Though it is now regaining market share, it continues to have recall problems and brand issues.
So, whether a company survives a crisis intact depends to a certain degree of whether it makes the 6 basic common mistakes or uses the 6 best practices of crisis management. Either way, it’s a 6 step process to defeat or victory.
