Exxon Valdez Oil Spill - Assessment of the Incident - Case Study Example

Name: Tutor: Title: PUBLIC RELATIONS: A CASE STUDY OF EXXON Course: Date: Table of Contents 1.0 Executive Summary…………………………………………………………………………...3 2.0 Introduction………………………………………………………………………………..…..4 3.0 Exxon’s Assessment of the Incident …………………………...…………………………….6 4.0 Exxon’s Response to the Crisis ……………...………………………………..………………7 5.0 Public Relations Theories, Frameworks and Models……………………..…………….....….8 6.0 Outcome of the Exxon’s Response………………………………………………………..…10 7.0 Recommendations……………………………………………………………………...…….12 8.0 Conclusion…………………………………..……………………………………………….13 9.0 Bibliography………………………………………………………………………………....15 Public Relations: A Case Study of Exxon Executive Summary The Exxon Valdez oil spill is considered the most infamous disaster in world history, save for the Titanic. The US’s Supreme Court described the incident as the most notorious oil spill of all times. Before the Trans-Alaska Pipeline Authorization Act was passed, there was a dispute regarding whether the pipeline should have run southwards through to Valdez, which would have required the transportation of oil aboard ships, or whether it was possible to avoid the imminent maritime dangers by having the pipeline run across Canada. The dispute was discussed in public hearings, in litigation and in the congress. The proceedings of this dispute over a period of five years provided Exxon with ample time to consider the risks that the local community would be exposed to by using tankers to transport oil from Valdez. Exxon had received notice to the effect that the proposed route would have far reaching consequences on the residents who depended heavily on commercial fishing. Exxon was hence sufficiently warned that an oil spill of significant proportions in the area of the larger Valdez William Sound would result in incalculable destruction to the fishing industry and environment (Davidson, 1990). Permission was eventually granted for the construction of the Valdez route as opposed to the overland route. This followed the decision made by the senate to exempt it from compliance with the provisions of the National Environmental Policy Act. Construction of the pipeline was undertaken between 1974 and 1977 and pumping oil began in 1977 (Keeble, 1999). As observed by Keeble (1999), Exxon seriously aggravated the damage to its public image by failing to respond promptly to the crisis and working at establishing itself as an organization concerned about the outcome of its actions. Exxon grossly violated key cardinal rules and guidelines of crisis management. It was predicted that the Exxon Valdez episode will for a long time remain a textbook example of how things are not supposed to be done in the event of an unexpected crisis that has potential to thrust a company negatively into international limelight. Stephen Greyser, a public relations professor at the Harvard Business School, remarked that companies should be well aware that it may not be possible to predict when disasters of such magnitude are likely to happen, but they should know that they can happen (McDonald and Härtel, 2000). According to Greyser, Exxon should have had in place a comprehensive public relations plan that could have enabled it to effectively disseminate substantial information to give the impression that the company was on top of things. According to Paul Shrivastava, a director at the Industrial Crisis Institute, any form of crisis has a 45 minutes to 12 hours window of opportunity to regain control, and Exxon clearly failed to utilize this opportunity to recover any public relations ground (Sturges, 1994). Introduction On March 23, 1989, the Exxon Valdez departed the Valdez terminus loaded with 53 million of crude oil. The tanker was captained by Hazelwood, the only officer on board that had an official licence to navigate the vessel across the precarious parts of the vast Prince William Sound area. Hazelwood was reportedly drunk, so drunk that according to Davidson (1990), a non-alcoholic with such a level of intoxication would have passed out. After Hazelwood left the bridge, he descended to the cabin and left control of the tanker to a fatigued third mate. Shortly thereafter, the vessel ran aground on the reef. The grounding ripped the tanker open resulting in a spill of over 11 million gallons of oil. The oil was rapidly spread by wind and wave action along 6000 linear miles, and over 10,000 square miles of the area surrounding the saltwater ecosystem. Other than the extensive environmental harm that the Exxon Valdez spill caused, it resulted in real damage to real property, caused a drastic drop in fishing prices, and led to a rise in cases of inflicted emotional distress (Davidson, 1990). An estimated 30,000 class members were affected by the spill whose economic damage was quantified at $504 million, including $287 million of loses to fishermen in major fisheries. In a testimony by Wallace Noerenberg, Alaska’s Commissioner for fish and Game, it was that emphasized that construction of a terminus at Prince William Sound required stronger measures for effective oil spill control. The commissioner reiterated the economic significance of healthy fishing resources to the principal settlements of Valdez, Cordova and the native village of Tatitlek. Also noted in the Environment Impact statement was the fact that any large scale oil spills in the area around Prince William Sound would have been extremely difficult to contain or clean up because of the long distances that would have to be travelled to access clean up gear and manpower. Additionally, it was only possible to contain and recover 20% of spilled oil using the available state of-the art equipment and techniques. According a Clifford statement, it was evidently more effective to employ spill prevention measures than to clean-up any major oil spill, and even though, there was presently no proven and effective mechanism for containing a major oil spill, both in the open sea and in tidal waters. Despite the catastrophic consequences that the oil spill caused, the company’s action and response to the incident significantly altered the company’s public image. This study will analyse Exxon’s public relations response to the Valdez oil spill. Focus will be on the company’s assessment of the incident, how it respondent, and the outcome of its response. Public relations theories that are relevant to the incident and response will also be explored. In conclusion, the report will provide recommendations for consideration in improving an organizations crisis management, including planning and communication. Exxon’s Assessment of the Incident As outlined in Exxon’s oil spill contingency plan, the company was well aware that it was going to be a daunting task or near impossible to contain and reverse a spill of that magnitude. It had been hoped that that such an occurrence would never happen, but the unapprehended events happened, and the consequences were viewed by Exxon’s president as “acceptable”. An Exxon clean-up strategist that did not want to be identified clarified that the organizations recovery of money and oil was considered to be of greater priority than safeguarding its public image. According to Keeble (1999), when Exxon’s Vice President visited the Sound area, he reported that he had observed hundreds of the company’s workers cleaning crude oil from the beach, but two days later when Paul Jenkins, an anchorage newspaper editor visited the area, the same beach was empty, while most of it was still covered with oil. Apparently Exxon’s clean-up crew had vanished before informing both the state and the Coast Guard. The same day, Exxon’s public relations staff insisted that indeed the clean-up exercise was underway and workers were still on site (Keeble, 1999). Exxon contended that it should not have been held liable for any punitive damages unless it was established that it directed or participated in any wrongful conduct. According to a judge of the Court of appeal, Exxon was merely unfortunate to have hired a captain who committed an irresponsible act. Two weeks after the accident, a response from the top management was long overdue, and when it finally came, it was a blatant effort to defend the company’s handling of the crisis, reiterating that priority was given to recovering the millions of barrels that were still in the tanker. When the group’s chairman was taken to task to explain why he failed to visit Alaska, he argued that he was technologically obsolete, and getting him there would have diverted the attention of the workers on site. He acknowledged that he could have done nothing to help with the oil spill, or get the ship off the rocks. Crisis experts observed that Exxon’s overemphasis on ineffective operations was at the expense of a public relations initiative that was critical to rebuilding its image. Exxon’s Response to the Crisis Exxon was inevitably obligated to undertake clean-up measures, but only managed to clean up 14 percent of the spill. It was concluded by the Senates Environmental and Public Works Committee that the disaster had been greatly exacerbated by an unreasonably confused, slow and inadequate response both by the government and industry in containing the spill and preventing further damage. The National Response team concluded that Exxon’s response was not only slow, but grossly insufficient. Likewise, it was established by the House Conference Report that the inability of Exxon to contain the spill fast enough was an indication that Prince William Sound’s contingency plans were clearly inadequate. An evaluation of Exxon’s clean-up effort provided indications that the organization was at best simply creating the appearance of an effective clean-up process. For instance, an Exxon official was captured on audiotape ordering for clean-up equipment by repeatedly clarifying that it did not matter whether the equipment was working or not, all that mattered was to create the impression that some effort was being made. The decision not to involve external public relations consultants greatly hampered its efforts in safeguarding its public image. The company ignored criticism and dismissed any involvement of interested environmental activists. The company’s top management refused to acknowledge the magnitude of the problem and vehemently declined to abide by legal advice. The assistance that was offered by environmental volunteers and local residents was also rejected. The company instead shifted blame, accusing Alaska and Coast Gourd of causing the delay in the clean-up process. The company’s public relations were greatly hampered by a poor communication strategy, as there was no designated spokesperson, while the top management declined to communicate openly. A week after the spill the company was still unyielding on the request to facilitate better communication with the public. Before long the media clamor became so hostile that Frank Iarossi, Exxon’s director of shipping accepted to fly to Valdez for a press conference. Small pieces of information that emerged out of the conference were promptly contradicted by eyewitness accounts, journalists and fishermen. John Devens, the Mayor of Valdez at the time of incident, conveyed the community’s disappointment and sense of betrayal following the company’s inadequate response to the crisis. When the company’s chairman finally accepted to go on air to give the company’s position, he ignored to read the company’s cleanup plan, arguing that it was not for a chairman to read such reports. Public Relations Theories, Frameworks and Models The excellence study is widely considered to be a monumental evaluation of public relations theory, as it provides an integration of key strategic management theories. This study was achieved with the input of a team of six researchers, namely, J. Grunig, L. Grunig, Dozier, Ehling, Repper and White (Grunig, J, Grunig, A and Dozier, 2009). The excellence theory has over the years been extensively tested and supported through several researches. Most theoretical components highlighted in this study have been incorporated in development of relationship management theory. J. Grunig and Hunt developed the first four models of public relations in an effort to provide a description of the different ways in which public relations is practiced (Grunig and Hunt, 1984). They used two dimensional arrangements of directions of communication (one way versus two-way), and purpose of communication (asymmetrical versus symmetrical). According to Grunig and Hunt (1984), the press agentry model provides a description of propagandistic public relations that tend to seek media attention through any possible means. In practice, practitioners of press agentry theory employ a one-way, source-to –receiver model of communication. The public information model is focused on truthfully communicating with stakeholders. In this case practitioners emphasize provision of truthful information to the public, but they do not voluntarily disclose unfavourable information. The two-way symmetrical model lays emphasis on balanced communication where relationships between an organization and the public are adjusted through negation and compromise. In practice, this model focuses on planned communication to effectively manage conflict and improve understanding between the organization and publics. The premise of the symmetrical model is to promote mutual understanding rather than prejudiced persuasion (J. Grunig & L. Grunig, 1992, p. 289). In contrast, the two-way asymmetrical model is characterized by unbalanced and one-sided communication. Practitioners of this model seek to influence attitudes and behaviours through social theory and research. The focus is on persuading publics to accept the organization’s position, or to behave as it is deemed desirable by the organization. J. Grunig and L. Grunig contended that the normative model is the two-way symmetrical model of communication, which is the ethical approach to organizational effectiveness as compared to the other models. The most ardent discourse on public relations theory has been concerned with the apparent over simplification of the four models, as well as the practical relevance of the two-way symmetrical model. More recently, E. Grunig, L. Grunig and Dozier (1992) have strongly advocated for the reconstruction of the public relations models. In overall, they contend that the public relations function fails in a majority of organizations because they fail to recognize the different levels in the organization at which the PR function can add optimal value to corporate objectives. A close examination of public relations theory discloses the fact that there is really no single PR or framework, but only divergent theories and perspectives. More importantly, PR should be part of an organization’s management function by which it interacts with publics before and after important decisions are made. Precisely, an organization can only be able to achieve intended goals by using a systematic approach that fully acknowledges and embraces the requirements of the wider environment in which it operates (Grunig, 1992). The immediate environment in which an organization operates is composed of strategic constituencies that have competing values. An organization can therefore, only deliver on its corporate objectives by reconciling these values with its own (Kitchen, 2002). As postulated in the systems theory, the key to organizations effective public relations is to identify and embrace significant inter-dependencies between an organization, its departments and key external groups. According to Reichart (2003), the dominant role of the public relations function is to support strategic managers to engage with strategic audiences. This is the critical aspect that Exxon’s public relations function failed to acknowledge and embrace. Exxon’s response to the oil spill crisis precisely reflected the two-way asymmetrical model of public relations which postulates an unbalanced and one-sided form of communication. Despite Exxon’s apparent failure to respond promptly to the crisis and truthfully communicate with its publics, the organization yet went further to deny its responsibility and operational ineffectiveness. The organization, as implied in the two way asymmetrical theory, focused on influencing its publics to accept its view of the situation. Outcome of the Exxon’s Response Exxon’s response to the crisis intensified criticism against the company’s public relations policy. As a result the country’s oil industry paid the price following stringent measures by the government in awarding licences for exploring oil reserves especially in the Arctic Wildlife Reserve. When Lawrence Rawl, Exxon’s chairman, delegated management of the crisis to lower-ranking officials instead of taking charge of the situation himself in a forceful and visible way, it created the impression that the company did not regard the crisis as important enough to warrant the involvement of high management (Holusha, 1989). The situation was further complicated by the decision to concentrate news briefings in Valdez, a remote location with very limited communication operations. This complicated timely dissemination of information to the anxious public. Additionally, Exxon failed to update its media relations people within and outside the country. A week after the spill, Exxon’s top executives had not commented on the issue, inevitably creating the impression that the company was not vigorously responding to the crisis. Furthermore, public statements that were made by the company were often in contradiction with information from external sources. In an advertisement ran by Exxon in local newspapers 10 days after the spill, the company declined to accept responsibility for the crisis. Exxon was not prepared for the magnitude of negative publicity that followed the spill, partly because the company had been progressively more inward-looking at the time of the crisis. The company had prioritized cost cutting and delegating of decision making to lower levels of operation. Undeniably, Mr Rawl hardly ever spoke to the press, other business organizations or security analysts. Exxon’s vice president, Elliot R. Cattarulla, said that a comparison of the Valdez incident to any other crisis was not reasonable, as they had to deal with a four-hour time difference between the company’s head office and the remote location of Alaska. According to Cattarulla, this compelled the company to allow the media to get unfiltered information from Alaska. But according to industry watchers, this “unfiltered’ information was very unsatisfactory and contradictory. Recommendations The first step in improving crisis management is to prepare a system that will enable the organization to respond timely to emergencies. A proper way to undertake this is to prepare a list of probable problems and develop a plan to deal with them. This can be done by holding a brainstorming session with key people in an organization to identify areas that can easily cause unfavorable publicity. The second step is to develop a set of policies addressing specific situations which the organization’s spokesperson should be in position to articulate firmly. This is an area that Exxon failed miserably in developing. Developing a set of policies and designating a spokesperson helps to assure the public that the organizations source of communication is knowledgeable and reliable. Thirdly, it is important to put in place a crisis management team where specific people are equipped with requisite skills and knowledge about the organizations policies. The people should receive adequate training in problem-solving to be able to effectively handle emergencies. A team leader should be appointed, as well as a spokesperson to handle the media. Part of the team must have members that are well prepared to deal with emergency officials and victims, and others to guide the rest of staff and volunteers. An organizations crisis management team must then assemble and organize amble resources that are commensurate with the predicted problems. Exxon’s inadequate and slow response clearly indicated that it lacked sufficient resources in place to handle a crisis of that magnitude. The team must ensure it has ready access to up-to-date information required to respond promptly to a crisis situation. This should include contact list for team members, staff, volunteers and other emergency officials such as police, fire department and hospital facilities. Finally the team must ensure a guide of emergency procedures is distributed to key players and stakeholders (Rothwell, 2010). This is to make sure that team members, staff and volunteers have sufficient knowledge of the steps that are expected to be followed in the event of an emergency. Before launching any PR campaign, it is important to first undertake extensive research and planning. Public relations practitioners need to be aware of pertinent issues to be able to properly cater their publics. Dr. Walter Lindenmann of the Institute of public relations says that research should entail using objective appraisal to discover, confirm and understand facts and opinions pertaining to a given opportunity, problem or situation. Research enables an organization to analyze the public and stakeholders to learn how best to meet and satisfy their requirements. Through prior analysis of the situation, practitioners can be able to detect problem areas and initiate measures to prevent or deal with them in a rational and calm manner. When organizations are faced with sudden or unexpected crisis situations, research enables them to put key drivers of the problem into proper perspective. Conclusion Public relations professionals employ different techniques and skills when developing campaigns to promote a product or message. A core responsibility the public relations function is to deal effectively with a crisis by fixing the problem and positively reflecting the image of the company. According to Stacks (2002), the role of public relations is to help an organization in stabilizing the environment in which it operates by developing a public relations strategy and messages that result in informative, honest, prompt and concerned communication with the organizations important audiences, both internal and external. Essentially this is the primary reason why it is important to train public relations professionals in crisis management. Exxon’s handling of the crisis and especially the public failed in several ways. Foremost, the company failed to demonstrate it had an effective system in place for effectively handling the crisis. This was exemplified by its inability to move with speed once the spill had happened. Secondly the company failed to demonstrate operative leadership and commitment to ensuring such incidents would not happen in future again. Lastly, there was no evidence to the effect that the company was concerned about the impact of the crisis on the community and industry. Exxon’s negligence and ineffectiveness in responding to the crisis at best exemplified its indifference to the plight of the local community and environment. Bibliography Bryson, J.M. (2004) 'what to do when stakeholders matter: Stakeholder identification analysis techniques', Public Management Review, 6, 25–43.  Coombs, W.T. (1998) 'An analytic framework for crisis situations: Better responses from a better understanding of the situation', Journal of Public Relations Research, 10, 157–171.  Davidson, A. (1990) ‘In the wake of the Exxon Valdez: The Devastating Impact of the Alaska Oil Spill’, Sierra club Books, 12, 17-35 Dean, D.H. 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Cheney, Wash.: Eastern Washington University Press. Kitchen, P. (2002). ‘The Evolution of Public Relations’ in P. Kitchen (eds). Public Relations Principles and Practice. London, Thomson. McDonald, L. and Härtel, C.E.J. (2000) 'Applying the involvement construct to organizational crises', Australian and New Zealand Marketing Academy Conference Proceedings, Visionary Marketing for the 21st Century: Facing the Challenge, Department of Marketing, Griffith University, Gold Coast, Australia, pp. 769–813. Reichart, J. (2003) ‘A theoretical exploration of expectational gaps in the corporate issue construct', Corporate Reputation Review, 6, 58–79.  Rothwell, J. Dan. (2010). In the Company of Others: an introduction to communication, 3rd Edition. New York: Oxford University Press. Sturges, D.L. (1994) 'Communicating through crisis: A strategy for organizational survival', Management Communication Quarterly, 7, 267–346. Stacks, D. (2002). Primer of Public Relations Research. 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