Organizational Communication in Crisis of Pepsi

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In the 1993 incident of syringes were found in the Diet Pepsi cans, it is clearly showed that the company had demonstrated an effective halting from the company’s openness with the media. While dealing and handling with the crisis, the PR team of Pepsi focused on both their internal and external publics. It is important for an organization to have a strong internal communication as these internal publics helps to convince the external publics of the organization.

The internal publics of Pepsi were consists of the employees of Pepsi like executives, managers, stakeholders, and anyone that has a say in the production of Pepsi’s products whereas the external publics consists of the whole American population, competitors, FDA and the media. Communications among the internal publics were strong among them and the company directed an immediate disclosure of all facts (Anton, 2011). Internal communications is important in an organization as it helps to build bridges among the employers and employees.

Besides it can also help them to deal better with their external public in whatever they are doing regardless of solving crisis or as a tool of communication with its public. Pepsi then targeted the external public differently and chose to focus on television as its media vehicle. Besides, they also took a firm stand and said no to product recall. Alpac Bottling Company, the local canning and distributor of Diet Pepsi was one of the external publics that were involved with the crisis and Pepsi let the company to explain to the media that product tampering was merely impossible.

Publics do not believe that the case is over and then a documentation video was released. Pepsi invited media to the production plant and film the process. This video then shows the process of the sodas and that the product was virtually tamper resistant. Other techniques used by the PR of Pepsi include 24 hours hotlines for consumers query and complaints, assigning a specialist to work with the FDA and the legal department were also involved during the communications process (Pepsi case, n. d. ).

Videotapes were then sent out as well as memos and the surveillance footage that reaffirmed the Pepsi‘s innocence. As the hoax of the syringe scare goes on, a third video news release was aired by Mr. Weatherup that shows a surveillance camera from a convince store showing a lady purchased the product, opened it and then placed a syringe without anyone noticing. Commissioner Kessler from FDA then help a press release on June 17, 1993 notifying the public that the allegations scare of syringe was false (Yaxaira, 2011).

Throughout the crisis, it is clearly showed that communications between Pepsi and both its internal and external publics was very effective as the PR department disclosed all information to everyone as it is needed. They also convinced the external publics that on the proceedings of their investigation on a daily basis to ensure the public that the problem is under control. In this case study of Pepsi Syringe scare, the communication flow of the organization can be related with Blake and Mouton’s Managerial Grid of the human resources approach.

In this approach, it maps out different leadership styles compared to other approaches as this model concerns about both people and production. There are five prototypical management styles subbed under this model which are impoverished management, country club management, authority-compliances, team-management and middle-of-the-road management. All these five management styles have to be balance in concerning about people and production.

Concern for people in this model simply relates to the degree where a leader considers the needs of employees and team members before deciding on how to accomplish a task (Blake & Mouton, n. d. ). This concern can be seen when the PR team of Pepsi decides on its strategies, tools and techniques in communicating with both internal and external public during the crisis period. The authorities also guide and brief their employees on how they should communicate effectively with the public and customers.

Besides, the PR team of Pepsi also assigned a specialist to work with the FDA and to keep the employees on track that what is happening throughout the period and ensure the public that the problem is under control. Concerns for production, defined to the degree which a leader emphasizes production effectiveness and efficiency when deciding how to best accomplish tasks (Blake & Mouton, n. d. ). This concern can be seen when Pepsi emphasize on the effectiveness and efficiency of their production of the product.

The authorities even invited media to film the production plant and produce a documentary video news release to ensure the external public that product tampering is virtually impossible in the production. Finally a surveillance video of a convince store proved that Pepsi is free from allegations. Both of the concerns in the model can conclude that team-based communication direction is effective in handling such situation. The communication in the organization on handling with the crisis of Syringe found in Diet Pepsi Cans in 1993 was effective in the internal public but was not that efficient towards the external publics.

The president of the organization along the management team explaining and updating the employees on everything that is happening and by ensuring to the employees that the corporate office does not think that the tampering is the happening at the plants and by confiding and trusting in the employees abilities increased the employee’s morale at a critical time during the crisis. Employees were treated with the highest consideration. Advisories were sent to bottlers and managers at least once daily but often several times per day to update the situation. This information was to be shared with employees and customers.

These actions not only displayed willingness to cooperate but also efforts by the company to give the public any and all information it needed at different stages of the crisis progression. The 1993 crisis of hypodermic syringes reported in Diet Pepsi had effective communication results stemming from the company’s openness with the media. In addition, other technique used by the crisis management team was included 24 hours hotlines for consumers query and complaints, assigning a specialist to work with the FDA and the legal department were also involved during the communications process (Pepsi case, n.

d. ) (Fearn-Banks, 1996). The communication effectiveness of the company was a success as the crisis lasted for nine days with the crisis communication team working 15-20 hours a day. The team’s efforts resulted in positive media coverage during and after the crisis, which in turn reflected positively for the companies involved. Furthermore, Pepsi distributed instructing information, helping the public to react to the situation, making it an excellent example of how to handle a crisis. ( Strurges, n. d. ).

The poor communication with the external public can see from the action they did to the public after the incident happened. The first complaint regarding syringe was announced on 10th June 1993 but the company did not took any action to that. Pepsi-Cola Co. said that they could not just tell the public about the incident without having substantial amount of evidence to enforce their claim. Pepsi invited media to capture the canning process then the public relation department demonstrating the bottling procedure.

The crisis management team then releases the video news release (VNR) through the media such as television to reach the public eye after a total of 55 complaints about the case in a week. The video shows that is impossible to interfere with the process of the product, the speed of the equipment, and the safety precautions to produce the product. The management team should show the public with this video once they receive the first complaint and not to deny that it is not possible to have a syringe in the can. This is to ensure that they can still gain trustworthy from their customers.

The vice president of product safety, Jim Stanley said that “Because you don’t have a lot of time to gather the facts, you’d better take advantage of the first few hours that you do have. If you waste those early hours in trying to deliberate on what you should do, you are going to miss an opportunity to solve a lot of issues that you could best solve immediately”. In this case, the company had applied the Likert’s System IV where decision-making is performed by every organizational member and goals are set by complete work groups (Rensis Likert, 1967).

It can see from the unity of the Pepsi-Cola Co. employees’ work together to overcome or helps to solve the crisis in a short period of time. The crisis communication team works 15-20 hours a day in order to manage and try to work out the solution. Besides, the Likert’s System IV also emphasize on control of the organization in every level where the Pepsi-Cola Co. practices it during the crisis. The crisis management team had meeting with the internal publics on the ways to communicate with the external public or the way to answer media questions.

The way that internal publics answer questions from the external public is very important because they are representing the company to voice out the answer. According to most of the report from the publics including medias, the Pepsi-Cola Co. had handled the crisis effectively and able to rebound and increased its sales after the crisis. However, the organization could handle the crisis more effectively and better. With a better and effective internal and external communication, it will help to reduce the damages strike to their company.

Pepsi-Cola Co had showed a video regarding of the canning process and let the public understand how hard it would be to get an object into one of their cans. The company also showed a video of a woman trying to stick a syringe in a Pepsi can at a supermarket. However, they did not release the video on the spot. Public do not believe it although the company state that there were no way to insert the syringe in the bottling process at the plant. This become serious when there were 50 cases reported the following week. This proved their communication to the external public was not effective enough to convince the public when the crisis occurred.

They should release the video once the crisis happened and not release after they found out the case become nationally. If they could release the video instantly once they found out they were innocent, the public no matter from internal or external will tend to believe it was a product tampering cases. They external public (consumer) will not under panic attack (worried about the syringe might bring AIDS or hepatitis which it usually related to it) and the media will report the incident and make a clear statement which the product is safe to drink to the audiences.

The surveillance camera which caught the women trying to put a syringe into the Pepsi can when the worker turn around sound more solid and easier to gain public convincing than the video which shot about the canning process. The organization can handle the situation differently in the other way was the CEO of the company should stepped out as the spoke person once the first two cases occurred. At first case occurred, the CEO and president of the Pepsi-Cola Co. was not the spokeperson who accepted the interviewed by the reporter.

The first spokeperson was the Alpac Bottling Company CEO. As Alpac should be responsible of the incident, due to the external public only knew little about Alpac, they will only pointed their finger to Pepsi-Cola Co. because they were the imminent owner of the bottling company. Therefore, to decrease the damages brought by the crisis, the Pepsi-Cola Co. CEO should appeared in the first place to clarify the crisis and try to gain back public trust. The words from the company’s CEO will be more credible, powerful and convincing.

The external communication (consumer, media, government, etc) is important to the company as the internal communication (employee, employers and managers) will also play a crucial role in the organization. For the external communication to the publics who involved, they will tend to believe the words from the leader who was ultimately responsible than a public relations practitioner. The media can get a clear statements, answers or announcements from the CEO directly. As for the internal communication, the CEO who involved themselves into the crisis will gain more trustworthy and support from the employees or subordinates.

Different company practices different approach and theory. As for the Pepsi-Cola Co. , it practiced human resources approach during the crisis. The human resources approach was widely adopted by organizations in the 1960s. This participative, team approach to management-employee relations recognized that employees can contribute both physical and mental labor (Berger, 2008). Human resource approach acknowledges contribution of classical and, especially, human relations approaches to organizing (Miller, 2009).

According to the human resources theorist, individual labor is an important ingredient to reach organization goal but also must consider individual feelings in the organization. Therefore, human resource approach is the mix of classical approach and human relations approach which emphasize on both meeting organization goal and individual feelings. In human resource approach, communication became multidirectional and more interactive compare to the other two approaches. Feedback was sought to enhance problem solving and stimulate idea sharing and innovation content was added to social and task information in communications (Berger, 2008).

Concepts of employee trust and commitment emerged as important issues, and organizations began to share communication decision-making among employees (Berger, 2008). There are two theories categories in this approach which are Blake and Mouton’s Managerial Grid that concentrates on how a manager can combine values of the human relations school and the classical school into a leadership style and Likert’s system IV that specify the details of the organizational form that will incorporate the ideals of the human resources movement (Miller, 2006).

In the crisis of syringe found in Diet Pepsi cans in 1993, the Pepsi-Cola Co. is using the human resource approach in their organizational communication. During the crisis time, they not only work to solve the crisis but they also treated the employees with utmost consideration. The public relations department contacted the management department on how to communicate with the employees regarding the crisis situation and how to answer questions from the public and the employees (Yaxiara, 2008).

All 400 field locations were aware at all times of what was going on in the company, what information is being reported, how the government was handling this matter, and how the company is responding to this matter (Yaxiara, 2008). They updating the employees regarding the situation by sending advisories to bottler and manager several time a day. When there is any update from the investigation, the president was also contacting the management department to share the latest information.

This show that the company was concerning on employees feelings, therefore had explaining and updating the employees on everything that is happening and by ensuring to the employees that the corporate office does not think that the tampering is happening at the plants and by confiding and trusting in the employees abilities increased the employee’s morale at a critical time during the crisis (Yaxiara, 2008). Besides, they giving all information and teach the employees to respond is to control the information that shared with the external public and able to meet the company goal which is solving the company crisis.

The communication of the organization toward external public is also applying the human resources approaches. The company public relations department convinced the external public of the investigation proceeding on a daily basis to ensure to the public that the problem is under control (Yaxiara, 2008) in order to calm the public feeling and control the external situation. We cannot deny that management must exercise control for organizations to succeed. Based on the crisis that faced by Pepsi during the year 1993, we can see that the internal publics were well-handled.

. The Pepsi-Cola Co. did a very good job with keeping employees up to date with new information about the crisis they faced. This consequently gave faith to the internal publics. The Pepsi CEO also fully utilised his power towards the external public. During the crisis, Pepsi CEO appeared on every major network to share the message that defect was practically impossible in their products. A management function aimed at achieving defined goals and usually have three components which included taking corrective action, setting standards and measuring actual performance.

The contribution of power is very important in order to exercise control towards management. The power of ideology and hegemony made the employees in the Pepsi-Cola Co. to think that the organization hierarchy is needed to be practiced by the company. The Pepsi-Cola Co. created an ideology to the internal publics that the crisis can never related to the company and keep the employees up to date. The public relations department got in touch with the management department on how to communicate with the employees about the crisis situation.

There are also discussion on the way to answer questions from the employees and the public. All 400 field locations were aware at all times of what was going on in the company, what information is being reported, how the government was handling this matter, and how the company is responding to this matter. Internally, Pepsi prevented organizational disorder by updating employees with daily advisories to over 400 facilities nationwide. By doing this, the frame of an idea will be built in the internal publics’ mind. This ideology made the internal publics tend to trust the company.

In order to convince the external public, the internal public must have faith in the company too. The leader applied the legitimate power in the communication process within the internal public. The crisis management team which leaded by Craig Weatherup, the president and CEO of Pepsi was in charge of the education of the senior management regarding how to answer the questions from the employees and public. The employees were educated by the senior management regarding how to answer the questions from the public. This shows that the company are practicing legitimate power which is the power was emerged from positions and titles.

The people on the higher hierarchy have the right to control the lower level. However, the communication can be in formal and informal way. It also can be written and spoken and including all the channels. However, the legitimate power wasn’t excluded. From here, we can see that the Blake and Mouton’s Managerial Grid of the human resources approach was applied in the internal communication of Pepsi-Cola Co. This approach assumes that leaders will be most effective when it concerns both concern for people and concern for production.

The way that Pepsi-Cola Co passed their messages was practicing classical approach which is based on the hierarchy level. The legitimate powers of the leaders successfully control the management and formed an effective communication. On the other hand, they pass the message by using both formal and informal way. This is basically practicing human relations approach. By combining these 2 approaches, Blake and Mouton’s Managerial Grid of the human resources approach was applied in order to control and the organization and way of communication.

Pepsi successfully overcame the crisis by using different communication techniques and management power to show the internal publics and external publics that this scare was not possible. The internal publics were considered as successful in working together. The company guaranteed the external publics that there company does not experience any problems in manufacturing their products. It is now one of the biggest manufacturers in the world. Pepsi is connected with 200 countries and profits of the organization continue to rise per annum. This incident has not been discussed for years. Pepsi-Cola Co. will stay successful if they use the right communication way when facing problems.

References

  • Anton. (2011, May 8). Effective communication case study analysis: case 9-1 Pepsi Syringe. Retrieved November 6, 2011, from http://essays24. com/print/Effective-Communication-Case-Study-Analysis/48875. html
  • Berger, B. K. (2008, November 17). Employee/Organizational Communications. Retrieved November 5, 2011, from Institute for Public Relations website: http://www. instituteforpr. org/topics/ employee-organizational- communications/
  • Blake, R. , & Mouton, J.(2010, May 19). What is Blake & Mouton’s managerial grid? Retrieved from http://www. businessmate. org/Article. php? ArtikelId=188
  • Crisis management/Pepsi syringe scare. (n. d. ). Retrieved November 6, 2011, from http://iml. jou. ufl. edu/projects/Spring01/Morrison/Pepsi. html
  • Pepsi case study. (n. d. ). Retrieved November 3, 2011, from http://www. personal. psu. edu/bms5263/Pepsi%20case%20study%20marketing%20310. docx
  • Yaxaira. (2008, February 9). The Diet-Pepsi crisis. Retrieved November 6, 2011, from http://newsflavor. com/alternative/the-diet-pepsi-crisis/.

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