Coping with Catastrophe

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When a New York woman died on Feb. 8 after taking cyanide-laced Tylenol capsules, executives at Johnson & Johnson, maker of the painkiller, saw an old nightmare returning to haunt them. They recalled all too vividly how their company was shaken in 1982 after seven people in Illinois died from poisoned Tylenol. This time, Johnson & Johnson was ready. Responding swiftly and smoothly to the new crisis, it immediately and indefinitely canceled all television commercials for Tylenol, established a toll-free telephone hotline to answer consumer questions and offered refunds or exchanges to customers who had purchased Tylenol capsules. At week's end, when another bottle of tainted Tylenol was discovered in a store (see NATION), it took only a matter of minutes for the manufacturer to issue a nationwide warning that people should not use the medication in its capsule form.

Johnson & Johnson's previous experience with disaster had taught it the value of a spreading corporate discipline known as crisis management. Many other companies have learned the hard way that catastrophe can come from nowhere at any time: the lethal gas leak at Union Carbide's Bhopal plant in India in 1984, the 1981 collapse of two skywalks in the Kansas City Hyatt Regency Hotel. But more and more firms are not waiting until calamity strikes to think about what they would do. Instead, they are developing detailed plans to cope with such crises as industrial accidents, product recalls and even terrorist attacks. Says Steven Fink, president of Los Angeles-based Lexicon Communications and author of the forthcoming book Crisis Management: Planning for the Inevitable: "Companies are beginning to realize that what happens to a Union Carbide can happen to them, whether they're big or small, publicly traded or privately held."

It is the element of surprise that is most unsettling to executives confronted by sudden catastrophe. Says Fink: "The savviest chief executive in the world often falls victim to a kind of paralysis when a crisis strikes." Any kind of conditioning may thus be comforting in a crunch. Says Jean Lipman-Blumen, a professor at California's Claremont Graduate School's Executive Management Program: "The worst part of a crisis is being unprepared. By removing the unexpected quality you are removing that which is most unnerving."

United Airlines and Dow Chemical, among others, have set up corporate SWAT teams made up of employees who are trained to take charge in the event of an unexpected disaster. Attention to detail is a crucial component of most contingency plans. Dow has produced a 20-page program for communicating with the public during a disaster, right down to such particulars as who is going to run the copy machines. Many companies designate a single corporate spokesman to field all inquiries from the press. A list may be drawn up of those executives to be notified in emergency situations, and the late-night phone numbers of local radio and television stations may be kept posted on office walls. Some companies even simulate mock disasters as rehearsals for the real thing, like fire drills.