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WHAT NOT TO DO WHEN YOU LAND KNEE-DEEP IN IT. TOUGH LESSONS FROM PAN PHARMACEUTICALS
by Richard Newell and Genevieve Westcott © 2003

In these days of PR spin and media manipulation, it amazes cynical old hacks like us that companies still manage to tie themselves in knots - regularly - when faced with a potentially damaging situation. If you don't have an in-house media expert, get some help. Click here to check out our crisis communication life lines. There are few things more dangerous than a journalist following the sweet scent of a good story.

Case in point? When Pan Pharmaceuticals was the victim of Australia's largest ever product recall, the company directors did nothing to stem the flood of media speculation about the risk this posed for consumers.

What Pan did is a textbook case of how NOT to manage the media. Here's what you can learn from their costly mistakes.

Rule Number One - Don't Bury Your Head In The Sand

• This was a big story picked up by all the media. More than 1,500 products manufactured by Pan - Australia's largest contract manufacturer of pharmaceuticals - had been recalled. And because Pan was exporting its products, the international media was also chasing them hard. Astonishingly, it took almost 24 hours after the product recall was announced before Pan spoke to the media.
• Which means Pan was hoping the media wouldn't pick up on the story. Or worse, Pan simply didn't understand that this is precisely the sort of story that journalists love.
• A number of Pan Pharmaceutical’s directors spoke to the media on that second day, but gave conflicting - and often confusing - information. That means they hadn't even discussed among themselves what the company's response should be. You might call that naïve. We call it downright incompetent.

Rule Number Two - Move Quickly

• It took three days for Pan to hold a news conference. By then, the story had taken on a life of its own, and Pan had absolutely no control over it. The damage had already been done.
• In the glare of international media pressure, the company struggled to get its message across and was soon on the brink of insolvency. Should we expect better of our business leaders? You betcha. Any business that expects to scrape through life without getting scratched is living in La-La land.

Rule Number 3 - Tell The Truth

• Any director of a publicly listed company will tell you the market doesn't like surprises. Honesty is pretty much always the best policy. So Pan should have fronted up to the media with a properly prepared statement, as soon as the extent of the problem was known. By showing its concern and demonstrating that it was working hard to put the situation right, it would have been able to preserve some credibility. Instead, the company sought to hide the truth. And the cover-up is worse than the original sin. Always.

Rule Number 4 - Here Comes the Cavalry

• Pity the poor PR agency that was brought in to fight that fire. They never stood a chance. By contrast, after GlaxoSmithKline was forced to recall Panadol in 2000 following an extortion attempt, the company worked hard to restore confidence in its brands. Its PR consultants arranged a tour of the company's factory for journalists, with the company's chief executive demonstrating the safety of the product's packaging.

Rule Number 5 - Don't Touch That Paper Shredder

• A much more sinister aspect of the Pan story emerged when it was revealed that Pan staff had shredded files and had refused to return telephone calls. On one occasion, a Pan employee told auditors that computer records couldn't be produced because they didn't have the right password.
• Come on. We weren't born yesterday. This is precisely the sort of behaviour that arouses suspicion and hostility in the public. Let's put it this way. If you say to me 'No comment', I'll know for sure there's a story there. If you make some lame excuse for not being able to give me information, I'll know there's more to the story than meets the eye. And I'll be even more persistent in my questioning.
• Pan has since made attempts to clean up its act and hold those responsible to account. The bad news is the costly damage has already been done. It's going to have to work very hard and very long to to regain its credibility. Phew! What IS that smell?

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