Workplace fatalities among employees or suppliers can harm a company’s reputation: especially if they are seen as a symptom of corporate irresponsibility. But when stakeholders react, honest and well-prepared crisis communications can repair sentiment. Neil Gibbons reports

It’s 11am on the 24 May 2010 in the Cheung Sha Wan district of Hong Kong. It’s a largely residential area, unused to fuss, but today the mid-morning quiet has been replaced by the sound of shouting.

Some 30 protestors have gathered outside an innocuous-looking office complex and are screaming, waving placards and setting fire to cardboard effigies of iPhones. By midday, they have taken over the lobby of the building and a media scrum has formed.

This is the Hong-Kong headquarters of Taiwanbased electronics giant Foxconn in the hours after it announced that a ninth worker has fallen to his death at its southern Chinese factory alone.

A week later, scuffles erupt in Taiwan as activists try to enter an exhibition centre where President Ma Ying-jeou is opening Asia’s biggest technology fair. The protesters, shouting “Capitalists kill people” and holding placards and pictures of Foxconn chief Terry Gou, fight with uniformed police as they tried to deliver a letter to Ma while he launched Computex Taipei.

And a further week later, three dozen protesters picket Foxconn’s AGM in Hong Kong, holding signs saying, “Workers are not machines. They have self-esteem.”

 If it hadn’t before, Foxconn – supplier of electronic goods to Dell, Nokia, Sony Ericsson and Apple among others – now knew it was in a reputational crisis. It had been brewing all year. In all, 13 workers had killed themselves and three more have attempted suicide at Foxconn’s operations in China, the majority jumping to their deaths from company buildings.

But while campaigners were demanding a comprehensive overhaul of working practices, including independent workers’ committees, higher wages, shorter hours and a greater variety of work, Foxconn was installing safety nets around buildings to try to prevent further deaths. It was, said critics, focusing on the symptoms rather than the cause.

Few crises are as attention-grabbing and reputation damaging as death. Freak accidents are one thing, but when employee or supply chain deaths are attributed to systemic negligence, lax safety procedure, or a more pervasive indifference towards employee welfare, sentiment among the media, public and investors can slump. Managing the fall-out is a tall order.

In the case of Foxconn, crisis communications failed spectacularly. In a now much-criticised rearguard action, Foxconn quickly tried to paint itself in a positive light, pointing out it is overwhelmed by applicants when it announces vacancies. “We are certainly not running a sweatshop,” Foxconn chairman Terry Gou said. “We are confident we’ll be able to stabilise the situation soon.”

But addressing workforce deaths honestly is essential, says Matt Eventoff, a communication and messaging strategist with PPS Associates which trains C-level executives and political leaders in the art of the communication and messaging. “A high fatality rate, or more specifically a regular consistent fatality rate, is a reputation killer, period,” he says. “One key factor matters more than every manual and tactic – care. Truly care.

“At the point when disaster strikes, every action you take sends a clear message to the public and to the employees who remain. The reality is that the public are very accurate in observing sincerity, callousness, and phony sympathy – if you are communicating strictly to reduce reputational harm, if won’t work.” In the medium term, he says, the most important thing to do is implement new strategies and safety protocol to address disasters.

When it seeps into the public consciousness, workplace death becomes an investor relations issue. Investor sentiment towards Foxconn, for example, has undoubtedly been hit among more ethical funds. In July, 40 socially responsible investor groups wrote to the Electronic Industry Citizenship Coaltion, calling for action. One of the signatories, Adam Kanzer, managing director and general counsel for Domini Social Investments, said, “The Foxconn suicides are the latest reverberations of an alarm that has been ringing for many years now. The foundation of our global manufacturing system is not sustainable. Without strong investor support for meaningful change on the factory floor, we will continue to drift from crisis to crisis.”

But with most investors led by the bottom line, it’s wider public sentiment that’s important. The question is, do consumers take notice?

Marketing Sustainability 2010, a study by USbased consumer culture analysts The Hartman Group, reveals that while 69% of consumers are now aware of the term ‘sustainability’, just 21% can identify a sustainable product and only 12% can name specific companies as sustainable. And when asked specifically to rank their interest in issues of sustainability, more consumers say they were primarily interested in whether companies offer quality products than if they provided safe working conditions for employees.

“We’re seeing a broad gap in the way consumers and companies think about and approach sustainability,” says Laurie Demeritt, Hartman group president & COO. “That very few consumers today can name a sustainable company underscores the fact that so many corporate social responsibility and sustainability activities go relatively unnoticed by consumers.”

Jim Preen of Crisis Solutions isn’t convinced that high levels of mortality significantly affect reputation, unless there’s a newsworthy tipping point. “To be brutally candid the death of an employee is only likely to affect a company’s reputation if it makes the news.

According to Preen, the outcry very much depends on the sector. “Mining, construction and oil and gas are known for their dangers and if people die in accidents then this largely goes unremarked by the media.”

Tell that to BP, whose workplace fatalities have admittedly been given extra prominence thanks to the environmental disaster they were bound up with. On 20 April 2010, the blast on the Deepwater Horizon oil rig injured 17 workers and killed 11.

Angry shareholders were quick to respond. A significant number reacted swiftly and unsympathetically, initiating lawsuits which alleged that the company had long put profits ahead of safety and now faces potentially billions in losses because of the disaster.

The first such lawsuit – Firpo v. Hayward – alleges that BP executives and its board “recklessly disregarded accidents and safety warnings for years” related to the Deepwater Horizon rig. A similar class action was filed in Montgomery, Alabama, by over 40 BP shareholders who contend the company’s poor safety record, coupled with the Deepwater rig accident, could ultimately destroy remaining shareholder value.

Of course, it hadn’t helped that five years earlier BP had gone through a similarly fatal reputation-shredding disaster. On 23 March 2005, a fire and explosion at BP’s Texas City Refinery had killed 15 workers and injured 170 others. BP has so far paid out $1.6 billion in compensation. For another disaster to draw criticism of BP’s safety culture so soon afterwards, was galling.

Matt Eventoff cites this as a “clear example of poor handling” but ranks alongside it the Massey Energy tragedy of April 2010, the worst US mining disaster in 40 years.

Richmond, Virginia-based coal firm Massey Energy came under the spotlight in April after an explosion at a Massey mine in West Virginia which killed 29 miners. It found itself fending off claims that it operated unsafe mines and created roadblocks to delay the regulatory process. It is also fighting calls to remove its CEO and three board members.

But critics have been quick to brand its crisis management as lightweight and insufficient.

Although Massey set up a media hotline and website to provide information and CEO Don Blankenship was on hand to provide updates, condolences and media interviews, sentiment towards Massey remained negative, in part because its brand had been weak to begin with. It had long been targeted by safety and environmental groups and received negative publicity for previous fatal mining accidents while Blankenship has also been characterised as eschewing safety for production.

 “There’s no excuse for the lack of accountability at Massey,” wrote New York State comptroller Thomas DiNapoli in his support of removing the board members. He also called for Blankenship to resign. “The solution is clear: they have to go.”

Meanwhile, an overly defensive media relations approach played badly, with its website refuting claims by the federal Mine Safety and Health Administration, critics and news outlets about Massey’s safety record.

In its annual report, Vedanta says: “We remain dedicated to observing and implementing the highest standards of safety at all our projects and operational sites and continue to strive to make the working environment as safe as possible for our employees and contractors”. But the British Safety Council, which promotes workplace health and safety, has withdrawn an international safety award given to Vedanta in 2009 because of concerns that the company had failed to declare the industrial accident at Indian subsidiary, Bharat Aluminium Company, that killed another 41 construction workers.

• Vedanta: 27
• Anglo American: 19
• ENRC: 12
• Xstrata: 9
• Antofagasta: 5
• BHP Billiton: 5
• Barrick Gold: 4
• Randgold: 4
• Lonmin: 3
• Rio Tinto: 1
• Fresnillo: 0

Earlier this month, the Independent began a sector-by-sector analysis of workplace fatalities across the FTSE 100, starting with mining.

The lax list

Of course, corporate tragedy affects reputations beyond the factory walls. When the protestors picketed the Foxconn AGM, it was telling that some were waving cardboard cutouts of Apple CEO Steve Jobs with devil’s horns, while other placards bore the company logo and the words “Bloody Apple”.

A seemingly lax approach to the employee fatality rate can create major reputation problems for big brand names further down the supply chain. Just as, as decade ago, Nike, The Gap and other well-known clothing brands were faced with charges of sweatshop labour practices, fatally harsh conditions in the electronics supply chain have scared high-tech brands.

Death, especially preventable death, reverberates far and wide. In the case of Foxconn, critics have said the suicides stem from conditions that make life seem “meaningless.” Workers are forbidden to converse on the production line, bathroom breaks are nearly nonexistent, and minor mistakes are punished severely.

As the controversy over the Foxconn suicides spread, Dell, HP, and Apple announced that they would each investigate working conditions at the supplier’s facilities. Apple maintains that workers in its supply chain are limited to a max of 60 hours per week, including overtime. HP and Dell have similar supplier code-of-conduct statements.

It was little wonder these brands were jittery. Dell was promoting its slick new Streak tablet, HP was had just completed the $1.2 billion acquisition of Palm, and Apple had just launched the iPad worldwide. Workers jumping from the top of company property was not an image that sat well.

“We are saddened and upset by the recent suicides at Foxconn,” said a statement from Apple. We are in direct contact with Foxconn senior management and we believe they are taking this matter very seriously. A team from Apple is independently evaluating the steps they are taking to address these tragic events and we will continue our ongoing inspections of the facilities where our products are made.”

Essentially, however, companies must apply the same rules of thumb as they would in any crisis situation. “Companies must behave like compassionate and sensitive people, not as impersonal monoliths,” says Peter Morrissey of US-based reputation management firm Morrissey & Company.

He offers a reminder that rescuing reputation externally is only part of the task. Managing the crisis internally will help the rganisation to retrun to operational normality sooner rather than later. “A death can be a significant disruption to a company and a fine line needs to be walked to assure the enterprise continues to operate and moves on after an appropriate time of grieving. The best approach for the managers is to express sadness but also to suggest that the individual would have wanted them all to continue on. The idea is that the company is in a way a family of individuals linked through their professional and social lives.”