Last month, four lives were cut tragically short in an accident on the Thunder River Rapids ride at the Dreamworld theme park. Since then, serious concerns have been raised about the actions of the board, particularly concerning their handling of the tragedy itself.
Regular equipment breakdowns and an inexperienced employee left in charge have led to accusations the company didn’t do enough to prevent the disaster, while the board’s response to the crisis has done little to restore confidence.
A disastrous few weeks has seen the media attack the company for not contacting families of the victims, award a hefty bonus to the CEO just two days after the accident, have advisors to the business threaten to walk away, and cancel a controversial re-opening for a memorial amid police concerns.
These problems indicate that either the company’s crisis management plans have not been implemented, or that there was a significant lack of preparation for such an event. Either way, their actions (or lack of) could put both the business and their own careers at risk.
Poor Preparation Leaves Officers Personally Liable
Every officer must ensure that their business is actively monitoring and evaluating health and safety. A failure to do so not only put lives at risk but leaves that officer personally liable to prosecution.
Officers can be prosecuted under the WHS Act, with penalties of up to 5 years gaol time and fines for individuals of up to $600,000. Of course, aside from the fine and gaol time, a prosecution could be career-ending.
Poorly-Managed Crises Do Long-Term Damage to Business Viability
Dreamworld, and its parent company Ardent Leisure, could also be hit with fines of up to $3,000,000 under WHS prosecutions. But these fines are the least of Dreamworld’s worries. A failure in crisis management can tarnish a brand such that it has no hope of recovering.
Businesses in the food & beverage industry that have handled crisis in recent times include:
Fonterra Cooperative Group (2013)
A wide-scale recall of dairy products was undertaken after suspected botulism-causing bacteria were found in a sample. Although no cases of sickness were reported, the head of Fonterra’s milk division was forced to resign. Fonterra was also fined $300,000 due to issues with their risk management programme and are facing a multi-million-dollar lawsuit from customers for the impact of the incident on their business.
Patties Foods (2015)
Concerns about a hepatitis A outbreak linked to frozen berry imports led to a recall of Patties frozen products and a significant drop in share price. The ultimate result of the crisis was the sale of the business. Click here to read our previous coverage of the Patties contamination disaster.
7-Eleven (2015)
News that 7-eleven franchisees paid workers half-rates caused significant damage to both the brand and to the reputation of its board who had either failed to notice or act on the problem, which prior to the revelation had been ongoing for years. Click here to read out previous coverage of the 7-eleven half pay scam.
Will Your Business Be Hit By A Crisis Next?
No business can guarantee a crisis won’t occur, and it could be your business that is next. Dreamworld is a high-profile example, but unfortunately, this kind of tragedy happens all too often. As of the 8th November, 148 Australian workers have been killed in the workplace during 2016[1].
There’s no excuse for failing to put the proper procedures in place. We recommend you ask yourself the following questions:
How confident are you that your business won’t be in the headlines for the wrong reasons?
Are your board ready and trained to manage a crisis correctly and limit the harm to your brand?
Steps You Should Take Before A Crisis Occurs
Preparation is your best hope for correctly managing a crisis. If you haven’t already, you should take the following steps:
- Ensure your Crisis Management Plan (CMP) has clearly defined roles
- Ensure people are assigned to roles and are trained adequately to navigate these roles in the event of a crisis (In particular your nominated spokesperson).
- Ensure you know who your key stakeholders are and how you will communicate with them in the event of a crisis.
- Ensure you have the necessary resources available to navigate a crisis if necessary, including specialist
Dreamworld’s brand, and the reputation of their board, have been severely damaged by the inadequate response to this crisis. Only time will tell how bad the damage will be. Don’t put your risk management head in the sand and hope that this won’t happen to you. Make sure you’re prepared to handle any eventuality.
[1] http://www.safeworkaustralia.gov.au/sites/swa/statistics/work-related-fatalities/pages/worker-fatalities