How to Announce and Recover From a Product Recall

The way a company handles the announcement of a defective product becomes a matter of either good or bad business ethics.

How to Handle a Product Recall - Nagle

Almost any company can end up facing a product recall. The way the recall is handled determines how much the company's reputation will be tarnished when the media gets a hold of the information. While the desire to avoid conflict by keeping bad news quiet might be part of human nature, it can backfire for a business facing a recall.

How to Handle a Product Recall

• Move swiftly: Every extra day the recalled product is out in the open market becomes a liability for your company. People, and the media, will find out if you knew there was a problem and tried to cover it by dawdling. When lives are at stake, swift action and getting the defective product out of the market is your company's best chance of recovering from the recall.
• Consider your company's stakeholders: Your stakeholders include customers, employees, and anyone in the community affected by the defective product. Try to look at the recall from your stakeholder's point of view. If serious injury or loss of life was involved, with you as the victim or victim's family, what information would you want? That is the information you need to provide.
• Contact affected parties: If you have contact information for those who purchased your product, use that information to reach your customers. You cannot depend exclusively on contact information, though, because some products may have gone to third parties as gifts and as a result of sharing; so announcements also need to be promulgated through governing agencies and the media.
• Admit the scope of the problem when notifying stakeholders and media: While you might not want to immediately admit the size, or scope, of the recall in the hope of enacting some measure of damage control; once the word is out, people and government agencies will start digging. By providing the information, you represent your company with integrity; and the honesty will be remembered.
• Find the source of the recall: The people injured by the defective product will want to know how "it" happened; and that "it" will not happen again. Being able to say, for example, that supplier x sold you defective widgets and has now been dropped as your supplier; or that one of your machines malfunctioned; tells injured parties why they should trust you in the future. That does not mean you should "pass the buck."
• Take responsibility for the recalled product: If customers, employees, or your company's neighbors have been hurt by your product. People will want to know your company takes responsibility and will take the backlash that comes with it. One recent example of a company taking responsibility is the Kroger Company's pet food recall for aflatoxin.
• Select a company spokesperson: The company CEO, or business owner if a smaller business is involved, is a natural choice. Some companies, however, have public relations people who address the public and media concerns in the event of a recall.

Business Recovery After a Product Recall

Things to consider as your company moves forward: Regulatory agencies will require paperwork before you can resume business as normal. Also, Global Marsh recommends monitoring the product's reintroduction in regards to stakeholders, including: consumers, the media, government agencies, and shareholders.

Copyright Laure Justice