Crisis Management: How Hilton Handled Mold Problem

Honolulu, HI – In 24 hours, hotel executive Peter Schall thrust his company into a spotlight most executives dread.

By the end of the day on July 24, he had met with guests in 71 rooms, the state Department of Health, a labor union, 900 employees and seven news organizations to reveal that his newest tower — a $98 million project — was breeding a potentially dangerous mold that was out of their control.

Experts say he did well: Hilton’s is a lesson from which all businesses can benefit.

“We want to be proactive in everything we do to alleviate any type of speculation or misconception and any kind of inaccurate information that confuses the public and our employees,” said Schall, senior vice president and managing director of Hilton Hawaiian Village Beach Resort & Spa.

But not everyone is impressed with the way Hilton has handled its public relations.

“If this is how Hilton does PR, I would be very concerned for their stockholders,” said Eric Gill, financial secretary-treasurer of the Hotel Employees Restaurant Employees Local 5 union, which is in labor negotiations with Hilton. “They’ve done nothing to build confidence with us.”

For example, the union found out about the mold from one if its members, not from Hilton.  “We were preparing an information request when we found out there were dozens of rooms closing down,” Gill said. “Peter [Schall] assured us we’d be in the loop for everything, but two days later but two days later they had a press conference when they revealed the species of the mold and we had to find out from the press.”

“Hilton had admitted they got a subcontractor in May, yet they told the world they discovered this in June,” Gill said. “Hilton has a bit of a credibility problem here. And it’s not helped when they trot out a handpicked expert who is unwilling to submit his methodology to a peer review.”

Much of the trust during any crisis is established in the first few hours of going public with a problem that many lawyers might advise to bury, said Rene A. Henry, author and consultant on crisis management.

The natural inclination when something goes bad is to clam up and hope it goes away — a recipe for disaster, he said.

“Attorneys would say `no comment,’ but that’s like waving a big red flag saying `I’m guilty’!” he said.

Schall said concern about litigation was not an issue when the hotel decided to go public.

“We went forward because there is a concern for our employees and our guests, and we did not want them to be exposed to an issue we have discovered that needs remediation,” he said.

That’s smart, Henry said.

“The first thing I say is accept responsibility and admit what’s happening,” Henry said. “If you say it’s your fault and there are any victims, it’s not against the law to show remorse, sympathy and compassion. When any organization does, they’ll at least get the public trust.”

Besides, it’s the right thing to do, Henry added. Not only will it greatly reduce the risk of litigation, but being forthright and compassionate will help a jury side with the company in court, according to Jim Lukaszewski, chairman of the Lukaszewski Group Inc., a national management consultant company that specializes in crisis communications.

“It’s the single most important issue to a jury,” he said. “If our side comes off as arrogant and unfeeling, that jury will tear our butt into a million little pieces and put a dollar sign on each one.”

Health issues, such as the mold problem Hilton is facing, are the most tricky to navigate and require a solid plan and an unwavering helmsman, he said.

“Those affect us more personally and the most emotionally,” Lukaszewski said. “If it is an issue that is going to create victims, people are going to be concerned.”

For incidents that can create victims, it’s vital both to find as many victims as possible and to understand the psychology involved, he said.

Being a victim is really a self-designation that someone may choose to use to define himself, Lukaszewski said. They will assume that role as long as they feel like victims and will stop only when they decide it’s over.

Victims require three things, the lack of which undoubtedly will lead to litigation, he said.

“The first is acknowledgment; if you fail to acknowledge them, this is what causes people to go find lawyers,” he said. “Secondly, they need a platform and an audience to tell others and to warn what victimized them. The third thing they need is evidence that whoever created the situation is taking steps so it will not happen to someone else.

“Early on, they don’t sue, they spread the alarm,” he said, so it’s important to acknowledge as many as possible as soon as possible. “Holding lots of meetings is a very good thing,” he said.

Schall said he’d do it the same way again and recommended that his peers do the same.

“I believe that if any company should discover any issue, they should immediately step forward and inform the public and [tell about] the steps they are planning [in order] to keep any exposure to an absolute minimum,” he said. “When you discover a potential health issue, the sooner you take steps to remediate it, the sooner you can solve them.”

WEB EXCLUSIVE

There are seven steps a company should take to regain public credibility after a damaging situation:

Candor: Outward recognition, through promptly verbalized public acknowledgment (or outright apology), that a problem exists; that people or groups of people, the environment, or the public trust is affected; and that something will be done to remedy the situation.

Explanation (no matter how silly stupid, or embarrassing the problem-causing error was): Promptly and briefly explain why the problem occurred and the known underlying reasons or behaviors that led to the situation (even if only partial, early information is available). Also talk about what you learned from the situation and how it will influence your future behavior. Unconditionally commit to regularly report additional information until it is all out or until no public interest remains.

Declaration: A public commitment and discussion of specific, positive steps to be taken to conclusively address the issues and resolve the situation.

Contrition: The continuing verbalization of regret, empathy, sympathy, even embarrassment. Take appropriate responsibility for having allowed the situation to occur in the first place, whether by omission, commission, accident, or negligence.

Consultation: Promptly ask for help and counsel from “victims,” government, and from the community of origin — even from your opponents. Directly involve and request the participation of those most directly affected to help develop more permanent solutions, more acceptable behaviors, and to design principles and approaches that will preclude similar problems from reoccurring.

Commitment: Publicly set your goals at zero — zero errors, zero defects, zero dumb decisions and zero problems. Publicly promise that to the best of your ability situations like this will never occur again.

Restitution: Find a way to quickly pay the price. Make or require restitution. Go beyond community and victim expectations and what would be required under normal circumstances to remedy the problem. Adverse situations remediated quickly cost a lot less and are controversial for much shorter periods of time.