If you run a business that makes physical products, then it’s highly likely you will have to do a recall at some point. It’s a natural part of doing business. The more physical products you make, the more probable that you’ll run into this issue at some juncture.
If you’re running a smaller company, then a product recall might involve a few thousand products. The larger you get, the more disruptive a recall can seem.
For instance, Takata recently recalled 67 million airbags. They had little choice, though. Often, when a company has to do a recall, they realize that if they don’t move forward on this issue, they might have a class action lawsuit from injured consumers somewhere down the line.
Let’s take some time to talk about how companies should handle recalls. We will also review what you might do as a company if you’re looking at some accompanying negative publicity.
What Causes a Recall?
First, let’s define a recall so you know exactly what we mean when we use this term. A recall means that a company gives the public word that a product they have produced might harm them if they continue using it. They will ask that the public return the product.
The company also typically reimburses the consumers who bought that product. They do this because they want to maintain public goodwill.
Usually, the company will discover that there is some aspect of the product that is potentially hazardous. They might discover this when they do some additional testing.
It’s important to note that virtually any product should receive rigorous testing before it makes it onto store shelves.
However, it’s not a foolproof process. A product and its components might seem okay initially, but then the product might degrade over time and become dangerous after a few weeks, months, or even years of use.
A recall might also happen if a particular product or a component injures or even kills some people. Obviously, that’s a situation that a company wants to avoid at all costs.
Injured or dead consumers mean negative publicity. A company that manufactures a defective or dangerous product also opens itself up to potentially costs lawsuits.
What Might Happen if You Don’t Recall a Product?
If a company does not recall a product that becomes dangerous over time or has hazardous components that might harm the consumer the moment they start using it, then they risk both monetary damages and lack of public faith.
If the public turns against a company, that might completely sink them. Even large, multinational companies can suffer devastating consequences if they refuse a product recall, especially if they’ve sold thousands or millions of the products in question.
The financial consequences can cripple or even bankrupt a company. If a company won’t recall a product, or they don’t do so in time, then they might face a huge lawsuit that may force them into bankruptcy.
You Should Have Measures in Place
Every company that manufactures physical products should know to test those products very extensively before they let them get onto store shelves.
They must likely get the product to a point where it passes an inspection from whatever entity governs such things. These entities exist to protect consumers, so it’s good that they are there.
However, a company should not make a product that’s just barely good enough to pass required inspections. They should always strive to create a high-quality product that any consumer would say meets the highest standards of excellence.
Doing so often prevents any problems. However, even companies that test their products rigorously might occasionally face a recall.
That’s because a physical product might degrade in a way the company never expected. It might only become dangerous after a significant amount of time goes by.
As a company, you should have contingency plans in place that go into effect if you have to institute a recall.
For instance, you should have an insurance policy that you can use to pay consumers if you do have to face a lawsuit from a single consumer or a larger class action lawsuit.
How to Handle Potential Negative Publicity
If you can square things with a consumer or consumers that your product harmed, that’s great, but you should also try to temper public backlash. First, you need to apologize and sound like you mean it.
You can’t just give the problem lip service. The company owner or CEO should draft a statement and deliver it to the media.
You might hire a crisis management team to help you create a statement that says just the right thing. You should explain what went wrong and own it. You should also mention specific measures your company will take to prevent anything like this from happening in the future.
You should never refuse to apologize or try to drag out the process in court to deny the injured party or parties their financial compensation. If you do, that will increase public perception that you’re a greedy company that only prioritizes profit.
You need to remember that in this age of increased visibility for CEOs and company owners, perception and reality remain closely aligned.
A company that seems genuinely apologetic if their product hurts or kills someone might remain open. One that digs in their heels and insists they did nothing wrong may end up closing its doors forever, and rightly so.
While negative publicity means a great deal, you should also remember that employee morale will probably suffer if you try to insist that you’re not responsible. You should address your company as well and let them know that you’re going to do better from now on.
That’s usually how you will stay in business, regain the public’s trust, and retain your valued employees. Know that the larger your company gets and the more products you make, the more likely you will face this scenario eventually. How you handle it matters.
