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This article was downloaded by: [Eindhoven Technical University] On: 15 November 2014, At: 22:48 Publisher: Routledge Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK Journal of Change Management Publication details, including instructions for authors and subscription information: http://www.tandfonline.com/loi/rjcm20 Managing communications in a crisis Kevin Hawkins a a Communications for Safeway Stores plc Published online: 18 Jun 2010. To cite this article: Kevin Hawkins (2000) Managing communications in a crisis, Journal of Change Management, 1:1, 59-65, DOI: 10.1080/714042451 To link to this article: http://dx.doi.org/10.1080/714042451 PLEASE SCROLL DOWN FOR ARTICLE Taylor & Francis makes every effort to ensure the accuracy of all the information (the “Content”) contained in the publications on our platform. However, Taylor & Francis, our agents, and our licensors make no representations or warranties whatsoever as to the accuracy, completeness, or suitability for any purpose of the Content. Any opinions and views expressed in this publication are the opinions and views of the authors, and are not the views of or endorsed by Taylor & Francis. The accuracy of the Content should not be relied upon and should be independently verified with primary sources of information. Taylor and Francis shall not be liable for any losses, actions, claims, proceedings, demands, costs, expenses, damages, and other liabilities whatsoever or howsoever caused arising directly or indirectly in connection with, in relation to or arising out of the use of the Content. This article may be used for research, teaching, and private study purposes. Any substantial or systematic reproduction, redistribution, reselling, loan, sub-licensing, systematic supply, or distribution in any form to anyone is expressly forbidden. Terms & Conditions of access and use can be found at http://www.tandfonline.com/page/terms-and- conditions

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Page 1: Managing communications in a crisis

This article was downloaded by: [Eindhoven Technical University]On: 15 November 2014, At: 22:48Publisher: RoutledgeInforma Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House, 37-41Mortimer Street, London W1T 3JH, UK

Journal of Change ManagementPublication details, including instructions for authors and subscription information:http://www.tandfonline.com/loi/rjcm20

Managing communications in a crisisKevin Hawkins aa Communications for Safeway Stores plcPublished online: 18 Jun 2010.

To cite this article: Kevin Hawkins (2000) Managing communications in a crisis, Journal of Change Management, 1:1, 59-65, DOI:10.1080/714042451

To link to this article: http://dx.doi.org/10.1080/714042451

PLEASE SCROLL DOWN FOR ARTICLE

Taylor & Francis makes every effort to ensure the accuracy of all the information (the “Content”) contained in thepublications on our platform. However, Taylor & Francis, our agents, and our licensors make no representations orwarranties whatsoever as to the accuracy, completeness, or suitability for any purpose of the Content. Any opinionsand views expressed in this publication are the opinions and views of the authors, and are not the views of or endorsedby Taylor & Francis. The accuracy of the Content should not be relied upon and should be independently verified withprimary sources of information. Taylor and Francis shall not be liable for any losses, actions, claims, proceedings,demands, costs, expenses, damages, and other liabilities whatsoever or howsoever caused arising directly or indirectlyin connection with, in relation to or arising out of the use of the Content.

This article may be used for research, teaching, and private study purposes. Any substantial or systematic reproduction,redistribution, reselling, loan, sub-licensing, systematic supply, or distribution in any form to anyone is expresslyforbidden. Terms & Conditions of access and use can be found at http://www.tandfonline.com/page/terms-and-conditions

Page 2: Managing communications in a crisis

These events do not generally becomecrises, because retailers typically reactquickly and decisively by recalling theproduct and, equally important,communicating with their customers,both through the media and directly instores, exactly what needs to be doneand why.

That said, in the recent past therehave been two conspicuous examples ofevents which have turned into crises:

— the BSE scare of March 1996, whichcaused widespread concern about thesafety of British beef and immediatelyreduced the demand for beef by 30per cent, besides wiping out ourexport markets

— the public reaction to geneticallymodified foods which began inearnest in 1998 and has caused the

A crisis can be the most effective catalystto genuine cultural change in anyorganisation. Indeed, some observerswould argue that it is only adversitywhich challenges the established way ofdoing things. If everything is going well,why change?

So, what is a crisis and why is it anagent of change? The Oxford Dictionarydefines it as ‘a decisive moment’ and ‘atime of danger or great difficulty’.

In everyday food retailing there isusually some event which, ifmismanaged, could develop into a crisis.The most common is the recall of aproduct on health and safety grounds. Aforeign body is discovered to be lurkingin a can of beans, for example, so everycan in the batch must be removed fromthe retailers’ shelves as quickly aspossible.

� Henry Stewart Publications 1469-7071 (2000) Vol. 1, 1, 59–65 Journal of Change Management 59

Practice papers

Managing communications in a crisisReceived (in revised form): 18th February, 2000

Kevin Hawkinshas been Director of Communications for Safeway Stores plc since 1995. From 1989 to1995 he was Director of Corporate Affairs with WH Smith Group plc. Prior to that hewas Director of Public Affairs for Lucas Industries plc. Kevin is a graduate in economicsfrom Cambridge University and took his PhD in 1981. He is a member of theManagement Board of the British Retail Consortium, a Director of the Institute ofGrocery Distribution and a member of the London Regional Council of the CBI.

KEYWORDS: crisis, communications, merger, cultural change, communication, two-way

ABSTRACT Over the past five years the process of cultural change in Safeway hasprogressed beyond the classic model of top-down, programmatic activity backed byexhortation. A major corporate crisis, involving an abortive merger proposal and a decline inbusiness performance, accelerated the development of a more open style of management.Subsequent events, including the appointment of a new CEO, have generated real culturalchange in the business.

Kevin HawkinsDirector ofCommunications, SafewayStores plc, 6 MillingtonRoad, Hayes, MiddlesexUB43 4AY, UK

Tel: �44 (0)20 8848 8744;Fax: �44 (0)20 8573 1865

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peculiar to one company. Such was the‘decisive moment’ which occurred inSafeway in the autumn of 1997.

THE MERGER CRISISEarly in 1997 Safeway had started talkingto Asda about a possible merger betweenthe two companies. Safeway took theinitiative, despite the fact that at thattime it was bigger than Asda in terms ofboth annual pre-tax profit and stockmarket capitalisation. Safeway approachedAsda because, by the mid-1990s, it hadbecome obvious that the only way eithercompany could ever rival Tesco andSainsbury in terms of size and scaleeconomies was by merging. No othercombination of food retailers would haveproduced this result. It was equally clearthat food retailing was a mature industrywhich, given a permissive regulatoryframework, would eventually consolidateitself into a smaller number of largeplayers.

The discussions proceeded in secretover the next few months to a point inSeptember where the parties were in aposition to seek confidential guidancefrom the Department of Trade andIndustry, ie would the merger be referredto the OFT/Competition Commission?The parties were awaiting the DTI’sresponse when, on 28th September, abanner headline appeared in the SundayTelegraph that Safeway was in mergertalks with Asda. As a proposal, themerger was written up in positive terms— it would be good for consumers andgood for shareholders, The difficulty forSafeway was that the merger was alsopositioned as a virtual take-over by Asda.The authors of the article claimed that:

— Safeway had initiated the discussionsand, indeed, had talked to otherpossible partners because it was‘looking for a home’

food industry to change its policy onthe use of these ingredients.

Why did these events become crises?First, because there was no single,authoritative source of information. Itsoon became apparent that the publicand the media were getting differentmessages from a range of sources —ministerial, scientific and journalistic.Some of the messages contradicted eachother, while some wereincomprehensible to the averageconsumer. None, however, gavereassurance.

The second reason was a widespreadlack of confidence in much of theinformation that was given out. Ministryspokespeople and politicians weredistrusted, while the scientific communityseemed split down the middle on bothBSE and genetic modification. There wasno quick, effective response from eitherthe government or the food industry as awhole. Consequently, the media virtuallyran riot, and rational argument wasfrequently submerged by the language ofhysteria (‘Frankenstein Foods’ and thelike).

Retailers, being closest to theconsumer, were naturally in the firingline, but they failed to act together. Thiswas particularly true in the case ofgenetic modification, where someretailers quickly adopted a competitivestance and being ‘GM-free’ became partof the daily search for advantage in themarket place.

These two crises affected everycompany in the food retailing sectormore or less evenly, although eachhandled them in their own way. Theexperience frequently produced changesin specific company policies andprocedures but probably had little impacton corporate culture. By contrast, thecrises which create or accelerate culturalchange tend to be home-grown and

60 Journal of Change Management Vol. 1, 1, 59–65 � Henry Stewart Publications 1469-7071 (2000)

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obviously had to be resolved as amatter of urgency

— thirdly, whether the business wouldremain independent. Combined, theyrepresented the biggest crisis in thecompany’s history.

SAFEWAY’S RESPONSEIn these circumstances it would havebeen relatively easy for Safeway’s seniormanagement to have adopted a defensive,uncommunicative posture in the hopethat all the fuss would soon subside and‘business as usual’ be restored. Thisoption was never contemplated. It wasclear to the senior management that thecompany had to restore its credibility,not least in the eyes of its own managersand staff, as quickly as possible. It wouldonly do so on the basis of ‘comingclean’.

COMMUNICATION: TOP-DOWNWithin a few hours of the leak appearingin the press, Safeway’s Chief Executivesent an e-mail to all stores, depots andhead office divisions with a clearmessage. Paraphrased, the message was

Yes, we initiated talks with Asda because wecould see several advantages in combiningour businesses to become the No. 1supermarket chain in the UK. But the talksare now off and they won’t be restarted.Our priority is to get on with improvingour business performance.

Safeway also communicated the samebasic message to the media, itssuppliers and its shareholders. Later, asone or two journalists put morepro-Asda spin on the story, Safewayadded, correctly, that no decisions hadbeen taken on where the newheadquarters would be, who would fillthe top jobs, or whose name would beover our stores.

— The City would welcome the dealbecause it would enable the ‘dynamic’Asda team to ‘revitalise’ Safeway.

Later variations on this theme whichappeared in the same newspaper claimedthat Safeway had already conceded thatthe combined group’s head office wouldbe in Leeds, that the top jobs would befilled by Asda people and that Asdawould be the name over the door. Theeffect on morale inside Safeway,particularly in the company’s head officein Hayes, can easily be imagined.

Another difficulty with this press leakwas the claim that Safeway had initiatedthe merger talks because it was runningout of steam. In fact, when the talkswere initiated at the start of 1997, itssales performance had been quite strong,and its stock market value was wellabove that of Asda. During the summerof 1997, however, Safeway’s sales growthbegan to tail off, and at the start ofOctober sales from existing stores (ieexcluding that from new stores) hit a6-week-long plateau in which growthwas virtually zero. Meanwhile, Asda’ssales were growing strongly. So the claimthat Safeway’s performance was decliningappeared plausible on a short-termview.

The speed with which both sidesabandoned the merger did nothing toreduce the level of City and mediaspeculation. The proposal might be offthe agenda, but it was only a matter oftime — so the argument went — beforeAsda brought it back again, perhaps inthe shape of a hostile bid.

So Safeway had three issues to dealwith:

— first, the damaging effect of all thisspeculation on the morale of itsmanagers and staff

— secondly, the actual decline in theperformance of the business, which

� Henry Stewart Publications 1469-7071 (2000) Vol. 1, 1, 59–65 Journal of Change Management 61

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no decisions had been taken about wherethe new head office would be or whosename would be over the door. Hereiterated what most of the audiencealready knew — that the business wasnot performing well — but told themwhat he was doing to resolve thisproblem.

The Town Hall meeting was successfulin so far as it killed any notion of areturn to the merger talks with Asda.But the belief that senior managementwould sooner or later start looking for adeal with someone else remainedwidespread. This was not in itself aninherently negative factor. Mostexecutives in food retailing accepted atthe time, as they still do, that greaterconcentration in this sector is virtuallyinevitable. Safeway people were alsorealistic about the need for their businessto acquire more scale by merging withanother company. The issue was not somuch the likelihood of a merger but theterms under which it would take placeand whether Safeway would benegotiating from strength or weakness.This brings us to the critical issue ofcultural change and companyperformance.

HOW DID THE CRISIS ACCELERATECULTURAL CHANGE?To answer this question, we first need tounderstand Safeway’s cultural heritage.

BackgroundThe original Safeway business was theBritish subsidiary of Safeway Inc., thelarge American supermarket chain. It wasacquired in 1987 by Argyll Group plc, arapidly growing conglomerate of foodwholesaling and retail businesses. Thedominant culture of the expanded groupwas essentially that of Argyll: a cost andmargin-driven business which, like many

COMMUNICATION: BOTTOM-UPSending out e-mails from the centreensures that the correct message iscommunicated to everyone in theorganisation at the same time. However,while people want to be told ‘the facts’,many also want the opportunity tofeedback their own issues andperspectives. The greater their sense ofinsecurity, the more reassurance theyneed. This is particularly importantwhere they are getting conflictingmessages. In this case, each side waspredictably briefing the media with itsown version of events.

In seeking to rebuild morale andconfidence in Safeway, seniormanagement began by finding out howpeople were really feeling about whatthey had heard and read. Within the firstfew days of the merger speculationbreaking in the press, a small group ofsenior executives talked to colleagues atall levels in head office and also wentout and talked to staff in stores. Thisconfirmed the initial hypothesis that themorale problem was largely confined tohead office. The typical reaction in storeswas mixed but slightly detached —people at the sharp end of any retailbusiness tend to focus on the here andnow, not on speculating about whatmight happen in the future. Only thosestores in locations close to an Asda storeshowed any concern.

To help senior management respond tostaff concerns in Head Office, a ‘TownHall’ meeting was organised on the site,the first meeting of its kind in Safeway.It attracted an audience of around 700people, or around half the sitepopulation. The Chief Executivesummarised the position in an informal,15-minute talk and then invitedquestions. There was no reticence andthe questions were pointed and direct.They were answered with equalfrankness. Specifically, he emphasised that

62 Journal of Change Management Vol. 1, 1, 59–65 � Henry Stewart Publications 1469-7071 (2000)

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customer offer and spread a new, morepeople-friendly workstyle. The strategyfor delivering the required degree ofbehavioural change was essentiallyderived from the classic top-down‘change programme’ model. It waslaunched by the Chief Executive at asenior management conference inSeptember 1995. All Safeway’s middlemanagers attended a one-day workshoprun by consultants. Store managers weregiven a ‘tool-kit’ of ideas and materialsto help them communicate the basicideas to their staff. The main outcome ofall this activity was a series of in-storeevents, aimed at eliciting ideas andsuggestions from staff for improvingcustomer service in the run-up toChristmas.

However, like all attempts to changebehaviour which rely primarily onexhortation, the response it drew fromthe target audience was patchy. Somestore managers recognised its relevanceand sought, often with considerablesuccess, to involve their teams inimproving customer service. Othersbarely paid it lip service. Equallyimportant, there was no change in thepredominant management style of thebusiness, because most senior people inhead office made no apparent changes intheir own behaviour.

Nevertheless, for all its limitations,the ‘Make a difference’ initiative hadopened up a range of behaviouralissues for further debate. What becameclear in the course of 1996 was thatthe business needed a trigger todramatise and provoke action at Boardlevel. The catalyst was labour turnover,which was found to be running at asignificantly higher level than theaverage for the larger food retailers. Inthe latter part of 1996, the Director ofCommunications, working with anexternal consultant, conducted a seriesof discussions with a representative

conglomerates of the 1980s, gave toppriority to its City rating. Like mostother retail businesses, the prevailingmanagement style was one of commandand control.

Having bought Safeway, Argyll quicklyjoined its larger competitors, Sainsburyand Tesco, in the race to build newsuperstores in prime locations. From1993 onwards, however, the pace ofexpansion across the food retailing sectorslackened as it reached maturity and newsites became more difficult to acquire.The focus of competition in the sectorgradually but irreversibly swung towardsprice and value, underpinned by thedrive for greater scale economies. Inresponse to these changes, Argylllaunched a thorough-going reappraisal ofits entire business (a process known as‘Safeway 2000’). The purpose was tostrengthen the Safeway brand and attractmore mainstream customers, particularlythose with young families. This goalwould be achieved by substantial newinvestment in marketing, advertising,reducing prices and refitting stores. Thereorganisation which accompanied andfinanced this brand repositioninginvolved a major upheaval in structuresand roles, significant redundancies and afar-reaching programme of efficiencyimprovements.

These changes were more or less inplace by 1995. It was clear, however,that after so much change anduncertainty, managers and staff in stores,depots and central divisions alike neededto be won over and their commitmentto the new customer offer secured. Thiswould not be forthcoming unless therewas a change in the dominant culture ofthe business.

Safeway’s response was to launch aninitiative to change behaviour. Known as‘Make a difference’, its purpose was torebuild morale, encourage staff tobecome involved in delivering the new

� Henry Stewart Publications 1469-7071 (2000) Vol. 1, 1, 59–65 Journal of Change Management 63

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solution. Instead, it elicited a series ofresponses which required much moreactive involvement by staff at storelevel. One of these, for example, was‘Fill That Gap!’, an action programmeaimed at improving availability levelsin store by encouraging staff tobecome more aware of gaps onshelves and take action to fill them.Unusually for Safeway, which hastraditionally been reticent aboutdisclosing ‘price-sensitive’ information,the resulting performance figures werecommunicated to everyone in thebusiness. Another example was acompany-wide ‘bright ideas’ scheme(known as ‘Food For Thought’),which was launched in 1998 andattracted over 4,000 submissions inthe first three months.

— Communication channels within thebusiness were opened up. Town Hallmeetings led by the Chief Executivecontinued to be held, focusing on theperformance of the company andother relevant issues. To encouragemore ‘bottom-up’ communication, aninitiative known as ‘Talkback’ wasintroduced. This is a structuredprocess for dealing with local issues,in both stores and central divisions,which brings staff representatives anddirectors face to face.

— Senior managers decided to find outmore about how people were reallyfeeling and in the Spring of 1998commissioned a major survey of staffand management attitudes andperceptions. Some clear messagesemerged from this work, confirmingthe need for faster progress inchanging the culture. Specifically, themajority of people at most levels ofthe business wanted moreinvolvement, more opportunity tocommunicate upwards and morerecognition for giving good service tocustomers.

sample of managers and staff across thebusiness. The findings weresupplemented by a major survey ofleavers, conducted by an independentresearch agency. The conclusionsunderlined the critical importance ofworkstyle and cultural issues indetermining the level of labourturnover. A particularly significantfinding was that the company’straditional recruitment, induction,recognition and reward processes werenot consistent with its strategic visionor external brand values.

These findings were presented to theBoard in January 1997, together withsome outline proposals for correctiveaction, which after some debate wereaccepted. Remedial action focused, first,on giving store management teamsmore and better training in managingpeople and, secondly, on developing amore professional approach throughoutthe business to induction and careerdevelopment. But this was essentially acatch-up process to help improveSafeway’s competitiveness in the labourmarket. A more radical departure wasthe launch, in October 1997, of ashare option plan for all staff linkednot to the usual corporate financialcriteria but to their own performanceat store level in giving good service tocustomers.

The impact of the merger crisisSuch was the state of cultural change inSafeway on the eve of the merger crisis.The crisis itself accelerated the process inseveral ways:

— The challenge of improving theperformance of the business,particularly in the critical area ofproduct availability, wouldtraditionally have been met by aprescriptive, command and control

64 Journal of Change Management Vol. 1, 1, 59–65 � Henry Stewart Publications 1469-7071 (2000)

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the store chain during the latter part of1999, when the appointment of a newChief Executive gave it fresh impetus.

CONCLUSIONSOver the past five years the process ofcultural change in Safeway has progressedfrom the classic paradigm based on thedownward communication of desiredbehaviours and exhortation by the ChiefExecutive, to a more realistic andcertainly more effective model based ontransferring more authority to the basicunits of any retailing business — thestores and the people who work inthem. Would this have happened withoutthe merger crisis of 1997? Probably not— and almost certainly not at the samespeed. A corporate experience of thiskind frequently acts like the ‘fastforward’ control on a video system. Thebasic essentials come into sharp focuswhile the pace of decision makingaccelerates. Senior people who havehitherto blocked progress are pushed outof the way or ignored. The changes inthemselves help maintain the momentumonce the immediate crisis has passed, butthe process is not inherentlyself-perpetuating. It requires vision,leadership and a continuing commitmentto action to keep it going.

The next stepThe survey findings lent more weightto those members of seniormanagement (as yet few in number)who had by this time becomeconvinced of the need for afundamental redistribution ofdecision-making authority within thebusiness from the centre to the stores.Towards the end of 1998 a new, moredecentralised framework was launchedfor a trial period in a small number ofstores. Store managers and their teamswere given much more informationabout their local market, drawn fromthe central database, and encouraged totarget local competitors. They weregiven more authority over pricing andproduct ranges in order to build theirlocal market share. Equally important,they were encouraged to involve theirstaff in developing and implementingsales and service initiatives and rewardindividuals and groups for theircontribution. The results, measured bysales growth and reduced labourturnover, were impressive. Regular,two-way communication on the salesfloor became part of business as usual.People felt they were trusted andresponded accordingly. The success ofthese trials resulted in the rapidapplication of this model to the rest of

� Henry Stewart Publications 1469-7071 (2000) Vol. 1, 1, 59–65 Journal of Change Management 65

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