TABLE OF CONTENTS: S. No.-Description……………………………………………………………..………Page No. 1. PART A…………………………………………………………………………………….…3 1.1. Timeline of Major Events………………………………………………………..…..…3 1.2. Effect of social media on a business…………………………………………………4 1.3. Root causes which led to Dominos’ crisis……………………………………………5 1.4. Major stakeholders affected………………………………………………..….………7 2. PART B…………………………………….….……………..…....….……….….......……..9 2.1. Recommendations about what company needs to say or do………………………9 2.2. Recommended Response Time……………..………………………………………11 2.3. Interventions to address root causes identified…………….………………………12 2.4. Recommended Mediums for Communication and their Potential Barriers & Recommendations for Presenter……………………………………………………14 3. PART C………………………………………..……………………………………………21 3.1. What was your team goal and did you achieve it? Why or why not? ……………………………………………..……………………………………………21 3.2. What communication challenges did you face as a team and how effective were you in overcoming them? ……………………………………………………………21 3.3. When did you sense your performance as a team peak and decline? Why? …22 3.4. If you could do the project again, what would you do differently? ………………22 3.5. To what extent would you be willing to work together on a team project again? Why? ……………………………………………………………………………………23 4. REFERENCE LIST………………………..………………………………………………24
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PART A
1.1
Timeline of Major Events
The following events have occurred prior to our Consultancy Services being engaged by Dominos (Hobson, Neville; WebProNews):
Day 1 (April 12, 2009) •
Video is posted on YouTube.
•
Video reaches 29,000 views within hours of posting.
Day 2 •
Domino’s is alerted to video by the Consumerist.com
•
Domino’s identifies location of store where the video was filmed.
Day 3 •
Hammonds and Setzer (involved employees) are fired by Domino’s
•
The video goes from 562,627 views at 8 am to 930,390 views at 9:30 pm.
Day 4 •
Video is removed from YouTube
•
Hammonds and Setzer face felony charges for distributing prohibited foods
•
Copies of the video remains accessible on the Internet
•
A Twitter account is created by Domino’s
•
Domino’s CEO (Patrick Doyle) responds in a YouTube video
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1.2
Effect of social media on a business
It is becoming increasingly important for businesses to understand the effect social media has on their brand image. Only one in seven companies has a formal process in place for the use of social networking in their businesses, a survey by Cisco Systems Inc. revealed in 2010. The same survey also noted that only one in five companies has established a policy about the use of social media (Pettigrew, Gareth; Jan. 2010; Cisco Systems). This lack of formalised attention is unfortunate considering the varied risks and negative effects on business that are associated with social media.
While social media presents exciting prospects of growth and customer-loyalty for a business, it also presents some negative effects which can cause a high level of damage to the image of businesses - especially if a strategic social media policy hasn’t been formed.
Increased Customer Power In the days before social media, negative company experiences might stay within an individual's circle of friends. In the present day, negative publicity in relation to customer service and disappointing products can be released through social media networks. It has become increasingly difficult for companies to contain its negative publicity. On the other hand, businesses now have a platform for positive news stories to spread in a swift manner.
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Tracking Negative or Misleading Statements As there is a high level of communication taking place, it is difficult for businesses to track statements in relation to their brand, which may be defamatory. Companies have the added burden of tracking statements and responding when necessary. However, the response might be of limited effect if the negative statement has already made the social media rounds.
Conclusion Although social media can have the ability to cause damage a business, using social media for business purposes can be beneficial if a skilled moderator is being employed. Social media can be likened to an amplifier – as through its use, it may amplify the negatives through its association, or in turn amplify the positives. (Lovering, Catherine; Demand Media)
1.3
Root causes which led to Dominos’ crisis
When a crisis occurs it is human nature to want to know what happened and why it happened (Arnold 1960a; Weiner 1985, 2006). People act as judges, assessing good or evil, right or wrong, moral or immoral (Weiner 2004). The following areas are examined to determine if they had the power to influence the magnitude of the crisis, or even its mere existence:
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Hiring Policies Skilled and well trained employees can be a source of a company’s core competencies and sustainable competitive advantage - therefore it is important to attract and retain them in the organisation. It is costly to rehire and retrain new employees, but it is costlier if organizations make the wrong decision of hiring unsuitable individuals. The latter seems to be the case with Dominos, hiring two employees who created the whole crisis. This is why it is important to have meticulous hiring policies.
Code of Ethics and Management-Employee Relationships It is argued that there is a correlation between interpersonal treatment of employees and their contribution (productivity) in return to an organisation. (Colquitt et al. 2001) Interactional justice refers to the perceptions that individuals have about the nature of the interpersonal treatment (respect and dignity) received from others, primarily from key organizational authorities (Bies & Moag 1986; Greenberg 1993). Hence, Dominos may need to evaluate how managers are treating their subordinates. Areas that may be addressed include; checking if employees are receiving respect, dignity and fulfilling their emotional needs as part of their working relationship.
Inadequate Crisis Management Policy Ashcroft (1997) states that Organizations which have handled crises well have been well prepared for them and their plans have been tried and tested. There are now a
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number of companies offering specialist training in how to handle the media in a crisis, which can involve training to suit the individual organization, including simulations. Furthermore, an organization must also have an adequate support system in the event of a crisis. This includes; training staff on how to respond, creating spokespersons and being actively involved in the preventative measures. Mock crisis response plans are advantageous in preparation.
1.4
Major stakeholders affected
A crisis can be triggered either by an actual event or the perception by a stakeholder group that an event has occurred (Benoit 1995). It is important to note that different stakeholder groups may develop different expectations and interpretations of what it is that organizations need to do and sometimes these expectations may be conflicting with each other (Fediuk, Coombs, & Botero, 2010).
Shareholders and Community Shareholder groups will hold profit and earnings as a high order value, and they will expect the organization to increase as well as to protect their profits and earnings. Compared to shareholders, the community may feel that the most important value in relationship with this organization might be to keep the community safe (Fediuk et al. 2010).
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Customers Domino’s development is inseparable from customers’ satisfaction and support. After the YouTube incident, many people expressed that they were afraid of Domino’s levels of hygiene and food quality, and if Domino’s does not develop adequate measures to achieve customers’ satisfaction, trust and loyalty; it could lose a high level of customers.
Employees The YouTube incident had a negative impact on Dominos’ employees, (180,000 people - Dominos 2009 Annual Report) which conveyed negative image to customers. The employees may be questioned by the public which may lead to potential embarrassment.
Government The government has a responsibility in regulating the food industry. The Domino’s crisis may lead to an increase in health and safety regulations and audits. There may be a mandatory increase in inspections to improve the public’s perception to the safety of restaurants.
Competitors There is a potential benefit of competitors as they may draw customers away from Dominos, as they see Domino’s crisis as an opportunity to adapt marketing initiatives in response to a vulnerable company.
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2. PART B
2.1
Recommendations about what company needs to say or do
It is important to recognise firstly the importance of telling the truth and secondly, rather than let the media network speculate, use the media network as an opportunity to disseminate your information. Leave no room for speculation – “if you can’t tell them something, tell them why you can’t tell them” (IPR Journal, 1995).
The messages communicated by an organization in crisis are expected to play a vital role in the alleviation of a crisis situation. More specifically, communication assists in reducing the damage incurred by the impacted organizations due to the crisis event. Therefore, understanding how individuals perceive and cognitively process crisis events and post-crisis messages is significant to understand.
Customers Through responding to customers, urgent actions need to be displayed. As the customers will be afraid of the Dominos level of hygiene and food quality after they had watched the Dirty Domino’s Pizza video on YouTube, and the customers are also a major stakeholder group in Dominos. In order to minimize the negative effects on Dominos, it must be actively communicated with a sincere apology, telling the customers the truth and working with its company's policy, saying, "We want them charged with a crime because there is obvious evidence". Dominos should also select
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the target audience for a response, which is putting its response on YouTube and official website as well. The target audience could help company provide more information that the existing customers be looking for, and it is very import to keep customers, especially when they are loyal customers (Accrete Web Solutions, 2004). In addition, Dominos should identify the individuals, contact with customers, in order to make sure that nobody received tainted food, and compensates some customers if they have eaten the tainted food (Amy, 2009). It also must be assured that the incident was a one off and won’t happen again, as loyalty may be tarnished, the act of revival should be treated seriously and with utmost attention.
Employees The employees too, are a major part of dominos and as mentioned previously they may be embarrassed through their association with dominos. They must be communicated with a message which will aid them through questioning by external stakeholders, especially from customers, as the employees are on the front line. If Dominos does nothing, its employees' loyalty will decrease, and they might leave the Dominos if they are not happy during their work, and Dominos has to hire some new staff, however the cost of replacing a lost employee cost 150% of that person's annual salary, which is higher than keeping the current employee (Kyle, 2008), therefore Domino's needs to increase its employee loyalty to improve its employee satisfaction, reduce turnover and remain stable.
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Government When responding to the government, the relevant officials need to be formally spoken to. Through meetings and discussions, dominos and the government – especially the health authority may need to work together when delivering messages. The government needs to realize that ultimately their needs are met – as they are accountable for the health in society.
Competitors Ultimately, the main thing that should be recognized is that there is the potential benefit of the competition as they may take customers away from dominos. They must still be aware that dominos is strong and not going to get weakened as a result of the crisis.
2.2
Recommended Response Time
It is vital to realize the speed of media coverage because of new technological developments (Ashcroft, L.S. 1997). Due to technological advancements, it is unlikely that there will be a time delay between an incident and a crisis erupting and the resulting media coverage. Dominos should react quickly and communicate immediately, as the prank video is removed, to inform all stakeholders about the actions taken. “Communicating effectively was now more often seen as of the same importance as putting the problems right.” (IPR Journal, 1995, p. 14).
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Furthermore, the media are in competition and hungry for the most newsworthy stories. Generally bad news is newsworthy and more sensational (Ashcroft, 1994). If immediate information is not available, this will leave room for speculative stories (Ashcroft, L.S., Crisis management – public relations).
2.3
Interventions to address root causes identified
Hiring Policies As Dominos have approximately 10,200 direct employees and a total of 180,000 team members who work in the Domino’s Pizza system (Dominos 2009 Annual Report), it is not an easy task to address the current hiring policy as franchisees are responsible for hiring their own store employees. It is recommended that Dominos and its franchisees should pay attention to their recruitment and selection process to mitigate future liability risk by conducting proper background checks when recruiting new staff and when evaluating current staff (Dwoskin, Squire, & Patullo, 2013) as negligence in recruiting could affect the company financially (Leach, & Hayden, 2012). When employees misbehave company may suffer not only from financial loss and but may also tarnish their brand image. (Schloss, &Lahr, 2008)
Code of Ethics and Management-Employee Relationships It is recommended that Dominos should have an adequate training provided to all employees regarding the company’s values and code of ethics along with their role in
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the organization. Regular audits and store inspections should be conducted by Domino’s representatives. The purpose of the training is to impose learning about the company values and ethical principles. Periodical ethical training for the staff is important for them to perform morally correct actions while working. Furthermore, a code of ethics assists managers, as they understand their requirements - to lead their subordinates by example. (McShane, Olekalns, & Travaglione, 2010).
Inadequate Crisis Management Policy In such a crisis, an organisation’s fundamental goal should be to preserve, protect and and retain their reputation. Dominos’ reputation is as important as any other corporate asset
(Ashcroft,
1997).
Effective
management
of
information
(controlling
communications) is vital. Accepting the difficulty that is presented, there should be clear communication of the information that Dominos is going to release. Ashcroft (1997) suggests that at a time of a crisis like this it is advantageous to tell the truth. It is also highlighted that quick release of information is essential. An organisation must also have an adequate support system in the event of a crisis. This includes; training staff on how to respond, creating spokespersons and being actively involved in the preventative measures. Mock crisis response plans are advantageous in preparation. A crisis is something that Dominos cannot completely avoid, but can create preventative measures. It is recommended that adequate training for employees is provided, and act to delegate suitable representatives in the event of a crisis. (Veil, Sellnow, & Petrun, 12
2012). Hence, proper preparation can help to mitigate crisis quickly without jeopardising the company’s brand image (Farb, 2011).
2.4
Recommended Mediums for Communication and their Potential Barriers and Recommendations for Presenter
It is important to note that different stakeholder groups may develop different expectations and interpretations of what it is that organizations need to do given the stakeholder’s high-priority values, and sometimes these expectations may be conflicting with each other. It should be noted that shareholders always have expectations about how the organisation should or will behave, and it is when these behaviour expectations are violated that a crisis occurs (Fediuk et al. 2010)
A realistic approach is to imagine target groups with different “zones of meaning” instead of planning for “general public” (Harro-Loit et al.). Interestingly, Pareto’s Principle applies to the stakeholder groups involved: around 20% of the people within each stakeholder group are responsible for generating 80% of what your business needs to keep operating. The crisis communication plan needs to outline how to reach those people with information in a crisis before they hear about it from the media or others (Harrison, Kim). Following are the various mediums of communications that we recommend be used by Dominos for different stakeholders to overcome the current crisis:
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Customers Customers are the biggest factor in the success of every organisation and because of the kind of business Dominos is, and the crisis being related to hygiene, it is even more important that customers be considered the most important target group for communication.
It is paramount to suggest, that the message be communicated through the same medium which caused the crisis to grow the most, i.e., internet/any other digital media. As mentioned in part a, social media is very important for an organisation and since the crisis spread through YouTube, the best medium of communication would be YouTube and other similar websites like Twitter, Facebook, etc. Also, it should be kept in mind not to overestimate the Internet or underestimate the traditional media channels. It should be ensured that newspaper articles about the crisis in favour of Dominos are communicated to the public and links to such articles should come up more often on popular search engines like Google and Yahoo. (Harro-Loit et al)
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Another communication strategy which is necessary is the release of public statements through various news channels as it is considered reliable and encourages word-ofmouth communication.
Online communication methods, such as email, message boards and Twitter, prevent you from expressing meaning through facial expressions, body language or vocal tones, which can lead to misunderstandings and other communication problems
To overcome these barriers, Dominos should keep the following guidelines in mind (Kang, Starr; Demand Media): ● Carefully choose your words and consider the purpose of the communication, (stick to relevant point and facts) ● Consider your audience. ● Check for grammatical mistakes, proper tone and accuracy.
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The recommendations regarding the presenter would be that firstly, the online video post and the public statement should be presented by someone who is in a position of authority in the company. The tone of the presenter should be apologetic and the language should be such which communicates that the company is working hard to gain back people’s trust and continue to provide good quality food. Also, the attire of the presenter should be formal to portray professionalism and reliability. In order to further portray apologetic feelings, nonverbal communication can be used in the form of hand gestures and posture.
Employees Clear lines of communication should be established to reach employees at all levels and in all locations. The employees should be informed about where they can obtain information – from their usual manager or from special telephone lines, meeting rooms, notice boards or other sources. Planning should take into account ways to continually update information during a crisis. For every message to the media, there should be a prior message to employees (Millar, Dan et al; June 1998). Another medium which Dominos should use is putting up posters in their stores since people retain more information through visual representation.
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There are a number of potential barriers that might emerge while using the suggested mediums for communication (Bernard L. Erven; Ohio State University):
● Poor listening skills - A typical speaker says about 125 words per minute. The typical listener can receive 400-600 words per minute. The solution is to be an active rather than passive listener.
● Number of employees (180,000) - It is important to have unified communication channels in order to deliver the message between all Domino’s stores worldwide
● Multicultural Employee Base - It is important to recognise that messages may need to be delivered in different languages and to take into account differences in cultures and hence perceptions.
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Shareholders Major stakeholders such as creditors, suppliers, bankers, etc. want to know the impact on revenue and profitability (Harrison, Kim; www.cuttingedgepaper.com). They would also want to be aware of any likely future financial implications regardless of the medium used for communication.
Another major group of investors would be the equity shareholders. Although, these shareholders would receive the message through the mediums opted for customers, they would expect special treatment and reassurance. For this, we would advise Dominos to send personalised messages via letters, emails and telephone calls. In addition, a written report and announcement should be readily available on Domino’s official website.
The potential barriers to using these mediums would be the collection of individual data but it is very likely that Dominos already has a database of its shareholders through which they send the annual reports. The contents of the messages should be informative and should include the various plans being undertaken by Dominos to overcome the crisis. The tone delivered in the message needs to be formal and optimistic.
Government/Health and Safety Regulating Authorities Research has found, surprisingly, that the most important sources of news during a crisis came from government – either politicians or employees of regulatory agencies.
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This finding points to the need to brief government stakeholders as a pressing priority during a crisis, preferably as part of ongoing communication programs. The politicians, advisers and officials who would be involved in the crisis should be identified. (Harrison, Kim)
The crisis strategy and communication process should be briefed to the relevant departments face-to-face and include crisis simulations. The language, attire and the tone of the presenter in the meetings should be completely professional so that the agents perceive that the crisis is totally under control.
Competitors/Food Industry (especially pizza) Although the crisis might affect this group, no direct communication by the company is required. At the same time, we want to make sure that the major competitors receive the message that Dominos will be able to overcome the crisis. Otherwise, competitors might use this crisis as a strategy for marketing themselves better.
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3. PART C
3.1
What was your team goal and did you achieve it? Why or why not?
Our team was given a task of advising Dominos in the crisis that they are currently facing. Our team had decided to make it our goal to produce a high quality consulting report in order to guide Dominos in the best way possible in dealing with their social media crisis. Through reflection, we achieved our goal of producing a high quality report in, accordance to our set standards from the commencement date. We contributed a high level of teamwork and effort, and worked cohesively as a group in order to reach our goal.
3.2
What communication challenges did you face as a team and how effective were you in overcoming them?
We have a diverse group as we all have different educational backgrounds, nationality, culture, and experience. Disagreement could not be avoided especially when voicing our opinion since we do have different points of view. However, we were able to overcome it by applying what we have learned in the class by using the nominal group technique for our decision making. We all wrote down our ideas for the assigned topics consolidated it into one document and then discussed and synthesized what we needed to present in the report. It was also a challenge to organise the group meetings since
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every team member has different schedule. It was a big challenge to find the perfect time for group discussion which affected our group communication. We also used the help of online documenting applications like Google Drive to share and edit our report online and discuss the changes in the meetings. Hence, we were able to make every group discussion as effective as possible.
3.3
When did you sense your performance, as a team, peak and decline? Why?
We were excited to do this assignment as it was an interesting topic for all of us to do. Our excitement motivated us to do a good research for us to discuss and also get to know each team members as we build our teamwork. However, during the middle of our work, we faced more challenges as each of us also have other obligations e.g. our individual assignment from other subjects. Our individual situations caused us to have less time to meet and discuss the work as a group which lowered our work phase for the assignment. Closer to the due date, we managed to increase our performance as all of us committed to finished the group report on time.
3.4
If you could do the project again, what would you do differently?
If we had an opportunity to work again as a team, we could put more effort in our meeting time schedules. Instead of only meeting once a week and doing the rest by collaborating online, we would increase the frequency of the group meetings. We felt
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that face to face discussions are more effective because we can help each other to clarify issues and discuss potential project solutions.
3.5
To what extent would you be willing to work together on a team project again? Why?
We would not have achieved what we did if we did not work well together as a group. Also, every member of the group was highly dedicated and enthusiastic towards achieving a high quality outcome and hence worked really well together. So, it would be a great pleasure for us to work together again in the future.
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4. REFERENCE LIST
Hobson, Neville (WebProNews); “Domino’s Pizza deals with YouTube Nightmare”
Cisco Systems; Social Networking's Impact on Modern Business; Gareth Pettigrew; January 2010
Lovering, Catherine; Demand Media; “Negative Effects of Social Media on Business”
Linda S. Ashcroft, L.S.(1997). ”Crisis management – public relations” Journal of Managerial Psychology.Vol. 12 No. 5. Pp. 325-332
Fediuk, T. A., Coombs, W. T. and Botero, I. C. (2010) Exploring Crisis from a Receiver Perspective: Understanding Stakeholder Reactions during Crisis Events, in W. T. Coombs and S. J. Holladay (eds) The Handbook of Crisis Communication, pp635 – 656 . Oxford: Wiley-Blackwel
H. Harro-Loit, T. Vihalemm, and V. Jakobson; “DEFINING TARGET GROUPS AND MESSAGE STRATEGIES DURING CRISES: SOME GUIDELINES BASED ON EMPIRICAL RESEARCH”
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Kang, Starr; Demand Media; “How to Overcome Online Communication Problems”
Bernard
L.
Erven
;
Ohio
State
University;
“OVERCOMING
BARRIERS
TO
COMMUNICATION”
Millar, Dan P. and Irvine, Robert B; Presentation to the First International, Interdisciplinary Research Conference of the Public Relations Society of America, at the University of Maryland; 12-14 June 1998.
Harrison, Kim; www.cuttingedgepaper.com; “Learn the secrets of stakeholder communication during a Crisis”
Amy, J. (2009). “Domino’s delivers during crisis: The company’s step-by-step response after a vulgar video goes viral” Public Relations Society of America
Dwoskin, L. B.; Squire, M.B; Patullo, J. E.(2013).” Welcome Aboard! How to Hire the Right Way “Employee Relations Law Journal. Vol. 38. Issue 4. p28-63
Farb, Britany. (2011).”Don’t let crisis destroy your image” Customer Relationship management Magazine. Vol. 15. Issue 11. p30-34
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Hartel, C.E.J; Fujimoto, Y; Strybosch, V.E & Fitzpatrick, K.(2007).Human Resource Management: Transforming theory into innovative practice.N.S.W: Pearson Education Australia
Leach, Stephanie R.; Hayden, William R.(2012).” Background Checks and the Pitfalls That Employers Face” Employee Relations Law Journal. Vol. 38. Issue 1. p14-17
McShane.S; Olekalns.M; & Travaglione.T. (2010). Organisational Behaviour on the rd
Pacific Rim 3 edn. N.S.W. : McGraw-Hill Australia
Schloss, L. M.; Lahr, J. G.(2008).”Watch Your Back: Smart Hiring and Proper Background Checks” Employee Relations Law Journal. Vol. 34 .Issue 3. p46-71
Veil, S. R.; Sellnow, T. L.; Petrun, E. L.(2012).” Hoaxes and the Paradoxical Challenges of Restoring Legitimacy: Dominos’ Response to Its YouTube Crisis” Management Communication Quarterly. Vol. 26. Issue 2. p322-345
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