COSTA CONCORDIA: A CRISIS WAITING TO HAPPEN

Posted in cruise industry, sinking ship on January 18th, 2012 by mnayor

“The public has a short memory. We might have some concerns for a few weeks. But so far, we have had no fallout.” So says Neil Gorfain CEO of the Cruise Outlet a booking agent, commenting to the New York Times about the reaction to the partial sinking of the cruise liner, Costa Concordia, off the coast ofItalylast week.

How is the world ever going to become a better place, how are companies going to become more responsible, how are the lives of individuals going to improve if this observation is true? Have we become so immune to tragedy that, after the initial shock waves, we all just go back to our normal routines and in time we forget? The short answer is yes, we do forget. The BP explosion in the Gulf of Mexico, the tsunami inJapanare already only vague recollections. Are there people now diligently working on better drilling safety? On better nuclear plant safety? Let’s hope so. After all, people died.

 Carnival Lines, parent of the Costa Lines, has felt the backlash. Its shares dropped significantly in theU.S.on the first day of trading after the partial sinking. Crisis management on the part of Costa Lines has been weak, amounting basically to shrill accusations of negligence against the ship’s captain, Francesco Schettino, in guiding the ship too close to shore. While the blame game does take some of the heat off of the company, it underscores the weakness of management control and loose cruise industry regulations. A more intelligent and responsible reaction would have been for Carnival and Costa to both hammer home the need to thoroughly investigate every aspect of the tragic accident, including human error, in order to identify every possible cause; and to pledge to take whatever steps necessary to ensure that nothing like this is ever repeated. Expressions of deep regret, which are not automatically interpreted as admissions of guilt, are in order as well.

 As an immediate step, the public needs to know that a company recognizes itself as the major player, willing to undertake that role for the public good. Expensive? Perhaps. Worth it? Most often a resounding yes, in terms of public perception and goodwill. As a responsible corporate citizen, act sensitively, investigate and devote whatever resources available to help fix the problem and keep the public informed regularly along the way.

 Preserving reputation and directing efforts to problem-solving are the first order of business. Assessing blame comes later and is best left to third parties. No one ever looks good saying it is someone else’s fault. An insurance investigation, a public hearing, a regulatory investigation, a private investigation that is made public are just some of the opportunities you have to provide input to show the root causes of a crisis. Let a neutral source absolve you of blame. In the end it carries far more weight, and is more persuasive and acceptable.

 Could Carnival and Costa avoid tragedies like this? Could the industry do something about it? Yes, on both counts. With sophisticated GPS navigational systems available, every cruise line can and should monitor its ships on the water as closely as planes are monitored in the sky. 

The cruise industry has over 12 million passengers a year and deals with many issues such as health and environment matters, safety, security, and employee conduct. The industry has far to go to achieve a high level of public acceptance and respect.

 Recent public concerns reached a point that The Cruise Vessel Security & Safety Act of 2010 (sponsored by Representative Doris Matsui D-CA and Senator John Kerry D-MA) was passed and signed into law by president Obama. The legislation primarily covered passenger safety from assaults. Cruise Lines International Association (CLIA) the industry’s trade association, devoted significant resources to unsuccessfully counter the legislation, and believes the industry can better handle matters by voluntary compliance. Yet the public has seen only attempts to stone-wall needed improvements. Because of Costa Concordia there is renewed call for stricter regulation. CLIA, dedicated to promoting and growing the cruise industry, will certainly be very active in countering future regulatory and policy developments.

 As responsible corporate citizens companies themselves need to do more to enhance their own reputations. They must become more proactive to sustain and augment their “brands” and corporate reputations. The public perception is that cruise lines are not transparent. Even after a crisis event has passed, a company is more apt to stay mum than to discuss its actions, thereby fomenting the idea that secrecy is the order of the day.

 Major efforts by the industry and individual companies to ensure all aspects of passenger safety, are vital to instill public confidence and customer loyalty, and to grow. Unquestionably, proactive management needs to implement continual training, accountability and monitoring.  Otherwise the call for renewed government regulation will rightly escalate.

 

 

 

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