Meat scare feeds media frenzy: Find out how one company dealt with a threat of product tampering and how the lessons can be applied to any situation. (Business Continuity).
According to the FBI profile, the person who wrote the anthrax letters is an adult male who is nonconfrontational, works in a laboratory or is comfortable around hazardous materials, is rational and calculated, rather than random in his actions, holds grudges for a long time, and is quietly vengeful.
While the nature of the threat-anthrax-may have been a new twist, receiving serious threats, or worse, through the mail is not new to corporate America, as the author has seen firsthand. During a 20-year career of directing loss prevention and security programs for retail supermarket chains, the author has investigated four different instances of "terrorism by mail." In only one of these four cases did the perpetrator actually carry out the threat (in that case by shooting into the homes of company executives). But even the threats not carried out posed serious problems, disrupting operations and hurting the company's image and bottom line.
Three of these terrorist campaigns were perpetrated by people claiming to be employees angry with the company and intent on harming customers and coworkers. The fourth was an attempt to extort money from the company. In this article, the author will detail one of these cases and how it was handled, as well as provide general contingency planning and crisis management tips that can help any company learn to manage an incident.
The chain of events. An anonymous letter was sent to the corporate office of a large upscale supermarket chain based in Tampa, Florida. The writer threatened to put razor blades in meat products at a particular bay-area store unless an unnamed "we" was treated better. The gist of the letter was that someone was angry with the company for some perceived wrongdoing.
The loss prevention manager at that time (the author) called the police and reported the letter. The police department opted to bring in the FBI immediately. However, before the police could even drive to the chain's offices, the supermarket's headquarters received a call from a local television station, asking how the company was going to respond to the threat of product tampering. The terrorist had sent copies of the same letter to every television station in Tampa.
Clearly, part of the letter-writer's goal was to put pressure on the company by publicizing the threat and spreading fear among the general public-the store's customers. The company was not prepared for this tactic. In a similar incident in the past, no such public notification had been given, and within two days the perpetrator had been identified and arrested. The notification of the media in this case created a new dynamic.
The chain's director of communications attempted to regain control of the rapidly deteriorating situation, but to no avail. He and the author begged the media not to run the story until the FBI could investigate the allegations and possibly identify the letter writer. They were told that the public has a right to know.
Corporate representatives had not yet met with the police or the FBI to begin the investigation when headquarters as well as individual stores were besieged with mobile vans and reporters seeking a scoop on the contamination story. News stations even broke into local programming to report the letters, showing the police in newsroom offices looking at them. The story then ran on every station in the morning, at noon, and at night for several days, which caused a widespread panic in every supermarket chain in the bay area. Calls from worried customers began almost immediately, and all 20 of the chain's bay-area stores were soon inundated with phone calls and customers returning products.
To try to stem the tide of bad news and control contacts with journalists, the author told store management to refer all media inquires to the corporate office. But the strategy was ineffective because the local broadcast media was determined to be "on the scene." For example, one reporter was in the parking lot, stopping grocery baggers and asking them what they had to say about the letters. (The author had to go to the store and threaten to call the police before the reporter and her camera crew would leave the parking lot.) Such incidents did not stop afterward, though this was the only case in which the author was involved; store managers handled the rest.
An immediate response was needed: The company's senior management team, consisting of the author, the president, and the vice presidents of operations and merchandising, met to develop a plan. Restoring customer confidence was a top priority, and the board knew that it must quickly send directives to store managers.
As its first step, the company told its store managers that if anyone wanted to return meat products or any other kind of product, employees should refund their money, no questions asked. The company used media outlets to make the plan public. Initially, the company informed customers to bring the suspect product with them so that it could be tested for contamination. But this became a storage nightmare, with customers bringing in large quantities of meat that they often had repackaged into smaller servings.
Headquarters also printed basic instructional fliers for store managers on how to address the concerns of customers. The store managers were outstanding in dealing with this customer service nightmare, and most customers were gracious, only wanting an exchange for a new product.
However, as in most situations, there were those who wanted to take advantage of the crisis. Managers reported that some customers were asking for refunds for half-eaten or completely consumed products, for example. One customer came in with a piece of cheddar cheese about one inch in diameter. The cheese had about io pinholes in it, and the head of a pin was sticking out of the cheese. The customer demanded a refund for the block of cheese. The "tampering" was clearly contrived, but the company refunded the purchase.
The pinhole-covered cheese was only one of many copycat tampering cases and hoaxes that plagued the company, as well as every other supermarket in the bay area, for the week after the release of the letter. During this period, the loss prevention department received more than 50 reports of tampering. While all were investigated and turned over to the police, not one was believed to be legitimate. Meanwhile, within 20-plus stores in the Tampa area, the supermarket chain paid out more than $32,000 in refunds and saw sales drop by more than $1 million.
Regaining control. To stem the financial losses due to the rampant refunds and hoaxes, the company decided that it was time to use the media constructively. The company called a joint press conference with the police to announce the arrest of a man who had put a foreign object in a box of crackers and then tried to return it to the store for a refund. That report put others who might he planning hoaxes on notice that they would potentially face charges. The company also used the press conference to highlight how misguided concern had led many customers to return safe products to the store for normal occurrences such as rock salt in sausages, waxy residue on fruit, and so forth. After the news ran this story for one day, reports of suspicious products plummeted.
On the trail. Meanwhile, the author and his staff combed through thousands of personnel files looking for matches to the clues offered in the letters. For example, the language of the writer indicated that he or she could be from the north.
With help from the personnel department, staff concluded that the terrorist did not work in the targeted store, which had been randomly selected and had nothing to do with the alleged grievance. But some of the matters referred to in the letter reminded personnel staff of problems at another store that had been a hotbed of turmoil. After examining the personnel files for that store, the author and law enforcement authorities were convinced that the threat came from someone there.
After examining human resources records more closely, the loss prevention department was able to present several suspects to the FBI. These persons were interviewed by the FBI and given polygraph examinations. Although the polygraph results on the two prime suspects were inconclusive, both quit their jobs shortly afterward and moved to parts unknown. The company was never able to prove who sent the letters, but thanks to the hard work of police, the FBI, and loss prevention staff members, no additional threats occurred in the case.
Lessons learned. One of the biggest lessons learned was the importance of handling everyday crises before they spiral out of control. Another was the need to build and maintain relationships with reporters and news agencies so that when an incident occurs, the company has contacts and can respond to negative news stories. A third lesson was the need for interdepartmental coordination. In the event of an emergency, the heads of personnel, merchandising, operations, and loss prevention must work together from the outset, rather than focusing on their own departments.
After this case was concluded, the author wrote a product-tampering and emergency response guide based on the lessons learned. The guide proved useful in later instances of terror by mail and, in one case, possibly prevented the death of an executive who was being stalked by the spouse of a former employee. The following highlights some of the recommendations.
Obtain senior leadership support. Everyone is concerned with performing his or her function within the business or organization, so probably the only way a loss prevention manager will get busy department heads to take the time to discuss long-range emergency plans is to go in with the express written support and encouragement of the president or other senior leaders.
Before security and loss prevention directors seek management support, they should compile information on the nature of the threat and the need for taking it seriously. For example, curity should gather industry statistics and monitor news reports.
They must also seize available opportunities to make needed changes. For instance, in the wake of the anthrax-laced letters, many companies became concerned about being victimized by similar threats. That created an opportunity for loss prevention directors to call management's attention to concerns that are more likely to occur, such as threats of arson.
Assess your situation. While working for a different employer, the author was the chairman of the special situation team, the first crisis management team in the company's history. It was composed of a core group of about eight people; topic-area experts were brought in as needed. The team was charged with asking each department what would happen to the business if a particular scenario occurred. To this end, members met with department heads and managers, asking what their worst fears were. The project was conducted with the blessing of the company president, which gave the team's task legitimacy in the eyes of those being interviewed. The problems found were divided into physical threats and threats to reputation.
The findings were enlightening, but also frightening. For instance, the team learned that the grocery chain's primary dry grocery warehouse had no backup generator or plan if something were to happen there. This discovery was even more troubling because the warehouse was situated next to a major airport, with fuel tanks sitting right beside the warehouse. Until the survey, staff had assumed that the comprehensive plan and equipment in place at the other major warehouse were present at this one as well.
One of the issues mentioned most frequently was hurricanes, a seasonal problem in the Southeast. Through the interviews, team members came to realize that the two most important issues in a hurricane relate to getting product to stores (merchandising) and getting rid of bad product (waste and produce management). For example, waste haulers normally do not operate during a hurricane, so a backup plan is required to deal with whatever must be thrown out.
The team also looked closely at issues of food safety, such as product tampering or contamination by food-borne illnesses such as salmonella, because food quality and safety is the cornerstone of a grocer's reputation. Other topics addressed included a disruption in the company's information systems, kidnapping, and extortion.
Write a plan. The company should put together a detailed manual of individual department instructions for what to do in a crisis. In the case of the assessment just discussed, the company went a step beyond that to develop an emergency situation flip chart that identified eight or nine situations most likely to occur, such as a fire or robbery, and to require an immediate response. Two different charts, were developed: One for the grocery stores and one for warehouse and manufacturing facilities.
This chart was distributed to all 160 stores and strategically placed throughout each store. Managers also took the charts home and kept them handy so that the information would be readily available in an emergency. Managers were trained on how to use the charts, and then that training system was replicated for the company's warehouses and manufacturing plants.
Use outside expertise. Whenever possible, a crisis planner should take advantage of external resources, such as colleagues who have already developed internal emergency plans and programs. Such expertise can also be found among suppliers or vendors. For example, the senior members of the special situation team flew to Chicago and visited the crisis management team at Kraft, which supplied products to the company's supermarkets. That's where security got the idea for the flip chart, which developed from comments about the importance of not relying on a manual to provide information. The meeting was coordinated by the grocer's merchandising department, which also provided support and cooperation and participated in the process as well.
Another source of expertise can be found through a company's insurance carrier, especially at the time of policy renewal and negotiation. For example, the author's former employer was renewing its product-tampering insurance at the same time it was developing the crisis management plan. The risk manager, a member of the special situations crisis planning team, discussed with the carrier alternative sources of information, and a consultant was suggested. So the company negotiated for and received the services of an international risk management consultant. The consultant visited stores, warehouses, and manufacturing facilities to review the procedures in place, helping the team develop a product-tampering response drill.
The team also contacted local and state disaster planning agencies and invited them to planning meetings. This cooperative relationship proved mutually beneficial during the natural disasters that plagued the state over the next several years, including four hurricanes, a major snowstorm, and a flood.
Test the plan. Simulations, exercises, and scenario discussions must be used to periodically test the emergency plans and procedures. It is difficult for companies to find the time to perform testing. It is also a challenge to conduct tests without disrupting operations. But a creative company does not have to actually shut down operations or disrupt stores for such exercises.
For instance, in the case of the grocery chain, each member of the special situations team created scenarios concerning his or her particular field of expertise; the quality assurance director wrote about food contamination, and the loss prevention manager covered product tampering and a murder in the store, for instance. Members then came back together to discuss the situations and create a document for potential tabletop. exercises.
These cases often used real-life events as a springboard. In one case, the team used the experience of a customer who had threatened to kill a store manager because she had lost a negligence lawsuit after a fall. The case was used to discuss how to deal with threatening situations more proactively and to elaborate on the roles of store managers, the police, and others in the process. (New twists and different aspects to the scenario should be interjected to test responsiveness and flexibility, because circumstances will change during real crisis situations.) Afterward, the team documented the comments and courses of action taken and incorporated them into the plan.
Integrate media relations. A critical member of the author's special situations team was the company's director of media relations and corporate communications. She advised the team on how such emergency scenarios would play with the media and how to best approach certain situations. Even if a company handles an emergency situation correctly, failure to deal with the media appropriately can lead to a public relations disaster.
Document lessons learned. After each crisis or special situation experienced by the company or its competitors, the author's response team met to discuss what went wrong and to determine what could have been done to mitigate, prevent, or better manage the situation. For instance, each hurricane experienced by the chain's stores raised a new aspect of emergency management that had not been considered before, such as the need for a reciprocal plan with local warehouses in case of flooding.
Right now, the focus is on the terrorism threat that has dominated the headlines. However, many companies are still unprepared to face challenges and crisis situations that are much more likely to occur. Loss prevention and security professionals need to take advantage of the current heightened level of awareness to help prepare their companies for less newsworthy but similarly devastating threats.
William A Alford, CFE (certified fraud examiner), is the president of International Lighthouse Group, Inc., of Charlotte, North Carolina. He currently serves on the Education and Liaison Committees of the ASIS Council on Retail Security.