Maple Leaf Foods is one of the leading food processing companies in Canada, where many of its processed meat brands are household names. The company also supplies restaurants and hotels.
On August 12 2008 management became aware of a possible case of listeriosis contamination at one of its meat processing plants, near Toronto. By August
23 the contamination had been confirmed and by the end of September more than 20 people’s deaths had been linked to the listeriosis outbreak associated with Maple Leaf Foods. Many more fell ill.
The Canadian press attacked the company and a number of class-action lawsuits were launched on behalf of victims and their relatives. Consumers started to avoid Maple Leaf brands, and trade customers began switching to other suppliers.
Maple Leaf Foods responded swiftly. All products from the affected plant were recalled as soon as the presence of listeriosis was confirmed.
Michael McCain, chief executive, took personal charge. He later told the Toronto Globe & Mail that in his handling of the crisis, “there are two advisers I’ve paid no attention to. The first are the lawyers, and the second are the accountants.” His public offer of a full apology and acceptance that Maple Leaf Foods was solely responsible was considered a brave decision because it left the company open to legal action. Mr McCain accepted this risk: the point was to act first in the interest of public health and then to be open and transparent.
The management dealt with the crisis on a number of fronts, including PR, strategy and restructuring.
● PR: As well as holding frequent news conferences, Maple Leaf Foods’ website provided information about what it was doing to eliminate further contamination. It updated the site round the clock.
The company used a television commercial to make a further apology
and to explain its response. The ad was posted on YouTube, and had received more than 60,000 hits by the end of September. This high-profile response persuaded many that the company was sincere in its apology and desire to remedy the situation.
● Recovery strategy: The management redirected all the company’s energies and resources to improving food safety. The only department that was allowed to hire any new staff was food safety, where the policy was to hire the best recruits regardless of cost.
The company instituted an overhaul of technical systems and stated that its aim was to be the industry leader in food safety and to exceed current standards, while also lobbying for tougher regulations across the industry.
Again, it developed marketing campaigns, this time to highlight these technical measures in order to convince consumers and trade customers that its brands and products could be trusted.
● Restructuring: As sales fell, Maple Leaf restructured to cut costs and sought additional equity capital in order to maintain its balance sheet. The subsequent class-action lawsuits were eventually settled for $25m.
By the end of 2009, Maple Leaf Foods had returned to profit. By 2010 overall meat revenues had recovered 95 per cent of their former value, to $2.3bn from a previous figure of $2.4bn.
Rapid reaction to a crisis of this nature is essential as hesitation will be seen by the press and public as a sign of weakness and culpability.
Second, the company is likely to be respected for taking responsibility.
Finally, it is essential that top management takes charge of the problem and the response.
The next important step was to rebuild trust among customers and the wider public by showing it put the interests of customers and the public first. This encouraged them to believe the company was speaking honestly.
The trust built in the days after the onset of the crisis laid the foundation for its eventual turnround.
The writer is a fellow of the Centre for Leadership Studies, University of Exeter Business School and author of ‘A History of Mangement Thought’