IKEA, founded in 1943, and one of the most successful international retailing companies, is undergoing a practical lesson in crisis management after admitting last week that political prisoners in the former East Germany laboured under cruel conditions to produce its furniture.
In May, a documentary made in Sweden – the home country of IKEA – made claims that the company had used the forced labour of political prisoners suppressed by the former head of the German Democratic Republic Honecker and his ubiquitous Stasi police to make its furniture.
With 338 stores in 40 countries and a €2.7 billion profit per year, IKEA as a corporation has to navigate its PR course with precision.
IKEA acted to quash rumours and gain facts. It employed auditors Ernst & Young to interview 90 people, comb through 20,000 documents from the IKEA archives and scour 80,000 pieces of evidence from the German historical files. The outcome was not good: former prisoners told how they were thrown into blacked-out isolation cells or fed punishment rations if they did not work hard enough on production lines for Ikea and other companies.
IKEA had already ridden out 2011 accusations that 86 year-old founder Ingvar Kamprad had been an active member of fascist Sweden’s Socialist Union (SSS). They blamed Kamprad’s youthful stupidity.
So then last week came the apology from Peter Betzel, the company’s manager in Germany: “Despite IKEA’s attempts in the 1980s to prevent the use of political prisoners in making its products in the GDR, political prisoners were used. I offer my deepest regrets to the victims.”
“Despite attempts to”…hmmm…”I deeply regret…” – this is one of the popular go-to phrases. It doesn’t actually require you to admit you did anything wrong.
…and Apple selects its apology
With every deed made public on the Internet these days, we’ve suddenly all developed a lot more to apologise for and corporations have started to develop some pretty universal techniques for “apologising” without really apologising. Top of the line is deep regrets, then comes “mistakes were made”…
There’s a lot to be said for taking it on the chin: As an individual in a corporate context, General Petraeus still has our respect for taking responsibility for his actions. No “apology” or “deep regrets”. He admitted his actions were wrong and acted appropriately: “I showed extremely poor judgement by engaging in an extramarital affair. Such behaviour is unacceptable, both as a husband and as the leader of an organisation such as ours.” He resigned.
In a real corporate crisis the PR rule is ‘Put it right and then put up your most senior spokesman to take responsibility and make your case.’
The rule is often to decide whether those all-important consumers will really care.
Apple is a case in point. It was supposed to be breaking employment laws in its factory in China where staff suicides, riots and strikes are common – however its most recent public apology relates only to the bad delivery of its MAP product: “With the launch of our new Maps last week, we fell short on this commitment. We are extremely sorry for the frustration this has caused our customers and we are doing everything we can to make Maps better.”
Apple took it on the chin and from the top. Maps directly affected its customers – and it still has record sales for the products still being manufactured in the factories in China.
The customer is king. Despite IKEA’s two brushes with oppressive authorities which certainly jar with the Swedish retailer’s image: ‘soft toys for education’, family oriented shopping experiences, the joys of the in-store cafe with its traditional meatballs – IKEA as an organisation thrives – it was named ‘International Retailer of the Year 2012’ at the World Retail Awards in September.
Posted by: Natalie Rimmer @ IBA