Management Mistakes and Successes - Case Study Example

Analysis of Trust loss based on two case studies Institution Name Course Table of Contents Introduction 2 Presentation of the topic 3 Methods 5 Presentation of the case 6 Discussion 7 Analysis of what the company did 7 Root causes of the loss of trust 8 Effectiveness of the mitigation measures 10 Possible implications if the company did not give a public address to the matters and making of changes 11 Possibility of chances of recovery of its reputation 12 Recommendation 13 Conclusion 14 References 16 Introduction It is important that organizations understand that trust is a basic building block of its objective success. Loss of trust has been a common occurrence in the world of business, involving investors, customers as well as other related stakeholders. However, there is a trend of trustworthiness afforded to business organization globally from members of the public. Incidences that may lead to loss of trust ultimately result to major internal and external problems. The latter include a destroyed business image and public trust. This report analyzes and examines two case studies of two companies; Toyota and BBC, and their actions which led to a great destruction of failure of trust, and their subsequent attempts to recover from the failure. The report also extensively discusses the trust as a major concern in its literature review, the basic components of the cases, the actions taken with regard to trust, the root causes of the loss of trust, the effectiveness of the measures of mitigation that each company implemented with their implications, and the possibility of recovery from of their public images. Presentation of the topic Trust forms the critical concern in this report.Heckscher & Adler (2006) suppose that trust is understood as the evaluation of level of reliance with confidence in an entity, in most cases an individual or a business organization. They further argue that an organization that works on the principles of trust is thus characteristic of productivity, flexibility and innovation. Such organisations then achieve employee motivation maximally, while the public view the organisations as potential and reliable partners in business transactions. According to Peppers & Rogers (2011), popular models of trust give special attention to three basic factors in relation to the characterization of the party in question. Such a model will thus seek insight into the party’s benevolence, ability and integrity. In this order, the interests and motives, the technical disposition and levels of sound treatment and honesty of the party are evaluated. Cavoukian & Hamilton (2002) propose that in the process of evaluating the trust to be accorded to an organization, ability, integrity and benevolence of the organization must show a positive trend for an individual to have any business transactions or deals that need trustworthiness of the organization. Such transactions might range from having investments in the stocks of the organization, purchasing their consumer products, seeking their services, to providing services to this organization in terms of labor. According to McKinley (2012), it is critical then that a business enterprise ensures that its integrity, ability and benevolence are not of questionable value if the organization is to win public trust. Any instances that might call for the customer to hold contempt for these intrinsic organizational features will ultimately result in wariness in the customer, and as such the customer shows reluctance in taking any form risky engagements with the organization. Therefore, mistrust in the objectives, honesty and capability of an organization is equivalent to ineffective monitoring, weakened innovation and collaboration, and destroyed relationships (Heckscher & Adler, 2006). Any act that has a destructive effect on the customer trust is likely to cause a negative public image of the organization. A negative public image is thus preceded by mistrust in the organization by the public or its bona fide customers (Cavoukian & Hamilton, 2002). This implies that each encounter between the trustee and the trusted in a way presents a confirmation of the partner’s level of honesty in the dealings, which has a direct implication on the subsequent trust, or mistrust. It is apparent that even if the trustworthiness of an organization has been called into question, it is possible for the organization to work towards restoring its lost trust in the customers and the critical public. This is what is entailed in the process of trust repair. It takes a great to win customer and public trust, but a slight form of abuse of this total reliance on the organization can destroy this trust. The relationship between the organization and the customers afterwards is solely dependent on the corrective measures that the organization seeks to take. Effective and efficient trust failure management requires that the organization comes up with a strategy which aims at regulating the mistrust experienced (Knoespel, 2011). The strategy should adequately define control of conduct of stakeholders within the organization so as to deter future occurrence of such or related mistrust issues, through such actions as reviewing of the incentives and defining the work procedures. In Hartley’s (2011) view, an organization can also regain the lost trust by demonstrating that it can still uphold honesty, integrity and benevolence, although in a new way. This novel evidence is achieved through such acts as timely apology, meeting the costs of penalty and adequate investment intended to enhance honesty. Methods The report largely draws from the quantitative and qualitative data provided in the Toyota and BBC case studies. An analysis of the facts about the case helps in understanding and writing of this report. The occurrences and experiences of these companies both individually and collaboratively are described and analyzed to shed light on the possible instances of failure of trust and the subsequent comprehensive process of trust repair in organisations. Inferences and adequately informed conclusions are also drawn to enhance the general topic of trust. The data in the cases was extracted from the public, specifically the media, and the sources’ reliability was ascertained. The report’s argument is also connected to the popular analysis of the model of trust. Presentation of the case Toyota Case Study The Toyota case study draws from the incident which took place in August 28th, 2009. A customer in a Toyota Lexus made a call to the emergency department with a voice that carried terror. This was a result of the uncontrollable acceleration of the automobile. As the emergency response team were analyzing the context of the call, the accident caused death of those in the car before a solution could be reached by the emergency team. Toyota had to face criticism that pointed outwardly that the company had lost clients’ honesty. Toyota further heightened the tense mood of the public by such ineffective acts as lateness in reaching out to the public for apology, recall, disclosure and communication of relevant information. This had grave impacts on the image of Toyota, and its effect to the popularity of the company were far bigger that the accident itself. The reputation of the company was destroyed and went down by a percentage of eleven from thirty, the total sales of the company greatly declined, the market share went down and the confidence of both the consumers and the potential investors with the organization crumbled down. The case also received driving forces from the fact that the company did numerous records in the past years. Recalls are an attempt to regulate distrust and repair trust. However, it should be noted that the regulation of distrust is in an indirect proportion to the regulation of distrust. It therefore give an implication that more recalls which every automobile manufacturer does per year trigger loss of trust. For Toyota automobile manufacturers, the recalls meant worse as they had recalls every year starting 2004 to 2010, with exceptions of 2006 and 2008. These recalls were identified to link to over 8.5 cars with issues related to braking systems, ignition and at times, acceleration. BBC Case Study In 2007, BBC was in a crisis involving misjudgment by the editors that results led to information that could mislead or deceive the BBC audience. Phone-in undertakings also seemed to but did not give access to viewers participating in the shows. The honesty of BBC was compromised through charity organisations and viewers of child programmes. Up to about 58 percent of the public held contempt for BBC for broken trust. Although operational and political scars remained with regard to the motives that gave impetus to such malicious steps by BBC, the crisis was successfully solved. Discussion Analysis of what the company did Toyota The Toyota Company responded after a period of two days from the day of the tragic accident. A statement with regard to the accident was issued, and in it Toyota expressed its deep concern for the lives lost. The company pledged to undertake a comprehensive investigation of the matter in collaboration with NHTSA, (National Highway Traffic Safety Administration). However, the attempt was an appropriate cover measure following the accident. BBC The organization, on attempting to investigate claims made by a newspaper that BBC had a deceptive show named ‘Saturday Kitchen’, when one of the viewers raised a concern over the integrity of another programme. This program was designed in such a way that viewers could not participate in the phone-in charity competition. However, as the news of the fake programmes went circulating in the public, BBC was compelled to make apologies to the public for exploitation of viewers’ trust. Root causes of the loss of trust Toyota As revealed by respondents to the accident, Toyota did exhibit a great deal of slackness in identification and response to the root cause of the accident. The respondents had a general feeling that Toyota had initially failed or shown ignorance with regard to solving the problem, until the situation could not be contained any more. Toyota failed to allow for effective speculation and subsequent investigation of the matter by turning down the requirement to give insight on the possible factors which might have led to the tragic accident. Toyota has also been identified as such a manufacturer who has a consistent record of recalls. These recalls are an illustration of the degree to which the company has failed to offer satisfactory services to its customers through standard quality vehicles. In essence, the high and consistent tally of recalls is a destruction to the trustworthiness customers have assigned to Toyota. BBC BBC as an organization undermined customer trust by way of dealing in deceptive programmes that could be interpreted as attempts to counter the market competition that they were facing. BBC was also dishonest as they were undertaking an investigation over claims made by a newspaper with regard to fake shows, yet they owned up to these dishonest acts aimed at taking advantage of viewer trust. BBC took initiative to make a public apology with regard to the untrue events of the Blue Peter show before the show was confirmed to be misleading and deceiving. The managerial team also admitted to their dishonesty, citing that the acts of the organization had adverse effects in line with viewer trust. Effectiveness of the mitigation measures Toyota The mitigation measures taken by Toyota cannot be said to be fully effective, as these measures did not achieve total recovery of the reputation that had been destroyed. Toyota did enhance a positive image by making a statement about the accident, which had massive links to the reliability of the services to their clients. The statement revealed the company’s capability to acknowledge the tragic accident, and to show concern for the lives it claimed. This is initial measure that company did to abate the pressure and increasing contempt that clients were holding up against Toyota. Although after much pushing, Toyota gave out warning to its clients and in turn asked them to return vehicles that seemingly had design problems. A total of 3.8M vehicles were recalled. This move had financial disruption to Toyota, and the ability to recall such a big number of vehicles was a distinct show of benevolence extended to its clients. The slow nature in which they responded to these issues saw the company meet retributive measures. A fine of $16.4 million was payable to NHTSA in 2010, April. This measure was confirmed on the argument of that Toyota knew the risk paused to its customers. Even though Toyota paid the fine, they were opposed to the knowledge of the risk of their cars. This move even yielded further negative results on their image as the acceptance to meet the penalty for allegations they do not own up to justifies their guilt and further risks the public image on honesty. BBC The trust repair process of BBC, as opposed to that used by Toyota, did win the broadcasting firm the trust which had been lost. However, negative that are deeply rooted in the operation and politics still linger on. The workers were seen as not qualified for their incapability ethically as well as a means of taking advantage of the market share. Possible implications if the company did not give a public address to the matters and making of changes Toyota The company would have suffered to even greater tunes of lack of trust from its customers had it not given a public address of the crash of San Diego. The effects could be more pronounced since damage to the organization’s reputation had suffered damage due to the sluggish manner of response to the accident. The institution could have possibly been treated to higher retributive charges as opposed to the $16.4 million which was as a form of contempt held to the company for its apparent slackness in acknowledging the accident. BBC The BBC audience did consider the deception by the media company a great violation of the integrity, benevolence and ability with which the audience held the organization. The institution could have experienced massive destruction of the public image that it had taken a lot of effort to build. The market share pride and preference that BBC boastedof in the past quality services also could have been have been destroyed. In return, the attention of the public could shift to criticism of the media firms and the integrity and honesty could be a priority to the media houses. Possibility of chances of recovery of its reputation Toyota Although not an easy objective to obtain, Toyota still had the opportunity of regaining lost trust in its customers, as proved by the continued existence of the company with customers purchasing cars from this manufacturer. This continued customer support is as a result of the following key steps that were taken; Novel system to guarantee safety was to be implemented, which could combine up to 5 technologies to avoid accidents. Change in the design of the organizational structure which could see Toyota significantly reduce the number of directors so as to ensure timely response to crises. Toyota undertook the responsibility of meeting the retributive costs to the relevant individuals with regard to the Diego tragedy. This further proved the benevolence of the organization. BBC BBC had the ability to recover its customer trust. The firm won back the trust that the public had accorded the organization after appropriate measures were put in place. The steps taken included; The events of competitions involving viewers making calls to the stations were suspended. Temporary legislation was documented and implemented on editing policies. Here, experienced persons were suggested for relevant positions to ensure efficiency. The staff was to be necessarily trained on techniques that could render BBC broadcasting maximally interactive. Recommendation Both organisations failed to take necessary precaution to prevent instances that undermined the trust of their bona fide clients. Toyota car manufacturers can better their customer trust by; 1. Timely response to emergency situations 2. Owning up to issues of trust and making necessary apologies in time 3. Ironing out the technical defaults with regard to automobile design to avoid negative speculation and possibility of comprise to safety BBC should ensure that; 1. There is frequent training of employees to ensure they have mastered the art of interactive broadcasting 2. The policies governing editorial boards have prioritized integrity, ability and benevolence of the organization towards the general public. 3. The mitigation measures taken are a response to operational and political considerations in addition to trust considerations Conclusion It is apparent that organisations can lose client trust if they are involved in actions that threatened or violate the honesty of clients in these organisations. The institutions can be able to successfully turn the events of failure of trust and win back the client honesty depending on the effectiveness of the mitigation measures. This is the reason Toyota did not achieve much success as BBC. The organization can prevent future loss of client trust by ensuring that integrity, benevolence and ability are given priority. References Cavoukian, A., & Hamilton, T. J. (2002). The privacy payoff: How successful businesses build customer trust. Toronto: McGraw-Hill Ryerson. Hartley, R. F. (2011). Management mistakes and successes. Hoboken, NJ: Wiley. Heckscher, C. C., & Adler, P. S. (2006). The firm as a collaborative community: Reconstructing trust in the knowledge economy. Oxford: Oxford University Press. Knoespel, R. M. (2011). "How did Toyota stay on top?": Revisiting crisis communication discourse. Milwaukee, Wis.: e-Publications@Marquette. McKinley, M. M. (2012). Ethics in marketing & communications:Towards a global perspective. New York: Palgrave Macmillan. Peppers, D., & Rogers, M. (2011). Managing customer relationships: A strategic framework. Hoboken, N.J: Wiley. Read More