June 03, 2009
The spillage of 5 million cubic yards of coal ash is testing the Tennessee Valley Authority like never before. Its immediate response and ultimate resolution will determine just how its neighbors and its wholesale customers interact with the nation's largest provider of electricity.
The prescription for remedying any disaster is to demonstrate empathy and to communicate those concerns from those at the top of the organization. Companies may wrestle with whether to limit their legal liabilities or to respond to the public interest. But working to ensure the safety and well-being of neighbors and customers is always the correct response. The stakeholders, in turn, will likely respond in kind. The goal of entities in the hot seat is to generate more goodwill than legal ramifications.
"The volume of media calls is unprecedented," says John Moulton, senior media manager for TVA. "Our objective is to provide the community and the media with accurate and timely information as it becomes available. We do not speculate. The coverage has been a mixed bag. Some of it is balanced. Some of it is one-sided and takes information from environmental groups without first checking it out. Regardless, the media has definitely had the access they have needed."
On December 22, 2008, a retention wall used by a coal-fired power plant near Kingston, Tenn., ruptured and poured out 1.1 billion gallons of fly ash sludge into the surrounding communities. Such ash, which contains arsenic, selenium and cadmium, has been responsible for destroying multiple homes and escaping into area's watershed. It will cost an estimated $850 million to clean up, something that the TVA says that it is committed to achieving and will do so in an expeditious and proper manner.
In times of calamity, it is easy to lapse into denial. Preparation is key -- the ability to shift into crisis mode and to effectively react. Companies that have not organized and that have not trained for potential trouble may be ill-fated. Dodging and weaving around the issues is exactly the wrong tack. Most cases of emergency management are those confined to one incident -- as opposed to ongoing matters -- that could do irreparable harm: An ExxonMobil ship spilling untold oil or a natural gas pipeline explosion.
The public and press generally have preconceived notions when it comes to corporate conduct. The bias may be toward believing that all companies cut corners in an effort to boost their bottom lines. To avoid that, businesses must have a culture of openness and accessibility, and they need to plan for the "unthinkable." Core values are always applied and even if there is a short-term cost of doing so. When Johnson & Johnson learned in 1982 that some of its Tylenol tablets had been poisoned, it immediately pulled from the shelves all remaining bottles.
The Roadmap
In the case of TVA, Moulton says that organized teams of employees are visiting with scores of homeowners to address their concerns that range from property damage to air and water quality safety. Company executives have been out front and have participated in public forums, emphasizing that their top goal is to preserve health and safety and to restore the natural habitat to where it was before.
The company acknowledges that early on it had violated one of its own precepts -- the need to dispense accurate information as it becomes available. In its quest to get answers for a nervous public, it incorrectly estimated the amount of coal ash that had escaped from the plant. But once it had the right information, it corrected itself and then gave reporters access to subject-matter experts and to the devastated areas.
"The roadmap is awfully clear," says Bill Esrey, Sprint former chief. "Get the head guy out there and do it quickly. Get the message out yourself or others will do it for you. Hold nothing back no matter how bad it may seem. The companies that have done this have moderated the effects of bad news," says Esrey, chair of Spectra Energy's Board.
But TVA's response does not satisfy the environmental community. It maintains that the utility has underplayed the ecological damage to the immediate vicinities around the Kingston facility and that it hypes the results from those outlaying regions that have been largely unaffected.
The activists say that the overall harm is pervasive and that the contaminants have settled in with the surface soil. TVA, they say, is hiding behind the very regulators who routinely bow to industry.
"At TVA, it's about spin and not resolving issues," says Jeff Stant, director of the coal combustion waste initiative for the Environmental Integrity Project. "It does not call this a disaster. It calls it a 'mishap' or an 'accident.' This is the power industry and it owns most of the state houses in this country. We now have our hands full. TVA is responsible. We can't have it deciding what is to be done and then giving the public sugar-coated press releases. The public will have to be vigilant."
Countless issues ranging from potential legal liabilities to apprehension over admitting culpability can complicate a proper response to crises. It's particularly true in the midst of an ordeal that tries the patience and sanity of all involved. Under any circumstance, TVA must be open, honest and accessible. It's about rebuilding trust and leaving a legacy.
The utility readily admits that to date it has received "mixed reviews." But it quickly adds that it is working to restore consumer and regulatory confidence by providing transparency and involving all stakeholders. It's a mission that media manager Moulton says is embraced throughout the hierarchy and one he says is necessary if the utility's actions are to be ultimately accepted by its constituents.
That commitment is indeed the lifeblood of any company. It is the foundation that holds an institution together in both good and bad times.
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