The character of a corporation -- like that of a person -- is tested most pointedly in a crisis or tragedy, as Union Carbide Corp. is about to demonstrate.
How Union Carbide responds to the calamity in Bhopal, India, where many hundreds were killed and thousands injured by a poisonous gas leak from one of its plants, will affect its reputation in this country for a long time to come.
Union Carbide has taken a significant first step, with the decision of its chairman, Warren M. Anderson, to go to Bhopal to lead the company's efforts in determining why the accident occurred and what the company's response will be. There will be many other tests, including how candidly it answers questions here about the safety of its U.S. plants that handle the lethal chemical that caused the Indian tragedy.
All American companies should be closely watching the aftermath of this tragedy and paying attention to some blunt advice from Irving S. Shapiro, the former chairman of E.I. duPont de Nemours & Co., and one of the most forthright, influential corporate executives of his era.
His book, "America's Third Revolution -- Public Interest and the Private Role," written with Carl B. Kaufmann and published this year, is a commentary on the social responsibility of business leaders and a warning that corporate leaders cannot successfully lock their doors to the outside world.
Shapiro advises that a reputation for credibility is earned, day-in and day-out, in the way a company's leaders deal with employes, the public, government and the press. The way business executives react in a crisis is likely to be conditioned by the way they have handled routine relationships with those outside the company, he suggests.
Shapiro devotes a chapter to the relationship between business and the press, noting that the press is a vital point of contact between the corporation and the public, particularly a corporation in trouble.
"My philosophy on this," he wrote, "is so simple it hardly deserves the honor of such a fancy word:
"A private organization of any size and substance is best served when it gets full and fair coverage from journalists. The chances of getting that are best when the organization helps journalists get their job done. Ergo, return their calls. Answer the questions. . . . Set up as few filters as possible. Never lie. When you have a problem and the press becomes aware of it, do not try to paper over the facts. Admit them. That alone will go a long way toward keeping them in context."
Shapiro's advice calls to mind two dissimilar incidents of corporate public relations. One, which he cites, is the way Johnson & Johnson handled the Tylenol poisoning tragedy in 1982, when seven people died after taking capsules that had been contaminated with cyanide.
The other is the decision this week by Mobil Corp. to pull its advertising from the Wall Street Journal and to refuse to answer questions from the Journal's reporters.
"The best demonstration of corporate 'damage control' I have ever seen was by Johnson & Johnson," whose McNeil Consumer Products Co. subsidiary makes Tylenol, Shapiro wrote.
"When it discovered that someone had put cyanide in Super Tylenol capsules, Johnson & Johnson adopted a full-disclosure policy, with around-the-clock information services for the media with senior executives available to answer questions."
Shapiro's view, shared by many other observers, is that "because of the way the organization stepped up to its responsibilities and turned to the media to help it communicate -- to the public's benefit, not its own -- Johnson & Johnson emerged from the episode with widespread public support. Its reputation, instead of being destroyed, was if anything strengthened."
Mobil's decision to boycott the Wall Street Journal is not at all on a plane with the Tylenol episode, but it does represent a breakdown of the press-business relationship Shapiro advocates.
Two Wall Street Journal reporters said they believed Mobil's action was sparked by a Nov. 16 Journal story reporting that Mobil was building a $300 million Chicago office tower with Galbreath-Ruffin Corp., a real estate firm that employed a son-in-law of Mobil Chairman Rawleigh Warner Jr.
Mobil Vice President and chief spokesman Herbert Schmertz said, "It was not the Chicago office building. It is five years of this kind of treatment." The last straw, he said, came Nov. 16, the day of the office building story, when a major business announcement by Mobil got short shrift in the Journal. The newspaper "ignored" the business report, and centered on a story that was "full of gossip and innuendo," he said. Mobil concluded that "it made no useful sense to continue the relationship," Schmertz said.
This column isn't an attempt to referee the dispute between Mobil and the Journal. The point here is that Mobil stands out among American companies for its biting criticism of what it regards as biased and incompetent reporting, charges often leveled in its editorial pieces carried by many newspapers around the country. Mobil -- more so than any other major company -- is locked by choice in an adversarial relationship with the press.
That's Mobil's business, but it's hard to see how the company benefits in the long run. Shapiro, in his book, says, "Energy spent by companies attacking the faults of the media would be better directed at scrutinizing their own operations, which are probably more responsible than any other factor for whatever poor press they are getting."