The culture of a company plays a major role in determining whether it will survive, or even thrive, following a crisis situation.

Major Product Recall

Pacific Hoists is Australia's leading provider in manual and electrical lifting equipment, predominantly to the construction and logistics markets.  It imports products from leading brands such as Hitachi, Vital and JDN and distributes these throughout Australia and New Zealand.

The company prides itself on its strong family feel.  The average length of employment is 15 years and many employees are related.  This has contributed to a tight-knit and strongly supportive culture. 

In 2002, just as it was recovering from a downturn in sales, Pacific Hoists identified a fault with one of its key products, a chain block used for lifting. The problem wasn't a design fault as such, but the fact that this particular product was non-compliant to Australian standards and a voluntary industry standard at that.

Pacific Hoists' CEO, Richard Crake, had only started at the company two months earlier.  Faced with a poor cash flow situation, he had to decide whether to invest in a product recall with the potential to cost more than $500,000. But Richard's decision was strongly influenced by the sense of family values at Pacific Hoists.  The company had a reputation for quality, but also very strong relationships with its customers, reflective of its personal approach to doing business.

Richard informed the market; both his customers and the managing directors of his competitors, to tell them of his decision and then advised the Australian Competition and Consumer Commission (ACCC) and initiated his industry's first product recall.  "The market was shocked," recalls Richard. "But in a good way.  We got a lot of respect for acting with such integrity and the recall really strengthened our reputation for quality."

The extended sense of family meant that Richard was completely open and honest with distributors, customers and stakeholders as to the issue at hand and its solution.  Pacific Hoists' staff and family members worked around the clock to identify stock affected by the recall and fix the minor defect. By pulling together, the cost of the recall was limited to only a fraction of what was originally anticipated.  How Pacific Hoists reacted to the recall also deepened relationships with its major distributors, resulting in significant additional orders.

Shirlaws business coach, Stephen Shepherd, who has been advising Pacific Hoists since 2001, says that the company is a great example of how culture is integral to business decisions.  "The culture of a business dictates how to manage crisis situations," he says. "The more open and honest your business culture, the more likely you are to establish long-term loyal and trusting relationships with customers and staff. The commercial benefits of this loyalty are significant, as Pacific Hoists' experience shows."

Contact Us