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When Recalls Come Back to Haunt You

WYou identified a potential safety issue with your product and conducted an investigation. You worked closely with your regulator to plan for and execute a recall. Your team worked tirelessly to communicate with consumers and fix the issue. Then the regulator closed the recall. And you moved on.

Or so you thought.

The National Highway Transportation Safety Administration recently launched separate investigations into whether two GM recalls conducted years ago were inadequate. Most recently, the NHTSA  announced it’s looking into the 2014 recall of defective seat belts that dealers were ordered to replace in 1.4 million crossover SUVs. Two weeks before that, the regulator opened a probe into whether GM’s 2016 recall of some 3,000 small pickup trucks should have included another 115,000 pickups made the year before.

while there’s been no formal announcement of new – or relaunched – recalls yet, GM is now reliving two recalls it once considered complete. More bad publicity, lawsuits, fines and other regulatory action may be ahead for the automaker.

We certainly don’t have all the details behind the 2014 and 2016 recalls, but our experience managing recalls for car makers and other companies over the years tells us that GM’s intentions were likely in the right place throughout this process: chiefly protecting consumers and following all the regulatory rules to the letter.

Regardless of the outcome of these new investigations, , they provide an important teachable moment for all manufacturers who are planning for or facing recalls in 2019:

  1. Rushing through the process may prove to be costly. Time is of the essence when safety is in question. In our experience, companies are eager to move quickly when a risk is identified. They want to meet regulatory requirements and move past the crisis. But doing the job correctly is more important. Even worse, rushing to identify, develop, and roll out a remedy may cause you to overlook a better, more effective fix. And you, not the regulator who approved the action, will be held responsible.
  • Check all work and keep accurate records. If your recall is later suspected to be ineffective, you will need to prove that you took all the necessary and proper steps. This is the case even when the fix agreed on by the company and its regulator, with input from industry and safety experts, was the best alternative at the time. In fact, one of the most common mistakes companies make in a recall is to delegate a fix “down the line” to lower-level staff, business partners or contractors without adequate supervision. Then the mistake is often compounded by inadequate record-keeping, so there’s little evidence that everything was done right.
  • When in doubt, widen the recall. Companies ranging from food processors to drug and medical device manufacturers to automakers naturally seek to limit their recalls to as few units as possible to minimize costs and save time. But as often as not, they are forced to widen the recall days, weeks, or even years later, resulting in exponentially higher recall costs and greater legal liability, regulatory sanctions and adverse publicity. Far better to rip the band-aid off all at once and conduct a comprehensive recall from the start. In our experience, it’s usually more cost-effective.
  • Follow up with consumers and learn from the experience. Once the recall is complete, stay in touch with your customers. Ask them how you did. Offer to help with any lingering issues they may have. This approach can help you stay ahead of any new problems or dissatisfaction they may experience. Then you can manage their concerns before they complain to regulators. And you can also learn how to manage your next recall more effectively.

Managing a recall is an extremely complex ordeal. We should know; at Stericycle we handle about 1,000 a year of all types and sizes. by learning from your experience and that of other companies, you can minimize your exposure and actually emerge from a recall with stronger trust and support from your customers.

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