What is Remedial Action?
A remedial action is an undertaking to correct a problem or issue. Such actions can be done as part of a voluntary compliance program, with a person or company making changes to address an issue of concern without being specifically asked. In other cases, people are ordered to fix a problem, usually by regulatory agencies, and must complete a remedial act within a set time period in addition to facing penalties like fines.
One example of a remedial action is environmental remediation. When the environment becomes polluted as the result of business activities or other events, it must be cleaned up for safety and welfare. If the culprit can be identified, it will be tasked with taking remedial action or applying for financial assistance if it cannot pay for the cleanup. In other cases, government agencies step in to handle cleanup.
Other remedial actions can include recalls of defective products for repair or replacement, correction of inaccurate financial records, and changes to company policies considered to be violations of the law. The action is corrective in nature and is intended to fix a problem that has been identified, whether internally or externally. Sometimes, remedial action is intended to prevent legal penalties, such as fines for not keeping accurate records.
When companies are proactive about a remedial action and engage in this activity to protect health and safety before regulators step in, they may promote their activities, using them to show that they care about customers and are committed to fixing problems. Public relations departments will try and put a positive spin on an event like a recall to avoid problems like customer dissatisfaction or erosion of consumer confidence. When companies lag their heels on addressing a problem and are ordered to do it by government regulators, they tend to downplay the event as they do not want the general public thinking poorly of them.
Remedial actions can be triggered by issues identified by company personnel, consumer complaints, or problems identified by inspectors and regulators. They can be very costly, and companies take steps to avoid them as much as possible, ranging from very strict testing and quality control to prevent problems to strong defenses in liability suits to avoid being forced to undertake expensive product recalls. People who purchase products subject to remedial action should be aware that the company bears the responsibility for correcting the problem and replacing the product or providing compensation.
There are so many companies that make toys and other products for babies and children in the U.S. And some of them are far from ethical.
Some companies manufacture and sell toys and other children's items that are not carefully tested, and the defective items are either voluntarily put under a remedial action plan, or are ordered to do so.
As part of the plan they must recall these toys and items, and give a refund back to the customer.
Then, in order to recoup their money from a large recall, they export the defective items to third world countries and expose them to the dangers. How unethical is that?
Nice article -- I've got another kind of remedial action though -- a medication recall. Once you start getting a few clusters of reports of bad side effects, the kind of news spreads like wild fire, especially among those who are taking the medication.
Then the company starts scrambling to take the drug off the market and do PR damage control, at least until the claims have been looked at. Often this is the time when lawsuits are planned, if the effect is even more serious.
Even though new drugs are tested for years and finally approved by a government agency, unknown factors can come up after approval.
Companies really have to monitor themselves, so they don't release a drug too soon.
@everetra - I agree that fixing the problem is more important than the spin control for their image.
I disagree, however, in your assessment that Toyota was more focused on image than on fixing the problems. The moment they became aware of the problem, they issued recalls, to the tune of losing about $2 billion from what I understand.
The models affected were the Camry. I realize that they took a wait and see approach with the Prius and so that wasn’t as urgent, but executives have the prerogative to make these decisions on a case by case basis.
Automobile recalls, from what I’ve seen, tend to be handled with a sense of urgency regardless of the manufacturer. This is not simply a fact of the marketplace, but also owing to legal regulations imposed by the National Transportation and Safety Board.
One of the areas where I believe a remedial action plan is of utmost importance is with automobile manufacturers. The moment companies become aware of a problem with their vehicles they should immediately implement a recall.
Generally this is true, but as the article points out, sometimes the companies are also busily engaging in damage control to repair their tattered public image.
One of the most well publicized examples of this was the Toyota recall that took place in late 2009 and early 2010. Toyota, a standard for quality and reliability, suffered a humiliating public relations fiasco as some of their cars had brake and acceleration problems, even resulting in deaths in some cases.
While I respect everything the company had to do to fix its ruined reputation, in my opinion this is not as important as implementing a recall and focusing on fixing the underlying problem.
@SZapper - I agree with you, to a point. I do think there are some circumstances where remedial action and other punishment would be appropriate.
A simple mistake is one thing, but what about serious negligence. For example, if a company rigorously tests their product and overlooks one small detail, that's one thing. But if a company doesn't even conduct tests, knowing that they should, that's a different story. Remediation should be made in both case, but I think jail time is appropriate when a company is seriously negligent and people get hurt.
I think remedial action should definitely be the only "punishment" in instances where a company does something wrong completely by accident. I feel like sending someone to jail wouldn't fix the problem or be appropriate. After all, everyone makes mistakes.
However, mistakes do have consequences. Companies should have to answer for their mistakes and fix them with remedial action. I think this is especially true for unsafe products.
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