Why You Should Plan for Crises Before They Happen


What is the objective in any crisis?

It is to maintain company credibility and reputation, and create the perception that as an organisation you are doing everything humanely to act in the positive regard to all stakeholders.

If I had the opportunity to address a Board of Directors about the need for adequate crisis response planning and emergency preparation, there are only five points we would discuss, and the discussion would take just a few minutes.

They are:

1. How surviving the first two hours of an emergency or disaster can save assets, markets, and reputations.

2. How poorly handled crises can end careers. The BP Gulf of Mexico, which ended the career of the CEO is an excellent high-profile example.

3. Why the expectations of outsiders and various stakeholders will control the perception of how a crises is managed.

4. How handling a crisis insensitively, or not at all, can escalate visibility, cost, and reputational damage. (Look up Dow- Corning’s handling of the breast implant disaster)

5. Why what the Board says and does and when it is said and done will profoundly affect the organization’s reputation for some period after the crisis subsides.

The single purpose for preparing to manage the unplanned visibility caused by a crisis is to survive the first few minutes, hours, and perhaps day or two of the problem – if indeed it lasts that long. The greatest inaccuracy, misinformation, and error occur during this very early timeframe.

In fact, most communications energy following this early phase will focus on the correcting errors, mistakes, and misperceptions created at the beginning of the problem.

Fortunately, with a modest amount of preparation, practice, and assignment of roles and tasks, early miscues can be minimized and corrected. That means less damage to reputation, credibility, and employee morale.

If your organization is worthy of its reputation and is interested in maintaining its credibility, then crises management preparations are an absolute necessity. When bad news occurs, there are critical audiences, including your own employees, who have expectations of your behaviour and ability to manage problems.

Every one of your stakeholders will focus on your organization’s response. How it acted, what it said, all of these will either add or distract from the organization’s reputation.

That is why I refer to Crisis Communication and Management as Siamese Twins! You cannot have the one without the other. The problem is that in many organisations crisis response are fragmented and should be combined instead of being called Emergency Response, Business Contingency, Disaster Recovery, Occupational Health & Safety, Security and/or Crisis Communication plans.

When a crisis hits an organisation it better be ready to react with speed and finesse to deal with the reality and the perceptions created during the crisis. Experience have taught the importance of foresight and preplanning.

A Crisis Response and Communication Plan is a blue print of what processes and actions needs to kick in depending on the type of crisis facing the organisation.

Here are some of the questions I will ask your Board: “How ready are you to deal with the hand of fate?” “How long will it take before your plan of action is executed?”

“What will you say to a group of stakeholders, bereaved families and news hungry media?”

As a company with good intentions, how do you communicate bad news such as a profit warning, in such a way that you can minimise negative market fallout.

What goes through most company management’s minds are: "What if shareholders pull their money out? Well, they may or may not. Today, that decision can depend at least in part on a company’s reputation in the market place – how a company is perceived by shareholders and the public- whether they think it operates efficiently, has credible leadership and has a firm grasp on the industry and its place in the market.

The challenge lies in how you manage and shape those perceptions and get the right message across to the investment community about your company. Especially in the Internet Age when you have no control over the flow of information and rumours. After all, how can you control perceptions when any investor, large or small, can gather detailed information on your operations with the click of a mouse?

These days, it takes extraordinary knowledge and skill to navigate the territory of managing perceptions and building a corporate image and identity, "You’ve got to have a good understanding of how perceptions are formed and how the investment community operates. But more important, you have to find ways to get your message across in an era of uncertainty!

Indeed companies that once had time to react to a drop in earnings or an internal crisis before breaking the news to the investment community now must find ways to get ahead of the news or stay in a reactive mode and face the consequences.

In today’s high-pressure, every second-counts environment, a company can’t afford to employ a communications policy that forces shareholders and potential investors to read between the lines when problems are present. As a company you need to communicate consistently and proactively. Some companies want to go quiet during bad news, but they need to communicate regularly in good and bad times.

Many companies have learnt that openness and transparency relates to much more than just financial data. A good example is the increasing interest in for example ethical investing. More and more investors are looking at measures beyond the "financial statements". They are increasingly looking at the drivers of reputation such as whether management is capable in running the company, whether the organisation is playing a role in sustainable development and whether it has an adequate record on managing it human capital etc.

So here are some valuable strategies and tips that can minimise the potential damage:

Open the lines of communication and educate all your stakeholders as your business climate UNFOLDS. Keep them in the loop through regular briefings and knowledge sharing LONG before whatever hits the fan, does. Make sure that you have done adequate stakeholder profiling and that your contact lists are up to date

Prepare for any fallout. Message preparation and reputation recovery should take place long trouble strikes. In today’s climate a company only has a nanosecond in which to respond. How ready is your company to respond to a news crisis? How quickly can you post new information on your website? How quickly can you communicate DIRECTLY with key stakeholders and influencers?

Take time to build relationships before a crisis hits. Build relationships with key stakeholders, analysts and key opinion leaders. Another way of spelling the word TRUST is "TIME". It takes time to build relationships and credibility. Start now. Identify stakeholders carefully (Stakeholder Profiling & Prioritisation I cover in detail in my Stakeholder Reputation Master Classes). Today one person with a PC and a modem can damage your company’s reputation.

Benchmark your communication processes both formally and informally. Executives go for annual medical checkups but they also go and see the doctor when they are feeling uneasy. Conduct regular spot checks. Use online survey methods such as Zoomerang to track issues and perceptions.

Incorporate maximum disclosure as part of your company’s strategy. That means that it’s not so much what you say; but how consistently you say it.

Manage expectations. The best way is to be honest and keep people informed. No one likes untimely surprises. No one likes bad news, but it becomes more palatable when it is less likely to damage a person’s personal position.

As a general rule I would suggest that it is better to be honest upfront. Be careful to discern between pure hype and honest information. If you do have negative news, be honest but concentrate on sharing that the company has a clear focus on its mission and goals and a commitment to follow through on its strategies. When potential investors sense the management team’s commitment, their confidence is strengthened.

Minimising the potential fallout from a Crisis is an essential strategic planning exercise. However it is an exercise that deals in tangibles like planning issues AND perceptions and intangibles.

The only positive lies in HOW your company will respond and these types of decisions should be brainstormed and made long before the actual crisis.

I guess what I have been trying to say is that your organisation should immediately plan and prepare a plan of action that you will duly communicate to ALL stakeholders. Remember that even if you cannot deliver the goods or pay salaries, that you want your reputation to remain intact.

Thus the way in which your company reacts to this crisis will be paramount in its future dealings.

Footnote – THE CRISIS MANAGER TOOLKIT

This toolkit is designed to assist companies with their crisis management planning or to assist those managers interested to learn about managing crises, but cannot or are not allowed to attend a Crisis Management program.

Years and years of experience have proven that the companies who copes the best with crises of all kinds are those who are prepared to deal with the hand of fate. Those companies who have set in motion processes to minimize potential crises.

Companies who cope successfully with crises are normally companies who have a predetermined plan of action to deal with various types of crises. This plan of action normally includes stakeholder communication response plans. The toolkit is a useful resource that can assist any manager in this phase and during a crisis, and can serve as an instrument that you can use to benchmark your existing plan against.

The Crisis Manager Toolkit contains everything you need to compile an integrated crisis management & communication response plan – available as a down loadable zip file.

For more information e-mail deonbin (at) icon.co.za

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3 comments

  1. Rajan Sooknundan

    Hello Deon, thank you for yet another inspiring series of articles via Powerlines !
    I’d like to purchase a copy of the Crisis Manager Toolkit please advise the procedure and cost.
    I’m contactable on 011 6366720 / 082 767 5682.

    Regards
    Rajan

  2. Boris

    Deon, I agree with you as these are all major factors in preparing the contingency plan for the organisation. But I remember some flops from the other side as well, for example last year we worked hard to make lots preparations for Swine Flue outbreak, but it turned out to be bad alert level increase by the World Health organisation. So millions of productive hours were miss-allocated.

  3. Bulelwa

    What I cannot get over is how government departments do not seem to take reputation management at the same level of importance as private companies do. It’s almost the mentality that says “we have nothing to lose – no share price crash, no impact on market positioning, etc.” Of course I must emphasise that there are government departments that are serious about reputation management and recognise its importance, albeit there is insufficient understanding and / or skill and plans on how to manage it properly. In many instances, the communication specialists understand the need, but without the buy-in of the leadership very little advice is heeded, and possibly when it’s already too late. How do we get over this?