PRE-CRISIS MANAGEMENT

Posted in Anticipation, CRISIS MANAGEMENT STARTS WITH PLANNING, Ethics and Crisis Management, PRE-CRISIS PLANNING on September 12th, 2012 by mnayor

 The term crisis management itself is enough to send executives and managers scurrying back to their desks, burying their heads in papers so they can be overlooked. If one is tapped to head a pre-crisis management team, it’s like being the designated fire marshal for your floor in the building. If you are appointed to manage a post-crisis event, you may have everything to lose and nothing to gain. After all you may be in the cross hairs of public opinion and totally distracted from your regular role in sales, marketing, advertising, or finance.

 

But crisis management is a vital function. It should be recognized as such by the CEO of any organization and communicated down the chain. Any one event, whether due to totally external factors or self created, a crisis can set an organization back years or deep six it, if not handled properly. Handling that one event may well far outweigh for example the importance of the market roll-out of a new product.

 

Pre-crisis management is preventative in nature. It helps you avoid a crisis. It also prepares you for handling a crisis in the event one occurs.

 

Post crisis management implements the plan you have prepared in anticipation of a crisis occurring.

 

So, what is a crisis. It can be any event or circumstance that has the potential for negatively impacting your organization whether it is damage to reputation, operations, markets, or products. Tainted, shoddy or defective products. High profile litigation. A government investigation. The resignation of a key officer. An environmental or natural disaster. n internet failure. Illegal employee activities. Computer data loss. A walkout or strike. The list goes on

 

The spill-over effect is the negative impact the event will have on your stakeholders – your customers, your suppliers, investors, employees, government officials, the public at large, the media. Major crises happen all the time. We have seen several  recently and they are not pretty.PennStateof course, Wal-Mart’s Mexican subsidiary bribery story, Netflix’s pricing fiasco, Olympus Corporation’s cooked books, J&J’s poor handling of product recalls. These stories and many more underscore the necessity for pre-crisis management.

 

Of course we are not all Wal-Mart or Johnson & Johnson.  But the owner of the local retail toy store has as much to gain from crisis management as the big boys. Bad press, damaged relationships, investor confidence, employee morale, supplier cut-offs, civil and criminal liability – none of these things happen only to giant institutions.

 

How to start. It’s easy. Brainstorm. No one can anticipate an exact crisis but we can all speculate as to what our organizations may be vulnerable. List these vulnerabilities and what you can do about them. Example: you are a farmer and need to protect yourself against weather-related events. Insurance coverage, smudge pots, protective coverings etc. may be your answer. Example: your supplier of critical components has had problems. Begin identifying and ordering from alternative sources of supply, vertical integration, overseas sources etc. may be your answer. Example: you produce or distribute products for human consumption. Check your sources for utmost reliability, third party liability insurance, random quality checks.

 

Other potential solutions to problems: alternate transportation sources, duplicate bookkeeping and records backup, key man insurance, family succession planning. All these actions, if circumstances warrant, can be extremely helpful in avoiding you being caught unaware.

 

Next, assemble a team, a core group made up of the CEO, your PR people and legal counsel. Identify those managers or employees who have the best in-depth knowledge and are capable of attacking a problem in their respective areas. Identify those managers and employees who are capable of succinctly explaining issues to top management and/or to the public. Assemble this team and assign roles. Ensure that you have an organized document management system in place that preserves data and information and be ready for fact finding. Develop a communications strategy which includes assigning responsibility for communication content and approval, and assigning the role of spokesperson. Recognize the need for different messages for different stakeholders. develop responses for different media, from press releases, on air responses and social media.

 

Don’t think you can handle everything in-house. Your attorney, your public relations consultant or those who you rely on for sage advice will come in handy. Outsiders have a broader perspective than you may have and can assist to anticipate problems, develop a plan, assist in investigations and document management, assess any legal exposure and help prepare public statements.

 

One observation I personally believe to be of utmost importance.  If you look at some of the highly publicized crises of the day, many stem from lax ethics. Enhancing the bottom line has many times replaced the goal of doing the right thing, often at the expense of customers. Increasing short term profits may make a hero out of someone today but the actions taken to accomplish this may have severe repercussions to an organization tomorrow. A CEO can pressure everyone to redouble their efforts to increase revenues and profits and let employees find their own path or a CEO can communicate the need for high ethical standards which in the long run, will bear more fruit and allow everyone to come to work the next day. Crisis management especially crisis planning is a crucial effort to manage those events that have slipped by you. The worst and the best that can happen is that you will never have to implement your plan.

 

 

 

 

 

 

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WHAT WE CAN LEARN FROM THE JPMORGAN DEBACLE

Posted in analyze the problem, Business Crisis Management, Corporate Crisis Management, Crisis Management, Crisis Management Planning, Crisis Management Response, don't white wash the crisis, fix the problem, Jamie Dimon, JPMorgan Chase, problem employees, Taking Responsibility for actions of an organization or its employees, Throw an employee under the bus on May 23rd, 2012 by mnayor

The JPMorgan $2 billion debacle stunned me as it did everyone else. It was like catching the self-righteous little kid with the smoking slingshot in his hand.

Well, not quite. I got to thinking. Yes, it’s true that Jamie Dimon has this holier than thou attitude and perhaps it’s nice to see him knocked down a peg or two. But many crises are without question caused by those employees who you think you know – but don’t. Or caused by the hierarchy or the controls you’ve established but which really don’t work. You look out over your domain and deem it good, but there is always someone or some circumstance or some poor decision that puts you and your company in the hot spot.

 Yes, the buck stops here and the CEO should always take the rap (instead of throwing someone or a few  people under the bus and taking the $23 million), but that doesn’t mean the CEO can really plug every hole that springs a leak. It would require too many thumbs. Dimon was frank and honest, but he did forget to say it was on his watch and he accepted full responsibility. You can’t have everything. But, what do you do when your trusted employee or employees do something dumb, or worse.

 Several months ago I wrote about Charlie Sheen. I also wrote about Christian Dior’s John Galliano. For those who don’t recognize the names, suffice it to say that both of these guys gave their employers and themselves black eyes and heartburn. CBS and C.D. each acted fairly quickly and dumped its famous and talented employee, regardless of his value. They restructured. They went on and in a matter of a couple of weeks after their decisions, the crisis each faced disappeared.

 Crisis management calls for decisive action. That doesn’t mean just dumping a perpetrator. It means analyzing a situation to see if the organization continues to be vulnerable. It means identifying the basic problem and rectifying it. Do potential employees have to be tested? Drugs? Psychological testing? Do they have to be supervised more closely? Should they be cleared to give public statements? Do employment contracts have to be tightened up? Do the work environments have to be more closely supervised? Do supervisors have to have greater responsibility for the conduct of their departments? Do department managers and regional vice presidents have to be more hands on? Should they be required to know all the employees under them? Should the work environments be evaluated for potential risk? Are there checks and balances? Are there activities being conducted that are beyond the scope or the purposes of the business  or the established guidelines or policies of the company?

Crisis management should lead to problem solving not problem white-washing. JPMorgan Chase has to look well within itself to answer these types of questions. So does the rest of the banking industry. The crucial question that needs to be answered is whether the reins on the biggest banks should be tightened: re-institute Glass-Steagall? Put real teeth into the Volcker Rule? Something has got to give and the big boys should act like big boys. The financial fate of the nation depends on it and the right to massive profits is not justification  for behavior that jeopardizes the well being of the country.

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WHAT TYPE OF RESPONSE DOES YOUR CRISIS NEED?

Posted in Crises Communication, Crisis Communication Failures, Crisis Communication Response, Liability Communications on November 10th, 2010 by mnayor

On November 4th, a Rolls Royce engine on a Qantas A380 Airbus blew apart near Singapore. While there were no deaths or injuries there will likely be financial consequences to the three main players in this story: The Australian airline itself, Qantas; Airbus, the pan-European aerospace company; and Rolls Royce Group, plc the manufacturer of the Trent 900 engines.

There has been much press about the incident and the consequences would appear to be a direct function of how quickly the problem is diagnosed and resolved. Qantas and Rolls Royce are both busily inspecting and analyzing specifications, tolerances and operations that could affect performance.

Because Qantas has the most direct relationship with passengers, it has been the most visible and, seemingly, the most direct and quickest in taking action in this crisis. It has taken its fleet of six A380’s out of service at least temporarily and has made major efforts to redeploy aircraft around the world. Additionally it has provided its passengers with a multitude of assistance in order to avoid as much disruption as possible. Its website has detailed instructions to aid passengers.

Rolls Royce made a statement on November 4th and published it on its website.It stated that safety was its first priority and calmly explained that it has “well established processes to collect and understand information relating to the event and to determine suitable actions”. It then finished with a list several self-serving statements about how terrific the company is, the most recent expenditures on R&D, its revenues and its order book. Its November 8th statement advised that it was working closely with Airbus, and that the incident was unrelated to any of its other engines. While the statements exude a coolness and stiff upper lip mentality that Americans are not quite used to, they also reflect competence and a no-nonsense approach that should reflect well on the company, if it is able to determine and fix the problem in a matter of days.

Finally, turning to Airbus itself, the manufacturer of the A380, a search of its website uncovers nothing. There is a highlighted special report on the latest updates on the WTO Boeing-Airbus dispute but no reference to the Qantas incident. The Press Centre tab brings up many articles, all good, about Airbus. A search of its website does not uncover one mention of the incident.

Three different companies, three different types of response. And perhaps rightly so. Obviously, the closer to the consuming public the more urgent the need for a corporate public response. In the case of Qantas there are passengers who need to be immediately tended to. And potential customers need to be considered. One step down is Airbus whose customer base is the airlines themselves, a much smaller market in numbers. At the bottom rung is Rolls Royce whose customer base is tiny. The bottom line is that crisis communication has to be tailored to the complexity of the situation, a company’s responsibilities, and its stakeholders. Crisis communication is not one-size-fits-all. Less communication and more technical expertise and greater effort to solve the problem would have been far more preferable in the BP Gulf oil spill debacle.

Rolls must make good. Qantas can always buy different planes, although it might take awhile. Airbus could always buy different engines, although that could take awhile. Both Qantas and Airbus could suffer financially in the process but can always rebound. But Rolls will certainly suffer the most if it doesn’t fix the problem fast. Strange that it would be criticized for its lack of communication at a time when 100% of its energy appears to be devoted to fixing the problem, as reported by The Wall Street Journal writer Daniel Michaels, on November 9th. Crisis management is more than communication. If Rolls Royce makes a quick diagnosis and resolves all issues expeditiously, it should be praised for its efforts.

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CRISIS MANAGEMENT AND THE BLAME GAME

Posted in Business Crisis Management, Crisis Communication Implementation, Crisis Communication Response, Crisis Communication Strategy, The Blame Game on October 5th, 2010 by mnayor

Over time, crisis management pundits have considered many types of responses to a crisis and have sometimes recommended actions and reactions that today seem out of step with effective solutions for most crisis situations. These out-of-step solutions fall into two categories: 1) stonewall the media and the issue will eventually die without you fueling the topic; and 2) a strong defense is a good offense, namely attack the accuser, deny the issue or point the finger elsewhere.

In today’s media jungle, stories don’t die. If something doesn’t pass the smell test, someone in the media is going to pursue it. Ignoring a crisis by ignoring the media doesn’t cut it. And if the media doesn’t pick up on an issue, the public certainly will, via Facebook, U-Tube, Twitter or some other yet to be invented faster-than-light communications vehicle.

In times of crisis most corporate managements would prefer to avoid the limelight, deal with its issues, solve its problems and escape negative publicity. Understandable, but dealing with a major crisis like an ostrich is terribly risky and makes a company look like it’s not owning up when the crisis is exposed.  

So let’s assume you are willing and able to deal head-on with the public. Most senior executives are used to being in control. They pull the levers, call the shots and aren’t used to being told what to do. There is a tendency to be defensive. “I nurtured this baby, I grew it and I know how to defend it”.  The reaction often lacks finesse. Instead of appearing open, the reaction is authoritarian. Instead of appearing honest, the reaction is defensive and oftentimes gravitates towards the blame game or, just as bad, the rationalization or justification game. 

All of these “public” reactions can hurt your organization, because you will have missed the point. There is a problem. Acknowledge it. The problem has ramifications. Acknowledge them. No one is interested in finger-pointing or excuses, even if you are correct. There is time for that.  Don’t act like the whiney school kid or the weasel that can’t or won’t take responsibility. The public expects companies and organizations to man-up. Period. Man-up and get moving so the problem can be fixed. The public respects organizations (and their spokespersons) that emanate competence and authority.

When BP went to Capital Hill to testify back in May, 2010 they were joined by Halliburton and Transocean, Ltd., two of BP’s subcontractors. All three looked foolish because of the finger pointing and denial that ensued. What to do?  Act like a responsible citizen whether you are at fault or not.  A responsible citizen acknowledges the problem and positions itself to take whatever action it can to help fix it. It investigates and determines the best course of action based on its expertise. The public needs to know you are responsible citizen. You convey that when you take immediate, competent action.

But what if you are not to blame? If you aren’t, good for you. It will come out in the end but as an immediate step the public needs to know that you recognize yourself as a player with a role, and that you willingly undertake that role for the public good. Expensive? Perhaps. Worth it. Most often a resounding yes, in terms of public perception and goodwill. If you are to blame the same holds true. Your legal team and your insurance advisors may have made it clear that you cannot say anything that admits culpability. Even so you can act as the same responsible corporate citizen as you would if you were not to blame. You can act sensitively, you can investigate and you can devote whatever resources you have to help fix the problem and keep the public informed regularly along the way.

Preserving your reputation and directing your efforts to problem-solving are the first order of business. Assessing blame comes later and is best left to third parties. No one ever looks good saying it is someone else’s fault. An insurance investigation, a public hearing, a regulatory investigation, a private investigation that is made public are just some of the opportunities you have to provide input to show the root causes of a crisis. Let a neutral source absolve you of blame. In the end it carries far more weight, and is more persuasive and acceptable.

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QUICK RESPONSE VERSUS INTELLIGENT RESPONSE

Posted in Anticipating A Crisis, Crisis Communication Strategy, Crisis Management, Crisis Management Planning, Crisis Management Response on July 27th, 2010 by admin

A maxim in crisis management is that you should control the dialogue. It is better to leap out in front rather than be reactive to questions and probing which often leads to the deer caught in headilghts phenomenon.

What is not said quite so often is that a quick response must be an intelligent response that is backed up by facts and knowledge. Which brings us to the Obama Administration. Early in his term President Obama held a press conference and was asked why it took him a couple of days before he made a statement on AIG bonuses. He gave the CNN reporter an icy stare and stated that he liked to know what he was talking about before he made public statements. Bravo I thought.

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PLANNING FOR POST CRISIS MITIGATION

Posted in Anticipating A Crisis, Crisis Communication Planning, Crisis Communication Strategy, Crisis Management, Crisis Management Planning, Crisis Management Response, Crisis Management Strategy on March 23rd, 2010 by admin
No one can anticipate exactly what kind of crisis may befall your organization. Nevertheless there are many things that can be done – let’s call them generic – that will extremely helpful if and when the day comes that you need to call out the troops. And that is precisely the first step.
Assemble a team. Naturally, you have to assemble people who are trustworthy, loyal and competent. You may find that certain employees fit the bill while others are doubtful. You are not limited to employees. You most likely have relied on the services of outside people – people who have been your organization’s kitchen cabinet – throughout the years. Lawyers, accountants, marketing and public relations people, former employees who have gone out on their own. Shake the tree and you’ll be surprised who can be helpful.
Next, prioritize your needs. Who are the technical people available to fix the most likely problems? Who are the ones most capable of immediate fact-finding? These are the people who need to be mobilized quickly in order to isolate and address the most immediate concerns. Who are the individuals who can set up a document management system, document the issues, preserve evidence, research and fact-find and make information available to the very top. Finally, who are those who will speak for the organization. A communications strategy is a must. Generally speaking there is one spokesperson, perhaps with a backup individual. Information from the technical people and the document management people have to flow to the communicators who must be fully informed. Legal specialists and public relations personnel round out the communications team.
Communications is the key to effective crisis management. Of course, an organization’s problems need to be solved. But just as important, the public needs to know what the problems are, and what you are doing about them. The day of “no comment” is over. In fact it is long gone. Whether it’s Toyota or the local public utility, communications strategy is largely the same. An organization must be quick or else others will set the agenda and you will always be on the defensive. An organization must be proactive otherwise it will always be reactive. Openness and honesty coupled with the most up-to-date facts constitute good communications strategy. Staying on message, taking bold action to protect the public or making its needs paramount generally rule the day, regardless of whether you have been totally successful. Best intentions and extraordinary efforts are very often held in high regard by the public, especially when communicated regularly, clearly and openly.
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