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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DODGING THE-ALL-THE-EGGS-IN-ONE-BASKET-SYNDROME

Posted in Anticipating A Crisis, Anticipation, Business Crises of our own making, Crisis Management Consulting, Crisis Management Planning, Diversification on January 13th, 2011 by mnayor

Secretary of Defense Robert Gates will most likely cancel the $14.4 billion program to develop a Marine landing craft designed to navigate water and storm beaches. Gates’ decision represents a change in fighting strategy. Now that ships and landing craft can be hit by missiles from a range of distances it is a signal that this type of warfare may be relegated to the ash heap.

What should companies take away from this development? Easy. Doing work for the Federal Government can, no doubt, be rewarding, (even though highly frustrating; red tape can turn crimson and frustrations can escalate) but a business must be ever vigilant and conscious of the winds in Washington. Certainly many high level decisions make a great deal of sense. But others can be politically motivated, or motivated by nothing more than the need to squeeze the national budget. Whatever the reason, it behooves any company that is a government contractor, to always have an ear to the ground.

The Marine vehicle in question is being built by General Dynamics. Although the cancelled $14.4 billion program was to have been spread out over a number of years cancellation will certainly still be a blow. At the end of 2009 GD had sales of $32 billion. The Combat Systems Division alone in 2009 generated 9.6 billion in sales and the company had an overall profit of $3.7 billion. So putting the project in this proper perspective, it was not just loose change.

GD has a diversified operation. With over 90,000 employees worldwide, it does not just rely on the government for business. It has thriving Aerospace, Marine Systems and Information Technology and Systems divisions, with many commercial customers. Its Gulfstream brand of business jets is known worldwide.

The moral of the story is clear. While GD may be diversified enough to withstand the travails of cancelled programs and losses of billions of dollars in sales, not all businesses are as prepared. Crisis management is not just for the “now” when the crisis has struck and everyone is scrambling. It includes crisis planning. A way for executives to focus on this is to consider it an offshoot of long range planning. Where does the company want to be in five years? In ten? What are the company’s vulnerabilities? How do we soften the exposure?

By treating crisis management not as a something to deal with as a rarified event, but, rather, as a necessary corollary to a normal function of long range planning, you will be able to mitigate the losses that come from the cancellation of your very own amphibious landing craft project.

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DEALING WITH A CRISIS – BEFORE AND AFTER

Posted in Anticipating A Crisis, Crisis Communication Strategy, Crisis Management, Crisis Management Planning on March 9th, 2010 by admin
A crisis is anything that creates an impediment to the success and perceived value of your organization.
 
We are all aware of certain obvious and well-known crises involving tainted, shoddy or defective products. But that’s just the tip of the iceberg. Your organization may be confronted with high profile litigation, an industry-wide government investigation, the resignation of a well-known executive, an environmental or natural disaster or a major internet failure. The list goes on – illegal employee activities, computer data loss, a walkout or a strike.
 
You and your colleagues can brainstorm the vulnerabilities of your organization and take steps to protect yourselves before the fact. Protection takes many forms and these are the nuts and bolts aspect of mitigation – taking steps to reduce physical loss; taking steps to anticipate and mitigate crises that have not yet ocurred. First, insurance: flood, fire, catastrophic, third party liability, product liability, key man insurance, officers and directors’ liability insurance. There is insurance for practically everything if you can afford it. Next, there are internal measures such as laboratory testing, and computer backup and file storage. An organization, whether a business, or a not-for-profit, must anticipate its soft spots and plan ahead. This is mitigation before the fact and lessens the impact of a crisis
 
Mitigation after the fact is a whole different animal. Yes, you will have to ramp up the IT people or your lab technicians, make alternate plans for business continuation. There may be alot of mop-up. But now you are faced with an additional problem: public perception. Are you a deer caught in headlights or are you in full charge and control. do you have a plan in place? Do you have a spokesperson? Do you know how to take responsibility and avoid legal pitfalls?
 
Post-crisis mitigation is essential to the long-term survival of your organization. Without well planned and well executed post-crisis mitigation some organizations have found that they cannot recoup lost ground and cannot reclaim their previous stature or standing, whether it be worldwide or local. It must be taken seriously. When executed well, post crisis mitigation can even enhance reputation and standing.
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DO IT NOW – DO IT LATER

Posted in Anticipating A Crisis, Business Crisis Management, Crisis Management, Crisis Management Planning on March 8th, 2010 by admin
Every business or organization has a choice. Anticipate what problems or crises may befall you in the future and have a ready plan – or punt. Oftentimes punting is the option chosen – either because the principals are clueless, or consciously because of time constraints or because the odds are so against lightning striking.
But lightning does strike, many times without warning. The most obvious example is a natural disaster. Speculate what may be the most likely cause of a natural disaster where you are located. Hurricanes, floods, avalanches, twisters. Are you potentially vulnerable? None are exactly your fault but you have to play the hand you are dealt. The first rule of crisis management is anticipate.
 
 
You don’t have to be the manufacture of Oxycontin, or Perrier or Tylenol. You could be a retailer on Main Street. Do you sell peanuts, or tomatoes, or asparagus, all of which have hit the headlines within the last two years because of contamination. Do you sell toys from China that are finished with beautiful lead paint? Anticipate. Are you selling perishable commodities? Are you importing product from third world countries? Do you have alternative sources of product?
A little anticipation can go a long way towards protecting your best interests. Conversely ignoring this step can leave you vulnerable. If you have a plan for a crisis that may never occur the worst and the best that may happen is that you will never need to implement it.
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