CRISIS MANAGEMENT: Crisis Checked

Environmental disasters and accounting scandals can tarnish corporate reputations. Mark Johnson reports on a crisis checklist drawn up by top crisis experts for PRWeek

Terrorism has heightened tension globally. In this atmosphere, the need to be prepared for any kind of crises has been brought to the fore.

Following the invasion of Iraq, it is mainly American and British multinational brands that experts warn are vulnerable to possible terrorist retaliation.

Nevertheless, a sense of concern over managing crises is growing. This has thrust the role of the crisis manager into the limelight as all types of organisation assess the potential risks they face.

PRWeek assembled a team of some of the UK's leading crisis management experts and handed them the task of formulating a crisis checklist. This would take into account the ways in which crisis management has developed in the last two years and help companies assess vulnerability and prepare for potential crises.

The checklist they have compiled, while covering key areas of concern in crisis preparedness, is generic in nature. It reflects different concerns depending upon the size of the firm and the industry in which it operates.

The risk assessment, complete with detailed descriptions of potential vulnerabilities and threats to the company's reputation, should be in the crisis manual. This is the first consideration in a company's preparedness.

Edelman crisis and issues management international director Mike Seymour believes September 11 has not significantly changed the way crises are handled, despite conceding a significantly increased sensitivity to terrorism.

He says: 'It (September 11) hasn't altered the characteristics of a crisis or the task that has to be achieved in managing it. The bottom line is to protect and rebuild the bond of trust you have with key individuals.'

A far more potent threat to reputation comes in the form of a corporate scandal, such as the Enron case. Kissmann Langford co-founder and managing director Martin Langford agrees that Andersen, Enron's accountant at the time, showed how seemingly insignificant behaviour inside a company poses a more potent threat than terrorism or any other disaster beyond corporate control. He says: 'If you had asked two years ago if someone in a backroom office shredding paper could bring down one of the world's top five accounting giants, people would have laughed.'

Whistleblowers and leaks to the press are two of the most potent threats to corporate reputation. Langford adds: 'The power of the individual to cause havoc is far greater now than it has ever been before.'

At the same time, NGOs play a leading role in creating crises for multinational corporations. Nestle's recent experience in Ethiopia, in which the company took flak for attempting to recover £3.7m of debt from an impoverished nation, is one such example. The food giant was caught by surprise with the story when Oxfam supporters turned up outside Nestle's UK HQ protesting.

Companies are more likely to be faced with the unexpected in future, on areas as diverse as the environment and labour issues to CSR, because activist groups will be ever more watchful. This, says Michael Bland Communication Consultancy founder and head Michael Bland, is due to the psychology of such groups.

'I believe that, where you get extreme pressure group activism, you are dealing with people whose paranoia is always there, so they will always campaign. These people will protest more and more about less and less, the more companies and organisations clean up their acts,' he says.

Ongoing pressure from NGOs is now influencing boardroom decisions, and NGOs are also courting the opinion of senior politicians. Just this week, the US Senate blocked a move by the White House to drill for oil in a wildlife refuge in Alaska.

On top of this, the expansion of international media and electronic communication has rarely been taken into account in crisis preparation.

A health and safety concern in a Brazilian factory, warns Countrywide Porter Novelli crisis management director Jonathan Hemus, can now reach investors within hours, sending the share price plummeting.

'You have to have a culture where people in outlying countries will tell you if something is wrong,' he says. 'There are far too many company cultures where the idea is drummed into managers that "we don't talk about problems, only solutions". And sometimes that situation, where a problem is not raised, can develop into a crisis.'

Incidents can therefore happen at any time, putting pressure on a company in crisis to react on a 24-hour basis.

Burson-Marsteller crisis management practice managing director Geoffrey Hyde warns: 'It's a terrifying fact, but experience shows that the crisis team are invariably never all there on the first day of a crisis.' For that reason, each team manager needs an assigned deputy, empowered to act with the same authority in emergencies.

The crisis team must be small. The team members listed in the checklist (see box) represent a wide range. The golden rule is: the team should never exceed ten, and four is ideal. The core members should be the team leader, co-ordinator, communicator and lawyer. The leader and the co-ordinator have particularly important roles.

'The greatest role the crisis co-ordinator has is getting the team in order and delegating tasks. The team can't be bogged down in all of the information,' says Langford.

Some crisis experts say the team leader should always be the CEO, while others say this depends upon the seriousness of the crisis. Hemus says: 'Before any of this starts, you need to get the board and management involved in the crisis. Without it, all of this (planning) is superficial lip service.'

One point on which all agree, however, was that the leader should not be the communicator because, as Langford says, 'he or she has a mountain of communication to face'. Of all the team members, the communicator is most likely to be on call 24 hours a day.

The crisis team should be locked into the crisis room as soon as they are gathered by the co-ordinator. They will be sat with a brief, prescriptive plan, providing key contact details and a guide to the decision-making process. The plan must also be carried by team members at all times in hard copy or electronic format.

The first question for discussion will always be: what information do we have? The crisis plan must be designed to assist the immediate gathering of information.

Seymour says: 'Information can be spread all over the company. That dispersion is exacerbated by flat structures (in companies). There has to be a clear system and a mental process showing where to get that information.'

Only with factual information can the team begin managing the problem.

Even then, says Hyde, experience shows the pressure to communicate and act may be so high that waiting for details to be made available is not viable. He adds: 'Get on with it on the basis that you won't get clarity.

Some info will be incomplete. You must work with what you've got. It may well be that the truth and facts of the situation are not known for a long time.'

An essential point to remember about crisis plans, says Langford, is that they 'are not there to help you build a strategy to get through the crisis. Absolutely not. They are there to help you organize the team and delegate tasks.'

The crisis manual, a much more detailed document, will be there for specific information about the company and how to deal with certain issues, and must therefore be updated constantly, as well as being used as a tool during regular simulations.

The Enron scandal has had a seismic impact on stakeholder trust. The whole experience has been at least as damaging to confidence as 9-11, the panel agree. But there is a key difference between the two kinds of crises, which should inform the way corporations communicate, and with whom.

'In PR terms, 9-11 was more of a disaster,' says Bland. Unlike a rail crash, for example, where the rail company will be held responsible, a terrorist attack does not impact on corporate reputation, he adds.

'In a disaster, something terrible happens to you and you receive public sympathy - it doesn't harm your reputation. In a crisis, something terrible does happen and your reputation is threatened - usually because you are perceived to be the culprit,' Bland says.

So has September 11 affected the way companies should prepare for potential crises? Seymour answers with a qualified 'yes'.

'It all adds up to lower tolerance levels,' he says. 'September 11 has accelerated certain things. People's attitudes have shifted to previously unthinkable things. When Enron hit, the atmosphere changed, as did attitudes outside.'

Regardless of a company's level of preparedness, it must communicate in a crisis. The question is: with whom do you get in touch first?

Hyde advises: 'Communicate with everyone simultaneously (internally and externally).' His only caveat is in the case of a 'share price sensitive' situation, in which case all stock exchanges should be prioritised.

Involving the legal team from the start is essential, but striking the right balance of involvement is of equal importance. Communication is essential in a crisis, and this is where the lawyer and the communicator may be at loggerheads.

The lawyer can often slow the communication and management process while considering the legal implications. In addition, Hyde says: 'Very often, the legal argument is not the one you want deployed.'

The role of the lawyer is to keep stating the legal case, but not to manage the crisis. This is vital, says Langford: 'They need to understand the issues of culpability and liability as communicators need to understand the court of public opinion.' It is public opinion that will ultimately decide whether or not the company survives the crisis.

One of the most positive developments in crisis communications in recent years is the internet.

'Electronic communications help you to move with the speed of the crisis and not be limited by the speed of the company,' says Hemus. Timing and speed of reaction are paramount.

Deciding which channels to use when sending out responses and statements can depend greatly on whom the messages are intended to reach, and when.

But the internet can be a great ally, as well as an adversary, in a crisis.

'Previously, people's perceptions were formed in a 24-hour timeframe.

Now they are formed within an hour,' explains Hemus.

Nevertheless, traditional forms remain valuable. While an email can be sent quickly to a mass audience, a telephone call to an influential journalist can achieve a lot more, says Hyde.

Very importantly, communication should be two-way. Market research is an invaluable tool during a crisis.

Langford says: 'In every situation I have handled, where we've conducted daily research among stakeholders it has been invaluable help. If you just read the headlines, the company can over-react.'

The need to share crisis experience has never been greater. And, while the checklist is an up-to-date guide for companies, Hemus warns: 'A crisis cannot be managed by checklists.'

Ultimately, the list is there to help management make decisions, but only preparation and practice can shore up crisis handling.

CRISIS CHECKLIST

The experts give their view on the most critical factors to manage in a

crisis

RISK ASSESSMENT/IMPLICATIONS

- Types of risk

- Who would be impacted?

- Regulatory/legal

- Health and safety

- Who would find out about it and how?

- Has it happened before?

- What do we know about the situation?

CRISIS TEAM

Team leader: depending on scale of crisis, in most serious cases, the

CEO

Co-ordinator: manage crisis processes, co-ordinate planning and team

activities

CFO: assess business and cost implications of all actions Operations

manager: manage production and technical issues

Lawyer: brief on legal implications and liabilities

PR: manage all communications issues

CRISIS PROCEDURES/PLAN

- Reduce to A4/filofax size, lodge on laptop or Palm pilots

- Decision tree - tracks likely course of info gathering and decision

making processes

- Alert and call-out telephone numbers and email contacts for key

personnel

- Crisis Manual containing detailed information and data, updated

regularly and managed by the co-ordinator Audiences

Internal: employees/family, management, corporate, front of house (sales

and night security), trade unions, sister companies and/or group

External: stock exchanges and financial community (analysts,

journalists, etc), regulators and ministries, politicians, customers,

consumers, distributors, contractors and suppliers, shippers, victims

and families, local communities, interest groups and relevant NGOs,

media (including newswires, online media and agencies)

LEGAL TEAM

- One legal representative on crisis team to assess and advise on legal

implications and liabilities

- Legal team not necessarily part of the crisis team, but there to be

involved in legal strategy

- Legal representative may change as expertise requirement changes (eg

in-house corporate lawyer may be advised by QC)

COMMUNICATION CHANNELS

- Letters

- Face-to-face briefings

- Telephone helpline

- Newswires

- Advertising

- The media

- The internet (chatrooms, bulletin boards, corporate website)

- Intranet

- Email

- Market research (two-way communication)

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