Is your CEO ready?

Imagine one of these scenarios happening to your company: a product recall; a plane crash; a very public sexual harassment suit; a gunman holding hostages in your office; an E-coli bacteria contamination scare; a market crash, along with the worth of your company stock; a labor union strike; a hospital misconduct suit; and countless others.

Imagine one of these scenarios happening to your company: a product recall; a plane crash; a very public sexual harassment suit; a gunman holding hostages in your office; an E-coli bacteria contamination scare; a market crash, along with the worth of your company stock; a labor union strike; a hospital misconduct suit; and countless others.

The media is knocking at your door. Those affected by the event are expecting requital.

If your employees are in a state of shock, you don't want your CEO quivering in the corner or stonewalling the media for a day or two until they can figure out what to say.

The ideal solution is to have a well thought-out crisis plan with a pre-picked team of managers on hand, and to implement it at the first whiff of trouble. If you don't, your organization is in for a very bumpy ride when a crisis strikes. 'Be prepared,' the Boy Scouts's motto, should also be a company's crisis mode mantra. The experts all claim you should have a plan with the CEO involved, a crisis team in place and on the ready, a media contact protocol, and perhaps even an Internet page on the side to use solely for emergencies. Depending upon each individual crisis situation, the CEO may not always be the company spokesperson. But he or she should definitely be the 'man or woman behind the curtain' at all times.

'A vast majority of companies don't have a crisis team. They have to get organized on the basis of what the situation is at the time of crisis,' says Robert Irvine, president of the Institute for Crisis Management, based in Clarksville, IN. His consulting firm specializes in crisis communications and tracks how companies are viewed in crisis, and after.

Auto manufacturing received the most negative news coverage in the first half of 1998, according to the Institute's index. In order of most critical, the other top five in negative press are computer software, stock brokers/investment firms, labor unions and banking, Irvine reported. As for specific companies, General Motors got the most 'bad press' in the first half of the year because of labor strikes, with 172 hits on the Institute's index. The next number of hits was 40 for Microsoft, because of the government's anti-trust suit. Mitsubishi makes the top five with sexual harassment problems, Sunbeam for its executive suite shuffle, and Columbia HCA for government investigations. The Institute's index calculates the number of hits from 1,500 print sources of business news coverage in a certain period of time.

Get a plan
Bad things often happen to a company that faces a crisis without a plan, warns Richard Hyde, executive managing director of Hill & Knowlton. 'A company is most vulnerable in a crisis,' he says. The goodwill a company has developed through the expression of its corporate values and cultures also works in its favor when a crisis is at hand.

Hyde is responsible for H&K's U.S. crisis team, which operates from 10 offices across the country. 'Either someone (like the CEO) in the company takes control of the situation, or some other force is going to run the crisis for them,' he says. Examples of outside forces include the media, the competition (another company), a public interest group, a government official, or a regulatory agency.

To prepare a sound crisis plan, a company must take steps to anticipate crisis situations by monitoring its reputation and possible trouble spots, whether activist groups or government. So, the company must develop a communications plan and an 'Early Warning System' that permits employees to communicate potential problems before they become a threat.

Then, the company must train key individuals on a crisis response team.

This can involve conducting role-playing scenarios/simulations, as well as media and presentation training.

'We have a list of things which a company should be concerned in putting a crisis plan together,' says Hyde. 'The real trench work is getting to know the ins and outs of a company as well as possible. The plan has to be clear and concise.' Here's what H&K recommends:

Develop an extensive crisis communications program.

Monitor media and Internet to know what is being said about you and your industry. Have systems in place that allow employees to communicate potential problems before they become a threat.

Train key individuals who would comprise a crisis response team. This can involve conducting role-playing scenarios/simulations as well as media training and presentation training.

Continually review and update crisis plans to make sure that they are up to date.

Monitor your Early Warning System and make sure it is in working order.

Most crisis experts agree that a plan is the best insurance policy against being caught unprepared for the worst. There are a number of elements in a plan; ranging from management's role to media relations.

The leader
The CEO, by definition, is the leader and sets the tone. 'The CEO should be the total overseer and final decision maker in what should be in the crisis plan,' advises Hyde. They should also set the dimension of the crisis team and the parameters in which they can operate. 'The CEO decides which executives can call the shots; they decide how many dollars a manager can authorize in a time of crisis.'

In the planning stages, a CEO should meet regularly with a select group of people whose judgment and knowledge they value. Each person on a crisis response team has a specific role, which must be spelled out in the plan, Hyde advises. The team is comprised of representatives of key departments, such as legal, human resources, public affairs or public relations, operations and product management. 'Our work with a couple score of companies has shown that the best start with the CEO and go throughout the company to reach other key executives,' he reports.

H&K crisis experts conduct simulations for clients to show how the resources of the company can be summoned in a crisis. The results are critiqued at the end. 'In the Navy, I picked up war-gaming concepts that we've now transferred to the business world,' explains Hyde. Sometimes a tabletop exercise occurs in the confines and safety of a conference room. In other cases, a range of people within the company participate along with actual outside reporters to bring a touch of realism to the activity. These simulations may last anything from four hours to three days.

'At the time of a crisis, communication with the media, employees shareholders, the community, government officials and others is essential,' says Hyde.

'I can't think of a single crisis that has been successfully handled without communication. You cannot stonewall the media, ever, and certainly not in a time of crisis.'

H&K has developed the following checklist of rules to follow in a crisis.

- Take responsibility

- Recognize the difference between bad publicity and a crisis, and calibrate your response accordingly.

- Use research to determine how to respond.

- Recruit and use third parties to speak on your behalf.

- Treat the media as conduits, not enemies.

- Assume you'll be sued.

- Watch the Internet as closely as the traditional media.

- Demonstrate concern, care and empathy.

- Take the first 24 hours very, very seriously

- Begin your crisis management program right now by doing the things you need to do to build your reputational assets.

There are two schools of thought on when and how to use your CEO in crisis response. The first is always protect your CEO from exposure. The second is use the CEO as an active on-site manager. The second option is mostly used for incident-type crises, such as plane crashes, explosions, floods, bombings and the like. 'Maximize opportunity while minimizing exposure,' says Hyde. 'This means your CEO must always be perceived as a leader, with the direction, competence and the ability to take charge and to act responsibly.'

There is a difference in being involved and being out front, he adds.

'It depends on the situation.' For example, Jim Burke, CEO of Johnson & Johnson, had to become actively involved in the Tylenol crisis, according to Hyde.

But in other crises, the CEO's impact is felt in the advance work, in establishing the plan. The public never hears or sees the CEO. 'For many years, we worked with Quaker Oats on problems that qualify in any company's book as crises. The CEO was visible in less than 10% of the cases. Other executives did the job.

The CEO knew the plan, set the tone, and established limits and parameters,' Hyde concludes.

'We strongly recommend not using the CEO as a spokesperson in a crisis,' asserts Irvine of the Institute of Crisis Management. 'If he or she makes a mistake, says the wrong thing, or does the wrong thing, there is no one who can rectify it. It has happened all too often.' In his view, there are very few chief executives who have the skill and personality to be a prominent spokesperson. 'We've only seen one - Lee Iacocca when he was at Chrysler. Most CEO's are not really that well-suited to be thrown into the bull pen,' he says.

'We suggest using the CEO where he or she can be most effective under the circumstances, such as in one-on-one communications with families of accident victims or government officials,' Irvine advises. 'A lot of CEOs have difficulty expressing sadness in a very genuine way,' He adds.

'But when they do, it makes a big difference.'

The CEO should make an appearance as soon as possible to express the views of the corporation, 'and then get out of the way,' he says. 'Let the CEO introduce the person with the background and experience to deal with the crisis in an operational and communications basis. For example, use the financial officer in the case of fraud, or someone in brand management or quality control for a product in trouble.

'It's amazing how much a title lends creditability,' adds Irvine. 'And if the person who is the primary spokesperson doesn't handle the crisis correctly, you now have another line of defense that is much more effective,' he says. Then the CEO can step in.

This is his advice on communicating in a crisis:

- Make a statement in a timely manner. Respond quickly to the situation.

- Take control and make a statement within the first few hours.

- Be sure of the facts. People talk too fast, too soon. 'It's the biggest single problem we see with these sudden, no warning crises,' the expert notes. 'We learned a new way of dealing with these constantly changing factors from Delta Airlines.' In times of crisis, the airline now uses the phrase: 'This is what we can confirm at the present time,' at the beginning of a crisis situation, Irvine admits.

- Spread the news electronically. 'We saw something new with the Swissair crisis. They were up fast on the Internet.' They probably had a specific Internet page strictly for emergencies sitting on the side, he guesses.

'Anyone could go to the Swissair web site for information. It took some of the pressure off them.'(See box for Swissair's crisis handling advice.)

'Life goes on after a crisis,' Irvine concludes. 'Whether or not the crisis is handled, people in the industry learn from other's mistakes Every CEO has to study how his counterparts deal with these situations.'

Handling a crisis: a veteran's view
Jackie Pash, manager of corporate communications in North America for SwissAir, has been in her share of crisis situations. When it comes to knowing what to do, here are a list of major points she claims are of the highest priority.

1. Get the basic facts confirmed and communicated accurately and quickly to those people who are affected. And that doesn't always mean the media.

Remember there is a lot of confusion at the time of a crisis; your adrenaline is running and you've got media people who are questioning and speculating over your every move.

2. Try to keep the message clear, but be flexible. Each day things can change. Everything is not etched in stone. While you have to be prepared for an entourage of speculation, stick with the facts, with what you know on that given day.

3. Don't just react: Once something goes astray, it is hard to control it. The bottom line is that speculation runs rampant. Before reacting, see what is happening nationally and locally.

4. Evaluate your staffing needs. There are a variety of tasks that need to be considered. Assign specific tasks or roles to people both at the scene and at headquarters. For instance, decide on who will handle media, who will deal with the affected parties, etc.

5. Maintain open lines of communication. There is a lot of interaction, especially if your company is based internationally, so set up an open line of communication with headquarters immediately. Use various channels, such as Internet web sites, assistance centers, hurricane rescue squads and the media.

6. Have your CEO available early, frequently, and as much as possible.

We are fortunate our president Jeff Katz is available and that's his primary concern. Get your CEO to understand what you want him or her to communicate.

The CEO needs to be believable and sincere. It takes presentation skills, a certain disposition, and knowing how to answer those questions for which you might not have answers ready.

7. Set up a monitoring process. Evaluate constantly the media reports that might be coming in, or questions from those who are affected.

8. Be in tune with whatever has happened. Think about who the crisis is affecting locally, nationally and internationally. For example, if something happens in an airline or hotel situation, tourism is affected; people's lives, roles and daily routines are affected as well.

9. Keep focused. Our overall objective is to keep focused on those affected.

How would I feel if it were me. How am I going to reach them? How am I going to present information to them? They are the key element.


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