Surviving a business crisis is a lot like surviving a battle: Decisive action leads to victory. In the business world, however, battles are played out on the pages of The Wall Street Journal or on CNBC, and our arsenal is made up of information that is clearly and quickly communicated.
The goal of all this is to shape the story before it shapes you.
Yet some businesses still use silence and empty statements. In an age of 24-hour news channels and round-the-clock worldwide access to the internet, this strategy almost assures defeat.
Anyone reading the papers lately has seen Fannie Mae, the hybrid government-private sector home-mortgage lender, stung by accusations of accounting fraud, leading to questions about the strength of its leadership and ethics. Only terse holding statements came from the company when the story broke, and they provided little by way of explanation. More surprising, Fannie Mae was fully aware of the eight-month probe, giving it ample time to prepare a substantive statement. Finally, two weeks after initial media reports, Fannie Mae provided a more complete explanation, but even then, it appears that it did so because it was called on the carpet by Congress.
In his testimony, Fannie Mae CEO Franklin Raines, regarded as a paradigm of political astuteness, said the company had primarily left the accounting activities in question to its outside auditing firm. This effort to shift blame offered little solace to stakeholders and likely further damaged the CEO's credibility.
Savvy PR pros know that owning the issue is central to dealing with crisis communications and gaining credibility. In order to own the issue, a company has to be seen and heard. The opposition - those attacking a company and shaking the public's confidence - can't be the sole voice. Silence allows others to frame the issue and automatically puts one on the defensive. By the time one speaks, it may be too late to find anyone to listen.
Crisis communications should be seen like any kind of emergency-response mechanism - as vital. Fires aren't put out by ignoring them, but rather through acknowledgement and action. Crafting scenarios, designating crises teams in advance, setting protocol that outlines how messaging is to be developed and the next steps that should be taken, and other methods can all be used to craft an effective plan.
While being front and center with a response is paramount, it shouldn't overshadow the need for a substantive message. A message that doesn't help the public understand the situation or your position, no matter how quickly delivered, isn't valuable. Those first critical hours or days that perceptions are created cannot be regained. And whether a company defends itself rigorously or takes responsibility, it must explain why it did nothing wrong or what it specifically will do to correct the situation.
One company that has embraced a strategy of accountability is Citigroup. After assuming the title of CEO, Charles Prince faced an uphill battle of regulatory issues and lawsuits. However, he has made it known that he plans to put an end to such issues, and stated at a conference in June that he wanted to keep Citigroup "out of the headlines." This is, ostensibly, because he intends to strengthen the bank's business to the point where there is no longer anything negative for the press to cover. Following each accusation or lawsuit over the past year, Citigroup has taken responsibility and reiterated its intention to improve. The company has not been hiding and, by all appearances, it does not appear that it will start to.
In 2000, when Microsoft's business practices were being criticized and a potential breakup loomed, it opened its previously cloistered culture to the media as it never had. Bill Gates made himself more available for interviews. The company was more communicative with the public about its position on the breakup, what proposals it offered to the government, as well as its vision for the future as one company. The argument against Microsoft was never one-sided.
Crisis communications is by no means a science, and the art of developing and enacting effective plans is particular to each company. But silence isn't a response and doesn't help a company tell its story. Reactions must be quick. They must show that the company is strong, stable, and ready to act. By articulating a substantive position and communicating it in a timely way, a company has a better chance to influence how events unfold. While the presumption of innocence is the cornerstone of our judicial system, the competitive nature of our markets offers no such sanctuary.