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Surviving a business crisis

In the event of a fire, every business knows what to do. When the alarm sounds, the person designated as the fire warden heads for the clipboard while everyone quickly evacuates to the safety assembly point outside. How does everyone know what to do? First, the protocols are clearly laid out. Second, businesses practise the drill at least once a year.

However, when it comes to business-related crises, most companies have little or no plan for managing the upheaval. It’s true, most businesses will never encounter a genuine crisis. It’s also true that for some, the reputational damage from not having a crisis management plan will be substantial.

How, then, do you prepare for the unlikely event?

What constitutes a business crisis?

Every company that ever existed has had ‘issues,’ difficult situations. Director of Pendulum Strategies and crisis management expert Julien Leys draws a line between difficulties and a full-blown crisis.

“A crisis is an overwhelming, all-consuming event. It’s the business equivalent of a bushfire where nothing else matters, an event that threatens to expand out of control unless it becomes the sole focus of leadership. It cannot be managed in a moment. All you can do is mitigate the fallout and try and protect and preserve the business reputation.”

Speed of response is paramount

Timing is one of the two big issues of managing a crisis. The initial stages of a crisis are often referred to as the ‘Golden Hour,’ the make-or-break period where action and communications need to be swift. Julien explains the urgency.

“Speed of response is crucial because you can’t allow a vacuum. When there is silence, you risk others filling the space with incorrect information and their version of the story.  If you don’t control that hour, you’ll be in catch-up mode.

“I remember a crisis that hit Shell Petroleum many years back. There was a fatality on one of their forecourts. They took about five hours to decide what to say and who should say it. By that stage, it was all over the media and they’d lost control.”

Kate Webber is senior account manager for PR firm HMC. In Kate’s experience, social media has shrunk the Golden Window considerably.

“Depending on the scale and nature of the crisis, a business may need to put something out within 10 minutes. Smart phones and social media have given rise to the rapid dissemination of news. Without preplanning, it is impossible for a business to beat that timing.”

Preplanning is everything

To meet the timing and coordination demands, developing a crisis media plan is crucial. Getting experts in to help formulate a crisis plan is a good option, but Julian knows that experts cannot invent effective strategies in a vacuum. Leaders and key staff need to do the inside work.

“One of the first things to organise is a crisis workshop. Get key people around a table for a couple of hours and work through the crisis scenarios that could happen in the various sectors of the business. Once you’ve examined the possibilities, you can start mapping out a plan.”

HMC managing director Heather Claycomb understands crisis management from a PR perspective. She knows the difficulty of coordinating moving parts during an emergency and, like Julian, recommends advanced planning.

“After you’ve described the worst-case scenarios, the task is to decide how to talk about the events, to staff, to the public, to the media. What are the key messages? Who will do the talking? And you also need to know who to go to for assistance, who to talk to first. You won’t have time to think through the ‘who’ bits once the crisis hits. Organise that ahead of time.”

Kate adds another important group to be communicated with.

“Don't forget your industry stakeholders and partners. They can be real allies and advocates for you in tough situations, so keep them informed to maintain trust and credibility with them.”

Test your plans regularly

Remember the fire drill. The reason why most companies navigate emergencies well is because they carry out practice drills throughout the year. Without crisis rehearsals, it’s not a given that people will instinctively know what to do in a business emergency, even if the protocols have been established. Julien cites the Shell Petroleum case as an example.

“Shell had thick folders full of crisis procedures. Reams of paper on what to do. The problem was, they hadn’t run a scenario for ages, so in the heat of the moment, they were scrambling.

“I tell companies to set aside half a day, once a year to run drills with key staff, the people who will be executing the major actions. And once a year, include all personnel. I know a large transport company that does this, and their staff have emergency bags under their desks, bags containing the items they’ll need if they have to stay for long periods of time to work on a crisis. If that day ever comes, they have every chance of quickly doing the right things to protect their reputation and their business.”

Who should front a crisis?

Conventional wisdom says that the head of an organisation should be the person to front the crisis. For the most part, this is probably correct, but as Julian points out, it’s not a hard-and-fast rule.

“In most cases, it is the Chair, CEO or the MD who will front the crisis, but it isn’t mandatory. Sometimes the best play is to give the comms lead to the person most suited for the task.  It’s critical the selected person have empathy and can garner trust.

“The flood crisis in Auckland was a good example of this. Mayor Len Brown began fronting the situation, but as the crisis persisted for several weeks, he wisely deferred to Deputy Mayor Desley Simpson. The Mayor recognised that being in the media spotlight was not his strength, and that Desley was very effective in that role.”

For Heather, there are other reasons why the most senior leader may not be the right person.

“It depends on the crisis. If you've had a workplace incident where someone has died or been horribly injured, and your leader isn't naturally empathetic, another person might provide the warmth and humanity needed. Yes, the top leader needs to be right there in the centre, they need to be seen, but it may be appropriate to allow another person with niche expertise to front the detail.”

Transparency is critical

When it comes to transparency in crisis management, there is a baseline rule: never lie. A second rule could be: always say something.

In 2004, Glaxo Smith Kline took the Say Nothing approach when two Pakuranga College students informed them that their Ribena drink contained no detectable level of vitamin C. This was a problem because the company claimed the product contained seven milligrams of vitamin C per 100 millilitres, or 44% of the Recommended Daily Intake.

Did Glaxo Smith Kline quickly address the issue? They did not. Instead, hoping the problem would go away, they continued making the false claim until action was taken against them in March 2006.

There is a lesson there: in a crisis, be transparent. Clarity and specificity build trust and credibility. Silence or opaque management-speak do not.

As Kate points out, transparency can be displayed even when there’s not much to say.

“When businesses know few details pertaining to a crisis, they can be tempted to remain silent. They reason being that they plan to something when more information comes to light. That’s a mistake.


“For starters, the social media gears will start turning regardless, so some version of events will get out into the public domain. Also, people get anxious when nothing is said, and they may interpret the silence negatively, that you have something to hide, or that you don’t care, or that you’re not doing anything.

“It is quite acceptable to give the truth – that information is still coming and that you are doing x, y and z in the meantime and will keep people informed as facts surface. People respond well to that level of honesty.”

Displaying transparency isn’t easy. As Julien notes, there can be conflicting objectives within a business entity.

“Organisations sometimes have competing internal interests. Senior leaders may wish to front the crisis and say something, but legal counsel might respond, ‘Yes, we have to say something, but let's be careful because there are issues around liability.’

“Often, the decision that's made at a managerial and operational level is weighing up the risk. What is the risk of not acting quickly versus going out publicly? Often it comes down to commercial considerations. How much is this going to cost us?

“I would always advise to err on the side of transparency. There have been times when I have counselled businesses to take this approach and they have opted not to. Sometimes it works out for them. At other times they get significant blow back, as was the case with Glaxo Smith Kline and the Ribena situations.”

After the crisis

Post-crisis, maintaining trust means keeping the communication going and fulfilling promises made during the event. If things weren’t handled well during the situation, credibility can be earned by admitting fault, and by outlining the changes that will be made to improve things for the future.

The key is follow-through. Nothing builds trust more than good actions carried out, and few things damage it like empty words.

Heather says, “Crisis is an opportunity.  When you’re in the middle of it, it’s an to demonstrate your company values, build trust, demonstrate positive action and show your staff, stakeholders and community you have their best interests at heart.  Crisis naturally gives you a spotlight, and there’s opportunity to maintain that spotlight following the crisis, and filling it with ‘positive news’ stories. 

“Doing that will help to build that trust bank back up, getting you ready for the next crisis.  Because one thing if for certain – another is just around the corner.”