Archive for category: Risk Management

Thinking Through the Strategies

Crisis management is so much more than handling of the media. A major oil company had a plant explosion and proceeded to do a good job of communicating afterwards. Unfortunately, the follow-through never transpired after the media coverage died down. Thus, lawsuits flew in the company’s face.

My client (a different chemical company) later had a similar explosion. The chief legal counsel called and stated that we did not want the fallout as from the other company. We therefore mounted a full-scope crisis management initiative that focused heavily on after-the-crisis help for the victims and their families. The goal was to keep litigation from occurring, which was met. At a later news conference, OSHA announced that it was assessing its smallest fine, as a result of the forthright way in which my client had handled the crisis.

Another energy industry client operated coal mines. The irresponsible actions of two employees thrust sludge from the mines and into the Cumberland River, which subsequently contaminated the water supply of three cities. The State of Kentucky filed suit, seeking criminal charges against the company.

Working closely together with legal counsel, our recommended crisis program posed an alternative to a worst-case sentence. The program, approved by the judge, consisted of TV and newspaper apology statements, plus the assurance that safety-environmental training would be provided to employees. An investment of $50,000 effected a reduction of the fine from $2 million to $500,000 and reduction of the charges from criminal to civil. Sustained follow-up communication with employees, customers, the court, regulators and opinion leaders ensued.

Another client was a large urban shopping center. Rapes occurred in the parking lot during the Christmas shopping season. Neighboring offices began e-mailing their friends, concerned that the center was unsafe.

Our strategy to address the crisis was three-fold. We engaged senior citizen volunteer corps and criminal justice students to wear Santa hats and serve as holiday escorts, assuring safety but not appearing as armed guards. Secondly, we initiated safety training that expanded to help home owners avoid accidents. Thirdly, the communications process served to glean research data that we needed to upgrade the center, its tenant mix and security issues. The common denominator was open communications with customers, where other retail centers try to stifle mention of incidents.

The process of strategy development is not esoteric. It is common sense, with an emphasis upon ideas that work and are easy to communicate. You always draw upon successful elements of other client crises. I had a restaurant chain attacked by an auto incident. Its family customer base was uneasy for their safety. We took the shopping center escort idea and translated it to senior citizen door greeters, armed with friendliness and the latest serving suggestions. Coupled with armed guards in parking lots, the approach was to reiterate the friendly, homey atmosphere, in contrast to the stereotype of sterile chain eateries.

There are three aspects to Crisis Management and Preparedness. First, qualified business advisors conduct Crisis Communications Audits. This securing and evaluation of programs needed or in-progress has enabled corporate management to make informed decisions, take swift action and avoid possible litigation.

Next comes Crisis Planning. This becomes a coordinated committee, with multiple departments and professional disciplines represented. What-if scenario planning is similar to the processes utilized in overall company strategic planning and visioning. The crisis plan must be part of the bigger process, not an adjunct or afterthought.

Finally comes Crisis Training. Activities include media-spokesperson training, field and operations staff training, coordination of corporate response and message points, community liaison, collateral materials writing-production, video archiving-production, media relations, monitoring and expert testimony. The crisis teams need to be prepared.

Crisis planning and strategies should be intertwined with security issues, financial goals, workforce empowerment and many other corporate dynamics. Elements which Crisis Management and Preparedness Plans should address, per categories on The Business Tree^TM, include:

1. The business you’re in (core business). Protection of intellectual property, materials, business continuity and core business production information. Prevention of theft, leaks in proprietary information and delays in deliverables.
2. Running the business. Protection of physical plants, equipment, office files and other supplies. Prevention of unnecessary downtimes, spoilage, stoppage in processes and theft.
3. Financial. Protection of fiduciary responsibilities and financial assets. Prevention of theft, embezzlement, accounting fraud and overpayments.
4. People. Protection of human capital, knowledge bases of workers, executives, company safety and the work environment. Prevention of unnecessary employee burnout.
5. Business development. Protection of company reputation, partnerships and alliances, marketplace intelligence and customer interests and relationships. Prevention of leaks in customer information and losses in company market position.
6. Body of Knowledge. Protection of status and utilization of organizational working knowledge, management’s activities and relationships with regulators. Prevention of strains in company relationships with others and attacks from outside the organization.
7. The Big Picture. Protection of the overall organization, compliance standards in the organization. Prevention of loss in quality, purpose or vision.

In times of crisis, take assessment of damages, and investigate the truth. Never exaggerate, speculate, or withhold information. No statements should be “off the record.” Provide complete answers, and respond to media requests for additional information in a timely manner. Failure to return calls implies something to hide. Maintain accurate records of all inquiries and news coverage.

The best way to build bridges is to seek out community opinion leaders and stakeholders before times of crisis. Educate them of your activities. Offer tours or community visitations to facilities. Provide printed information on your business… and a video, if at all affordable.

Test crisis plans during simulated drills, using qualified outside strategic planning consultants to evaluate results. Company officials should take these simulations seriously. The military does, terming them “war games.”

Part of being prepared is being engaged in routine activity. Have a plan in force, and be sure that every employee has a copy. The binder containing the plan should include easy-to-read fact sheets and backgrounders on company operations, current phone numbers, and a delineated line of authority (from company resource people to the spokesperson)

Crises can have many liabilities upon companies, including loss of profits and market share. Inevitable spin-offs include government investigations, public scrutiny, and a tarnished image. This causes loss of employee morale and, as a result, company productivity.

Crisis management and preparedness can minimize negative impacts of any emergency. Going through the planning and implementation is a quality assurance process that strengthens any company. Crisis communications means banking goodwill for those times when the plan is called to the test.

Crises of one sort can and will happen to every company. They can be turned from disasters into opportunities to project corporate strengths. The manner in which a crisis is handled often wins praise for companies whose positions are improved in the public eye. Those who are prepared will survive and thrive.

Defining Moments in the Corporate Culture

Volatile business contractions, uneasy economic climate, plant explosions, health care crises, hostile corporate takeovers, governmental shakeups, and financial failings are crises that upset the routine of business life.

Some jolting incident puts every organization into a reaction mode. The consequences of miscommunication in a crisis can be devastating to all involved. By dealing with the unexpected, preferably before it occurs, companies can bank public goodwill that may be useful later. Playing catch-up means that you have lost the game.

It is the responsibility of corporate management to practice effective Crisis Management and Preparedness. Management must study practical experiences of what can go wrong, put a crisis team into place, understand the workings of news media, identify community opinion leaders, and predict potentially harmful or controversial situations. Learn from those who were successful, those who failed to achieve the desired effects, and those whose corporate credibilities were damaged by inaction or the wrong actions.

Return to part 1 of 4.

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About the Author

Power Stars to Light the Business Flame, by Hank Moore, encompasses a full-scope business perspective, invaluable for the corporate and small business markets. It is a compendium book, containing quotes and extrapolations into business culture, arranged in 76 business categories.

Hank’s latest book functions as a ‘PDR of business,’ a view of Big Picture strategies, methodologies and recommendations. This is a creative way of re-treading old knowledge to enable executives to master change rather than feel as they’re victims of it.

Power Stars to Light the Business Flameis now out in all three e-book formats: iTunes, Kindle, and Nook.