Banks, oil companies, an airline, dead mice and a PR agency in crisis and issues management spotlight

It’s day five of our 28 day investigation into the crisis and issues management challenges facing businesses around the world, and the incidents keep coming:

ACS Law: law firm; online attack resulting in publication of private and personal information

Barclays: financial services; customer bricked up their entrance in protest against treatment of small businesses

Chevron: oil; Greenpeace protest against deepsea oil drilling

Ketchum: PR agency; vote-rigging (!!)

Premier Foods: food production; product integrity – dead mouse found in loaf of bread

Segway: technology/transport; potential safety fears following death of company founder whilst using his own product

Virgin Blue/Accenture: airline/IT consultancy; system failure causing travel chaos [With thanks to Craig Velenski for bringing this crisis to my attention]

The range of sectors and the type of crises are incredibly diverse, but they all drain management time, usually cost money and pose a real reputational risk to the organisations in question. The key to the scale of the damage caused is almost always determined not by the crisis itself, but by the way that the organisation responds to it. Being geared up to do so swiftly and professionally are pre-requisites for success.

Another week, another crisis…

We all get that Monday morning feeling, but it’s much more intense when you’re beginning the week with a bout of crisis management. So, hats off to the communication teams at the following organisations who are doing exactly that right now:

Hyundai: automotive; product recall

BT: telecoms; allegedly at fault for an explosion which injured 11 people

British Gas: utility: unfair treatment of small businesses

South Korea Grand Prix: sports event; logistical problems

This posting marks day four of a 28 day campaign to highlight the scale and scope of issues and crises affecting all kinds of organisations every day. My objective is to illustrate that crises are not always as dramatic or high profile as those faced by Toyota and BP, but they are happening all the time and they are costing substantial amounts of time, money and reputational value. Being well prepared with a thorough crisis communication plan is the best way of minimising these costs – or maybe avoiding them altogether.

No day of rest when you’re managing an issue or crisis

Sunday’s the day for reading the papers, washing the car, taking the dog for a walk or maybe enjoying a convivial roast dinner at the local pub. But not if you’re in the middle of managing an issue or crisis. Like the following organisations:

The Commonwealth Games: sports event; logistical challenges and security concerns (please click on this link for a fascinating article by Reuters on how the Games’ organisers are dealing with reputational risk and this one for an insight into how the Games’ troubles poses reputational challenges for the whole of India)

Easydate: online dating; legal dispute

Betfair: bookmaker; Inland Revenue investigation

Tesco: retail; controversy over the sale of “Nazi helmets”

Crises and issues are happening around us the whole time, and they don’t stop for the weekend. Taking steps to prepare for a crisis – whatever sector a business operates in – is essential if organisations are to be confident of reputation protection.

CEOs as leaders in a crisis: essential qualities for success

In recent postings, we’ve taken a close look at the role of the CEO in crisis management. In the final posting on this topic for now, we list some of the key qualities required by a chief executive in this context:

1) Leadership
Leadership is a quality one would expect from a CEO at all times, but the stakes are even higher in a crisis: it is the ultimate test for a senior management team. The outside world will re-evaluate the ability of the senior management team – and the worth of the business – dependent on how it manages the crisis. Demonstrating leadership and the cool-headed ability to make critical decisions under the most intense pressure are pre-requisites for success.

2) Empathy
A focus on and understanding of the effect of your crisis on impacted stakeholders is essential, and that requires a CEO who can listen as well as talk. Conversely, a focus on what the crisis means for our business, or worse, what the crisis means for me as CEO is guaranteed to alienate stakeholders and make a bad situation even worse. It’s one of the key reasons that Tony Hayward endured such a torrid time during his leadership of the BP crisis.

3) Strategic planning
Reacting to a crisis is rarely an effective approach – it means that the crisis manages the business rather than the other way round. So, an ability to be clear on the objectives for crisis management activity, to see into the future and therefore plan the best course of action are invaluable skills for a CEO in crisis management mode.

4) Integrity
Nothing does more damage in a crisis than double-talk or downright dishonesty. A CEO who is straight-forward, honest and acknowledges responsibility will retain credibility and therefore the ability to be heard during a crisis. This is essential if the organisation is to exert influence on how the situation plays out, and emerge unscathed at the other end.

5) Communication
If the CEO is to play the role of lead media spokesperson, they must be a supreme communicator. The words of the CEO will be tested, analysed and used against them if they slip up. And in an online age, we’re no longer talking about today’s press comment being tomorrow’s fish and chip paper. Twitter ensures that today’s gaffe has gone twice round the world by tomorrow and is preserved forever on YouTube and/or Google.

Being a CEO in a crisis tests business heads to the limit. People who have been successful when running “business as usual” can quickly find their world unravelling when crisis strikes. Others rise to the challenge, proving that they are not just great managers, but truly great leaders.

Crisis handling: the role of the CEO

CEOs wanting to protect the reputational value of their businesses are right to focus their time and attention on crisis prevention and crisis preparedness. Unfortunately, that doesn’t make their organisations immune to crisis (though it both reduces their likelihood and increases the business’s resilience to them). The good news though is that all the evidence suggests that it is not the fact of a crisis that causes reputational harm, but the way that the organisation responds to it. Make a hash of the crisis handling and reputation is sure to suffer. Manage it well (and in a way which is true to your brand) and reputation need not suffer. In fact, it can be enhanced.

As leader of the company and guardian of its reputation, the CEO undoubtedly plays a key role in crisis management. So what exactly can and should they do in order to protect reputation in the event of a crisis?

In a previous posting, I discussed the thorny issue of employing the CEO as lead media spokesperson in a crisis. To re-cap, in a crisis of monumental proportions (and certainly those where there has been loss of life), it is certainly right for the CEO to front up to the media. It shows the seriousness with which the organisation is taking the incident, it demonstrates accountability and it communicates leadership. For less serious incidents (and sometimes crises appear bigger from the inside than the outside) this may not be essential, or indeed desirable.

More important will be the ability of the chosen spokesperson to get their messages across effectively, so make sure your senior executives benefit from media training and know in advance who your strongest performers are. Do be aware that if despite this, you decide to field your CEO as media spokesperson you communicate a subliminal message that this is indeed a major event and you set the benchmark for all future crises. If the CEO is lead spokesperson in crisis A, stakeholders will expect the same in the event of crises B and C.

Whether or not the chief executive plays the role of external spokesperson, they are likely to have an important role with regard to internal communication. Crises can be highly debilitating and demoralising to staff: it’s not pleasant to have the organisation for whom you work accused of bad things. More than that, you may worry for your future employment. Given that staff can play a key role as front-line ambassadors and communicators in a crisis, it’s important that they remain committed and motivated. Regular updates from the CEO – via the intranet, email, video clips or face to face – help to maintain morale and reassure employees that the business is doing the right thing and will not be crushed by this incident.

Beyond communication, the CEO will have an important role within the crisis management team. The size and nature of this role will once again depend on the scale of the crisis, but there will be occasions when they need to make a big call. Crisis plans are there to help guide an organisation through an incident, but they cannot use judgement and they cannot make decisions. That requires human intervention. And when the decision in question has major ramifications for the long term reputation of the business, it requires CEO involvement. It’s when the top person earns their corn – and it may define their future career as well as the destiny of their business.

After the immediate incident or issue has been resolved, there’s another important task for the CEO. Re-building trust and reassuring stakeholders is often a key priority in the weeks and months after the crisis. By being visible and continuing to communicate during this period, the CEO helps ensure that long term reputational value is preserved.

There’s one final role that the CEO can play in crisis management: fall guy. Successful crisis resolution demands that the underlying cause of the situation is addressed: if ineffective leadership is identified as a key contributory factor then the only way forward may be a change of leadership at the very top. Not a decision that any CEO would want to take, but sometimes the only one possible if the future of the business is to be assured.

Leadership lessons in crisis prevention

If creating the right corporate culture is the number one priority for the CEO in reputation protection, there are other ways in which they can help to prevent and prepare for potential crises. Given that no CEO would welcome the drain on human and financial resources that a crisis brings - not to mention the potential damage to reputational value - focusing their attention in this area should be a no brainer.

The start point in reputation protection is for the CEO to emphasise the importance of crisis, risk and reputation management. This means creating an expectation and accountability that crisis management will be done well, and checking regularly to ensure that this is happening in practice. When the chief executive pays personal attention to a certain area of the business, it tends to focus the mind and ensure that the job gets done!

But real leadership is of course provided not just by what a CEO says, but more powerfully by what they do. So, being first in the queue for regular crisis media training and not only ensuring that a crisis simulation happens every six months, but participating in every single one will send out a very clear message that more junior team members will undoubtedly follow.

Further reinforcement can be provided through “management by walking around”. Regular visits to the shopfloor to check that people know what to do if they spot a problem and that they understand that communication channels are open will help to ensure that the boardroom principles of crisis management are making it through to the front-line.

There’s one other vital task that the CEO can undertake as chief reputation officer: ensuring that the reality of the business matches up with its brand promise. This matters at all times, but it matters most in the event of a crisis.

How do we know this? Well, when Oxford Metrica undertook its analysis of how crises affect the value of businesses, they discovered that the biggest value changes occurred when the crisis struck at the heart of the brand. In other words, if the nature of the crisis or the way in which it is handled runs counter to the way that the company had positioned itself, the damage to reputational value will be especially severe. So, if the brand is built on quality, a crisis that reveals shoddy products will be especially harmful. If the brand is built on safety, a major accident will be especially damaging. If the brand is built on integrity, a crisis that centres on corruption will be particularly hard to manage. It is the CEO’s job to make sure that the organisation’s brand is much more than skin deep or else it leaves the long term value of the business perilously vulnerable to the wrong kind of crisis.

Crisis prevention can easily slip down the list of CEO priorities as tasks which seem more important - or certainly more urgent – take precedence. Enlightened CEOs avoid this trap because they know that the time required to lead an effective approach to crisis prevention is not only tiny in comparison with that required to manage a live crisis, they also understand that to gamble with the company’s reputation is a risk too far.

Jonathan Hemus

Reputation protection in an online world

I was recently interviewed about the role of social media in crisis management and was asked whether it has changed the way that organisations deal with crises. My view is that the fundamental principles that underpin good and effective communication remain exactly the same. However, social media undoubtedly provides an expanded set of opportunities and threats when it comes to reputation management.

Let’s travel back in time just five years and imagine we witnessed a London Underground staff member being abusive to a passenger. What would have happened? We might have told the story to our partner over dinner that evening, saying how awful it was and that the member of staff should be disciplined. Maybe one person in a hundred might even have taken the time to write to Transport for London, though they would not have been able to identify the member of staff, and in any case, it would have been their word against his.

Travel back to the present day and here’s how a real incident at Holborn tube station plays out. The incident is not just witnessed by a passenger, it is also captured using his mobile phone. When he gets to work, he blogs about it and posts the footage to YouTube. People come across the footage and begin to Tweet about how disgusting the staff member’s behaviour is. Twitter users within the media spot the Tweets and begin to look into the story. By the middle of the afternoon, London Mayor Boris Johnson is tweeting about it (“appalled by the video. Have asked Tfl to investigate urgently. Abuse by passengers or staff is never acceptable”).

By the evening, the story had moved firmly from an online issue to a “real world” one, with coverage on Sky and ITN. The next morning the story was in the national newspapers including the Daily Mail and, of course, its website. The latter provides yet another opportunity for the story to endure and spread, fed by reader comments posted about the story (over 500 in the Daily Mail alone).

This was not a major crisis that lasted for weeks and destroyed the reputation of an organisation. It does however highlight how incidents which would once have resulted in a dinner table conversation between two people can now reach millions of people within hours. Understanding this and having a crisis communication infrastucture to deal with it is essential for any business seeking to protect its reputation in an online world.