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Awareness
A
Crisis Plan Is A ‘Must Have’ For Every Company
By EDWARD MOED
How would your company
evacuate and communicate with employees if a dirty bomb exploded within
a 10-mile radius or your building was threatened with radioactive, biological,
or chemical agents? Or what if a new, more sophisticated cyber-terrorism
attack from a Mideast terror cell suddenly penetrated your firewall
and shut down your operations completely?
Does the current crisis plan gathering dust on your shelves really provide
up-to-the-minute protection for these types of events?
Any crisis management plan prior to Sept. 11, 2001, is obsolete since
it does not deal with many of the new potential terrorist activities
that are now part of our consciousness.
At the same time, American businesses are facing a virulent situation
– the fallout from the Enron/Andersen debacle. The ensuing virus-like
effect of “Enronitis” is infecting every company or industry
that was ever affiliated with the now bankrupt energy-trading giant.
Manufacturing conglomerate Tyco, the latest company to be scrutinized
for shady financial reporting, is in a mad dash to avoid becoming the
next-largest casualty case in U.S. history and is hastily selling off
its lending unit for an immediate cash supplement. Though Wall Street
does seem to approve of Tyco’s quick response, health care products
maker C.R. Bard Inc. has just called off its imminent merger with Tyco
that was announced in May 2001.
In addition, a black cloud of suspicion and distrust now blankets the
accounting industry as a whole and continues to grow as the depth of
Andersen’s deception is fully realized. Experts say it’s going
to be virtually impossible for the accounting industry as a whole to
escape the crisis unscathed. Other professional services’ sectors
such as management consulting, advertising and law are beginning to
examine their vulnerabilities in the post-Enron world as well.
So, what is the lesson we should be learning from all this? Many companies
make the mistake of not preparing for potential crisis situations in
advance. As a result, companies often make erroneous decisions, waste
critical time and allow the crisis to control them and/or spiral out
of control.
An actual crisis is not the time to try to figure out what actions to
take, whom to contact or how to communicate with your various constituent
audiences.
Being fully prepared ahead of time can be the difference between keeping
your business up and running or going out of business.
Preparing for the
Unthinkable
The most effective way to prepare for a crisis is to work with an outside
firm or expert that specializes in crisis management. These firms can
provide a vital outside perspective on how you need to handle any potential
situation during a crisis and will bring real-time experience to post-9/11
planning.
An actual crisis is not the time to try to figure out whom to contact,
how to control the media, notify your customers, disseminate the information
to your employees and international offices, and so forth. Being fully
prepared ahead of time can be the difference between keeping your business
up and running and going out of business. Crisis planning should involve
extensive scenario role-playing by teaching senior managers how to deal
with each possible twist and turn within a particular crisis.
In any crisis situation, it’s critical to assess what you can control
(i.e. who the lead spokesperson will be, which audiences are communicated
with and when, etc.). There will always be facets of any situation that
will be impossible to control such as rogue chat rooms. However, knowing
immediately what you can control and taking the proper steps to manage
it will impact the outcome of the crisis and determine your company’s
reputation moving forward.
If budget is an issue, check your company’s risk management or
insurance policy. Many policies will cover the fee for crisis management
planning. Being pennywise today will definitely become pound foolish
if your company is faced with a crisis.
A solid crisis plan must involve a team effort. The senior executives
responsible for your company’s IT, legal (including outside counsel),
risk management, audit and tax, and corporate communications must be
trained together how to react in a crisis, what steps to take, and how
to communicate with employees and external constituents. Lines of communication
must be established among all department heads in order to understand
what information can be disseminated and what information legally cannot
be released.
There are five important steps your company should focus on during crisis
preparation. We have created our own crisis management program called
CARES, which outlines the following five steps to provide a true measuring
stick to better understand how crisis management processes (and actions)
can be continually improved after a crisis takes place. By following
these steps it also allows for quick modification and changes to be
made.
Each step builds off the one before it and asks the senior executives
key questions, providing key metrics that demonstrate how prepared they
are for any particular crisis situation. Unlike many crisis diagnostic
tools, CARES also focuses on and measures specific behavior characteristics
exhibited in these stressful circumstances. Because of its generic template,
it can be tailored to work within almost any pre-existing system (and
can incorporate existing corporate procedures). The details of each
will be uncovered during the scenario role-playing enacted by the external
crisis communications expert:
Composure and Collection
of Information: How composed were the executives after hearing and initially
reacting to the crisis? What information was collected and how was it
collected? Did the executive collect enough vital information to properly
assess the situation?
Assessment: Did the executives adequately assess the situation? For
example, did the executives clearly assess the challenges and/or obstacles
surrounding the situation and who might be affected?
Reaction: What is the action plan and how was this decision made? Were
benchmarks created for success?
Evaluation: How effectively is the situation being evaluated, monitored,
and adjusted? Who is being notified and how? Based on new changes, how
is the situation being evaluated? What new goals/benchmarks have been
set?
Success: Once the crisis has subsided, how effectively do you measure
success? What changes to your crisis plan/process were made based on
these metrics? How prepared are you for the next crisis? Did your metrics
prove effective in measuring the situation?
By implementing a
program like CARES, companies can truly measure how well a crisis team
performed throughout any situation by providing real recommendations
as broadly or detail-specific as needed.
Repairing a Reputation
What happens if your company’s image is damaged by a crisis? How
do you win back public support? Reputations are often ruined not by
the crisis itself, but in the way the crisis is handled.
The Tylenol case is a positive example of a crisis handled well. When
seven people died in 1982 from capsules tainted by cyanide, Tylenol
immediately pulled the product from the shelves and developed a safer
product that gained the trust of consumers.
The Ford/Firestone crisis was handled poorly since, rather than admitting
fault and taking the proper steps to address the crisis, both companies
denied any wrongdoing and pointed fingers at one another, quickly eroding
consumer confidence. Months later, Ford and Firestone are still struggling
with the result of their missteps.
As seen from the above examples it becomes obvious that how you react
and respond to a crisis can ultimately be more important than the crisis
itself. Below are some simple “do’s and don’ts”
that companies should, by rule of thumb, keep in mind when it comes
to responding to a crisis.
• Always be the principal trusted source of information about your
own affairs.
• There is simply no way that you can be prepared for every single
possible scenario, but you can be prepared to react by having the right
materials, resources, and facilities in place. For example, companies
should have a contact sheet with names and numbers of the members on
each crisis team. There should be a solid procedure on whom to call
and the process you should take. Another important factor is key biographies
and media list should be on hand at all times. Lastly, there should
be a quick reference guide on how to handle physical disasters. For
example, each company should be equipped with a list of emergency exits
within their building.
• Don’t become an island unto yourself – first class
teamwork is absolutely critical for success.
• Smooth communications up and down the organization can prevent
further chaos. Therefore, always prioritize constituent communications
and create and effective mix of tactics and messages.
• If you don’t want to see it or hear it, don’t say it.
• Be honest, be deliberate, and be fast.
• It is not good enough to react and hope for the best.
• Lastly, learn from your mistakes and certainly set benchmarks
to measure success and failure.
Crisis Insurance
A crisis management plan is a company’s crisis insurance. Imagine
if your company was destroyed by fire or a terrorist act and wasn’t
covered by insurance. It would be virtually impossible to rebuild.
If a crisis unnecessarily overheated because your company didn’t
know how to contain it, it’s possible your company’s reputation
could be permanently scarred … beyond repair.
Edward Moed is a co-founder
and managing partner for PepperCom. PepperCom has conducted crisis management
programs for a wide range of mid-sized and Fortune 500 companies. For
more information, call PepperCom at 212-931-6100 or visit the Web site
at www.peppercom.com.
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