And now who can help us? Crisis Management

A crisis affects Stakeholders within and outside of a company

Hector m. meza 16 may, 2014
La Medición de la Comunicación y su Estandarización en la Ciudad Condal

Almost every week I have a meeting with my team to follow up on pending items and review accomplishments of the different areas of the business. These sessions have become an excellent time to brainstorm and bring new ideas to the table, in order to continue innovating with the purpose of providing quality service for our clients. Sometimes we debate on communication and marketing subjects, during a meeting the question arose: "A crisis can be prevented or avoided?”

The conclusion we reached was that a crisis can´t be avoided, but influencing its evolution and outcome can reduce its negative impact both internally and externally. I think, this question has been asked several times by many CEO´s and executives throughout their professional life, and no one is born knowing how to react to a crisis, and even less how to manage it in an environment where several factors are not under our control.

The dictionary defines crisis as a serious and difficult situation that endangers the continuity or development of a physical, historical or spiritual process. There are a number of circumstances that can detonate a corporate contingency: natural disasters, rumors, stock market movements, an unhappy customer, a sex scandal, discrimination, suppliers´ errors, staff´s negative comments, among others, these undoubtedly could damage the image and reputation of the company and its revenues.

From a communications standpoint, a crisis is a business or organizational problem that is exposed to public attention, and that threatens a company's reputation and its ability to conduct business.

An example of a crisis that comes to mind, was the Olympic Games in Sochi, Russia, where the event beyond shinning for the winning athletes, the extreme winter sports and the excitement of the competitions; was marred by spreading non-sports situations such as threats of terrorism, doping, protests of repression, the anti-gay Russian government feeling, excessive costs to build its infrastructure, as well as doubts about the ability of hospitality and accommodations. In my opinion, all these affected and tarnished the image of an event that could have transcended time and space.

No company is exempt from having a crisis at a time and when it least expects it. That’s why as a core part of its Risk Management and Business Continuity Strategies, it becomes necessary to have a Crisis Communication Plan, as well as engaging the captain of the company and its management team in its development so that in case of a contingency, they weather the crisis understanding also that opportunity can come out of adversity.

There are two types of crisis, those that occur internally within the company´s operations, which could be exposed to public attention and externally those which threaten a company´s reputation before its Stakeholders. An external situation could be exemplified with a bank that has problems servicing their clients on line because of a computer crash thus generating unease and affecting its image.

Both types cannot be avoided, but their impact can be reduced with a well-managed Crisis Communication, coupled with an effective Recovery Plan, enabling companies to face any eventuality, from the failure of a product / service; a blackout; even natural or man-made disasters. As a result, companies that are better prepared to deal with a contingency through a coordinated approach to help your organization effectively identify and anticipate potential issues can prevent communication crises from developing, and influence their evolution and outcome. What makes them a crisis is the fact that they are the focus of intense media scrutiny.

One of the most memorable phrases in history of a crisis was expressed by President John F. Kennedy in 1959 during a speech in Indianapolis: “The Chinese use two brush strokes to write the word 'crisis.'(wei-chi).  One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger--but recognize the opportunity.”  So having a good Crisis Management will allow making the right decisions from the start and setting the spokespersons and managers´ mindset to overcome it.

“The Chinese use two brush strokes to write the word 'crisis.'(wei-chi).  One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger--but recognize the opportunity.”

A curious fact, some scholars of the Chinese language comment that this assertion is incorrect, since the word crisis in Mandarin Chinese “wei-chi” is made up by “wei” meaning danger and “chi” has three principal meanings: machine, table and time, resulting in dangerous times.

Beyond the debate over the meaning of the popular Chinese pictogram, is at that time of imminent danger, when the CEO must permeate confidence across the entire organization and to the Stakeholders, since the contingency could be only a temporary phase in the life of a company that has a Crisis Management Plan. Even though it could have negative effects on the company, these may be reversed or their impact lessened in a satisfactory manner, depending on how the communications are managed and with clear and timely responses to its Stakeholders.

ACT AND COMMUNICATE

This is why it becomes important to develop a Crisis Communication Plan that includes very clearly the steps to follow, people responsible, roles, actions and methods to be applied to lessen the effects of the contingency.

To be consistent and remove all doubts, a key element is to have an official position on what happened and distribute it at all company levels. It is also suggested to use your Owned Media such as a web page, social media, corporate blogs and microsites to report the development of the crisis and inform Stakeholders on actions being taken to reduce the impact of the contingency.

Nowadays, it is not enough to share information with representatives of Traditional Media, but also among Digital Influencers and Social Media, with the scope and credibility they have, not having the right information, any rumor or crisis will spread quickly virally.

An adequate Crisis Management Plan considers seven steps that can help maintain the reputation and credibility of the company:

  1. Conduct an inventory of the company’s vulnerabilities and the critical issues it is likely to confront.
  2. Develop scenarios on their impact to your different Key Constituencies.
  3. Draw a Crisis Communication Plan, coupled with an effective Recovery Plan.
  4. Test the plan to ensure that the messages contained are delivered effectively and with credibility, and that the plan can be carried out. This is where crisis training and simulations come in, as well as media training.
  5. Manage the Crisis to minimize potential business damage and take control of the situation.
  6. As the crisis comes under control, you should examine the impact the contingency has had on your brand and reputation. If the brand has taken a hit, you may need to give consumers a reason to trust them again.
    You can call upon an entire arsenal of Public Relations Techniques
  7. Learn and apply best practices for future contingencies. (Hopefully none will happen to you! Although from time to time and despite the best planning and foresight, organizations inevitably find themselves in a crisis.) 

A crisis caused by a company´s vulnerability should never left unattended and be taken lightly, because it directly affects its reputation and image, as well as relationships with its target audiences. But with action plans, the company will give firm and safe steps towards the solution.

Running through the DNA of the company and its CEO, should be the culture of prevention understanding also that opportunity can come out of adversity. When taking action, communicating and accepting responsibility for the contingency, will make the journey less complicated in addition to gaining the trust and support of its Stakeholders.

As the Chinese proverb says: "Dig your well before you are thirsty ". Do you already have in your first aid corporate kit your anti-communication crisis kit?

About the author: Hector worked for IBM Mexico for more than 30 years, managing different functions and areas: Marketing and Commercial – Channel Sales, Manufacturing, External Relations, Human Resources, Legal, Education, IT, Foreign Trade and Security. During his career at IBM, he had two international assignments in charge of Marketing and Sales for Latin America. After his retirement as IBM's Executive Vice-President, he took the position as President and Corporate Director for Mexico, Central America and the Caribbean for Motorola Mexico; he was also Vice-President for Motorola Corporation.

Hector has a college degree in Business Administration from Texas A&I University, and a Master's degree in Economics from Trinity University. He has also received intensive training in advanced business management, corporate strategies and international trade at IPADE; Pittsburgh University, IBM La Hulpe in Belgium, IBM Executive Institute in N.Y. and Motorola University.

Hector is also an Independent Consultant for Management, Strategic Planning, Human Resources and Marketing Communications and is a  columnist for Forbes Mexico, Alto Nivel  and Dialogo Ejecutivo. He may be contacted vía: Twitter: @HectorMezaC; Facebook: Héctor M. Meza; LinkedIn: Héctor M. Meza Curiel.