Anyone running a business should be prepared to manage a real crisis at some point.
“It’s a matter of when, not if,” said Deborah Hileman, president and CEO of the Institute for Crisis Management.
It’s hard to predict when a crisis may strike or how it will come about. It may stem from human error, negligence, a bad actor or Mother Nature. And it can take many forms: health and safety issues, fraud, sexual harassment, racism, financial cover-ups, environmental disaster, data breaches, a viral video of an employee mistreating a customer … the list goes on.
No matter the cause, handling a crisis is always hard. But mishandling it can make things 10 times worse.
Hileman conducts a vulnerability study for clients who want to proactively map out how to handle a crisis, should one arise. She studies the company culture, looks at the operations of the business and finds out what keeps those in the C-suite up at night. The head of finance worries about something different than the head of operations, who worries about something different than the head of HR, she said.
Whenever a crisis does hit, the company’s leadership should be ready to address the situation in a coordinated way.
But that’s easier said than done. “Crisis communications is not automated. It’s an art,” said Ronn Torossian, CEO of public relations firm 5WPR.
Even with a plan in place, every situation will require on-the-spot decisions, especially when something is unfolding in real-time on Twitter or Facebook.
“With social media you have to be prepared to respond in minutes, not days,” Hileman said.
Put the right person out front (Hint: It’s not necessarily the CEO)
Ideally, long before a crisis hits, a company will have assembled a crisis team that includes people from different functional roles.
The best person to lead the team when a problem arises depends on the part of the business involved. For example, the chief communications officer might lead the charge on a reputational crisis. If there’s an issue with safety protocols, then the chief operating officer might be best.
“The crisis team leader ideally is not the CEO, especially in larger companies, because the CEO needs to focus on running the business,” Hileman said.
But the team should stay in close contact with the CEO to offer guidance and updates.
What’s more, the CEO may not always be the best public face of a company in crisis either.
“[Sometimes it’s] better to go lower down the rung and put a subject matter expert on instead of a CEO who is inexperienced with the media or the subject matter,” Hileman said.
Ditto if the CEO is tone deaf. Exhibit A, Hileman said, is former BP Oil CEO Tony Hayward. Five weeks after the company’s oil rig off the coast of Louisiana exploded, killing workers and polluting the fishing waters, Hayward said, “There’s no one who wants this thing over more than I do. I want my life back.” Just a couple of months after the spill, he took time away to attend a yacht race.
“When the CEO blunders, where do you go?” Hileman said.
But a CEO should be prepared to be the face of a crisis when it pertains to the core business, Torossian said. Even then, however, things can go very wrong.
Don’t hide the truth
If you don’t tell the truth, the truth will come out and your company will look even worse.
Former Wells Fargo CEO John Stumpf tried to blame thousands of employees for creating fake accounts in customers’ names. Turns out, the accounts scandal stemmed from the company’s extremely aggressive sales goals and a toxic culture.
The Volkswagen emissions scandal is another cautionary tale.
The company first attributed suspiciously favorable emissions test findings to errors. When presented with strong evidence to the contrary, it finally admitted to cheating on its emissions tests but claimed there was no indication that high level executives knew of the decision to cheat.
Since then, the former CEO has been indicted by US federal prosecutors for allegedly being aware of the cheating and the SEC is suing the company for “massive fraud,” alleging that senior executives concealed the emissions scheme when raising hundreds of millions of dollars in bonds.
Sometimes, company spokesmen may unintentionally lie because they feel pressured to give an answer, even though they may be unsure of what actually happened.
In that case it’s always much better to say, “I don’t know and will get back to you,” Torossian said.
And you need to assure the public your organization will investigate, Hileman noted.
Don’t ignore the problem
Not dealing with a known problem swiftly can backfire.
Hileman cites the breach of nearly 146 million Americans’ personal data at credit reporting agency Equifax. The company later admitted the hackers exploited a vulnerability in its systems that the company knew about two months before the attack.
Burying your head in the sand is also a terrible strategy.
“I’ve seen CEOs like a deer in headlights, thinking that if they avoid a phone call, the problem will go away,” Torossian said.
He’s also dealt with CEOs who think lawyers and media don’t get priority over their meetings. “Crisis doesn’t wait for you. It doesn’t give a damn that you have hours of meetings or it’s your wife’s birthday.”
His advice: “Take threats and noise very seriously.”
Maintain control of the narrative
Being the first to respond publicly to a crisis and acting quickly to stem the fallout is critical.
If you don’t, others will shape your story in ways that make your company look worse.
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After the second fatal crash in less than five months of Boeing’s 737 Max 8 planes, the company waited nearly four days before calling for all 737 Max jets to be grounded. That was only after many other countries had grounded the planes and after the Boeing CEO reportedly called President Trump to assure him of the plane’s safety.
While Boeing may have been waiting for more definitive information about the causes of the two crashes that killed 346 people in Indonesia and Ethiopia, the prudent thing to do would have been to suggest grounding the planes sooner, Hileman and Torossian said.
Instead, the company gave the impression that it cared more about its bottom line than the public’s safety.