A crisis can take many forms, and while not every crisis grabs the media headlines, you need to know how to deploy communications effectively in order to manage your way to a resolution. A lengthy systems outage, product contamination, data breach, loss of a facility– these are all crises that have been faced by companies recently, all of which required a crisis communications capability.
A report by Oxford University and the Sedgwick Group entitled “The Impact of Catastrophes on Shareholder Value” revealed some interesting insights into a company’s behavior in a crisis. The researchers discovered that companies that responded well to a catastrophe experienced an increase in share price within 50 days. The reason, according to the report, is that a catastrophe offers “an opportunity for management to demonstrate their talent in dealing with difficult circumstances.” If senior management handles a crisis well, it can end up increasing the value of the company.
By and large, every crisis response operates at two levels: what you do about it, and what you say about it. You can handle a crisis internally with smooth efficiency, but if you project the wrong message to your employees, shareholders and the general public, most of your good work will come undone. Likewise, you can say all the right things to the battery of microphones and TV cameras, but if your message is not backed by effective actions, it will sooner or later be seen as simply “spin.” Crisis management and crisis communications have to be intertwined to succeed. So what does crisis communications involve? It requires a number of things: advance planning, media training for senior management, an experienced communications person and a clear understanding of the impact of the news on the media. All of these certainly require a willingness to admit the truth, even when it is painful. Crisis communications is often confused with PR. Some companies assume that in the event of a crisis, their PR department will be able to handle the communications. Others have made a strategic decision to keep a low profile in the marketplace and assume they won’t need to communicate in a crisis. Both are equally dangerous mistakes.
A PR department’s role is to spread good news about a company – it is rarely equipped to handle communications when things go wrong. Likewise, a company that flies below the radar in the good times is much more likely to arouse the suspicion of journalists if something goes wrong. Whether you like it or not, a crisis draws attention to your company and you need to think through how you are going to handle the spotlight.
Here are four simple recommendations:
1. Have a plan. Most companies now consider a crisis management plan an important part of reputational risk mitigation. In addition, the organization should also have a crisis communications plan. It need not be long or complex, but it should have the input and support of senior management and should be communicated to employees so that they know what to expect when they see their boss on TV.
Everyone should be aware that the plan will need to be adapted for different situations: how you respond to a fraud would not be the same as the way you respond to a fire in your corporate headquarters or a natural disaster affecting your warehouse.
2. Provide media training for senior management. Your press office may be accustomed to dealing with the media, but in a crisis, it will be the CEO or the division chief in the spotlight, not the press officer. How he or she responds in those first moments could have a significant impact on shareholder value. The Oxford University report showed that the amount the share price drops in the first 48 hours depends on the company’s immediate response. Role-playing is a very good way to test your company’s message effectiveness and your ability to “connect” with different audiences.
3. Keep more than one experienced communications person on hand. This needs to be someone who knows the company well, who can craft messages rapidly under pressure, and who commands the respect of senior management – he or she needs to be able to tell them difficult truths about when they should (and should not) give interviews. The person can be either in-house or a consultant but needs to be fully briefed regardless: good communications advisors are only as good as the knowledge they have of your situation.
4. Develop relationships with the media in advance of a crisis. Make sure that the first time the New York Times hears of your company is not when it is covering your product contamination story. Identify the key media outlets in your markets, whether they are local, national or international, and cultivate relationships with them. A good journalist contact is worth a lot in a crisis. The media is global, continuous and omnipresent. You cannot hope to control everything that is written or said about your company, but you can at least control your own message – and it is far better for you to control it than someone else.
About MHA: MHA Consulting is a leading boutique Business Continuity Planning, Disaster Recovery and IT Optimization consulting services firm for Fortune 1000 companies. Visit our website at www.mha-it.com.