How to Lead in a Crisis

In this borderless world, crisis events escalate within minutes and threaten the most complex companies and organisations. Whether it be an exploding phone, fraud at one of the world’s largest banks, a disaster in an amusement park or an act of international terrorism - high level management preparation, through a Crisis Management Plan, is vital, particularly for CEOs, corporate boards or government administrations. 

If crisis management is to be taken seriously and installed efficiently, it must come from and be part of the people who run the business.  After all, in the end, it is those people who will have to manage the crisis when it reaches its most ferocious point.

The corporate crisis plan has to be part of company good governance and policy and those who are involved in its creation, instalment, and ongoing delivery, need to have their accountability listed in their job description.

A crisis plan must be simple and easy-to-use.  People have less time and less attention span to be confused by long-winded, long-worded, jargon written instructions.  The plan needs common language that simply and easily identifies the goals and objectives, the methods of delivery and implementation, and the ongoing evaluation and continuity.  

Accountability is essential.  Senior management personnel must be given the time and the authority to be accountable for the ownership of this plan.  Once a senior manager is given the responsibility of validating a crisis management plan, he or she should be supported and assisted in the review by a dedicated, professional outside crisis management consultancy.  This should not be a PR or emergency management consultancy but more a provider focused on delivering a strategic process.

A crisis management budget needs to be set and approved.   Some organisations may prefer to link the crisis management budget with the legal or risk management function.  Others may associate it with good corporate governance and build it into the corporate affairs and public policy area.  Some may prefer it to be associated with company secretary or corporate finance. Manufacturing companies may link their crisis management plan with their marketing and product recall function. 

The crisis management plan must be capable of application at every office, branch, site, and location.  Just as Head Office has a role to play in managing corporate and business crises, so do divisional offices, branches, plants, and major sites in managing the same responsibility on the spot.  When a crisis happens, it must be handled quickly where it happens.  If the location or site is not given the authority to act, valuable time will be lost and ultimately the control and the agenda may move to another negative party.

Every crisis plan needs to have a maintenance process.   It must be acceptable to internal auditors, outside auditors, senior management and endorsed by the Board of Directors. 

Education of team members and support groups needs to be an ongoing process.  Once the Team Leader and core team members have been familiarised with their roles and responsibilities, it is necessary to test and review these functions regularly.  Most teams are tested at least one or two times a year with either a desk-top exercise or full-scale simulation. 

Every crisis team at every location will rely enormously on resources.  Control room facilities such as whiteboards, IT connections and telephones, are all part of the resource kit.  

At RCA, our professionals are recognised experts at installing, developing, and maintaining corporate crisis management teams. We are routinely asked to provide counsel on escalating issues and crises. 

RELOCATING IN A CRISIS

What happens when your head office is compromised in a major crisis? You must leave your building and can't return for some time. This can happen as a result of a natural disaster, a man-made disaster, a systems collapse or an energy failure.  All of a sudden there is a need to move to temporary or new premises.

During a crisis exercise workshop, one of the first questions for the Crisis Management Team is:  "Where would you manage the crisis from if you couldn’t manage it from here?"  

Probably the most important element of any Team Leader’s responsibility is to ensure that the organisation can continue to function even though it experiences a major incident or accident.

Losing your building, your office, your site, your location or your precinct, should be an essential element of risk recovery planning.  The fundamental element in this situation is the back-up premises.  The time to prepare for this is well before an emergency occurs, not when an emergency occurs. 

Long before the horrendous World Trade Centre catastrophe, in one of the worst terrorist attacks in the City of London, the Commercial Union building was literally blown to pieces.  This Head Office building was rendered totally inoperable.  Three people lost their lives and 30 people were injured.  Almost immediately, the huge British insurance company was able to locate alternate premises. 

Their temporary crisis management team moved to a specifically identified location and managed the crisis issues from that office while the company set up an empty building to move all their staff and management into over a weekend.  Telephones, computers and communication systems were rapidly brought on line and staff were contacted about the move to this new location and briefed on the changing situation that had rendered their normal office unusable.

Their recovery plan allowed the firm to get back in business virtually over a weekend.      

Some organisations have made their crisis management team and its facilities portable.  In other words, they have prepared a comprehensive crisis and recovery transportable unit for dealing with a situation that prevents them from using their normal crisis control room.  The portable unit (a crisis case) allows them to respond quickly at any location with the appropriate equipment and supplies such as mobile and sat. phones, manuals, contact lists, maps and checklists.

Organisations that want to keep their losses to a minimum and need to take immediate control of a crisis situation, should identify alternative premises to manage a crisis well in advance.  These premises can take a number of forms:

  

1.   Close sites.  These can be alternative and temporary premises close by.  Usually these premises are linked with sufficient immediate communication access to the organisation’s main line of information.  This allows a switch-over to support the database and telephone system.

  

2.  Friendly neighbours.  This is a back-up site for full or temporary operation.  It might not have the immediate technical communication lines to link computers and telephones, but can give immediate access to key stakeholders and is still within close access to the original operation.

3.   Corporate regional office location.  This can be one of your organisation’s offices that is located some distance from the original organisation location.  It provides “hot”, instantaneous links to databases, telephones and email, but takes you away from the location of your crisis.

4.  The portable location.  This is more a mobile situation which has been pre-organised to give you an ongoing temporary back-up facility.  It can be set up from suitcases, in a van, bus or local hotel, and can provide the necessary switch-over to back up databases, telephones and communication systems.   This unit is often used by the transport industry and emergency services for managing protracted events that happen at distant and inaccessible locations.    

Lindt crisis management response to siege

The dramatic events in Sydney this week resulting in the tragic deaths of Katrina Dawson and Tori Johnson by a radicalised individual represents not only a dark day in Australia’s history but is a sobering reminder that all organisations must be prepared for the unexpected. Over 17 hours the eyes of the world focussed onto the Lindt Café in the otherwise busy Martin Place and the extensive response by the New South Wales Police Force’s Tactical Operations Unit.

With the national terror alert recently elevated to ‘high’ by the Federal Government in September 2014, the realisation that Australia is not immune from the effects of violent extremists was brought to the forefront of our collective mind.

This week’s horrific events should clearly cement the fact that the threat of a major act of violence must remain high on the corporate threat agenda.

In the coming weeks and months there will be debates, questions, reviews and constant differing opinion about this event. What is clear is this critical incident again highlights the need for organisations to have up-to-date, rehearsed and seamlessly integrated Incident and Crisis Management Plans.

What are the learnings for business?

Firstly, a critical event can affect any organisation at any time.  Response must be immediate to take control. Moreover the effects of “someone else’s” crisis could rapidly become your crisis; drawing you into a situation for which you may not be prepared. A routine morning coffee quickly escalated to involve multiple organisations whose employees were tragic victims. In this case Lindt Chocolate Australia and Eight Selborne Chambers.

Secondly, if your organisation has identified the threat of an act of violence or armed intrusion as a risk to its operations then the Lindt Café siege is confirmation of that risk’s validity. Not all events can be prevented, however your organisation can control its response through the application of crisis management best-practice process and response.

Every Chairman and CEO should confirm that their organisation is prepared to deal with the worst case scenario. Does the organisation have a validated Crisis Management Plan that manages people issues immediately while strategically positioning the business to respond and recover from adversity? If the answer is ‘No’ then now is the time to reinvest in protecting your business and brand from company destroying events.

The age of social media

The Lindt Café siege again has highlighted the immediate power of social media. It confirms the necessity of incorporating this communication platform into your organisation’s response. Social media must be a front-line integrated part of the arrowhead that is your organisation’s crisis response.

  

The high profile effects of social media were visibly seen: The hostages were directed by the perpetrator to use it to communicate during the crisis, the solidarity characteristics of the crisis spawned the viral and global trending of the #Illridewithyou hashtag and the NSW government used it to communicate with affected publics.

An equally valuable learning for business was also demonstrated through Lindt Australia’s social media response. Within the early stages of the siege unfolding, Lindt delivered through social media a caring and concerned message strategy that was timely, appropriate and consistent. They demonstrated their compassion through an explicit stating of what their corporate priority was: People. Within two hours of posting their first message on their two Facebook sites (Lindt Australia and Lindt Chocolate Café Australia) there was a combined 35,000 likes, 2,000 shares and 2,000 comments. This necessarily excludes those who simply viewed the message only. As the situation developed, more messages appeared and their priority remained steadfast. Business leaders would be well served to familiarise themselves with Lindt’s social media response by viewing their Facebook page.

The Lindt communications response is a valuable contemporary learning that demonstrates the positive reach of social media. Conversely a poor message strategy could indeed create a secondary crisis for an organisation. The court of public opinion can be an unforgiving arena; if you do not get your message out fast and correctly someone else will fill the void with an alternative, inaccurate and potentially damaging message.

Crisis apology from CBA - from CAN'T to CAN.

At last, under the threat of a Royal Commission, the Commonwealth Bank's Chief Executive has apologised unreservedly for its multi-million dollar financial planning scandal. In such high-profile corporate crises, "no comment" is no win. It is only a few days ago when a spokesperson for the Bank said "the CBA does not comment on rumour and speculation".

The Bank's highly-promoted brand slogan, "Can", categorically became "Can't" in their initial response to this critical and escalating disaster. When a strong brand and reputation need the protection of an early executive response, it is essential that the top management come out fast, loud and clear. And in this case, the Australian Treasurer, Joe Hockey, says the Bank did not act quickly enough to address the problem. And he should know. His own mother-in-law was affected by the scandal.

Public outrage must be managed fast, particularly in this age of social media igniting rumour and innuendo. Malaysia Airlines. Costa Concordia. BP oil spill. All criticised for early failure of a corporate message strategy to key stakeholders.

Corporate crisis communications pre-planning is central to the management of how an organisation delivers information to others during a critical event. This process should identify:

• who are the stakeholders who will be seriously affected by the event and must receive information immediately?
• what is the message strategy (not the media strategy but the central message strategy for all stakeholders)?
• how will the messages be delivered with pace and priority?
• who is the most appropriate spokesperson at the top of the organisation? If it's a major negative event, it has to be the CEO.  There is no hiding place.

Communicating with employees, customers, shareholders, government, media or regulators is an essential part of deescalating a crisis situation. This requires strategic pre-planning, constant monitoring and feedback. As the crisis develops, it is vital that communication is analysed and that the receipt of central messages to key audiences is confirmed.  This is now more important than ever with social media driving messages further and faster from the hub of the incident through the organisation nationally and internationally.

In a round of recent executive exercises with 10 sites in Asia, one common factor kept feeding back to our facilitator in the hot debrief - "our communication of key messages to stakeholders was too slow - we needed faster approval of corporate messages and clearer pathways to our key audiences".

Without doubt, "no comment" is no win. Early communication allows those who are affected to know what is happening and that it is being managed effectively.

Executive Crisis Management Plan

Recent crises such as BP's Deepwater Horizon rig explosion and environmental catastrophe, News Corporation's phone hacking scandal and the Costa Concordia cruise ship sinking clearly identify the need for a crisis management planning system that can manage the adverse impacts of an escalating issue or accident.  These crises also identify the need for the CEO and top management to buy-in and express their endorsement of crisis management planning, particularly related to training top executive teams.

In a major critical incident, the executive Crisis Management Team will have the highest authority across all corporate response actions - they will be the decision drivers that affect corporate governance, corporate image and the future of the business. 

In light of executive planning, here is a checklist that identifies what needs to be in place to provide an orderly and efficient transition from normal to a crisis situation:

• Is there an Executive Crisis Management Plan?
• Is the Plan up-to-date and does the Crisis Management Team know its role and responsibilities?
• Does the Team include primary and back-up team members for operations, emergency interface, public affairs and media management, environmental, health and safety, legal, finance and security?
• Have worst case scenario threats been identified? Are there checklists to manage these?
• Have systems been confirmed to notify key stakeholders?
• Has a crisis communication strategy been confirmed?
• Have arrangements been made to communicate with employees?
• Is there a designated crisis management room and support rooms?
• Is there a clear interface with other State and Federal offices and sites?
• Has the Crisis Management Plan been tested at least half yearly?
• Are exercises conducted on an annual basis?
• Are critical events debriefed and are the learnings added to the Crisis Management Plan?

Uncontrolled crises can cause serious property damage, lawsuits, skyrocketing insurance premiums, loss of market share, brand, employee concern and interrupted workflow. Corporate leaders need to be sure that the organisation, its stakeholders and the community, are protected at the best possible level. 

With an Executive Crisis Plan, you can.

When is a crisis plan out-of-date?

Recent oil spills, product recalls and natural disasters have identified major critical gaps in crisis planning processes. Systems change, authorities shift, equipment ages, new equipment is installed and, importantly, key people move.

A rapid response will save lives and property and should ensure minimal operational interruption, but there are a number of reasons why this may not be possible:

* ownership of the crisis management program have changed
* organisational changes have occurred across the business
* management expectations of crisis preparedness have altered
* emergency and crisis interface have not been tested recently
* new threats/risks have not been incorporated into the plan
* key stakeholders need reconfirming
* internal communication systems have not been validated recently
* loss of contact with essential agencies - fire, police, medical
* new employees are not familiar with contingency plans
* impact of "social media" in crisis has not been considered
* reputational and brand issues have shifted

A regular, formal crisis audit needs to be applied to confirm that all subsidiaries and contractors maintain the currency of their crisis plans. People become lazy about preparedness for crisis and live training exercises are the only way to ensure that crisis plans are functionally up-to-date.

Demise of crisis management planning in top corporations

BP's massive oil spill in the Gulf of Mexico; the deaths of leading mining executives, all on one plane in Africa, and the resignation of a major retail CEO in the wake of sexual harassment claims - the crises keep coming. And the management of these critical events is under the microscope. What is the brain of these corporations doing to ensure crises will be managed?

BP continues to struggle with the crisis management of, and recovery from, one of the world's worst environmental spills. This is long after the global learnings that came from the Exxon Valdez oil spill in Prince William Sound, Alaska, and the devastating Piper Alpha explosion in the North Sea. The BP oil spill carries with it major safety concerns related to response capability, ongoing communication problems, particularly from the CEO, and an early loss of stakeholder trust from the general public to the US President. An extraordinary response from a company that in 1989 was at the forefront of international crisis management planning.

The deaths in a plane crash of the Sundance Resources mining executive Board in remote Africa is a tragic crisis. Debate continues regarding the gigantic risk of so many key personnel flying together on one aircraft. Not only a loss of life but a serious loss of intellectual capital and corporate leadership. This event occurring only months after the catastrophic Polish air crash that killed 96 VIP passengers, most of whom were part of the Polish Government, including the President. Both these disasters needed to have been mitigated against in pre-crisis planning.

Sexual harassment, another high-level threat to corporations, is at the centre of the shock resignation of retail giant, David Jones CEO, Mark McInnes. He acknowledged that he committed "serious errors of judgement". The resignation led to $81 million being wiped off the market value of David Jones. As The Australian newspaper reported: "The resignation and the reasons given are unprecedented in corporate Australia". A parallel to this is the recent top-profile resignation of the CEO and President of Penguin Canada, David Davidar, who quit his post and later admitted that the publisher had sacked him after a sexual harassment case was filed against him by a former female colleague.

High impact, low probability critical events are a reality, and high-performing corporations must be prepared to face these events with a proactive and well-rehearsed strategic crisis management response. This requires a continual review of best-practice crisis management planning and should be an essential ingredient of an organisation's corporate governance.