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. 

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.

A crisis they said would never happen

Consider this scenario.

"It’s 3.30 am and a dull, crimson glow throbs on the black horizon.  The CEO looks hard across the city at his plant - one of the world’s biggest.  The company boasts  leadership in its field.  He is now wide awake.  Fifteen minutes ago, his General Manager Operations was on the phone: “There’s been an explosion.  It’s blown half the site out and some of our people have been killed.” 

He can see the empty freeway filling now with countless emergency vehicles - the flashing blue, orange and red lights trailing towards the city in a morbid celebration.  Both his home and mobile phones are ringing.  The leak of deadly gas is spreading to the many crowded cottages surrounding the plant.  This is the crisis they said wouldn’t happen here."

How typical is this scenario.  A successful corporation.  A known brand.  Now faced with a catastrophe that in just a few hours could reach the magnitude of an international disaster.  The nature and the scale of the problem is almost impossible to recover from.  There are very few, if any, strategic options.  And while their corporate business planning and marketing processes are the most sophisticated, the decision-making plan to save its soul may have been left too late.

Sounds like the Titanic or the Costa Concordia, doesn’t it?  Echoes of the BP oil spill.  The Lance Armstrong cycling crisis.  A stark reminder of the twin towers.  There is a familiar ring - a fatal flaw in response planning. 

It is astonishing, and ultimately unforgivable come the day, how many businesses and other organisations still say It can’t happen here.  Generally, we live in a society that does not discuss crisis. The It can’t happen here syndrome is everywhere. Too many organisations are simply not prepared for the worst case scenario. 

So it comes as a painful shock when they are confronted by a crisis head-on.  Inevitably, they can neither manage the situation, nor cope with the consequences.

Yet, it takes years to build a successful organisation, and it takes only minutes for a crisis to pull it apart.

And, while it’s a fact of life that success does not happen overnight, the corollary is that failure often does. Massive damage can be done to corporate reputation and brand, sometimes for ever.

We believe that every organisation needs a framework for managing the risk of a critical disruption and to build organisational resilience in its crisis management and recovery planning.

Early 2013 is an important time to review your readiness and resilience to face the worst case scenario.

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.

Crisis management - Responsive Business Prescription

Managing the constant barrage of crises in today's rapidly changing environment will ultimately rely on the use of the internet, the inter-connectiveness of the business value chain and managing the changing information status.

Dr. John Bates, Chief Technology Officer at responsive business specialist Progress Software, proposes that businesses plug in and profit in the face of constant crisis. In the special abridged edition of his forthcoming book, Business Attention Deficit, he says that organisations need to follow simple rules:

* "Gain real time visibility of business events as they happen.
* Proactively sense and respond to opportunities and threats
* Continually improve your business using 21st century techniques
such as social media, mobility solutions and the cloud."

Dr. Bates identifies recent rapid cataclysmic crises that put modern business on a war footing. He confirms that business has to be responsive and provide a bulwark against the worst case scenario, particularly related to the Flash Crash that wiped trillions of dollars off the US stockmarkets and confounded regulators and traders, the BP oil spill in the Gulf of Mexico, escalating from an environmental crisis, and the earthquake and tsunami in Japan disrupting the supply chain in car parts and affecting the global automobile industry.

Identifying crisis threats needs to be constant. As an organisation changes, so do the threats. One year in a period of building, plant accidents may be high on the agenda and in another place, in another country, the threat of kidnap and ransom may be high on the agenda. As the organisation faces larger audiences, the threat of safety and security may be the priority. Once the threats have been identified, the priority is to determine the strategic and tactical responses that would contain, control and then recover from such an event.

Dr. Bates' book, "B.A.D. - How to plug in and profit in the face of constant crisis", was previewed at the Progress Revolution conference in Boston in 2011 and will be published in 2012.

Qantas explosion communication

Qantas has just come through one of the toughest critical events in the airline's history. The airline has handled a mid-air explosion with professionalism, speed and sensitivity. One of Qantas' Airbus A380's four Rolls Royce engines failed in flight, not far from Singapore, on the way to Sydney. "I just heard this massive bang like a shotgun going off," a passenger said on Australia's Nine Network news. "Part of the skin had peeled off and you could see the foam underneath. Pieces of broken wire sticking out." The aircraft landed safely in Singapore and all 459 people on board were unhurt.

A strong message of incident control was delivered rapidly across the media about the escalating situation, first by the aircraft's Captain, and then by the CEO to qualify the facts. Qantas made sure the passengers got a chance to tell their story.

Qantas Captain, Richard Champion de Crespigny, was given accolades for his communication skills and the way in which he explained the incident on board. When the engine exploded he spoke to the passengers immediately. "I do apologise. I am sure you are aware we have a technical issue with our number two engine...I am sure you are aware we are not proceeding to Sydney at this stage...the aircraft is flying safely at this stage...thank you for your patience."

In fact part of the engine had come away and torn through the left wing. Indonesian media showed Facebook pictures of debris that had fallen from the aircraft onto an island. Qantas has grounded its fleet of A380s as safety regulators and investigators from Rolls Royce and Qantas carry out tests to determine the cause.

Alan Joyce, Qantas' proactive CEO, moved forward with the company's response. "This was a significant engine failure," he told a press conference. "We are not underestimating the significance of this issue."

Earlier this year, Alan Joyce told Business Review Weekly: "We have a fairly refined crisis management team and crisis management process, probably more so than many other companies. It’s what my predecessor, Geoff Dixon, calls the ‘constant shock syndrome’. We plan on a steady state and then we plan scenarios and risks around that.”

Qantas has never had a fatal accident and there have been no fatal accidents involving the A380.

Chile rescue crisis high ground

The Chilean miners are safe on high ground after one of the most intense rescues in modern mining history. Thirty three men safely recovered after 68 days of critical and dangerous recovery. The government of Chile can stand proud in the knowledge that it achieved a dynamic process of crisis management response and leadership. In short, they under-promised and over-delivered.

Chilean President, Sebastian Pinera, and the Minister for Mining, Laurence Golborne, took the high ground in taking control of rescue operations and leadership. They delivered the status of the rescue accurately and transparently. A very different result to mining disasters like Sago in West Virginia where a tired, washed out CEO gave the news that 13 miners were alive, and a short time later it was announced that 12 people had died and only one had survived. The Chilean example of crisis leadership also differs greatly to the confusing response to the devastating Hurricane Katrina and more recently the BP oil spill.

The keys to the success of this crisis outcome relate very much to the Chilean government having a focused crisis plan and communicating proactive, clear messages to essential stakeholders. The first and most important audience were the miners and the community, and the government placed them at the centre of their communication strategy. The government's candour with the mine's employees and community increased its credibility with a massive number of global media. Credibility translated into fair treatment and respect for the rescue process.

Capturing Crisis Management learnings – evaluating response

Post-crisis evaluation is a review of a crisis response. It is not about evaluating front-line tactical/emergency response or clean-ups. It is about how crisis teams responded. The following items are some of the issues that need to be addressed in a post-crisis evaluation review:

1. A narrative of the actual event. What caused the event?
2. How was the response managed by the crisis management team?
3. How did the crisis response relate to governance of the business
4. Was the reputation and brand of the business affected?
5. What was the decision making process based on?
6. Were human and technical resources adequate?
7. Is the organisation still at threat from the problem?
8. What were the unintended consequences from the original incident?
9. Were there any barriers to communication (internally or externally)?
10. Were all stakeholders advised effectively?
11. Was there sufficient co-operation with government?
12. Were crisis plans, manuals and procedures useful?
13. Was human resources response effective?
14. Were there barriers to crisis response from senior management?
15. Were legal and commercial issues dealt with efficiently?
16. Was the spokesperson’s role effective?
17. Were message strategies effective
18. Was media managed effectively?
19. How was business continuity and recovery managed?
20. What is in place to prevent this crisis from happening again?

A post-evaluation needs to be carried out by either outside consultants or a senior management team and preferably not by the crisis management team. The process should be dedicated to continually improving crisis management response capability, decision making, plans and protocols and particularly leadership skills. It should also ensure the crisis management team has understood its roles and responsibilities.

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.

CEO crisis manager

Good to see Qantas Chief Executive, Alan Joyce, extolling the virtues of crisis management in Business Review Weekly magazine. "Flexibility and adaptability is really key," says Alan Joyce, the diminutive, Irish-born Chief Executive of Qantas, without any hint of irony. "We have a fairly refined crisis management team and crisis management process, probably more so than many other companies." Joyce was talking about a broad range of threats including the volcano turmoil where Qantas lost $10 million during the threat to air travel. "It's what (my predecessor) Geoff Dixon calls the constant shock syndrome...we plan on a steady state and then we plan scenarios and risks around that. But the volcano would not have been on the risk register." (BRW May 6-12,2010 - Managing the Unmanageable)


There is determined growing recognition among CEOs that crisis management is part of day-to-day planning. The process, its respondents and its leaders need to have matured either in an arena of real crises or with the experience of test runs. Best practice is practice. CEOs and crisis teams need to practise together. Organisations never know when the worst case scenario can happen but they can be prepared to handle adversity and minimise the impact when it does.

CEO crisis leadership

As we can see from current global crises, there is no hiding place for the CEO in a crisis. And when the big one hits, it is the CEO who will end up facing the music.

It is inevitable the CEO will be pursued for their views and opinions. What did they do? What did they say? Every stakeholder involved in the organisation knows that the company stands the best chance of surviving if the leadership is from the top and on top.

Ensuring the cultural approach to managing a crisis must have the imprimatur of the CEO. It is they who should proactively oversee the corporate crisis management strategy that will work in a crisis situation. However, the levels of unpreparedness, inexperience and defensive reactions that still exist in many organisations generally indicate that many lessons have not yet been learned.

To see the CEO walking the talk in crisis planning is a statement of strong leadership that will direct the organisation to the high ground when the worst case scenario happens.

In the end, the buck stops at the top. In rapid escalation, the sooner the CEO leads the agenda, the better.