Stakeholder Control in a Crisis

When a crisis team meets in the first 90 minutes of managing a critical incident, one of the essential priority actions has to be identifying key stakeholders. There is no doubt that a stakeholder checklist can be prepared by crisis managers before an event happens but many of these stakeholders can only be identified on the day.

This proactivity is about getting ahead of your key audience agendas.  It doesn’t take long to call and tell a politician, a senior police officer, a journalist, a regulator, a stockbroker, a banker or indeed your own executive and managers about your emerging problem and how you are dealing with it.  They become a credible source in understanding and communicating your response. It’s not a time to bury your head in the sand and say nothing.  The bunker mentality may feel good for a few hours but it’s the fastest way to lose the high ground and encourage the rumour mill.

The court of public opinion wants to know what happened from you and social media plays a large part in early news transmission. Very quickly they will form opinions as to whether you are guilty or not guilty.  If your stakeholders understand that you are on top of the situation making every effort to fix it, they will be an asset to your response.

Commercial Union, one of Britain’s largest insurance companies, had their offices blown apart in London in the 1990s as a result of a terrorist bombing.  Much of the incident and emergency management was handled by the London Metropolitan Police in a very efficient manner, however the company played its part in dealing with a large group of audiences of its stakeholders.  The CEO and crisis Team Leader showed strong leadership and split the business management team into two, one to deal with the day-to-day running of the business and the other to deal with the crisis.  

This explosion killed three people and injured 30.   Four hundred tons of glass and debris were spread across the street and the city of London was brought to a virtual standstill.   The Commercial Union premises were totally inoperable.  The management team went straight to their crisis plan which outlined management teams and established priorities. 

As part of their damage limitation, assessment and action planning, they were quickly able to audit their employees to identify injured personnel and make contact with families.  They had procedures for effective liaison with emergency services. 

Plans were in place to make their building safe and secure, particularly related to the company's information and communication capability. 

All meetings were documented as were all discussions.  They moved immediately into recovery mode to restore communication links and it wasn’t long before they had established alternative premises and replacement of their main switchboard and computer information facilities. They established a temporary communications centre while they were moving into their new building and they were able to follow a plan of where to go, what to do and who does it.

In terms of communication, they made themselves available and distributed information to their staff, the public, media, customers, shareholders, brokers and the insurance industry.  Commercial Union particularly honed in on immediate and longer term plans for staff to encourage morale, goodwill and enthusiasm.

Admittedly, Commercial Union were the victims of a terrorist bomb that blew up outside their 23-storey building.  They certainly had the support and understanding of the British population behind them.  However, regardless of this support, they had to ensure company, corporate and brand survival at the same time as showing that they were able to manage the situation.  They ensured continuity of operations and control of the situation. 

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.

2014 Crisis Management Imperatives

In 2014, crisis management has moved further forward to support risk and resilience management. The unexpected crisis, both for government and corporations, has become a high priority. While hospitals, fire fighters and law enforcement response organisations continue to upgrade their capability, many executives and senior managers are not prepared either intellectually or emotionally to face rapid, escalating tragic events such as major accidents, corporate collapses, infrastructure failures, massive product recalls or acts of terrorism.

Even though some organisations have been through a major crisis, management avoids talking about the subject, often because they equate crisis with bad management and events like that do not happen on their watch.

The most rapid advancement in crisis management preparedness is the speed of communication. CEOs and managers at every level need to know and share information rapidly. In today's world of instant media coverage and social media commentary, if an organisation doesn't get its message out clearly and distinctly at the beginning of a crisis, someone else will take the high ground. The moment of control will be lost.

Then why are some organisations better able to take control of a crisis rapidly? The key elements are:

* The CEO and CFO have a commitment to crisis management and contingency planning for response to
threats that can harm the organisation's personnel, property and reputation.
* Divisional, subsidiary and affiliate management develop similar contingency plans in their areas
of responsibility consistent with the organisation's policies and procedures established by senior
management.
* There is a clear identification and measurement of threats.
* Executive teams, divisional teams and site teams are trained and ready.
* The plan is tested, validated and current.

The crisis best practise organistions I work with understand that these are bottom line issues. They recognise that crisis management planning is a resilience strategy. They understand that uncontrolled crises can cause high employee turnover, interrupted workflow, massive asset damage, lawsuits, loss of market share and, in a corporate environment, a detrimental effect on share price.

Make 2014 the year to ensure that your people and your plans are functionally up-to-date. Take advantage of new technology to share information rapidly. Make sure your human resources, legal, risk, corporate governance and corporate affairs processes are linked with your executive rapid response. Err on the side of over-disclosure - credibility is the key to perception.

Crisis agenda control - your organisation must be heard

Do you want the head of a SWAT team, a fire chief, or a corporate watchdog from a government agency speaking publicly on behalf of your company? Very often, many different outside service organisations and government departments can be involved in a crisis response.

 These groups can dominate your organisation’s location and, if not effectively managed, can become the face of your company, at the same time as dictating the mainstream of messages coming out of the event.  It is important to ensure that an organisation’s crisis plans incorporate ways and means of dealing with outside support groups working in the same response.    

In the response of TWA Flight 800 that was bound for Paris and literally crashed into the sea near Long Island, more than 50 disaster and emergency services operations and government agencies came together to initially deal with the disaster.  At least 20 agencies went on to investigate the event, deal with the pollution caused on the coastline, counsel friends and relatives, and work towards recovery.

The mayor of New York became intensely involved in advising next of kin, problems of environmental pollution and getting the message out to the US and international public.  The Coastguard was involved in underwater salvage.  Other Federal officers from a number of agencies were involved in the complex range of investigations.

This disaster became a major news item across the US for several months as many families and members of the public believed the handling of the whole situation was a crisis in itself.  Many of the post-incident evaluation sessions emphasised the need for greater collaboration between emergency services and government authorities.  All these organisations have their separate response plans which eventually need one common planning and communication thread.

Eric Jacoby Jr., Director of the New York State Emergency Management Office,  indicated there will be a number of changes in local government crisis management procedures following the response to the TWA Flight 800 crash.  He is working towards a greater linking of disaster and emergency policies for future crisis planning.

Reading the reports from the Contingency Planning Exchange Incorporated, it identified what TWA had to face was far more than an emergency. 

It was:

·        dealing with distraught families

·        managing an emotional public

·        coping with a huge press response

·        managing rumour and innuendo

·       coping with a large number of government enquiries

·       management of collecting evidence and finding the cause

Agendas run high in crises.  Political agendas, personal agendas, corporate agendas, emergency agendas, legal agendas.  In TWA’s case:

• New York’s Mayor, Rudolph Guiliani, was concerned about notifying victims’ families, the environmental damage and telling the public.
• The Coast Guard was concerned about recovering evidence from the water and dealing with retrieval of bodies and managing the area of water where the wreckage was located.
• The New York Police Department were concerned about the huge security problems at JFK.  In addition to the normal airport traffic, there were literally hundreds of other people making enquiries.
•  The FBI was concerned about the federal and international implications of terrorism.   
•  Lawyers from around the United States wanted to represent the families and the businesses affected.

There were in fact 21 agencies involved in the investigation, cleaning up the beaches, security of the airport, investigations at the airport, counselling grief-stricken families.  Twenty one agencies who were dealing with the crisis management team at TWA.  Something like 2,000 people.  Five hundred media representatives set up operations at the airport and coastguard stations. 

The importance of crisis planning and communication was emphasised in all the post-incident evaluations. 

Planning and communication - two areas in which TWA was - quote “woefully inadequate” - said Mayor Guiliani on US television.  

TWA received criticism from many fronts.  As a result of much of the criticism and the Gore Commission for the US Congress, changes have been made to future crisis management strategies.

Pre-empt the worst case scenario for your organisation. Take control of the agenda in a crisis and make sure you are heard early and continually throughout the crisis response.

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.

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.

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.