An organization can face a variety of crisis. A single piece of paper can catch…
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” Warren Buffet
No one likes to think about disaster, but being unprepared can impact businesses on many critical levels. Taking the time to craft a careful crisis plan, monitor for smoldering issues, and executing thoughtful communication can make the difference between being a good example and possibly going out of business.
What drives crises? Often it can be too much complexity, deficiencies in warning systems or risk perceptions, or a collapse of vigilance. Many crises begin with normal mistakes or lack of foresight, snowballing into bigger problems.
Crises aren’t new, but our current environment does impact how we prepare for and react to them. COVID has changed so much about how we work, and at this point is also causing a lot of fatigue, which can lead to increased risk. There are also extraordinary challenges for businesses around supply chains, inflation, and staffing, all of which can compromise safety. Political turmoil at home and abroad, as well as more social activism (particularly on social media) has created new scenarios and eroded trust in the media and government. Stakeholders have higher expectations of work leaders to take a political stance, and employees are more willing to speak up about the companies they work for.
There have been a lot of changes on a micro level, too. Individual stakeholders have different behaviors and expectations than they did even a decade ago:
Business crisis as defined by ICM: “Any issue, problem or disruption which triggers negative stakeholder reactions that can adversely impact the organization’s reputation, business and financial strength.”
In the current climate described above, a crisis plan is an insurance policy. Ultimately insurance is about mitigating your risk of financial damage – you hope to never need it, but you better have it just in case! As the saying goes, hope for the best but plan for the worst.
Yet it appears most businesses do not have a crisis plan. PwC Global Crisis Survey 2021 reports that of the 2,814 business leaders surveyed on how they are managing through COVID, just 62% used a crisis plan, yet 84% have discussed the value of organizational resilience. A whopping 95% of business leaders report that their crisis management capabilities need improvement, and 7 of 10 organizations reported planning to increase their investment in building resilience.
In a related study, Vulnerability Gap: Deloitte, we see a similar statistic: “Disparity between feeling ready vs. being ready: More than three-quarters of board members (76%) believe their companies would respond effectively if a crisis struck tomorrow. However, only 49% of board members say their companies engage in monitoring or internal communications designed to detect trouble ahead, and only 49% say their companies have playbooks for likely crisis scenarios. Even fewer, (32%) say their companies engage in crisis simulations or training.”
The startling gap between realizing the need for preparedness and taking the actual steps of preparing is stark, despite the high stakes. And having a plan is just the beginning of effective crisis management – implementation, creating awareness, regular practice and tests of scenarios and communications, and incorporating it into organizational culture are the only way it will work effectively.
Goals of a good plan:
Why Crisis Plans Fail
Crises are about people. They range from disasters and disruptions to physical and cyber crimes. We can all think of several high-profile examples that often destroyed organizations or leaders. Even small businesses can learn from these examples to examine possible brewing crises and prevent them before they happen.
Often when thinking of a crisis we recall extreme weather or emergencies, but often business crises can begin as something much smaller that grows, called a smoldering crisis. Lacking safety protocols, poor reporting, and human errors are just a few. While these sound less dramatic, they can be just as damaging and should be planned for just as thoroughly.
Having a method for assessing the relevance of a risk is an excellent exercise. By gathering management perceptions of vulnerability across organizations and ranking each crisis scenario in terms of its potential probability and impact, you can more easily focus your time and attention on those situations that are the most likely or can have the most devastating impact on your organization.
RISK = Threat x Vulnerability x Impact
These are some ways you can categorize vulnerabilities as you assess risk, keeping in mind to also assess and prioritize stakeholders for each crisis (victims, customers, employees and their families, the community, media, etc.).
Serious business problems don’t become a “crisis” until your stakeholders find out. But the longer a crisis goes on, the more damage it does to reputation, sales, earnings, stock price, and competitive position. Management denial is the biggest obstacle to effective crisis management, as often they are only concerned with legal implications rather than stakeholder perceptions. Using effective communication throughout is critical to a more positive outcome.
Communication will happen on two fronts, internal and external. Often internal communication is a secondary focus, but for safety and reputation it should be given proper attention. Employees can be powerful advocates or critics (particularly on social media) depending on their perception of inclusion, trust and transparency of management.
Internal Crisis Communication Goals
What you say is important, but so is when, how, and where you say it. Most importantly, do not delay. Stalling, delaying and denying reality creates unseen victims and avoidable collateral damage. Additionally, cad news gets worse in a vacuum of the facts. Stakeholders will forgive communication missteps in the name of responsiveness; they won’t forgive a lack of information and will interpret it as excuses to stall or deny.
ICM Principles of Crisis Management and Communication
As technology and events continue to change the types of crises we experience, it is critical to anticipate potential problems and develop a crisis plan for managing and communicating throughout.
This information is taken from the webinar Not Every Crisis Makes the Headlines: Managing Issues to Prevent Damage to Brand, Reputation and the Bottom Line featuring Deb Hileman, President and CEO of ICM. Click this link to watch the webinar replay.
Pocketstop is a communication software solutions company who empowers companies to create personalized, automated messages designed to provide rapid ROI backed by the industry’s best support at a cost customers can afford. Our commitment to excellence propelled us to become the industry’s pioneer in innovative and effective technologies with a portfolio of customer-focused products designed to drive audience behavior, improve efficiency, provide insight and actionable data for decision making by improving their existing internal, employee, stakeholder or customer communication strategies. For more information, visit https://pocketstop.com.
Founded in 1990, The Institute for Crisis Management® (ICM) was one of the first crisis management consulting firms in North America. Unlike other general communication and PR consulting firms, crisis management and communication is all we do. ICM offers a variety of products and services designed to help your organization’s executives to lead effectively before, during and after a crisis.
An organization can face a variety of crisis. A single piece of paper can catch…
When we hear the word ‘crisis’, we think about a situation that is generally out…
First know this: you can never be too prepared when it comes to emergencies like…
See how RedFlag can help you protect what matters most with a 15-minute custom demo.