President Obama, now seemingly under siege on three scandals, is violating one of the most basic elements of crisis management: failure to take responsibility (not blame) for events that are torpedoing his Presidency.
All Presidents face controversy during their terms, but rarely have three major incidents all hit at the same time.
Obama, usually a skilled and gifted orator, is struggling as he responds to an IRS debacle, a Benghazi cover-up, and the furor over the seizing of phone records of Associated Press reporters and editors.
Political pundits are already comparing the situation to the Watergate scandal, although to be fair, at this point no concrete evidence has come to light that directly links the White House.
The AP intrusion is particularly troublesome because it raises the ire of the investigative journalists who make a living covering Washington. Carl Bernstein and Bob Woodward are no longer young reporters at the Washington Post, but you can be sure that others in their footsteps are digging hard.
The President’s May 15 press conference looked hastily arranged and lacking in meaningful content. Obama, looking a bit panicky, read a statement but took no questions and, in my view, took no responsibility for the three events that have created a circus-like atmosphere in Washington.
A second press conference held the next day (one in which the President actually took questions) was somewhat filtered because Obama was joined by the prime minister of Turkey speaking about international hot spots.
The President said his responsibility was to fix the problems, but came up short once again of accepting responsibility for the misdeeds. In my view, it appeared that he was placing blame with the bureaucrats, which are always a soft target.
Earlier, the administration had ousted the acting head of the IRS, released 100 pages of Benghazi emails (of course, none linking the White House to altering of talking points) and announced it would revive legislation to protect journalists from legal jeopardy.
One has to wonder, though, will that be enough?
If, in fact, the White House cannot be directly connected to these three scandals, the “I didn’t know” strategy may work. History has taught us, however, that where there’s smoke, there’s fire.
Granted, politics is a world unto itself, but in this case I believe Obama should have taken a page out of the crisis management playbook used in business.
Instead of bobbing and weaving, he could have told the American people:
“These three situations are outrageous. I am angry and upset. As the President of the country, I take responsibility for what happened in the bureaucracy under me. Beginning right now, I’m going to do everything in my power to get to the bottom of what happened and report back to you in a week.
“And, I won’t do it alone. Today, I’m announcing the appointment of an independent counsel whose responsibility will be to conduct a comprehensive investigation into the IRS allegations.
“I find this especially troubling because the IRS touches every taxpayer from the moment they’re born. Maintaining trust and confidence in how our government collects taxes is critical for a democracy to succeed.
”With respect to the Benghazi and AP controversies, I’ve already taken some action and will continue to vigorously pursue these issues to a resolution that the American people demand and deserve.”
Unfortunately, it’s become a cliché that modern-day Presidents don’t like to use because it harkens back to the 1950s, but “The Buck Stops Here” sign that sat on President Harry Truman’s desk has never been more relevant.
Maybe President Obama can take it out on loan from the Truman library where it’s been displayed since 1957!
Preparing for a Media Interview in a Crisis
In normal circumstances, conducting an interview with the news media is a relatively straightforward exchange of information.
In a time of crisis, the atmosphere is very different.
In a crisis, an event has likely occurred that caused considerable disruption inside a company or organization. In many cases, the incident may have even resulted in a tragic loss of life or lives.
A good example is what happened several years ago in New York City when a construction crane collapsed at an unfinished apartment complex killing seven people. Mayor Michael Bloomberg called it the worst construction accident in recent history.
Imagine for a moment that you were the spokesperson for New York Crane & Equipment, the company that owned the unit. How would you manage the media avalanche coming at you? What would you say?
There are no simple answers; however, there are steps that can be taken to ensure one is always prepared for an interview in a crisis. Here’s a primer:
Explore operational vulnerabilities. Make sure you understand the three or four worst-case scenarios that can impact your organization. In that way, you will have some sense of what could happen in a crisis situation. In the case of the crane company, a collapse would certainly be considered a possibility.
Conduct drills. While time consuming and tedious, mock crisis drills are a proven technique to prepare for a crisis. As part of the drills, it’s often prudent to retain outside help for media training. This will enable the company spokesperson to see and feel what it’s like to be behind the camera or interviewed in person or by phone during a deadline-driven media frenzy.
Know media. No matter how small or large the organization, there are news media outlets that are interested in what you do. Become familiar with the key media outlets and reporters/editors that cover that space. This likely includes daily and weekly newspapers, radio and TV stations, bloggers, online news sites, and even Twitter feeds.
Don’t stonewall. Except in a few rare cases, “no comment” does not work in today’s contemporary communications environment. In a crisis, be prepared to say “something,” even if it’s a short written statement. Keep in mind, in most crises, you should factually acknowledge the problem and take responsibility.
Do your homework. Before you respond in a crisis, write down the 10 most difficult questions you expect will be asked and develop answers. Depending on the severity and complexity of the crisis, you may not have all the answers. That’s okay. You can defer during the interview and say you’re obtaining the information that is being sought and will release it as soon as it’s available.
Use the A-team. One of the biggest mistakes made in a crisis is having an unprepared spokesperson speak to the news media. A crisis calls for the A-team. In the most severe crises, the public will expect a response from the president or CEO. If the task is relegated to a spokesperson, make sure the person has experience. If necessary, get outside help from a highly skilled crisis management firm.
Think key messages. No matter what the situation, there will always be three or four key messages that you’ll need to impart to your various audiences. Work with senior management and legal counsel to determine the messages and integrate them into any statement that is issued, or interview that is given. Research shows that your audience can grasp (and remember) a few messages.
Don’t panic. When a company or organization is under fire, there is a tendency to panic. Above all, don’t say something to the news media that you will regret. You may be tempted to give an emotional response in a tense time. Stay calm, and be thoughtful about what is communicated. Remember: in today’s hyper-digital world, once it’s in the databases it will be there permanently.
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MANAGEMENT FAILURES CONTINUE TO CAUSE PR NIGHTMARES
I’m often asked why crisis communications counselors are so busy.
One needs to look no further than the management failures that recently occurred at Rutgers University.
PR nightmares at prestigious institutions continue accelerating at a rapid pace. In the case of Rutgers, a number of administrators were involved in a decision to “rehabilitate” (rather than fire) basketball coach Mike Rice whose outrageous, abusive behavior was caught on video and leaked to ESPN.
Give university president Robert Barchi credit for taking responsibility, but the damage had already been done. “This was a failure of process,” he said at a press conference. “I regret that I did not ask to see this video when Tim (now the former athletic director) told me of its existence.”
Quite frankly, it’s hard to imagine that an experienced university president would not ask to see a video of this nature.
The PR fallout from this episode was swift and damaging. Even the governor of New Jersey got involved. Besides Rice, athletic director Tim Pernetti, interim senior vice president John Wolf, and assistant coach Jimmy Martelli all quit. Four careers permanently damaged for no good reason.
Other examples of poor judgment abound.
J.P. Morgan Chase & Co. CEO James Dimon had his reputation sullied when risk managers didn’t do their job. A report by the U.S. Senate’s Permanent Subcommittee on Investigations found that the bank’s top risk manager had called warnings about trading losses “garbage.”
Due to engineering failures, Boeing’s launch of the 787 Dreamliner turned into a PR fiasco. According to a report in The New York Times, when testing the batteries before production, engineers relied on the same test used for tiny cellphone batteries to gather data about the safety of the heftier lithium-ion units on the new jet.
The Jerry Sandusky debacle at Penn State is another prime example of what happens when senior leaders in key positions fail to use sound judgment. At a recent Pennsylvania state senate hearing, a senator stated that the PSU board was left “flat-footed” because former administrators such as Graham Spanier, Gary Schultz and Tim Curley testified to a grand jury but most of the board didn’t even know about it.
Maintaining Institutional Integrity
In a disturbing, reoccurring pattern, we are seeing large organizations make decisions that impact their institutional integrity. It’s as if they have lost their moral compass. Despite the world of communications we ive in, senior executives and administrators are not protecting the integrity of management and the brands of their institutions.
How does crisis management play into this dynamic?
Very simply, top inside communications executives and trusted outside counselors are usually not at the decision-making table.
Let’s play out the Rutgers situation a different way. A meeting is held in the president’s office and all the facts are laid out (including playing the video). A senior VP of communications at the college or a veteran counselor from an outside firm specializing in crisis management gets to opine on the matter.
Having been in similar situations during my 30-plus year career, I’m hard pressed to believe that the counselor wouldn’t warn about the need to understand that the institution they represent is larger than one individual, and that serious PR and reputational damage would ensue if the coach was allowed to stay.
Just think about Joe Paterno’s behavior in the Sandusky scandal. For years, he thought it was all about Penn State football and his legacy. When the story came out, it was the institution that suffered the most damage.
Bad decision-making at the senior management level is having an effect on crisis communications. Increasingly, crisis teams are called into situations where operational failures cause spiraling crises.
This creates an environment in which senior executives call in the communications team after the fact and ask them to “spin our way out of it.”
In my view, spin is long dead.
People are simply too smart to fall for lame excuses like the ones that Rutgers trotted out. Anyone with sound judgment and values who watched the video would have concluded that the coach had to go immediately.
While the position of senior communications executive has been somewhat elevated in recent years, there is still a long way to go.
Now is the time for management to put the insights, perspective and street smarts of communications executives to work at the decision-making table.
Right next to the CEO would be perfect.
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WHY CRISIS COMMUNICATIONS MANAGERS
ARE BUSIER THAN EVER
The outcry over poor risk management, serious operational failures, and lack of board governance are among the factors keeping crisis management counselors busy like never before. Adding to the stress is the ever-increasing adoption of instantaneous forms of social media communications.
Consider three recent examples.
A 301-page report by the U.S. Senate’s Permanent Subcommittee on Investigations found that J.P. Morgan Chase & Co. ignored alarms triggered weeks before CEO James Dimon dismissed concerns about them as a “tempest in a teapot.” Of the five big risk measures that are tracked almost continuously at the bank, the report said all five were breached during the first three months of 2012.
In fact, the report found that Peter Weiland, who at the time was a top risk executive, called the warnings “garbage.” That so-called garbage report has turned into a $6.3 billion trading loss for the bank, not to mention the hit on its reputation. Although he apologized, the resulting negative press has tarnished Mr. Dimon’s once pristine reputation on Wall Street.
Boeing’s 787 Nightmare
Boeing trumpeted its cutting edge technology with the development of the 787 Dreamliner. Due to operational failures, the dream has turned into a nightmare. All 50 of the new jets have been grounded since January after a battery on a Japan Airlines 787 caught fire, and a malfunction on an All Nippon Airways flight forced an emergency landing. According to a report in The New York Times, when testing the batteries before production, engineers relied on the same test used for tiny cellphone batteries to gather data about the safety of the heftier lithium-ion units on the new jet. The test and other evaluations proved to be far off the mark in predicting what would happen when the plane was actually in use, wrote the Times. After weeks of testing and analysis, Boeing finally unveiled a new fire-proof battery packed with added insulation, heat-resistant material and spacers and encased in a steel box. The FAA approved Boeing’s plan to test its new battery for certification, but it’s still not certain when the planes will actually fly. And, to this point, no one is really sure what caused the problem. This is a case where an operational failure has caused considerable reputational damage to the Boeing brand. Images of a fire in the underbelly of a 787 on the ground at Boston’s Logan Airport, along with a steady stream of Tweets and Facebook postings, have made passengers apprehensive about flying the 787 when it’s re-certified.
Penn State Debacle The Jerry Sandusky debacle at Penn State University is a prime example of what happens when boards don’t have the power they need to intervene and prevent a crisis. Recently, PSU board members testified at a Pennsylvania state senate hearing about governance reforms that the trustees are now weighing. Their testimonies underscored the divide that exists on the board over some of the recommendations from former state Auditor Jack Wagner and the recommendations for best practices in a post-Sandusky atmosphere. During the hearing, Sen. Jake Gorman said the PSU board was left “flat-footed” because former senior administrators such as Graham Spanier, Gary Schultz and Tim Curley testified to a grand jury about the Sandusky investigation, but most of the board didn’t know about it. A more involved board might have played out the scenario in a different way and avoided the reputational pounding that the university took for more than a year. The images of former coach Joe Paterno and the ugly end to his 60-year career still haunt the university as it struggles to return to normal.
Contingency Planning a Must These failures (and what are likely more to come) once again underscore the need for better crisis communications contingency planning and a stronger role for in-house communications staff and outside counsel who must deal with the fallout. As institutions become more complex and tied to a global economy (like Boeing), the reputational and financial impact of crises will affect brands, management integrity and, ultimately, revenue. For large conglomerates, it’s not a case of “if” a crisis will happen but “when.” How can these mega-crises be better managed, and how can companies, their C-level executives and boards protect their reputations? It starts at the policy making table. What companies do may be legal, but might not meet ethical business practice guidelines and standards. Many of the business crises that erupt stem from shortcuts that were taken along the way. Stronger risk management and empowering people responsible for it is essential in properly monitoring and focusing senior management on taking risks that when compared to gambling in Las Vegas look like a “safe” bet. One of the biggest risk management failures in recent memory resulted in the BP Deepwater Horizon oil rig explosion and fire. Months after the disaster, a joint report by the U.S. Coast Guard and Bureau of Ocean Energy Management said the blowout “was the result of a series of decisions that increased risk and a number of actions that failed to fully consider or mitigate those risks.” BP, which had to deal with 11 deaths, numerous injuries and nearly five million barrels of oil spilled, is still being impacted. Environmental, financial and social costs will resonate for years to come. In one recent case, John C. Liu, the New York City comptroller, was highly critical of J.P. Morgan Chase for the excessive trading risks it took. Liu, who invested in $500 million worth of J.P. Morgan Chase shares on behalf of public pension funds, told The New York Times, “It’s clear from the Senate report that senior executives not only misinformed investors and regulators about the excessive risks the bank was taking, but also withheld this information from their own board. Mr. Dimon’s failure on this score comes from the hubris of having too much power placed in his hands.” Recurring operational failures also mean that companies must focus more resources on the fundamentals of sophisticated contingency communications planning. More frequently, crisis managers are being called on to manage a crisis that could have been avoided, or at least supported with proper preparedness and training. As part of the risk management process, organizations can appoint a “brand threat” team charged with monitoring complex products and services that might go astray without notice. Companies also need to better understand and address exploring organizational vulnerabilities. In today’s business environment, it’s necessary to involve a company’s top executives to discuss what they see as the three to five worst-case scenarios. Hold nothing back. Once identified, the first step is to assess how these issues could impact the enterprise and develop business strategies to address these worst-case scenarios. There also needs to be a written contingency communications plan that states a situation analysis for each problem, objectives, strategies, key audience definition, key messages, implementation tactics, and social media protocols in the event a crisis erupts. If one does not exist, establish a crisis team that includes members of senior management, communications and legal counsel (inside and out), human resources, marketing, customer service and other key executives. Finally, invest in training. There is still no substitute for media and presentation training and mock crisis drills. As time has proven over and over again, no company is immune to a crisis. However, keeping things in perspective, it’s important to remember that it’s not the crisis itself that causes the reputational damage, but how well management responds to the crisis that matters.
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Winning in the Court of Public Opinion
Often in a business crisis, criminal or civil litigation causes a chasm between the court of law and the court of public opinion.
As an example, a group of concerned customers could sue a toy company over what it felt were hazardous products that endangered children.
By making the lawsuit public, the toy company has a crisis on its hands because retailers may pull the products from their shelves.
That action could prompt a move by federal and state regulators who will come down on the side of product and child safety and support the recall.
The company may believe the lawsuit has no merit, and the lawyers may agree, but that will not calm the fears of people who buy or own the products.
In an extreme case, a recall or regulatory action may be so draconian that it puts the company out of business.
What can be done to mitigate reputational damage resulting from a business crisis and ensure that the company wins in the court of public opinion?
Here are seven basic principles:
Assess risks. As a matter of practice, assess operational risks that can dramatically impact reputation. This will vary from company to company and industry to industry, but the task remains the same: prepare for worst case scenarios.
Be ready to act. When it comes to the court of public opinion, an organization must act fast to protect its image. In the case of the toy company, digging in and winning in the court of law may be tempting, but stabilizing reputational issues in the court of public opinion is, at times, more critical.
Stand tall. If something goes wrong, don’t hide or bury the issue. When it comes to public scrutiny, stand up and take responsibility (that does not mean taking the blame). It’s well-documented that the public will forgive a mistake, but rebel against deceit.
Work from a plan. Being unprepared in a crisis guarantees the organization or individual will suffer reputational damage. If a crisis hits, it may be too late to work through a plan. Therefore, developing a contingency crisis communications plan ahead of time is essential. If the talent to develop such a plan does not exist at the company, seek outside counsel.
Frame the issue. Due to social media and other means of instant communications, today’s public quickly jumps to conclusions. If a crisis hits, an organization must immediately frame the issue based on facts. Don’t let innuendo, rumors or half-truths cloud the issue. Also, remember to have lawyers review communications documents that are developed and distributed to various audiences.
Plan remedial action. Part of winning in the court of public opinion is repairing any residual damage as a result of the crisis. Considering that every crisis has a beginning, a middle, and an end, it’s critical to have a plan to restore public confidence in the brand. The plan will vary according to the type of crisis and duration.
Don’t forget employees. Whether the company is large or small, a critical part of its organization is the employee base itself. When a crisis strikes, it’s imperative to keep the employees informed about what is happening. In a nutshell, employees are company ambassadors to the public.
Remember: In most cases, it’s not the crisis itself but how it’s managed that determines the outcome.
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Defining a Communications Crisis
What is a communications crisis?
Put simply, a crisis is a non-routine event resulting in unplanned visibility that puts a person or an enterprise at risk.
Webster’s Dictionary puts it this way: “…an unstable or crucial time or state of affairs in which a decisive change is impending: esp: one with the distinct possibility of a highly undesirable outcome.”
On the surface, these definitions seem simple enough, but what constitutes a crisis is usually more complex.
Certainly, there are the obvious types of crises:
- Hundreds of people die in a plane crash
- Dozens of miners perish in a mine collapse
- A government investigation reveals illegal finances at a major corporation
- A major sexual harassment case is filed against a highly visible and prominent CEO
- A massive insider trading scheme is uncovered at a Fortune 100 company
- A toxic oil spill like the BP disaster creates havoc for a global conglomerate
- A recall involves millions of defective products, putting consumers in potential danger
- Contaminated food sickens people or results in death
- A union strike brings a transportation system to a halt
However, keep in mind that a crisis doesn’t always seem readily apparent. There are more subtle crises that can be less obvious at first, but threaten an enterprise. Consider what happened to Toyota in 2009.
In the winter of 2004, the U.S. National Highway Traffic Safety Administration (NHTSA) initiated a review of electronic throttle control malfunction complaints in Lexus cars. The investigation was closed in July without a defect finding. In 2005, the same thing happened again, this time involving Camry, Solara, and Lexus models. Once again, the inquiry was closed without a defect finding.
Over the next four years, the government fielded hundreds of similar complaints, Consumer Reports magazine reported a decline in Toyota quality, and dozens of legal actions were filed against the auto manufacturing giant. During these years, there was no news coverage in mainstream media, but an epic crisis was simmering beneath the surface.
The crisis began to erupt in August of 2009, when an off-duty California state trooper and his family were killed in a crash of their Lexus ES350. Investigators found pedal entrapment by a floor mat may have contributed to the crash.
By October of that year, Toyota had recalled 3.8 million vehicles. It got worse, with over eight million vehicles recalled and more than 80 deaths linked to the floor mat and unintended acceleration problems. The company’s sales dropped dramatically, and company executives were called to testify before Congress.
What (at first) seemed like a manageable situation spiraled out of control, costing the company billions of dollars to correct and resulted in major damage to its brand and excellent reputation for safety and reliability.
Crises come in all shapes and sizes. Like BP, they can be sudden. Like Toyota, they can be long-brewing problems that are not addressed and rapidly mushroom out of control.
Why is it critical to manage communications in a crisis? A few years ago, Burson-Marsteller, a large international public relations firm, conducted a study that found this: global executives think it takes a company an average of 3.2 years to recover from a reputation-damaging crisis. The data came from a survey of 685 business influencers contacted by Burson-Marsteller.
Given that humans are imperfect in many ways, there will always be crises. The good news is that they can be managed to a successful conclusion. You can find information and guidance about crisis management techniques and protocols by reviewing the other posts on our blog.
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Dealing with the Media in a Crisis
When managing a crisis, dealing with the news media can spell the difference between success and failure.
While there is no perfect solution when dealing with the news media, there are steps one can take to increase the chances of success.
In most cases, individuals and corporations in a crisis think of the news media as the enemy. They fear inaccurate and distorted reporting will contaminate the environment into which they are trying to communicate.
In reality, the opposite may be true.
Given the speed that news travels, communicating a message via the media is critical. Think about a food recall. What better way to notify consumers about bad food on the shelf than releasing the affected product name/codes to the media and having it blazed across the Internet in seconds?
While media relations is not “science” (in fact, it’s been called “black art”), there are workable techniques that apply universally. Here are a few to consider when you’re under the gun:
Don’t Hide. In reality, there is no escape from the news media. One way or another, the story is likely to appear. Even if you don’t have the answers right away, return calls and let the media know you’re addressing the matter.
Tell the Truth. Misleading the media will damage an institution’s brand, reputation and credibility. If for some reason (such as advice from legal counsel) it’s inappropriate to respond to a specific question, declining comment is okay.
Avoid “No Comment.” Twenty years ago, the “no comment” response held some water. Not so today. Times have changed to the point where the public equates “no comment” with stonewalling and hiding. Even in the worst situation, there is something that can be said. Remember, in a crisis reporters are under intense pressure to “get the other side of the story.” Not addressing the issue could lead the media to inaccurate reporting.
Be Consistent. In a time of confusion, there is a tendency to have “too many cooks in the kitchen.” It’s best to identify a single spokesperson that is well versed on the issue and will clearly articulate a response. In a major crisis, the spokesperson could be the CEO.
Respond in Writing. Some reporters do not like it, but it’s sound practice to put your response to the media in writing. This maintains consistency in messaging and avoids the trap of saying something that can be misquoted or misconstrued. If there are follow up questions, deal with them on a case-by-case basis.
Correct Mistakes. As soon as stories appear, review them with a critical eye. It’s your responsibility to make sure the media has it right. If something is inaccurate, point it out immediately. Otherwise, you run the risk of it being picked up by other news media outlets and used incorrectly over and over again. Keep in mind that reporters live by the creed of “accuracy.”
Educate. Don’t assume media (reporters, editors, broadcast producers, columnists, bloggers, etc.) know your industry. With editorial cutbacks rampant across all media, often times a reporter will get assigned a story that involves unfamiliar subject matter. It’s your responsibility to make sure the press has the facts and understands your business.
Keep a Log. In a full-blown crisis, things get hectic fast. Keep a detailed log of everyone from the media who calls noting the source, date, time-of-day, nature of the call, key questions, and any necessary follow up. Update the list daily and distribute a copy to senior management.
Ask for Outside Help. Individuals and companies of all sizes are often overwhelmed by a crisis. If necessary, contact outside crisis communications counsel. Getting help from experts can be invaluable as events unfold.
In the final analysis, dealing with the media in a forthright manner is a critical part of crisis communications management. You’ll still need multiple techniques to reach all your audiences, but the media still plays a major role in shaping how the public (and many of our key audiences) will perceive how the crisis is viewed.
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Six Common Mistakes in a Crisis
When a crisis hits, some senior managers panic and, in the process, make mistakes that could negatively impact the reputation of a brand, organization or individual.
Having been a crisis communications management counselor for more than three decades, I’ve noticed a pattern of missteps. Here are six common mistakes:
1. Denial “What Problem?”
Some organizations just can’t believe it could happen to them. A good example is the Catholic Church in the U.S. For years, and even decades, the church buried what it knew was intolerable: criminal behavior by priests who sexually abused young boys and girls. In the end, the truth won out and the Catholic Church continues to “pay the price” for such a blatant violation of trust.
Keeping a secret may be okay among friends, but it has serious consequences in business. This can be particularly damaging to a publicly-traded company. Apple Computer comes to mind, when its late CEO Steve Jobs became ill. At first, the company said it was a hormone imbalance. It turned out Mr. Jobs had a terminal disease. For many months, this strategy of secrecy and obfuscation was disruptive and adversely affected management’s credibility and the company’s stock price.
3. Unprepared Spokesperson(s)
One of the keys to successful crisis management is to get the facts before communicating to the public or, for that matter, communicating to any audience. This does not always happen. During the Sago, West Virginia mine disaster, without having all the facts, a spokesperson for the company said 12 survivors were found alive. In actuality, only one of 13 men was saved. This incorrect information raised the spirits of family members and the community, only to see them crushed when the facts were revealed.
4. Letting the Media Get it Wrong
For the most part, the news media gets the facts right. However, when a news story is breaking or crisis hits, events can spiral out of control because reporters are in a competitive race to break the story. Speed breeds errors, both large and small. This has happened on many occasions. When former U.S. Rep. Gabrielle Giffords was shot, dozens of news media outlets inaccurately reported she had died. In 2004, the New York Post splashed John Kerry’s vice presidential choice on its front page: “Dem picks Dick Gephardt,” blared the headline. Except he didn’t. John Edwards got the nod. In 2000, most major networks called Florida for Al Gore. Then they retracted that call. Then they called George Bush the winner. Then they retracted that call. Should the media get it wrong, it’s the responsibility of management to respond immediately and get the story corrected. This goes for large and small errors.
5. Allowing Lawyers to Drive the Communication Process
Lawyers clearly have their place in a crisis. However, they are not necessarily in the best position to drive the communications process. Executives in a crisis need to understand that lawyers operate in the court of law. They are trained to assess a situation and react to applicable law. A company or individual in a crisis must operate in the court of public opinion. Consider what happened when child abuser Jerry Sandusky let his attorney, Joe Amendola, do the talking. In an impromptu press conference outside a Pennsylvania courthouse, Amendola said a grand jury report that outlined the sex-abuse charges against his client was “deeply flawed.” Amendola also allegedly gave his client the green light for Sandusky to be interviewed on Bob Costas’ NBC show. In the end, the lawyer caused more scorn and ridicule for his client, who was later sentenced to at least 30 years.
6. Absence of a Strategy (Not Knowing the End Game)
When a crisis hits, events happen rapidly over the course of the first few hours/days. A lull may then occur while the parties involved sort out the facts. Beginning immediately, the company or individual in a crisis must develop a game plan that not only deals with the immediate crisis, but begins to develop remedial actions to repair a potentially damaged reputation. A good example of this is the so-called “London Whale” debacle at JPMorgan Chase & Co. CEO Jamie Dimon initially referred to the $6 billion trading loss as a “tempest in a teapot.” It turned out to be much more and damaged the reputation of Dimon and bank brand. As the crisis erupted, it appeared that Dimon did not have all the facts and lacked a cohesive communications plan and strategy to manage the crisis.
Strategic Communications is a Major Driving Force in Making M&A Deals Work
The unfortunate truth about mergers and acquisitions is that many of them just don’t work out.
They fail for many reasons: the acquiring company overpaid; cultural differences were insurmountable, intellectual capital leaves, or integration and cost savings never materialize.
Sometimes, there is a more subtle reason: poor internal and external communications management.
While corporate financial executives, general counsels, investment bankers and special consultants conduct due diligence prior to a deal being consummated, senior executives need to concurrently execute a similar “communications audit.”
We recommend a 10-step process:
- Evaluate reputations. Develop a matrix for each side that ranks various components on a scale of 1 to 10. Items to consider include ethics, financial performance, leadership, social responsibility, customer focus and quality.
- Identify issues. Conduct a web search going back at least five years and review any news media coverage on the company. Coordinate the review of publicly filed documents with legal counsel to identify any pending litigation or other material issues that could impact the transaction.
- Establish communications goals. Reach agreement on the three to five most important communications goals. In short, what are you trying to accomplish via the myriad of communications challenges that will come into play during the deal-making process?
- Define relevant audiences. Define all audiences that will be impacted by the deal and prepare to customize communication to meet their needs. The list typically includes employees, investors, analysts, customers, distributors, business partners, political and community leaders, regulators, trade organizations, etc.
- Assess social media. This medium has changed the landscape for successful communications. Prior to announcing any deal, review Twitter, Facebook, YouTube, LinkedIn, Google+, and Instagram. Understand the trends on each and how they might affect combining of the companies.
- Establish a positioning strategy. Whether it’s a friendly merger or hostile takeover, the entity must create a positioning strategy – that is how the combined companies will be perceived by their audiences and how their success or lack thereof will be measured when they execute their strategies going forward.
- Consistent messages. Building off the positioning strategy, agree on four to six key messages that will be incorporated into all internal and external communications vehicles. If, for example, the merger of company X and Y is going to create the largest player in the industry, say it – repetition in messaging is important.
- Select and train spokespersons. This an area that often breaks down. Once the deal gets announced, too many people are communicating different messages. All spokespeople should speak clearly and with one voice. If necessary, media train the spokesperson team or engage outside communications counsel.
- Synchronize communications implementation. This requires well-defined plans with specific responsibilities for specific individuals. It’s also imperative that all parties know exactly what they will need to communicate, when and to whom. An extensive Q&A document is also a necessity.
- Measurement. Once communications is launched, plan on qualitative or quantitative measurement programs. For example, there are software-based programs that can analyze news media coverage and social media comments on the deal. Here’s the key: don’t rely on anecdotal evidence.
When it comes to M&A activity, management must understand that the merger announcement is the beginning of a long-term communications challenge and process. Without a properly developed and executed plan, the transaction may end up in disaster.
9 Immediate Steps for Successful Crisis Management
Your organization is facing a crisis.
In short, an unplanned event has likely placed the enterprise at risk. What should you do?
Don’t panic. A crisis is a time for cooler heads to prevail. Here are 9 immediate steps to get things under control:
#1: Get the facts fast. Don’t believe rumors or what might have hit the press as fact. Get to the sources you need inside and outside your organization. Write down what happened and when.
#2: Develop a holding statement. In today’s frenzied communications environment, it’s unlikely you’ll be able to respond with a “no comment.” The statement can be used while you continue to research the matter and decide what action steps will be necessary.
#3: Assemble a crisis team. A single person cannot manage most major crises. Involve at least three to five groups of people. Likely candidates are the CEO, general counsel, VP/corporate communications, and outside PR and legal counsel.
#4: Create a “war room.” Designate a space that will serve as command central for actions and communications that begin to address the crisis. Equip the room with what you’ll need to analyze the situation and communicate to all audiences.
#5: Establish a communications protocol. In a crisis, the organization could be under attack on many fronts (sales, manufacturing, distribution, regulators, senior leadership, etc.). If a policy does not exist, set one to determine how inquiries will be managed.
#6: Designate a spokesperson. Organizations under fire must speak with one voice. This helps ensure consistent messaging. If there is no one on staff who can handle these duties, seek outside communications counsel. Make the spokesperson available 24/7. The news cycle never stops.
#7: Monitor social media. The days of waiting for the news to be in print or broadcast on TV are gone. Today, implications from the crisis will almost certainly appear first on Twitter, Facebook, YouTube, LinkedIn, and Google Plus+. Look here first to see what is being said.
#8: Develop a plan. It’s essential that the team begin developing a crisis management plan. Establish your communications goals and objectives, identify key audiences, agree on key messages, address any logistical concerns, and outline thoughts on remedial actions.
#9: Create a briefing “bible.” This is not a trivial matter. Everything that happens during a crisis must be chronicled. Collect all internal and external documents, broadcast, print and online news media coverage, social media feedback, etc. The “bible” should be accessible to the crisis team.
No two crises are the same, but following these first few steps will help toward mitigating reputational damage.