TTM associates Article
Which companies have a clear view of crisis— and which are ready to handle it?
According to Deloittes’s global survey report: More than three-quarters (76%) of the surveyed board members believe their companies would respond effectively, if a crisis struck tomorrow. But less than half (49%) of their companies have taken steps to be truly crisis-ready. Awareness of threats is not the same as preparation to deal with them.
Crisis management is the application of strategies designed to help an organization deal with a sudden and significant negative event. A crisis can strike an organization at anytime, anywhere. Before it happens, leaders should think about how a disaster would impact employees, customers, suppliers, the general public and their company’s value. It is never enjoyable to deal with crisis, but the way an organization deals with it will determine whether it becomes a crippling disaster or an obstacle that it overcomes… TTM associates has been in the field of Leadership for more than 20 years and have met and interviewed many CEOs, Business Leaders and Managers from various levels, and put together 10 tips for leaders in order to be emotionally stable during an organizational crisis.
1. Nurturing a prepared Organisation through strategic Risk assessment
Organizations can orient themselves—via changes in culture, design, and structure—to prevent system breakdowns that may lead to crises. While risk assessment is often studied in volatile industries or environments it must also be applied to any organization interested in managing complexity and seeking to avoid crises.
2. Building mindful Relationships with all Stakeholders
Pre-crisis research from the external perspective highlights the role of stakeholder relationships. Research from the external perspective argues that maintaining positive relationships with stakeholders can reduce the likelihood of a crisis.Stakeholders should be part of the prevention thinking and process as they can help in both identifying and mitigating the risks that may lead to a crisis.
Proper Stakeholder mapping also known as the Power/Interest Matrix, is an important tool to map different types of stakeholders as it emphasizes the importance of being mindful of stakeholders’ relationship expectations and obligations. (Please see below chart)
3. Eliminating the fear of crisis while maintaining trust
While the market’s reaction to a corporate crisis may initially centre on concern over lost revenues, the costs of fixing the problem, and other measurable commodities, reputation is intrinsically linked to trust. A reputational crisis is one in which that trust—whether it is with customers, suppliers, shareholders, or regulators—is broken. The people charged with managing such a crisis must focus from the outset on rebuilding that trust, and should accept that it may take some time to do so.
For example, when a data breach happens-which is among the top three types of incidents that affect brand reputation- there is nothing worse than trying to figure out how to manage the crisis on the fly as it is still happening. That’s why every strategic marketing plan and every company should have a strategic risk solution such as adequate ransomware education and prevention for employees at all levels, and a responsible action plan that can be followed without confusion if and when the company’s systems are attacked.
4. Translating plans into decisive actions
Dealing with a crisis is not the same as dealing with daily operations. Up and down the line and across the many silos inherent in most organizations, the “organization within the organization” that will swing into action has to be ready. A plan won’t work if people don’t know about it. A key player can’t play a role if no one has defined that role.
The field of crisis management is generally considered to have originated with Johnson & Johnson’s handling of a situation in 1982, when cyanide-laced Tylenol killed seven people in the Chicago area. The company immediately recalled all Tylenol capsules in the country and offered free product in tamper-proof packaging. As a result of the company’s swift and effective response, the effect to shareholders was minimized and the brand recovered and flourished.
5. Valuing the crisis experience
Perhaps the ultimate measure of experience is to ask, “What would you do differently next time?”
JetBlue’s operations collapsed after an ice storm hit the East Coast of the U.S., leading to 1,000 cancelled flights in just five days. CEO David Neeleman never blamed the weather. He wrote a public letter of apology to JetBlue customers, introduced a customer’s bill of rights, and presented a detailed list — which included monetary compensation — of what the company would do to help all the affected passengers.
6. Accepting various emotional outbursts:
People react to organizational crisis the same way they react to grief: First responses tend to be emotional – disbelief, denial, and anger. There is also a desire to find someone or something to blame. Considering the Kubler-Ross cycle helps Leaders understand that this is human nature and figure how to deal with employees during each stage of the “grief cycle”.
7. Communicating /Responding in a Whole Brain Way to Influence the Stakeholders
If the crisis could potentially impact the health or well-being of customers, the general public or employees, it may attract media attention. The organization must identify a spokesperson to speak with one voice and deliver a clear consistent message. A spokesperson must be identified as well as prepared to answer media questions and participate in interviews. Responding by using the whole brain model helps communicating efficiently and responding empathetically to different types of questions that arise from different thinking preferences.
After a test flight of Virgin Galactic went incredibly wrong, killing one pilot and seriously injuring the other, Virgin was able to rely on its spokesperson, Richard Branson, to immediately fly over to the crash site in California where he tweeted his deepest condolences on the way and wrote a longer, emotional blog later that evening. PR experts were unanimous in praise for the Virgin owner, crediting the way he addressed the deceased pilot as ‘brave’, influencing the media’s narrative. Branson remains one of the few people in business who holds a quality of empathy.
8. Sustaining Transparency throughout the organization
For any organization, crisis is a matter of when, not if.
The Southwest Flight 345 that landed nose first at LaGuardia is the most recent example of a big brand who knew exactly how to handle a crisis through social media. Quick response time and open, honest communication on Facebook and Twitter were key in helping the brand control the story and maintain good faith with its customers.
9. Establish a social media team
All companies now operate in a world that’s closely watching their policies, actions, and how they handle themselves when things go wrong. When literally anyone can simultaneously act as a customer, a protester, a critic, and a reporter with a video camera, executives have zero room for error. Social media is one of the most important channels of communications. A social media team can monitor, post, and react to social media activity throughout the crisis, project it through all communications channels.
It is wise to have a PR plan in place, including social media response, with clear roles and scripts for those who need to respond immediately to a crisis.
10. Maintain Buoyancy
In order for an organization to remain afloat post-crisis, it needs to quickly get over the crisis and move on. In spite of Samsung’s Note 7 Crisis in 2016, with an estimated product recall cost exceeding $6 billion; it didn’t hurt its Brand in the long term. The same applies to Toyota, in 2009 and 2010. Toyota recalled over 8 million vehicles globally after defects led to dozens of driver fatalities and serious injuries. But surveys show that despite the recall, the owners were highly satisfied with their vehicles, they indicated they would have no problem buying another Toyota in the future, and considered it one of the most reliable automotive brands. This phenomena is called the “brand insulation effect” arguing that a large, loyal customer base insulated Toyota from rapid loss of market share.
Despite its implications for organizations and stakeholders, research on crises and crisis management remains fragmented. Advanced planning is the key to survival, crisis can occur as a result of an unpredictable event or as an unforeseeable consequence of some event that had been considered a potential risk. In either case, crises almost invariably require that decisions be made quickly to limit damage to the organization. Crisis managers need to consider utilizing accommodative crisis response strategies, as it is evident that crisis awareness, preparation, and resilience needs to be a more prominent topic in the boardroom. Whether the crisis misfortune was towards a product or tragedy, reputation is one of the key elements to business success and companies must work hard to retain one thing from their customers – trust.