Business: Damage Control

When I began writing on crisis management, I decided to do a Google search for the word “crisis” under the news category and was flabbergasted when I got 57,500,000 hits. Obviously, we like to label events as crises.

One definition of a crisis is an “unforeseen event that has a critical impact on your life, family, employer, community, nation or the world at large.” The key element is whether an event or situation is foreseeable. If it is foreseeable then it can be managed and how things are handled will determine whether a “crisis” ensues or not.

How a consulting engineering company responds to an event or crisis will have an impact on the firm’s reputation. If you handle a situation poorly it could take years to re-establish your credibility, that is if the damage isn’t fatal to your firm. If you merely react to a crisis you will be doing so in a state of anxiety and therefore will be more prone to making errors in judgement or rash comments. There have been multiple instances in Canada where a firm has been forced to sell or disband as a result of a major event that was not handled in a manner acceptable to other parties, be they clients, government bodies or the public at large.

On the other hand, a well thought out crisis management plan can help you stand out as a corporate leader. Remember, the best defence is sometimes a well planned offence – it never rains when you have an umbrella.

Preparing for a corporate crisis

There are two types of potential crisis that a firm needs to manage.

Internal –

If your firm hasn’t developed a disaster recovery plan to get systems up and running and communicating with clients, you should probably skip reading this article and concentrate on that task. The firm should also have a succession plan to deal with the unexpected departure or death of key personnel.

External –

What should you do if the mechanical system for a bank that you designed fails and floods the premises, forcing the closure of the bank? How do you respond if there’s an outbreak of legionnaires disease at a hospital you designed? What should you do and say in the event a structure you designed collapses, or a tailings pond fails, or there is an explosion at a plant you designed? How do you respond in the event of allegations of wrongdoing in your business practices?

These are critical scenarios for which you need to be prepared to respond quickly, efficiently and empathetically to minimize your firm’s exposure to allegations and prevent long-term damage to your reputation.

Role of the CEO as leader

Leadership is probably the responsibility of the firm’s CEO who should ensure that a crisis management plan is in place. The leader and senior staff should have ongoing discussions on the types of exposure that the company faces. They should evaluate the probability and quantify the size of the potential failure.

During a crisis situation the team leader must be accessible at all times and facilitate access to resources for communicating with clients and authorities. He or she also needs to establish an internal and external chain of command. The leader should also arrange for a post-crisis review of any impediments encountered in applying the plan.

Message to
the media

This is the most crucial element of crisis management. The firm needs to designate a spokesperson to serve as the voice to the outside world, and this is not necessarily a role for the CEO to assume. We have witnessed first-hand that these individuals are not always the best spokespeople. Who can forget the comments of BP’s CEO following the failure of its offshore rig: “I would like to get my life back too”?

It is imperative that the person chosen is well spoken, speaks in concise terms, can demonstrate believable empathy and is not going to crumble under a barrage of questions from the press and affected parties. The CEO may be too emotionally affected or overly defensive in such situations. You need a spokesperson who is cool, calm and collected, and who will stick to the official position of the firm and not be distracted by loaded questions.

Many firms try to keep a low profile in a crisis situation under the false belief that by doing so they will avoid negative publicity. That is a serious mistake. The internet and social networking put an end to that approach as a viable option a long time ago. The firm must be visible and available to speak to the public to maintain its status as a good corporate citizen and to avoid speculative and negative comments by others. People always remember the negative things they hear about you, and forget or ignore the positive things.

Demonstrating leadership and taking immediate action in the event of a crisis is the best way to avoid speculation and critical judgements about your responsibility and liability for the situation.

Communication “Don’ts”

There are many ways in which to respond to questions from the media and other outside parties. Here are some approaches to avoid:

“No Comment.”

You may as well plead guilty and take the heat. At the very least, you should direct the party to a spokesperson for the firm, or state that a formal response is forthcoming (be precise as to when). If you are in your office and don’t want to speak to someone, don’t answer the phone. Being unavailable is less compromising than stating “No comment.”

“Did not return calls.”

This means you are guilty and afraid to talk to anyone. Always have your spokesperson call even if you don’t have anything meaningful to say.

“Was out of the country.”

This means you are hiding on an island where you can’t be found. Actually, this is a legitimate excuse if it’s true. If it’s not, be careful.

“We can’t” or “We won’t.”

In cases where peoples’ lives are at stake or affected, the only thing they want to hear is that every possible option is being considered to resolve the crisis — remember that the world is watching. Comments to the effect that nothing can be done, or that “We have exhausted all avenues” are not acceptable when people’s lives are at risk. There is always something that can be done even if the chances of success are remote, so the core message that needs to be conveyed is: “We will leave no stone unturned,” or similar statements that create a level of comfort that you care and are doing your best to deal with
the situation.

Don’t be arrogant.

You want to demonstrate that you possess the expertise and sincere desire to correct the problem. You don’t want to be seen as dictatorial or superior. You are sharing information with the public, not lecturing it.

Don’t speculate.

You are responsible for dealing with the facts. The world is full of speculators and it is not your job to defend yourself against speculation.

Don’t provide inaccurate or misleading information.

You will be found out. The best possible outcome of not being transparent and truthful in your statements is that you will be perceived as obstructionist and will fall out of favour with the other parties. At the other end of the scale, you will be labeled as untrustworthy and your credibility on all issues will be questioned. Ultimately, your reputation and that of your firm will be tarnished.

Don’t over-promise.

Given the number of external factors and uncertainties intrinsic to a crisis situation, it is often impossible to give specific deadlines for achieving results. Firms are advised instead to respond to such questions by outlining what is being done and the expected timelines for each aspect of the resolution process.

Don’t admit liability.

This is the insurance rule. Don’t say or do anything that jeopardizes defences that are available to you. There are plenty of ways to address and correct a problem without admitting liability. Anyway, if you screwed up it will become public knowledge at some point in time.

Communication “Do’s”

Make yourselves available.

You want to get your message out before the speculation and finger pointing begin. If you are seen as an accessible and credible source of useful information, you will have created an environment in which you have greater control over the media and the message that is disseminated to the public. You will then establish your firm as one of the leaders seeking to resolve the crisis.

Show empathy.

Always begin by including a statement demonstrating the firm’s concern about those affected by the crisis and saying that the number one objective is the wellbeing of the community.

State facts only.

Speculation, criticism and unsubstantiated allegations will arise no matter what you do. If you spend your efforts in trying to ward off or deny such allegations you are only focusing attention on these issues, and you may in fact give some credibility to parties making the statements. Remember: the more you say, the greater the likelihood that something will be taken out of context and misconstrued. Only provide explanations or elaborate when specifically asked to do so, and then be as precise and factual as possible. Be wary of the pregnant pause – the media will often wait after you have finished making a statement, hoping that you will continue to talk. Don’t fall into this trap.

Your initial message should be concise and identify three things: who you are and your role; a statement outlining your concern for the wellbeing of others; and the immediate steps you are taking. Each of the statements should be factual and concise (some advise 27 words or less) and must be capable of being read in a message to the media. The spokesperson should not elaborate on any of the statements except to state that the firm will release all relevant details as they become available.

You should also include the contact information for the spokesperson in an effort to limit the number of calls to random employees by media people who are seeking a salacious quote.

Check social media.

Facebook, which is no more than a glorified high school yearbook, now has over 500 million users. The Twitter universe comprises over 160 million users. Firms need to monitor these sites on a regular basis to search for comments posted about them and they should develop plans to deal with any vitriol as part of their overall crisis management plans.

Sidebar

CRISIS SCENARIOS

Canadian Mining Company

When a piece of equipment specified by the consulting engineers failed, a large mining operation and ore processing plant had to be shut down for three weeks resulting in a multi-million dollar loss to the mining company. The CEOs of the engineering and mining companies met and while it was agreed that operation and installation issues were partly to blame, it was acknowledged that the equipment specified was not able to operate as required.

The CEO of the mining company, in an effort to get the matter resolved and re-start operations, agreed to accept the engineer’s policy limits ($1 million) in full and final settlement if the matter was resolved in a week. Insurers initially were reluctant to agree to the settlement and only did so after the mining CEO issued an ultimatum. Intervention by a third party crisis management specialist could have expedited the process.

Algo Centre – Roof collapse

When it was announced last June that rescue efforts at a mall in Elliott Lake, Ontario were being suspended due to safety concerns, the public outcry was immediate and fierce. Rescue efforts were subsequently resumed, but the damage caused by the initial decision cannot be reversed. When dealing with death and injury to members of the public, it is imperative to demonstrate that every possible option is being employed to rescue or recover the victims.

Leaky Condo Crisis

When the outbreak of water
infiltration claims arose in B.C. and elsewhere during the 1990s there were delays in responding to the crisis, finger-pointing, a lack of communication and leadership, and most importantly no formal consensus on how to deal with the problem. Consequently, there were a rash of claims and a variety of remedial options on how to deal with the problem.

Sometimes, crises affect an entire industry (asbestos, urea formaldahyde, steel stud/brick veneer curtain walls, etc.) and the association representing that industry needs to implement a crisis management plan to protect the integrity and reputation of its members.

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Derek Holloway is principal of Spectrum Risk Services of Ottawa, professional specialists in risk assessment and management, contract negotiations, dispute resolution and crisis management. The author has also written a longer Guide to Crisis Management. E-mail spectrum.risk.services@gmail.com.