It’s hard to read the front page of a newspaper without coming across headlines about a corporate crisis. From Facebook’s Cambridge Analytica data privacy offense to VW’s emissions scandal and the #MeToo movement, businesses today are being taken to task by stakeholders. These public relations crises are fueling an increased media focus on corporate governance, business ethics and social responsibility. This heightened scrutiny isn’t lost on boards of directors: in fact, a recent PWC study noted that in 2018, allegations of misconduct was the top reason (39%) for CEO dismissals among the world’s 2,500 largest companies.
In an interview with Version 2.0’s Senior Vice President—and crisis communications expert—Melissa Mahoney, I asked her how leadership teams should think about preparing and managing PR crises.
Starting with a basic question. How do you define a business crisis?
A business crisis is any situation that could potentially damage a brand reputation; when it fails to do the right thing—or even appears to have failed to do the right thing. Brands may face a myriad of business issues, from product recalls to social media snafus. The impact of these issues varies of course, depending on factors such as the company’s size or existing brand reputation, but most importantly, a company’s ability to react swiftly and earnestly.
What are the different types of crises? Are they all detrimental?
There’s the old saying, “there’s no such thing as bad publicity.” I guarantee no one at Fairlife Milk will agree with that statement right now. The company’s products have been pulled off the shelves of every major grocery chain following an undercover investigation of animal abuse at one of its affiliate farms. That’s a reputational issue that will have a long-lasting impact on the company’s revenues—if it doesn’t run them into the ground altogether.
Companies face real and perceived issues every day—and when managed appropriately, these issues never become a crisis. Sitting on an issue and hoping it goes away will often have the opposite effect. This is commonly known as a “smoldering” crisis. If management pays attention and works to resolve it, the situation may never become a public crisis. On the other hand, sudden crises are unexpected and happen fast. In either case, a company is judged primarily on its response—how it handles the situation and demonstrates good faith efforts to resolve the problem.
What kind of businesses need to plan for crises? Are some types of companies more susceptible than others?
No business is immune to a crisis. Think about the types of issues we read about in the news every day—sexual harassment, union strikes, lay-offs and shareholder activism. The scale and impact of these issues are different for every organization, but every company would benefit from some thoughtful planning to prevent and respond to issues like these. It’s a mistake to think “we’re too small to worry about it”—or worse, “we’re growing so fast, let’s worry about that later.”
What does it mean to be ready for a crisis?
It’s important to recognize the difference between crisis management and crisis communication. They overlap quite a bit—but many leaders think they are crisis-ready because they have a business continuity plan in place in the event of work stoppages due to natural disasters, power outages and labor strikes. In all of these cases, communication to employees, customers and community leaders is one of the most important aspects of recovery but is often a missing link. Most issues that arise have nothing to do with daily business operations. Executive misconduct, a video posted on Facebook of unflattering employee behavior or a fateful accident on the manufacturing floor could all have significant ramifications.
The most important thing to understand is that a company will be judged by its response to an issue, not necessarily for the issue itself. The first step toward “readiness” is having a good idea of what could happen within your organization and know how the company should respond in good faith.
What’s the best-case scenario when managing a crisis?
A really well-managed issue may never become a public crisis. Crisis communicators are not often given enough credit for the time, effort and resources spent serving as the corporate conscience and helping to diffuse issues before they illicit bad reactions from stakeholders. One CEO I worked with would often refer to this work as “putting the genie back in the bottle.” Let me be clear, we are not talking about covering up an issue, but helping resolve it before it becomes a crisis. As an example, we recently worked with a large company that was closing an international office. The leadership was very concerned about the impact on the employees and how they would respond, plus creating a misperception that the company was shrinking. Because they were very thoughtful about these risks, a “crisis” never materialized—but they were ready.
Where do you start? There are so many types of issues that a company could face.
The first thing an organization should do is an exercise I call “identify and prioritize.” The goal of this exercise is to identify the types of issues the company has faced in the past, or is likely to face, and consider the relative impact or damage that scenario would have on the brand. Then, you plot these issues on a quadrant like the one below.
If you can pull the right people in the room to talk to each other, the workshop can be simple and effective. Ideally, you would have participation from the c-suite and the heads of business functions, like legal, HR, IT, operations, sales and marketing. The different perspectives can be quite illuminating. At V2, we use this information to align on next steps and develop communications protocols and playbooks for each priority scenario.
You can’t plan for everything, but if you take the time to plot through the company’s response to the toughest issues—not just what you say, but what you do—you’ll be in a much stronger position when something erupts.
These are all helpful tips. Can V2 help handle some of these publicity nightmares?
At V2, we help companies on several fronts—starting with identifying and prioritizing issues, helping business leaders uncover gaps in their ability to respond to issues, and finally, building the communications playbooks. We’re also on call to deal with crises as they unfold. It’s interesting and gratifying work, but certainly not for everyone!