Crisis? What Crisis? When Bad Things Happen to Good Companies

None of us likes to think of the possibility that our life may end sooner than planned. Not that anyone is planning to die. It simply is a foregone conclusion. At some point. Hopefully, later. After we’ve enjoyed a few years lounging in the sun or traveling the world with our spouse at our side. Retirement nirvana interrupted only by the occasional visit from our children and grandchildren.

While it’s a subject most of us don’t want to confront, the unexpected death of a loved one is something most families plan for through the purchase of a life insurance policy to replace income or cover debt in our absence. We hope that we’ll never need it. But, it’s reassuring to know that it’s there as a safety net.

For similar reasons, companies are advised to have a crisis communications plan. In essence, the crisis plan provides business leaders with a communications safety net, one that includes the roadmap and resources they need to respond quickly to a major disaster, management misdeed or operational issue that could damage trust in the organization. How companies respond in the first critical hours after a crisis can do long-term reputational damage if communications are handled poorly.

Think about it. What would happen if you suffered a life-threatening heart attack and, after being whisked to the hospital emergency room, upon arrival instead of getting immediate treatment you were asked to wait while surgeons, emergency equipment and medical supplies were summoned? Thankfully, emergency departments are managed and staffed to deal with patients requiring acute care on a moment’s notice. And hospitals use triage procedures to prioritize emergency care and identify patients who need immediate medical attention because of the nature or severity of their injury or illness.

A crisis plan is to business reputation management what triage is to emergency patient care. Only with crisis communications, the company’s image is the patient. Advance planning takes the sting out of crisis response when communications are handled effectively, with empathy, honesty and transparency.

We only have to look at recent news-making stories about Chipotle’s food safety crisis; Flint, Michigan’s drinking water disaster; and Volkswagen’s emissions cheating scandal for examples of companies who have faced the scrutiny of the press, social media and public opinion with serious financial consequences.

According to a survey conducted for Fleischman-Hillard and the World Economic Forum, strong brand reputational value equals greater profits. Three-fifths of chief executives surveyed in 2010 said they believed corporate brand and reputation represented more than 40% of their company’s market capitalization. Expectations, perceptions and business relationships all factor into whether customers and consumers choose to place their trust in organizations.

Small and mid-size businesses rely just as steadfastly on the trust they have established with their customers and are vulnerable to reputational threats, especially since they typically are not as well staffed to handle communications in a crisis. For these reasons, taking a close, thoughtful look at the most likely threats that could do the greatest damage to the company or brand can help them prepare for worst-case scenarios.

For more than half a century fictional Mad magazine mascot and cover boy Alfred E. Neuman has facetiously proclaimed, “What, Me Worry?,” as his comic character pokes fun at the political and cultural elite. The popularity of the magazine eventually spawned MADtv, an alternative to Saturday Night Live airing from 1996 to 2003. If Alfred E. Neuman had advice to give on how to best manage a crisis, what would he say? Here are a few of his most popular words of wisdom:

“In retrospect it becomes clear that hindsight is definitely overrated!” Although most crises cannot be predicted, they can be anticipated. Take time to assemble the executive team, map out, list and discuss all of the possible major issues and incidents that could affect the company, its employees, customers and other community stakeholders. Assign each issue a number on a scale of 1-5, based on how likely it is to happen. Then, rank them based on how much they could adversely impact the company’s reputation. Those getting the highest marks? They are your acute care patients deserving of your immediate time and attention. Build your crisis communications plan around these key issues.

“You can be on the right track and still get hit by a train!” Anyone facing the media spotlight knows perception is difficult to manage. But companies who go the extra mile to establish and follow clear, ethical policies and protocols in the operational and management areas that make or break their businesses have the upper hand. It’s one thing to say you are an equal opportunity employer. It’s another thing to develop diversity programs and hiring practices that cultivate experience from a broad range of applicants and team members. Words and deeds matter. Decide what your company stands for, then back it up with action.

“When you’re in deep water, it’s a good idea to keep your mouth shut!” No comment is never the right response to a question delivered by a reporter in the heat of a crisis. Depending on the situation, it is not unusual for the crisis team to be gathering information and facts about what transpired, where, and when as reporters are flooding the phone lines. It’s say that, while also letting media know that you’re working around the clock to get answers.

Volkswagen (VW) learned this the hard way, as reported here by The New York Times.  “There was something like a tsunami,” Hans-Gerd Bode, Volkswagen’s communications chief since September, said in an interview. “Thousands of calls and emails coming in at the same time. A crisis like this, the company was not prepared for,” he said.

What’s more, despite confirmed reports that VW had cheated on its tailgate- emissions tests, the new Chief Executive Matthias Müller recently claimed in an NPR interview, “We didn’t lie.” Ouch. Better to fess up, accept responsibility and undertake the hard work to transform the company culture from the top down to make sure it won’t happen again.

Most of us, in business and in life, appreciate people with integrity: those who are principled and can be counted on to behave in honorable ways even when no one is watching. Human resources expert Susan M. Heathfield gives several great examples of integrity in action here. These are the same characteristics that apply to reputable companies. And if bad deeds are exposed, they take the principled path, seeking to understand and learn from their failures.

Sometimes bad things happen to good companies. Sometimes when no one is watching. Chances are, you may be able to say much like Alfred E Neuman, “What, Me Worry?” But it never hurts to have a safety net.

The views expressed here are mine and mine alone. They do not necessarily reflect the opinions of my current or former employers, my friends and colleagues, nor anyone I have met or may meet in the future.

About Mary Brophy

Mary has held leadership positions at the world’s largest independent PR agency, Edelman Worldwide, Cramer-Krasselt, Jacobson Rost and other leading agencies. Her background includes advising CEO-level executives on a variety of crisis communications and reputational issues.