|CRISIS, WHAT CRISIS? ALAN TYRRELL ON FINDING A SILVER LINING AT A CRITICAL TIME|
A wise woman once said, In the midst of a crisis, when everyone about you is losing their cool yet you remain calm, then maybe, just maybe, you have no idea how bad it really is. Wise words and particularly relevant given the crises we witnessed in recent weeks. For a year that started well enough, things went downhill rapidly. From HMVs administration, to contaminated burger ingredients and Lance Armstrongs performance on Oprah, the month of January threw up more than its fair share of bad news.
It should not come as a major shock though. A crisis is much like an express train. It comes around regularly and travels extremely fast. In a random sample of 100 companies, on average, two-thirds of them faced a crisis in the past five years. In fact, as far back as 1984, crisis expert and sociologist Charles Perrow advised managers should no longer evaluate if an organisation will ever face a crisis, but rather when, where, what type and how large a crisis it will one day encounter.
So what is the best way to manage a crisis and why do some companies still stick their head in the sand and then implode at the slightest hitch? Before trying to answer that it is worthwhile defining a crisis. Simply put, a crisis is a 'critical moment or turning point that has deep impact or consequence for an organisation. It occurs rapidly in a highly pressurised manner. But it also has a very low probability of happening, which is perhaps why some people still follow the ostrich strategy of crisis management.
While a crisis is invariably complex, the management of it can be simple. With a little planning, brands can find a silver lining in a critical moment. The Chinese figured it out long ago. They use two words for crisis – wei ji – or danger and opportunity. There are some simple steps which can help marketers find an opportunity in a crisis?
Light at tunnel end
Keeping the analogy rolling, sometimes the light at the end of a tunnel is an oncoming train and the challenge is how to board safely. A best practice model on how to do this was proposed by Hale, Dulek and Hale (2005), based on research over two decades. As well as being best practice, it is also a relatively simple model, with three steps:
Step 1: Preparation including mitigation, planning and warning systems
Step 2: Response – activated only when prevention has failed and continues while the crisis danger is still clear and present
Step 3: Recovery – managing public perception in the aftermath of response
Step 1: Preparation
Before you rush out to do scenario testing or investing in grab bags, take a step back and ask yourself a question. How do you know you are dealing with a crisis? Like all best practice, the answer is measurement. Crisis Management 101 is about building a model that lets you determine an actual crisis, the scale of the problem and the escalation path.
Without the measurements in place the danger is that you end up making a mountain out of a molehill. It is far easier to talk yourself and others into a crisis than it is to get out of one, so early warning signals and validation is crucial. It is best to use just three quantifiable factors though each can have a number of components:
- Physical impact, for example human loss, asset damage
- Financial impact, namely lost revenue, reparation costs
- Reputation impact – brand damage, drop in NPS, drop in employee engagement
With the measurements identified, it then becomes much easier to develop more extensive plans for a best and worst case outcome. It is also much easier to decide how and when issues get escalated and what resources to apply in such a situation.
Step 2: Respond with clarity, speed and accuracy
At the risk of stating the obvious, there is one thing people want in a crisis and that is information. They want it fast and regularly and in most cases they will take it from whatever source they can. In our fast-moving digital world, that means information (or misinformation) can be with customers within moments of an incident happening.
Unfortunately, information is also the thing that is in shortest supply during a crisis. But by being open, honest and transparent with the information to hand, most reasonable people will give you some time. Here are four simple rules, the 4Rs of crisis response:
- Rule 1: Regret, say sorry. No ifs or buts. When in the court of public opinion, express regret and, just as importantly, mean it.
- Rule 2: Resolve. Prove you are sorry by fixing what is broken as quickly as you can. If it is going to take time, explain that clearly and openly. Keep telling people until it is fixed.
- Rule 3: Reform. Find and fix the root cause of the problem to ensure it does not happen again – and tell people.
- Rule 4: Recompense. If your mistake costs people money, you need to fix that for them too. It may not always be necessary, but plan for it just in case.
The role of internal communication cannot be underestimated. Whether you make cars or widgets, are a bricks and clicks retailer or service provider, your employees are your first point of contact. A poor flow of information internally could damage trust for both customer and employee and exacerbate an already fraught relationship with your brand.
In setting up your response, build in clearly defined times for information updates internally and externally. Ensure the media (including your internal media) are geared to the rhythm of your information and vice versa. Remember that if the matter involves sensitive or restricted access areas, you may need to set up a media pool service. That way, the media gets access but you also ensure that the integrity of the site is maintained. Most reporters will respect and understand the necessity for a pool system.
But with the emergence of high quality cameras that upload straight to web, this can be a more significant challenge with media outlets relying on user generated content (UGC) from untrained citizen journalists. Most media now have policies for how to manage such material or guidelines that they will issue to the public in such an event.
Step 2A: the media reporting cycle for another fine MESS
If you have not planned for a crisis then, like Laurel and Hardy, you will find yourself in another fine mess. The reporting cycle of a MESS in todays media world is like a meal with four courses, from mayhem to stoplight, with epicenter and searchlights in between:
- Starter course is mayhem this is the chaos at the start of any crisis. It will be fast paced and based on news bulletins. Media will report the mayhem asap.
- Main course is the epicenter the media will go after the mayhem, where they get to see what is at the core of the problem and it usually covers the aftermath.
- Dessert course involves the searchlights where the hunt is on for those who caused the problem. It is when the guillotine first appears and heads roll.
- After Eights or stoplight the crisis reporting stops and is replaced by the next big story out there, which may well be somebody elses crisis.
Throughout the MESS (Mayhem, Epicenter, Searchlights and Stoplights), the role of the leadership team is crucial. You may need a stand-in CEO to run the business while the official CEO runs the crisis. Either way, make sure you have able spokespeople, who can clearly articulate and communicate the cause, effect and solution as you strive to keep customers. The communication needs to happen internally and externally and keeping employees up to speed is vital. You need a coalition of the willing and in a crisis your frontline teams need a good flow of information, support and strong leadership.
Step 3: Recovery (aka when will it end?)
Everyone who has been through the white heat of a crisis knows that it seems to go on and on and on and on. But it does end and research shows that crises typically last about 50 days. These will be days of unrelenting pain but it does come to a conclusion.
Listed companies can expect a share price drop of between seven and ten per cent in the first few days. It will be accompanied by a lot of volatility and a drop in trading volume. But after about 50 days, all things being equal, the share price should have recovered.
The factors which make a positive difference as you recover include:
- Having a crisis communications plan ready
- Practising the crisis response with key personnel
- Having an experienced and trusted communications team
- Quick and efficient information flows across your business
If you have built a plan, followed the 4Rs and navigated the MESS, then you are on the road to recovery. But it is the long hard slog when you need to build up the deposits again in the bank of goodwill. Putting your marketing expertise into action is vital for recovery. Things do return to normal. If you are lucky, or if you plan for it, the new normal may even be better than before, so never waste a good crisis by failing to plan.
Alan Tyrrell is deputy managing director of Pembroke Communications where he heads up the agencys corporate division. He joined Pembroke last year from Ulster Bank and prior to that he worked with Aviva and Slattery Communications.