Corporate Crisis Management - Minimize the Chaos


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This white paper is an executive introduction to crisis management—what it is, why it's important, and key principles for success. Senior managers in particular will benefit from this insider's guide.

People, processes and management tools are critical components of a successful crisis response, and effective communication is the foundation. Neglect any of these facets, and a crisis can easily escalate.

Crisis management expert Elizabeth Stevens provides a solid overview of these areas, as well as expert advice.

Table of Contents:

What is Crisis Management?
– People
– Program
– Platform
Communication: the single most important element
Critical communications considerations

Published in: Business, Economy & Finance
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Corporate Crisis Management - Minimize the Chaos

  1. 1. Emergency Notification • Incident Management Corporate Crisis Management: How to Minimize the Chaos An executive introduction to crisis management, with key principles for success By Elizabeth Stevens
  2. 2. Corporate Crisis Management: How to Minimize the ChaosAbout the Author IntroductionElizabeth Stevens is an acknowl- The business world is becoming more complex, and results need to beedged leader in the fields of Crisis obtained more rapidly. Many organizations have taken a methodicalManagement, Emergency Re-sponse, Safety, and Security. Her response to business disruptions—primarily a combination of planningcareer has spanned the aviation, and insurance. They no longer have that luxury. Incidents are becomingretail and financial services in- more common and less predictable, inside and outside the enterprise.dustries, as well as numerous U.S. What’s needed is a way of managing any crisis, regardless of its source.Government agencies. People, processes and platforms are vital to managing a crisis success-During her tenure at Northwest fully are. Underpinning these is the need to communicate effectivelyAirlines, she worked on more than between all participants and stakeholders. Miss any of these and the300 incidents and accident inves- crisis can rapidly escalate out of control, increasing the damage to assets,tigations. She also built dedicated including people and brand.crisis management teams at TargetCorporation and Ameriprise. If there was any doubt about the long term effects of a crisis on an or- ganization, a study conducted by Oxford University and the Sedgwick Group (now Marsh) will be interesting reading. The study analyzed the impact of catastrophes on shareholder value, evaluating companies that responded well to a crisis, as well as those that responded poorly. Not surprisingly, companies that responded poorly suffered a decline in stakeholder confidence. However, companies that recovered well saw a 22% positive difference in stock price.Table of Contents1. Introduction What is Crisis Management?2. What is Crisis Management? “Hey, that’s my favorite store!” said the boy, pointing to the business3. Bad Stuff Happens card ID tag on my briefcase as I settled in for the flight. Then he asked “What’s crisis management?”4. Preparedness • People At the time, the Department of Homeland Security was in its infancy, the • Program US Government was scrambling to hire Federal Air Marshals to protect • Platform commercial aircraft, and I was one of a handful of people working in the private sector with a job dedicated to crisis management. Tsunami,5. Communication: Katrina and “bird flu” weren’t yet a part of anyone’s lexicon. The Single Most Important Element “Well,” I said, not wanting to keep him from his Harry Potter, “Most of6. Critical Communications the time our stores run smoothly, and you can shop and get what you Considerations want when you need it. But occasionally, when bad things happen, like a hurricane or a major power outage, things get disrupted. That’s when7. It’s Up To You I get involved to make sure we take care of our team members, our guests, our stores and the communities we serve.” That was an acceptable response for a 10-year old. For others, crisis management can’t be defined so simply. The “corporate Department of Homeland Security/FEMA” analogy I’ve occasionally used doesn’t fully explain the convergence of safety, security, business continuity and risk management. For those who are tired of the complexity of business risk management, disaster recovery details and the doom and gloom “we’re all going to© Copyright 2010-2012, MissionMode Solutions die” tabletop scenarios, I’m going to try to simplify it a bit. Page 2
  3. 3. Corporate Crisis Management: How to Minimize the Chaos Read on and you’ll learn what crisis management is, what I call the Ps of Preparedness are, and the single most important element for any plan or program. Bad Stuff Happens For many leaders, crisis is par for the course. This is evidenced in cor- porate lingo taken straight from emergency management and military manuals. Days at the office are spent “fighting fires” (managing un- expected issues) or “drinking from the fire hose” (quickly learning all about a topic) to prevent a crisis. Important work is “mission critical”, evaluation occurs in a “post-mor- tem” and hindsight is documented as “lessons learned.” Most likely the corporate crisis of the day doesn’t actually involve injury, illness, crime or other lasting punishment, and would be better described as a challenge. But true crisis? Since 9/11, when the intentional harm of terrorism hit American soil and brought a new set of fears, dozens more disasters have demonstrated the need to be prepared for just about anything. Tsunamis, wildfires, earthquakes, hurricanes, floods and tornados destroy entire communities. SARS takes lives and travels by jet to infect other countries, and only hints at the horror of an eventual Pandemic In-Prevent what you can, and invest fluenza. Bridges fail. Crazed shooters take aim at students or mitigation efforts to minimize The electrical grid goes down across the North-Eastern quadrant of theyour overall risk. U.S. Trapped underground, miners run out of oxygen. The worst disasters, although infrequent, claim many lives, and come with high stakes. An “all-hazards” approach envisions preparedness for any situation, without regard to cause, complexity, and scale. Crises vary in severity and frequency. They are at least somewhat unex- pected and involve some risk of loss. Prevent what you can, and investPreparedness involves a great in mitigation efforts to minimize your overall risk. And carry a gooddeal, principally people, a insurance policy, of course.program, and a platform. But when the situation hits home, whether your company is at fault or simply suffers the impacts, you’ve still got to weather the storm. Are you prepared for a crisis? Any crisis? Preparedness involves a great deal, principally people, a program and a platform. Preparedness The People: Crisis Management Teams Your preparedness plan likely involves teams. Continuity planning teams, emergency response teams, crisis response teams and the critical senior executives—the ones with C-level responsibility for it all—who have the authority to make highly unusual things happen when a crisis is declared. Any major event would bring all of these teams to the table in short order. Page 3
  4. 4. Corporate Crisis Management: How to Minimize the Chaos Today, the number of Fortune 500 (Global 5000) employees whose work is focused on one or more elements of crisis management has grown exponentially as jobs are being created within private companies to pro- vide risk assessment, planning, response training and incident coordina- tion for “bad stuff”’s critical to have the bestpeople working with you, who I once attended a business continuity association meeting at which abring a variety of experience, State of Minnesota official presented “lessons learned” during the re-talent and flexibility to get sponse and recovery to the complete collapse of a major interstate bridgethings done “on the fly”. that resulted in 13 fatalities and over 100 injuries. One of the points that was stressed: it’s critical to have the best people working with you, who bring a variety of experience, talent and flexibility to get things done “on the fly”. The same companies that used to rely entirely on public sector emer- gency response capabilities have now invested in enhanced protection, recognizing that safety and security require more than a patrol guard and an insurance policy. A solid program puts the right people in place. The Program: Have a “Plan B” Most governments in industrialized countries have developed response plans that outline “what to do” and “how to do it” for various agencies and levels of government. Clearly, though, these plans were not devel- oped to ensure your company’s long-term viability and best interests in the face of any catastrophe. Neither government nor military forces can protect from all harm, and no government can provide comprehensive response and recovery ser- vices to ensure every business is made whole, free of charge, in the faceOf the myriad reasons prompting of disaster. And the majority of corporate crises don’t even require lawcompanies to take on crisis enforcement or fire department or other massive government response,management, perhaps most as the source of the crisis as well as the loss are contained within thepainful are the “been there, company.done that” examples. You are responsible for corporate preparedness. The growing interest in enterprise risk management stems from mul- tiple seeds. Influenced by regulatory requirements, prompted by media accounts of an insufficient government response, or because it’s simply “the right thing to do” and fits well in community relations programs or corporate responsibility profiles, executives take action. Of the myriad reasons prompting companies to take on crisis manage- ment, perhaps most painful are the “been there, done that” examples. They are the ones who were caught unprepared and without contingen- cies to support unusual, unexpected and unnerving situations. A robust preparedness program involves policies, procedures, plans and processes that are flexible and scalable, to address the broad range of incidents. Your crisis management, disaster recovery and business conti- nuity plans are comprehensive, tested and audited. You have the people, and the plans. You’re close to being ready. Page 4
  5. 5. Corporate Crisis Management: How to Minimize the Chaos The Platform: Be In as Many Places as Possible You are responsible to run your business and likely do it efficiently, effectively and enthusiastically. You’ve created value with operational strength, a best-in-class product, committed executives and an efficientEven a seemingly insignificant strategy. Your people even like working for you. It’s all worth protect-situation, unaddressed, can fester ing. Even a seemingly insignificant situation, unaddressed, can festerand grow into a major threat. and grow into a major threat. You know that just one crisis can hamper or even cripple your timelines, productivity, and energy. So far, you’ve got people and plans to rely on.But the plans do not specificallytell you how to simultaneouslynavigate the complexity andchaos of these abnormal, andoften emotional, situations. The plans tell you what to do, and what you do in the hours and days after a critical event will determine, in part, how successful you are at managing back to normal operations, minimizing losses, and maintain- ing value. But the plans do not specifically tell you how to simultane- ously navigate the complexity and chaos of these abnormal, and often emotional, situations. That shortcoming is crucial. One revealing description of the enormity comes from On Top of the World:Cantor Fitzgerald, Howard Lutnick, and 9/11: A Story of Loss and Renewal, 2003, by Tom Barbash, a book that should be required reading for any executive with a response role. From the perspective of Cantor Fitzgerald CEO Howard Lutnick, whose brother was among the almost 700 Cantor Fitzgerald employees who died in the World Trade Center. Page 5
  6. 6. Corporate Crisis Management: How to Minimize the Chaos “So many things were going on at the same time. And I needed to treat each issue separately, to segment each hour so that I could be in as many places as possible, so that at each moment I could be on top of what was happening. Each time I spoke to someone, I need- ed to say to myself, this is what I’m doing now. And if that took a half hour, then when the time was up I gave the same attention to the next subject.” “There were emotional issues, and business issues, and some that touched both areas, and I couldn’t be emotional with the banks, and I couldn’t even think about the business when I was talking to the widows of my closest friends. I shifted from extremes, some- times from minute to minute.”During the initial fast-paced,high-stakes hours and days of Anyone who’s played a significant role in crisis response will tell youa crisis, you need to have a solid they weren’t fully prepared when the real thing hit—even with robustplatform to support the response plans and hours of training and exercises to practice various scenarios.and recovery efforts. Use your plans, experience and best judgment. But the plans themselves are just the “what” of your response. During the initial fast-paced, high-stakes hours and days of a crisis, you need to have a solid platform to support the response and recovery efforts.Your people are the who, your Your people are the who, your program is the what, and the platform isprogram is the what, and the the how of crisis management. The platform includes how you assembleplatform is the how of crisis the crisis teams, whether in one room (a million-dollar high-tech com-management. mand center or the back room at Perkins using paper napkins for a whiteboard) or virtually (conference call or an online shared website) and how you share and document information (verbal, fax, text messag- ing, email). At a minimum, your platform should be portable, flexible, reliable and tested, because that platform absolutely must support your team when so much is at stake. Communication: The Most Important ElementIf you don’t get informationout quickly, people will create People need to know what’s going on, and you’re expected to providecontext through speculation direction. If you don’t get information out quickly, people will createand even misinformation, if context through speculation and even misinformation, if necessary—necessary—they won’t wait. they won’t wait. You may not have all the facts, but in today’s world of instant messaging, accuracy invariably takes a back seat to timeliness. How do you get information? Validate the facts? Provide updates and send out status reports? Make changes to the plan on the fly and ensure everyone knows? How do you know everyone is safe? How do you contact your response team? How fast can you have everyone up to speed in the midst of the chaos? What is unclear? What have you not addressed? Who else do you need to communicate with? Page 6
  7. 7. Corporate Crisis Management: How to Minimize the Chaos From the “golden hour” that immediately follows a critical incident through the first three days of any disaster, the actions taken and not taken will determine your ability to respond and recover effectively. Get your people and your plans together and get to work. Time is critical, and your first need is for information. To get information, you need toCommunicate well—quickly, with communicate.reasonable accuracy, providingfrequent updates, and soliciting The single most important element in any crisis management programinput from various audiences— is always communication. Not leadership. Not a “hot site”. Not multipleand the end result can be smooth redundancies. Communication—all kinds.sailing once more. You’ll need to navigate the tenuous elements that threaten your core business. Communicate well—quickly, with reasonable accuracy, pro- viding frequent updates, and soliciting input from various audiences— and the end result can be smooth sailing once more.Communicate poorly, and your Communicate poorly, and your response to a bad situation may actuallyresponse to a bad situation may create more problems, perhaps even sinking the ship.actually create more problems,perhaps even sinking the ship. In a crisis, you communicate at multiple levels. Most critical is the in- formation exchanged directly within the organization and among your various crisis teams. These are the dedicated members who contribute to critical content that shapes both the response actions and the various messages shared with others. Beyond this you need to communicate with employees and contractors, customers, partners, vendors, clients, shareholders, the board of direc- tors, regulators, and perhaps even the media. The sooner you know what needs attention the sooner you can address those needs and get things back in order. Communication is too broad a topic to tackle without some context, and adding the word crisis to communications conjures thoughts of CNN media briefings. Conducted within hours of major “breaking news”, these feature a fire chief, police chief, mayor or CEO who is clearly con- cerned, likely overwhelmed, and not able to answer all the questions. Although crisis communications plans must include media relations ele- ments, it’s just one kind of communication. Peter Sandman is a recognized crisis communications expert who works with government and private sector clients to improve risk communi- cations. His candor is refreshing as he challenges corporate communi- cators to radically change their fierce protective stance during crisis. Within a larger body of work, Sandman has identified six focus areas for crisis communication. Six Focus Areas for Crisis Communication - Peter Sandman 1. Information content: What do we know about this particular crisis? What do we want our audience to know? How do we com- municate this content simply and effectively? 2. Logistics and media: How do we reach our audience with our information content? Page 7
  8. 8. Corporate Crisis Management: How to Minimize the Chaos 3. Audience assessment: Who do we need to reach? What do they know, think and feel already? How should this affect the way we communicate our information content? 4. Audience involvement: How do we solicit suggestions and feed- back from our audience? How do we provide opportunities for people to be active rather than passive? 5. Meta-messaging: How do we manage the non-information content of our messages (how reassuring to be, how confident to sound, how to address emotion, etc.) 6. Self-assessment: How will our own values, emotions, and politi- cal problems affect our communications? What are we likely to get wrong? How can we overcome the internal barriers to good crisis communication? Sandman’s focus areas can be applied to many levels and types of com- munication—within the organization, outside the organization—to help get the right messages out. All six are important, but for this discussion,Good leaders are able to distill I will focus on numbers one (the message), two (the mode), and one spe-confidence even in difficult times. cific part of number six (the method). For more information, visit www. Good leaders are able to instill confidence even in difficult times. To avoid an avalanche of losses, executives must carefully ensure that all communications are as truthful and timely as possible, and that they are consistent with other communications, regardless of the audience. What you tell your Board of Directors and what you announce to your employees via a memo at the time clock should not be in conflict, al- though the tone and tenor or content may vary. “Transparency” is the current buzzword that comes to mind. This is easier said than done, and it’s often because there are so many communicators within an organization. Many companies differentiate communications according to the audience. You may have a very small company with just one communications expert, but it’s more common toTo ensure a successful response have an army of them: media relations managers, shareholder liaisons,to any corporate crisis… you associate/employee/team member or other “internal” communicationsabsolutely must ensure that specialists.everyone is on the same page. You have people responsible for community communications and some who handle the vendor/contractor/supplier interactions. Yet others write storyboards for advertising purposes. And because of the various and somewhat confusing options for communications, there’s the “engage- ment engineer” whose job it is to get you to the right communications person/people within each division. To ensure a successful response to any corporate crisis, and to protect and preserve the long-term value you have created in your company, you absolutely must ensure that everyone is “on the same page.” Whether or not your crisis becomes public or is contained internally, you must ensure factual accuracy, provide everyone with a common Page 8
  9. 9. Corporate Crisis Management: How to Minimize the Chaos plan, document and update your progress over and over and over again—to confidently address the matter at hand and make sound deci- sions. If you don’t have a way to get everyone out of stale voicemail and email and into the current situation status, your risks are multiplied. Critical Communications Considerations The Message The messages you create are derived from what Sandman calls Infor- mation Content. You need to gather as much relevant information as possible, and quickly, from your people and other sources. What’s hap- pened? Is everyone OK? What’s the damage? What actions have already been taken? What decisions need to be made? Who else knows, and who should know but doesn’t? You’ll gather and document and assess the information, make decisions,Most crises don’t happen take action. Create specific communications for various stakeholders,conveniently in your head and distribute those in short order. As time goes on, you need to updateoffice when all your key your information, anticipate questions, and refresh your messaging ac-players are waiting there for cordingly.a crisis with nothing elseimportant to do. The Mode The import of Sandman’s question “How do we reach our audience with our information content?” cannot be understated. Most crises don’t happen conveniently in your head office when all your key players are waiting there for a crisis with nothing else important to do. At first notification, your response teams are most likely tending to more routine matters, and certainly not in one location. You should have mul- tiple modes and methods identified, because you may not be able to use one or more of your normal modes of communication. Whether written, verbal, visual or aural, your message and information should be shared using more than one mode. Commonly considered options include phone (land line, mobile, VOIP, or satellite), text messaging, fax, pager, e-mail, and web-based options. Less common but worth considering are public address systems, mega- phones, signs (electronic and old school), posters, billboards, newspa- pers, flyers, brochures, post/parcel (USPS, UPS, FedEx, DHL), courier, radio (AM/FM/EmergencyAlert/HAM), television, walkie-talkies, closed-circuit camera systems, videoconferencing, teletype, and, the old- fashioned face-to-face discussion. Phone systems are particularly taxed in the first few hours following a significant incident, simply because everyone is attempting to communi- cate something to someone and the systems and networks can’t sup- port the concurrent demand. Capacity isn’t the only limiter. Safe from a tornado below ground level, you might find your phone service unavail- able if a repeater hasn’t been installed. Page 9
  10. 10. Corporate Crisis Management: How to Minimize the Chaos So what’s working? To start with, determine how you got the informa- tion, and work from there. But give careful consideration as you choose your modes, and understand the benefits and drawbacks of each. For example, emergency communications must be made immediately and communicated broadly because safety and health are at risk if ac- tion is not taken. These most critical messages must be succinct, direc- tive, and repeated to be effective. Modes used include public address systems, emergency megaphones, and industrial sirens that urge people to seek shelter, and are often accompanied by flashing strobe lights or other visual cues. On 9/11, text messaging was the only communication for hundreds as they descended the stairwells of the World Trade Center. In New Or- leans after the flooding, satellite phones and ham radios were needed and later billboards and newspaper ads. If you’ve evacuated your offices and only the crisis team carries mobile communication devices—with the rest of the employees relying on their desktop PCs—sending a company email with the “all clear/you can return to your desks” message will be the highlight of your “lessons learned” report. Draft the messages, determine the modes, and deliver the meaning. The MethodHow do you get people out of the The method is where you find the key to success. Your method for get-nonstop game of catch up... ? The ting people on the same page, to share and discuss information, makeideal solution is to have a web- decisions, and document your response, will provide the critical plat-based, hosted service that notifies form mentioned earlier. Sandman wisely identifies self-assessment as ayour people, has your program key focus area for crisis communications, and begs the question “Howdocuments and plans at the ready, can we overcome the internal barriers to good crisis communication?”and provides a 24/7 “one-stop- How do you get people out of the nonstop game of catch up with fourshop” crisis coordination center new voicemail messages coming in with each one call returned? The ideal solution is to have a web-based, hosted service that notifies your people, has your program documents and plans at the ready, and pro- vides a 24/7 “one-stop-shop” crisis coordination center for all of your stakeholders. You can’t expect that everyone on the crisis response team will be im- mediately able to respond to a common physical location. Your ability to convene and communicate may involve just one mode of communica- tion or several. But you’ve got to get people in place somehow before you can even begin asking the first questions. What processes are you using? Are you using old-fashioned call trees that keep people tied to phones for hours or an automated data-driven call solution that gets the exact message delivered to hundreds or thou- sands within a few minutes? That’s the difference between starting your conference call in 5 minutes or 45 minutes from the word “go”. Page 10
  11. 11. Corporate Crisis Management: How to Minimize the Chaos That said, the faster your team assembles, the faster your response and resolution. The chaotic nature of these early assemblies contain an environment ripe for errors: during a conference call, other phones are ringing, static and background noise distort messages, people talk over one another and clarifications aren’t always made. People join late and drop off early. Email conference call summaries that contain critical decisions and task assignments don’t get sent for more than 20 minutes after the call, and valuable time is wasted. Email and voicemail are roadblocks for any cri-Expect the critical information to sis team trying to stay on top of a complex and changing situation. Web-change—the crisis is dynamic. based, real-time situation rooms allow a single-source-of-truth approach for your extended key audiences. Expect the critical information to change—the crisis is dynamic. Details must be updated to ensure resources are managed properly and stake-Choose a secure system that allows holders are kept in the loop. Choose a secure system that allows eacheach stakeholder to directly input stakeholder to directly input updates without an intermediary; thisupdates without an intermediary; reduces delays and increases accuracy.this reduces delays and increasesaccuracy. Fear and adrenaline drive some people to their peak performance, while others will feel unsure and uncomfortable. During any unusual event, you must communicate more often (and in more ways) than you would otherwise. The increased frequency and multiple modes are important, but within the crisis, do not send all messages as urgent, sensitive or of high importance. Overuse of priority messaging will defeat the purpose. To best manage your most critical communications, create a pre-defined view for posting to a shared, on-line situation room. This lets people get the current information when they need it, 24/7, without distracting oth- ers. Tasks can be assigned and updated, and all the necessary plans and reference documents are right there. It’s Up to You Employ your method in the midst of madness, and rely on your plat- form to support the program. If you’re not using a multi-faceted, secure, on-line solution as part of your crisis management program, are you best managing the risks? Are you confident that you could get the information you need quickly in a crisis? Ensure all your players are at the table? Put your hands on the current documents in time for the first call? Do you think your program employs the tools that help each of your people respond quickly? Crisis is demanding. You need to ensure your program is supported with reliable technology solutions that supports the challenges that come wave after wave, as crises keeps mounting. That old insurance policy alone won’t give you much confidence when it comes time to test the plans and take care of the crisis. Preparedness will. Page 11
  12. 12. This white paper is brought to you by Crises are difficult. Crisis management software shouldn’t be.MissionMode’s web-based crisis management and Smarter Emergency Notificationcommunications solutions simplify your responseto any type of incident, from routine operations The Notification Center™ eliminates the guessworkissues to major disasters. They reduce the time and of what message to send, who to contact andcost of returning to normal business operations. how. Customized automation adapts to constantly changing situations, yet the system is so easy to use that accurate, targeted alerts can be sent in as littleIncident Management Simplified as ten seconds.”The Situation Center™ provides the tools to remedy Revolutionary Mobile Communicationsthe incident better and faster. This simple-to-usevirtual command center enables your team to share EarShot goes far beyond ordinary notification. Itinformation, monitor tasks, track people’s status, enables rich 2-way communication using forms,send alerts, access any type of file, and more. It photos, text, profiles and GPS location services.provides an accurate common operating picture for EarShot combines a unique mobile app with anmaking informed decisions and ensuring that no online control console and complete emergencydetail is overlooked. notification system. Online tools that are easy to use, cost-effective, and require minimal training. Contact us to learn more or schedule a “MissionMode radically reduces the demonstration. time it takes to get an overview of an incident and take appropriate action to minimize its impact” Group Business Risks Manager North America Toll-free: 877.833.7763 | +1 312.445.8811 “With MissionMode, we feel like we are their only customer.” International Phone: +44 1494 837198 Director of Corporate Crisis Management 101512 Page 12