WILL YOU BE READY WHEN A CRISIS COMES?
by Janine Reid
Is your company vulnerable to a crisis? Most of us would respond by saying, 'It won't happen on my watch!' Realistic folks might say, 'I guess it could happen, but I hope it doesn't.' And then there's the group who say, 'I've been there and realize it could happen again.' Which group do you identify with?
Simply put, a crisis is anything that brings negative attention to your company and can affect your bottom line adversely. A crisis may also threaten your reputation or relationships with customers, vendors, or other important parties.
Clearly, this covers a lot of territory. Let's look at some crises your company could be vulnerable to. Review the following list and check the situations that could befall your company. (Also, note the ones you've already experienced!)
Crisis Could Happen Been There
Natural Disaster
- Flood
- Drought
- Earthquake
- Hurricane/Tornado/Tsunamis
Operations
- Fire
- Explosion
- Transportation accident
- Power outage
- Computer system failure/loss of critical data
- Bomb threat
Environmental Accidents/Liabilities
- Release of toxic chemicals into the air or waterways
- Groundwater contamination
- Long-term exposure of the community to toxic chemicals
Employee Safety and Health
- Injury/fatality
- Chronic safety problem
- Exposure to carcinogens
- Personal injury suit
- Regulatory citations
Customer Relations
- Negative publicity
- Contractual dispute with client resulting in litigation
- Rumors
- Community protests
Labor Relations
- Negotiations
- Work stoppage
- Organizing drive
- Violent strike
- Unfair labor practices
Management Issues
- Reorganization/downsizing
- Serious cash flow problems
- Bankruptcy
- Management succession
- Employee crossing over to a competitor
- Sudden market shift
- Key employee starts competing company
- Owner or key employee dies
- Hostage/kidnapping
- Merger/acquisition
- Hostile takeover attempt
- Terrorism
- Suicide
- Murder
Employee/Management Misconduct
- Workplace violence
- Disgruntled employee
- Lawsuits from discrimination, sexual/racial harassment
- Scandal involving top management
- Bribery/kickbacks
- Slander
- Price fixing
- Theft/Vandalism
- Suicide
- Murder
Government Affairs
- Legislation that could impact business
After reviewing this list, you'll find it difficult to say, 'It won't happen on my watch.' As a matter of fact, the Institute for Crisis Management (ICM) reports a 19% increase in the index of business crisis news during 1997. ICM reports that the most prevalent business crises were labor disputes and white-collar crime, with hostile takeovers being the fastest growing category in 1997.
No one is immune to a crisis. Its arrival typically comes as a surprise to most companies-especially the unprepared.
HOW DO YOU PREPARE?
The most prudent business decision a company can make is to develop a crisis-management plan. When a crisis occurs, things move at lightning speed. A plan affords you the luxury of being in control and gives you the ability to be proactive (as opposed to reactive). If you're reactive, you're behind the curve and will have little chance of catching up. A plan helps you make good decisions under pressure because you've thought through the process before the crisis.
DO YOU NEED A SPOKESPERSON?
If you have a situation that draws attention from the public or is perceived to be negative, you can bet that the media may take an interest.
The media can be extremely aggressive-especially in a crisis. If reporters believe there's a story to be told, they won't go away until they get it. Your company must have a spokesperson equipped with the skills necessary to portray it in the best possible light while working under the worst possible circumstances. If a company is not prepared for a media encounter, it will probably get poor coverage-or worse yet, inaccurate, one-sided coverage. The penalty is severe, because no practical recourse is available to 'set the record straight.' As part of your crisis-management plan, select and train a spokesperson (and backup).
CONCLUSION
Simply put, you'll be judged more on how you handle a crisis than the crisis itself. If you appear unprepared, you'll be perceived as incompetent, and your hard-earned reputation will suffer. Is it worth it? Not in this lifetime!
Protect your reputation and credibility. Develop a crisis-management plan and train your employees on how to use it. In today's business arena, it's no longer a question of if, but when a crisis will strike your firm.
Janine Reid is the founder of the Janine Reid Group, Inc. in Denver, CO. She's the author of What to Do When the Sky Starts Falling and an upcoming book entitled Crisis Management Planning and Media Relations. She can be reached at (303) 322-3211 or E-mailed at [email protected].