Every company faces crises that have the potential for doing serious damage to its reputation, image, and/or financial stability. Events that might’ve been minor or even unnoticed a few years ago could now wind up on the evening news or on page one of the newspaper. While some incidents are insignificant, others can be devastating. Yet when they occur it’s often difficult, if not impossible, to know whether the problem will evaporate or escalate, blow over or boomerang.
If it can happen, it’s only prudent to assume that such an incident will happen. While it might not become a debacle of global proportions, it can still have a disastrous impact on the financial health and the image of a company. Being prepared is perhaps the most effective way to minimize possible damage. Role-playing potential scenarios is one way to uncover the unknown, identify the questions that require answers, and create a credible message. It’s also a good way to develop a working crisis response team.
Every company needs a crisis response policy — a carefully crafted understanding of how a company will react to a potentially damaging situation. Whatever else it might do, it gives you a way to turn lemons into lemonade. Here are some basic elements for such a policy:
TAKE IT SERIOUSLY
No matter how insignificant or trivial a problem might seem, take it seriously. More often than not a crisis catches management off guard. When this happens, management will try to downplay any potential impact.
When a manufacturer unearthed 100 drums of toxic waste, it took the problem very seriously. It called in state environmental officials to review the situation, developed a clean-up plan with the cooperation of the town where the waste site was located, and invited the press for a briefing. This cooperative effort won the praise of town fathers and state officials. While the company didn’t overreact, it demonstrated that it wasn’t taking the problem lightly. It not only avoided a potential environmental nightmare, but press reports portrayed the company as proactive in its clean-up efforts.
DON’T ASSUME IT’LL GO AWAY
Although it’s common to hope that a dark cloud will pass without causing a storm, playing the 'let’s sit tight and see what happens' game only exacerbates a possible problem. Whatever the facts, the public often believes a company failed to act when problems come to light. Problems don’t go away. In fact, they often get worse. The longer the delay, the more suspicious and doubting the press and the public become.
RESPOND QUICKLY
The failure to take quick action can create the appearance of a cover-up and a lack of decisiveness. Sometimes every minute counts in retaining credibility with the public.
PREPARE THOROUGHLY
Shooting from the hip is more myth than reality. Even though some business executives seem to thrive on images of a shoot-out at the OK Corral, a dose of reality is preferable when it comes to dealing with the public, the press, employees, and stockholders. If you don’t prepare thoroughly, someone will catch you. Shooting from the lip can be even more deadly. A business crisis, such as dealing with a contaminated product, isn’t like talking your way around a lousy golf game.
The first rule is to put your position on paper. Then have it critiqued. If it doesn’t hold water among friends and associates, it’s certainly going to leak outside. Does it contain all the facts? Are you withholding information? Are you being straightforward, or are you putting a spin on it to avoid responsibility? And, of course, the most important question of all: Will the average American believe you? If not, you’re not prepared.
TALK TO THE PRESS
Don’t try to hide. It won’t work — and it shouldn’t. And don’t hide behind a spokesperson, either. Put the top person out in front. Be candid and open. If you can’t answer a question, say so. 'I’ll get that for you' is all you need to say.
TELL THE TRUTH
If you goofed, say so. Don’t try to cover it up. The president of a large regional bank called a marketing executive and said, 'Tomorrow morning the Justice Department will announce that it’s fining us $50,000 for improper cash transactions. What should we do?' Within hours the president had accepted the executive’s recommendation: Tell the truth.
At the next morning’s press conference, the bank president said, 'We made a mistake, and we’ve taken steps to make sure it never happens again.' That’s exactly how the press reported it. The story died. Later, the bank president noted that deposits actually increased after the incident.
A few weeks later, the Justice Department fined another bank in the same area $500,000 for the same reason. At its press conference, bank officials denied any wrongdoing and attempted to defend their actions. The result was a firestorm of negative press and an uncomfortable congressional hearing for the bank.
GO ALL OUT TO MAKE AN IMPACT
A leading car dealership believed it was in a sales slump because of a rumor that the dealership was in financial trouble and was about to fold. It appeared that aggressive competitors were spreading the rumor to customers. The dealership reviewed and evaluated the situation, and emerged with a strategy. It held a press conference to announce that the its management team had become shareholders in the business and that a leading bank was extending a significant line of credit.
The firm removed all but two cars from the showroom and arranged the area for a press conference. They decorated the showroom and invited guests. On hand were representatives of the auto manufacturer and a vice president of the bank, all of whom spoke. The press coverage that followed laid to rest any suggestion that the dealership might be in financial trouble.
The dealership went all out to make the right statement, one that resonated positively with the press, customers, and the public. Later, the firm indicated that the effort was a great success. The story was stopped in its tracks.
These guidelines are lessons every company should take seriously. There are no exceptions. It’s possible to get lucky, of course. But it’s a mistake to take the chance. Potentially troublesome situations need not become disasters. An open mind and a willingness to be straightforward are all that’s needed to turn lemons into lemonade.