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Hud Englehart: Five Things You Need to Know about Business in Crisis

Posted: June 9, 2016 2:00 a.m.
Updated: June 9, 2016 2:00 a.m.
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Chances are fairly high that you’ve already read something today about a business or organization in crisis. A product was recalled. A familiar packaged food is reported contaminated. A government agency fails to disclose or perform. A CEO is indicted or tossed. Employees go on strike. There are fatalities at a job site. Credit card systems are compromised. A medical device is found defective. A wireless network goes dark.

These kinds of events – there were over 200,000 of them that made headlines last year – can have vastly different outcomes for the organizations involved. Depending on how they are handled, stock prices may plunge or rise. Sales may collapse or surge. Employee morale may sink or sail. Donors may flee or continue to fund. Regulators may exact penalties or help remediate.

Meanwhile, the outward signs of all this consternation is unrelenting. The news media – pens, cameras and other devices in hand – are on the sidelines reporting every move, exposing every misstep, going outside normal channels to investigate causes and effects. The frenzy is the antithesis of the mission for business managers. At the very time they most need to be in control, things appear to be out of control.

So here is a crash course on what businesses need to know about crisis before it happens. Keeping these five things in mind might mean the difference between weathering the storm, or running aground when the unplanned happens.

First, the best crisis antidote is to tell it all and tell it fast.
Among expert crisis communicators, this is code for the obvious: the best way to get out of the news is to stop making news. Cover ups, diversions, and delays will inevitably deepen your troubles. “Fast” is a relative term here. What it really means is much faster than normal. Businesses, by their nature, are deliberative organizations. In a crisis, time compresses and, aided by relentless media, there is a premium on speedy decision making.

Second, understand that crisis is the ultimate marketing event.
Every value that your brand stands for is put to the test during a crisis, and your stakeholders will expect you to live up to those values when things aren’t going your way. Think how much better off GM would be if they behaved like customer-concerned leaders when their ignition switch problem surfaced.

Third, crisis is a creature of media and communication.
Let’s face it; operating incidents that don’t make the news are much different than ones that do. Most businesses aren’t accustomed to the kind of scrutiny that comes with a full blown crisis. Sure, they have contingency plans for accidents or incidents that interrupt their business. But very few have plans for dealing with an onslaught of piercing media inquiry.

Next, you can’t talk your way out of trouble.
In fact, it is what you do in a crisis that is important. Think of it this way: you really don’t have anything meaningful to say unless it lines up with what you are doing. Tylenol is the icon for successful crisis management because Johnson & Johnson’s actions did the talking. Taking the product off the shelf told stakeholders all they needed to know.

Finally, you can plan for the unplanned.
In fact, being in control means anticipating failure and being prepared to deal with it. It is the one sure way to improve your odds of success. Develop a worst case scenario and anticipate what it would be like to have the case broadcast on the six o’clock news and/or go viral over social media. Rehearse the communications response and, like you often hear an experienced NFL quarterback say, it will “slow down” the action on the (media) playing field.

One last note. More than 30 percent of all business crises connect directly to executive decisions. The point being, there is no substitute for good decision making when the pressure is on. Do what’s right. Tell the truth. Protect your customer.

If you want to follow a lead, track what Commissioner Adam Silver did in the Donald Sterling/Clippers crisis to get the NBA out of the spotlight. After audio tapes of Donald Sterling surfaced on April 25, Silver called them “truly offensive and disturbing” the very next day. Only four days later, Silver lowered the boom on Sterling by indefinitely suspending him from the NBA and levying a $25 million fine.

Or, speaking of ‘spotlights,’ if you want to avoid other’s mistakes, consider how much better off the Catholic Church would be if they protected the kids (customers) by prosecuting the priests and telling the truth at the onset. There’s no movie in that version of events.

Hud Englehart is managing partner of Beacon Advisors, a crisis communications consulting firm and teaches crisis communication at Northwestern University’s Medill School. Englehart is also a member of the board of directors for the Paladin Multi-Media Group, owner of The Signal newspaper and SCVBJ.

 

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