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Corporate Crisis Management Executive Briefing White Paper

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Corporate Crisis Management Executive Briefing White Paper

  1. 1. Executive Briefing White Paper Corporate Crisis Management: How to Minimize the Chaos In this article Elizabeth Stevens provides an executive’s introduction to crisis management, why it’s important and the key tenets for successful crisis management. The business world is getting more complex and results need to be obtained faster. Organizations that hitherto have prospered with a methodical response to threats using a combination of planning and insurance no longer have that luxury. Incidents are becoming more common inside and outside the enterprise. They are also less predictable for when and what will happen. What is required is a way of managing any crisis irrespective of its source. Vital to managing a crisis successfully are people, processes, and platforms. Underpinning these is the need to communicate effectively between all participants and stakeholders. Miss any and the crisis can rapidly escalate out of control increasing the damage to assets including people and brand. And if there was any doubt about the long term effect of a crisis on an organization then a study conducted by Oxford University and the Sedgwick Group (now Marsh) should prove interesting reading. The study analyzed the impact of catastrophes on shareholder value, and evaluated companies that responded well to a crisis as well as companies that responded poorly. Not surprisingly, companies that didn’t respond at all or responded poorly suffered a decline in stakeholder confidence, but quite interesting to note that the companies that recovered well actually saw a 22% positive difference in stock price. Elizabeth Stevens is an acknowledged leader in the fields of Crisis Management, Emergency Response, Safety and Security. Her career has spanned many industries including aviation, retail and financial services. Trained by the Federal Aviation Administration and the National Transportation Safety Board, during her career at Northwest Airlines (NYSE:NWA) she worked on in excess of 300 incidents and accident investigations. At Target Corporation (NYSE:TGT) Elizabeth built a dedicated crisis management team to deal with the issues relevant to the retail world. She did likewise at Ameriprise (NYSE:AMP) proving that the most effective crisis management is through an “all-hazards” approach applicable across industry. Throughout her career, she has worked with numerous other U.S. Government agencies, non-governmental organizations and professional associations, including DHS, FAA, TSA, NTSB, FBI, CIA, DOJ, DOD, FEMA, ICE, OSHA, NRF, RILA, BENS, IAFC, SIFMA, NASD, SEC and American Red Cross at local and national levels. Under her guidance, companies have responded effectively to 9/11, hurricanes Katrina, Wilma and Rita, the SE Asian tsunami and I-35W Minneapolis bridge collapse as well as hundreds of internal incidents. Elizabeth has represented the State of Minnesota in Department of Homeland Security initiatives. During her spare time Elizabeth continues to volunteer for various public emergency response bodies. © MissionMode Solutions, inc. 111 N. Chestnut St, Suite 200, Winston-Salem, NC 27101 US +1 877.833.7763 | Int’l +44 1494 837198 |
  2. 2. Corporate Crisis Management: How to Minimize the Chaos Elizabeth Stevens What is Crisis Management? “Hey – that’s my favorite store!” said the boy, pointing to the business card ID tag on my briefcase as I settled in for the flight. Then he asked “What’s crisis management?” At the time, the Department of Homeland Security was in its infancy, the US Government was scrambling to hire Federal Air Marshals to protect commercial aircraft, and I was one of a handful of people working in the private sector with a job dedicated to crisis management. Tsunami, Katrina and “bird flu” weren’t yet a part of anyone’s lexicon. “Well,” I said, not wanting to keep him from his Harry Potter, “Most of the time our stores run smoothly, and you can shop and get what you want when you need it. But occasionally, when bad things happen, like a “You are responsible for hurricane or a major power outage, things get disrupted. That’s corporate preparedness.” when 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 die” tabletop scenarios, I’m going to try to simplify it a bit. 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 corporate lingo taken straight from emergency management and military manuals. Days at the office are spent “fighting fires” (managing unexpected 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-mortem” 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. Wildfires, hurricanes, earthquakes, floods, tornados and tsunamis destroy entire communities. SARS takes lives and travels by jet “Crises vary in severity and frequency. to infect other countries, and only hints at the They are at least somewhat unexpected horror of an eventual Pandemic Influenza. and involve some risk of loss. Prevent Bridges fail. Crazed shooters take aim at students what you can, and invest in mitigation or shoppers. The electrical grid goes down across efforts to minimize your overall risk.” the North-Eastern quadrant of the 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. The more frequent events that fit in the crisis category don’t necessarily involve complete property destruction or meet the definition of mass casualty. Imagine being inside the headquarters of a pet food company as CNN broadcasts an unfolding story of deadly dog food. Or, immediately following your promotion to Vice President, Investor Relations, you’re handed a note that reads “CEO son arrested; DUI & assaulted officer, local news airing police vehicle video, GC and VP media relations are on flt. to China /not available today.” Or a company laptop © MissionMode Solutions, inc. 2 111 N. Chestnut St, Suite 200, Winston-Salem, NC 27101 US +1 877.833.7763 | Int’l +44 1494 837198 |
  3. 3. Corporate Crisis Management: How to Minimize the Chaos Elizabeth Stevens containing social security numbers and other sensitive client data has been stolen, and the technology department can’t verify whether it had been encrypted. Or, a YouTube video shows two of your trusted pilots boarding the corporate jet, the paint barely dry with your new logo, along with several young bikini-clad women to “audit” the liquor cabinet. Sound familiar? Bad stuff happens. “Preparedness involves a lot, but principally, people, a Crises vary in severity and frequency. They are at least program, and a platform.” somewhat unexpected and involve some risk of loss. Prevent what you can, and invest in mitigation efforts to minimize your overall risk. And carry a good insurance policy, of course. 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 lot, but 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. 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 provide risk assessment, planning, response training and incident coordination for “bad stuff”. I recently attended a business continuity association meeting at which a State of Minnesota official presented “lessons learned” during the response and recovery to the complete collapse of a major interstate bridge that resulted in 13 fatalities and more than 100 injuries. One of the points 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 emergency 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 developed 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 services to ensure every business is made whole, free of charge, in the face of disaster. And the majority of corporate crises don’t even require law enforcement or fire department or other massive government response, as the source of the crisis as well as the loss are contained within the company. You are responsible for corporate preparedness. The growing interest in enterprise risk management stems from multiple 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 management, perhaps most painful are the “been there, done that” examples. They are the ones who were caught unprepared and without contingencies to support unusual, unexpected and unnerving situations. © MissionMode Solutions, inc. 3 111 N. Chestnut St, Suite 200, Winston-Salem, NC 27101 US +1 877.833.7763 | Int’l +44 1494 837198 |
  4. 4. Corporate Crisis Management: How to Minimize the Chaos Elizabeth Stevens 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 continuity plans are comprehensive, tested and audited. You have the people, and the plans. You’re close to being ready. 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 efficient strategy. Your people even like working for you. It’s all worth protecting. Even a seemingly insignificant situation, unaddressed, can fester 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 your people, and you’ve got your plans to rely on. “Your people are the who, your program is the what, The plans tell you what to do, and what you do in the hours and days and the platform is the how after a critical event will determine, in part, how successful you are at of crisis management.” managing back to normal operations, minimizing losses, and maintaining value. But the plans do not specifically tell you how to simultaneously 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: “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 needed 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, sometimes from minute to minute.” Anyone who’s played a significant role in crisis response will tell you they weren’t fully prepared when the real thing hit – even with robust plans and hours of training and exercises to practice various scenarios. Use your plans, experience and best judgment. But the plans themselves are just the “what” of your response. And during the initial fast- “And during the initial fast-paced, paced, high stakes hours and days of crisis, you need to high stakes hours and days of have a solid platform to support the response and recovery crisis, you need to have a solid efforts. platform to support the response and recovery efforts.” Your people are the who, your program is the what, and the platform is the how of crisis management. The platform includes how you assemble the crisis teams, whether in one room (a million-dollar high-tech command 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 messaging, 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. © MissionMode Solutions, inc. 4 111 N. Chestnut St, Suite 200, Winston-Salem, NC 27101 US +1 877.833.7763 | Int’l +44 1494 837198 |
  5. 5. Corporate Crisis Management: How to Minimize the Chaos Elizabeth Stevens Communication: The Single Most Important Element People need to know what’s going on, and you’re expected to provide direction. If you don’t get information out quickly, people will create context through speculation and even misinformation, if necessary -- 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 “If you don’t get information out timeliness. quickly, people will create context through speculation and even How do you get information? Validate the facts? Provide misinformation, if necessary -- updates and send out status reports? Make changes to the they won’t wait.” 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? 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 to communicate. The single most important element in any crisis management program is always communication. The single most important element in any crisis management program is always communication. Not leadership. Not a “hot site”. Not multiple redundancies. Communication - all kinds. You’ll need to navigate the tenuous elements that threaten your core business. Communicate well -- quickly, with reasonable accuracy, providing frequent updates, and soliciting input from © MissionMode Solutions, inc. 5 111 N. Chestnut St, Suite 200, Winston-Salem, NC 27101 US +1 877.833.7763 | Int’l +44 1494 837198 |
  6. 6. Corporate Crisis Management: How to Minimize the Chaos Elizabeth Stevens various audiences -- and the end result will be smooth sailing once more. Communicate poorly, or worse – not at all -- and your response to a bad situation may actually create more problems, perhaps even sinking the ship. In a crisis, you communicate at multiple levels. Most critical is the information 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, “Communicate well -- quickly, partners, vendors, clients, shareholders, the board of directors, with reasonable accuracy, regulators, and perhaps even the media. The sooner you know providing frequent updates, what needs attention the sooner you can address those needs and soliciting input from and get things back in order. various audiences -- and the end result will be smooth Communication is too broad a topic to tackle without some sailing once more.” 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 concerned, likely overwhelmed, and not able to answer all the questions. Although crisis communications plans must include media relations elements, 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 communications. His candor is refreshing as he challenges corporate communicators 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 communicate this content simply and effectively? 2. Logistics and media: How do we reach our audience with our information content? 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 feedback 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 political 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 communication – within the organization, outside the organization - to help get the right messages out. All six are important, but for this discussion, I will focus on numbers one (the message), two (the mode), and one specific part of number six (the method). For more information visit 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 the audience. What you tell your Board of Directors and what you announce to your “During any unusual event, employees via a memo at the time clock should not be in conflict, you must communicate more although the tone and tenor or content may vary. “Transparency” often (and in more ways) is the current buzzword that comes to mind. than you would otherwise.” 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 to have an army of them: media relations managers, shareholder liaisons, associate/employee/team member or other “internal” © MissionMode Solutions, inc. 6 111 N. Chestnut St, Suite 200, Winston-Salem, NC 27101 US +1 877.833.7763 | Int’l +44 1494 837198 |
  7. 7. Corporate Crisis Management: How to Minimize the Chaos Elizabeth Stevens communications specialists. 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 “engagement 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 “To ensure a successful response created in your company, you absolutely must ensure that to any corporate crisis… everyone is “on the same page.” Whether or not your crisis …you absolutely must ensure that becomes public or is contained internally, you must ensure everyone is on the same page.” factual accuracy, provide everyone with a common plan, document and update your progress over and over and over again – to confidently address the matter at hand and make sound decisions. 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 Information Content. You need to gather as much relevant information as possible, and quickly, from your people and other sources. What’s happened? 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, take action. Create specific communications for various stakeholders, and distribute those in short order. As time goes on, you need to update your information, anticipate questions, and refresh your messaging accordingly. 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 multiple 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, “Most crises don’t happen mobile, VOIP, or satellite), text messaging, fax, pager, e- conveniently in your head office mail, and web-based options. Less common but worth when all your key players are waiting considering are public address systems, megaphones, there for a crisis with nothing else signs (electronic and old school), posters, billboards, important to do.” newspapers, 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 communicate something to someone and the systems and networks can’t support the concurrent demand. Capacity isn’t the only limiter. Safe from a tornado below ground level you might find your phone service unavailable, if a repeater hasn’t been installed. © MissionMode Solutions, inc. 7 111 N. Chestnut St, Suite 200, Winston-Salem, NC 27101 US +1 877.833.7763 | Int’l +44 1494 837198 |
  8. 8. Corporate Crisis Management: How to Minimize the Chaos Elizabeth Stevens So what’s working? To start with, determine how you got the information, 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 action is not taken. These most critical messages must be succinct, directive, 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 “Expect the critical they descended the stairwells of the World Trade Center. In New information to change – Orleans after the flooding, satellite phones and ham radios were the crisis is dynamic.” needed and later billboards and newspaper ads. If you’ve evacuated your offices due to a gas leak, and only the crisis team carries mobile communication devices – with the rest of the employees relying on their desktop PCs – then 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 Method The method is where you find the key to success. Your method for getting people on the same page, to share and discuss information, make decisions, and document your response, will provide the critical platform mentioned earlier. Sandman wisely identifies self-assessment as a key focus area for crisis communications, and begs the question “How can we overcome the internal barriers to good crisis communication?” How do you get people out of the nonstop game of catch up with four 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 provides 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 immediately able to respond to a common physical location. Your ability to convene and communicate may involve just one mode of communication 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, hand-written 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 thousands within a few minutes? That’s the difference between starting your conference call in 10 minutes or 45 minutes from the word “go”. 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 “Choose a secure system that allows critical decisions and task assignments don’t get each stakeholder to directly input updates sent for more than 20 minutes after the call, and without an intermediary, as this reduces valuable time is wasted. Email and voicemail are delays and increases the accuracy.” roadblocks for any crisis team trying to stay on top of a complex and changing situation. Web-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 stakeholders are kept in the loop. Choose a secure © MissionMode Solutions, inc. 8 111 N. Chestnut St, Suite 200, Winston-Salem, NC 27101 US +1 877.833.7763 | Int’l +44 1494 837198 |
  9. 9. Corporate Crisis Management: How to Minimize the Chaos Elizabeth Stevens system that allows each stakeholder to directly input updates without an intermediary, as this reduces delays and increases the accuracy. 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 others. 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 platform 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. © MissionMode Solutions, inc. 9 111 N. Chestnut St, Suite 200, Winston-Salem, NC 27101 US +1 877.833.7763 | Int’l +44 1494 837198 |