After It Hits the Fan: Five Big Mistakes Companies Make in a Crisis
Lentini, Anthony R., Jr., Risk Management
It was nine o'clock on Christmas Eve and I was waiting for the kids to drift off to sleep so Santa could visit, when my phone rang. It was a reporter.
"Is it true they're going to evacuate Bridgeport?" he asked. The North Texas city was the location of my company's largest moneymaking asset, a natural gas processing plant.
"I beg your pardon?"
"Your gas plant is on fire and the rumor is, they're going to evacuate the entire city," the reporter explained.
"Let me check into that," I said, trying to sound as though I knew what was going on. I took his number and said I'd call back shortly.
Within about 10 minutes, I had a better picture of the situation. Yes, our gas plant was on fire. The local fire department, with assistance from others in the area, had contained the blaze to one corner of the facility, but we were not out of the woods yet. There was still no assessment of damage. And neither we nor the local authorities were calling for Bridgeport's evacuation.
I called the reporter back, told him an evacuation wasn't necessary at this time, and gave him an update on efforts to control the fire. Then I called various company sources to gather additional facts and prepared a brief statement for the news media.
One week later, I learned that the company CEO and CFO still had not been informed that our biggest revenue generating facility had caught fire and would be out of commission for a number of weeks. The manager of the division that operated our gas plants tended to play his cards close to the vest and had not gotten around to delivering the bad news.
1. Having No Plan or Internal Notification System
This real-life example illustrates the first big mistake companies make in a crisis: not having a plan and a foolproof internal notification system. A good plan should not try to anticipate every possible crisis that may befall an organization but should, at a minimum:
* Establish a mandatory internal notification system and telephone contact list
* Identify the people and disciplines within your company that need to be included on a crisis management committee
* Develop a contact list of the appropriate government, regulatory and public safety agencies, as well as any news organizations that may need to be notified
* Identify and gather details on company facilities where a mishap could have public safety implications (and ensure that evacuation plans are in place for those locations, as well as for nearby residences and businesses)
* Provide for training of key personnel and tabletop exercises to test the plan periodically
Having a mandatory notification system within your company is one of the most important components of any crisis plan. Management and the appropriate departments need to know about the crisis situation before the news media and regulators start calling.
The notification list should include contact information for representatives from senior management, legal counsel, insurance/risk management, HSE (health, safety and environment) and public relations/corporate communications and should be posted in all company locations.
For one company with numerous remote field locations and workers who operate semi-autonomously, we produced individual wallet cards with the notification list on one side and basic tips for crisis media interviews on the other. We also media-trained all field personnel.
2. Putting the Lawyers in Charge
Mistake number two is placing lawyers in charge of crisis management. That may seem counterintuitive, since many crises involve death, injury or damage to property and these things tend to generate lawsuits. But lawyers can be the very worst choice for leading a crisis management effort because they are hard-wired to avoid lawsuits. As such, they are likely to shut down any communication efforts or tie them up with restrictions and legalese when candor and clarity are called for. A legal expert does need to be on the crisis management team, but only as an adviser with equal weight as other team members.
One of the simplest and most effective methods for defusing a crisis is for the company spokesperson to express genuine concern and apologize for any disruptions, damage or loss of life. Your legal department may take a very dim view of this course of action, fearing that it is tantamount to admitting legal responsibility, but it is almost always the right thing to do.
Former "Big Five" accounting firm Arthur Andersen relied far too much on its general counsel during the Enron scandal when Andersen's auditors helped the rogue energy marketing company cook its books. Instead of admitting that a few bad apples had acted improperly and assisting with the investigation, Andersen circled the wagons, virtually shut down all public communication and sealed its own doom. Do not put the lawyers in charge.
3. Shutting Out the News Media
The third mistake companies make in a crisis is excluding the news media when the bad news goes public. Contrary to the popular saying, "No news is good news," any news vacuum will be filled with rumors and speculation (usually negative) during a crisis. At best, a company that fails to communicate looks insensitive and uncaring; at worst, it appears to have something to hide.
Years ago, I was called on to assist an oil company that had had an accidental spill in the reservoir that supplies drinking water to the city of Dallas. Reporters and local officials seeking information about the incident had been turned away at the gate to the storage facility where the oil spill occurred. After visiting the site, I countermanded the order barring reporters and instead organized a visit for news organizations and area officials to witness the cleanup. We also hired an independent water quality consultant to test for contaminants and made the results public. Instead of condemning the company for having spilled the oil in the first place, the public officials (including a member of the County Water Board) praised it for openness and for the "textbook" cleanup operation. News stories on the spill were equally positive.
On another occasion, a different company drilling in a bayou near Houma, Louisiana had a blowout (uncontrolled natural gas flow) that ignited, causing a spectacular fire that raged for days and was visible for miles. Fortunately, nobody was killed or injured during the incident, but television reporters wanted to take a boat out to the burning drill barge to get some close-up footage. We had every right to bar them from the site, which was on company property. Instead, we had the local office manager (our crisis spokesperson) take the news crews by boat to a vantage point located a safe distance away from the fire. News organizations could--and did--videotape the fire from public land miles away, but our transparency (and the spokesperson's skilled presentation) portrayed the company in a favorable light.
Critical to dealing effectively with the news media is preparing a statement that addresses most or all of the "Five Ws" that reporters try to put in the lead paragraph of every story: Who, What, When, Where and Why. Crisis planners call this a "holding statement," meaning it holds off reporters for a period while the company investigates the incident and its causes. Although if the statement is comprehensive enough and you have a relationship with the news media and a reputation for honesty, the so-called holding statement is often the only one you have to issue. In all but the highest-profile crises, the media usually moves on to the next big thing rather quickly.
The key to an effective statement is to provide only what you know to be factual (anything else is speculation and to be avoided like the plague). Stay away from any discussion of causes (unless you are certain, which is seldom the case in a developing situation), liability and insurance coverage. The first paragraph of a typical statement might read something like this:
HOUSTON, June 3, 2009 - A large fire (What) broke out around 2 p.m. today (When) at XYZ Corporation's (Who) oil refinery located in Baytown (Where). The company reported all refinery personnel accounted for with no deaths or injuries. The cause of the fire (Why) is under investigation, according to company spokesperson John Smith ...
Note that in this case, the "Why" is not addressed other than to say the cause is "under investigation." Reporters may ask about causes any number of times, but your job is to only present the facts, not to speculate. "Under investigation" is an acceptable response because it is the truth and represents the extent of your knowledge at the time. The sample statement should go on to discuss any public impact the fire is having at the time of the statement, such as evacuations, road closings and possible toxic releases.
Generally speaking, your initial statement will be relatively brief, reflecting the limited number of facts at hand in the early stages of the crisis. You will be asked additional questions. Just remember never to speculate. "I do not have that information at this time but will be happy to share it with you as soon as we know more" is an acceptable answer to a question requiring speculation. It is also OK to say, "Our company policy is to never discuss specifics with respect to insurance coverage." What is not acceptable is shading the truth or speculating.
This may sound like heresy, but preparing an initial statement does not necessarily mean calling the media to inform them of the difficulties your company is experiencing. If calamity occurs at a remote location and there are no public safety or regulatory considerations that require issuing a news release, you may want to wait and see if the media contacts you. This is purely a judgment call. Generally, if a situation is likely to come to the attention of the news media or has fairly widespread implications, it is a good idea to take a proactive approach and release your statement. This will also help you establish a trusting relationship with news organizations. But you do not have to alert the media every time something goes wrong.
4. Using Untrained Spokespeople As humans, we have been communicating all our lives, so we all should be experts, right?
As the saying goes, anything worth doing is worth doing well. That is especially true when a crisis is unfolding and your organization's credibility and reputation are on the line. If you are preparing to hold a press briefing, you had better be ready. That means having your facts down cold, anticipating the questions you will be asked and knowing what your responses will be. This is definitely not the time to wing it.
There is a famous crisis training clip involving former Exxon CEO Lawrence Rawl being oh-so-gently taken over a cliff by Good Morning America co-anchor Kathleen Sullivan after the Exxon Valdez spill. He was stiff, wooden and talked in circles about "The Plan" for the cleanup. When pressed to answer questions, he accused Sullivan of creating a PR nightmare for Exxon. He was worse than ineffective.
If the chairman of one of the world's largest, most successful companies could benefit from media training, chances are that your spokesperson needs crisis communications training too. Media training teaches you how to develop and stick to a limited number of messages that convey your company's position in a credible, empathetic manner. It provides techniques for "bridging," or briefly answering (or not answering) an interviewer's questions and then getting back to your messages. It teaches you how to anticipate virtually any question you may be asked and how to stay on message no matter what. It even teaches body language.
There are two schools of thought on crisis media training. One is the "boot-camp approach" because it takes raw recruits (in this case your executives and spokespeople) and breaks them down, then rebuilds them into flawless media machines.
The only problem with that approach is the "breaking down" process, which generally involves humiliating the trainee by subjecting him or her to a hostile interview followed by a brutal critique of all the things the unfortunate spokesperson did wrong. It makes most people never want to do another interview again, even though their interview skills improve as the training program progresses.
A kinder, gentler approach may be preferred. The would-be spokesperson is still subjected to an interview, but the reporter/trainer is not hostile and the critique emphasizes positives. Negative aspects are noted, but more along the lines of: "How could you have handled that question a little better?" Most people undergoing the training are smart enough to know when they have made a mistake and are more apt to self-correct if treated in a respectful, rather than hostile, manner.
Crisis communications training should empower your spokespeople. Knowledge is power and power breeds confidence. Do not skimp when it comes to media training.
5. Lacking Outside Perspective
I was contracted to advise the CEO of a major company facing a serious crisis involving the alleged bribery of foreign officials to facilitate business in their notoriously corrupt country. The stakes were potentially enormous--hundreds of million dollars in fines and SEC sanctions; jail time for employees, loss of significant business and severe reputational damage.
A small group of senior executives and I were brainstorming likely media questions and answers when the CEO dodged a question I had asked that was certain to come up in media interviews. It got uncomfortable in the room as I repeated the question again and again, until the CEO finally snapped at me in anger. He immediately caught himself and apologized, adding, "That's one reason we have you here; so I don't get frustrated and blow up on some reporter asking the same question."
This real-life example illustrates just one reason why it is important to retain the services of a crisis management consultant when things go seriously wrong. He or she can speak freely whereas a regular employee might be reluctant to do so. An outsider can also bring experience, a flesh perspective and helpful contacts to the table.
Surviving a Crisis
Bad things can happen to good organizations. The trick is to respond immediately and proactively in a direct and honest manner. That sounds easy, but when you are up to your neck in alligators, you might not be thinking clearly. That is why you need to have a plan, test it regularly and follow it.
The other important thing to remember after any crisis is to investigate the causes thoroughly and then correct what caused the problem in the first place. The more serious the crisis, the more important it is for you to determine the contributing factors and fix them so a similar event never happens again.…
Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Article title: After It Hits the Fan: Five Big Mistakes Companies Make in a Crisis. Contributors: Lentini, Anthony R., Jr. - Author. Magazine title: Risk Management. Volume: 56. Issue: 5 Publication date: June 2009. Page number: 42+. © 1999 Risk Management Society Publishing, Inc. COPYRIGHT 2009 Gale Group.