Corporate Crisis Management - Minimize the Chaos | White Paper
Description
This white paper is an executive introduction to crisis management—what it is, why it's important, and key principles for success. Senior managers in particular will benefit from this insider's guide. People, processes and management tools are critical components of a successful crisis response, and effective communication is the foundation. Neglect any of these facets, and a crisis can easily escalate. Crisis management expert Elizabeth Stevens provides a solid overview of these areas, as well as expert advice. Table of Contents: What is Crisis Management? Preparedness: – People – Program – Platform Communication: the single most important element Critical communications considerations
Document Sample
Emergency Notification • Incident Management
Corporate Crisis Management:
How to Minimize the Chaos
An executive introduction to crisis management,
with key principles for success
By Elizabeth Stevens
Corporate Crisis Management: How to Minimize the Chaos
About the Author Introduction
Elizabeth Stevens is an acknowl-
The business world is becoming more complex, and results need to be
edged leader in the fields of Crisis
obtained more rapidly. Many organizations have taken a methodical
Management, Emergency Re-
sponse, Safety, and Security. Her response to business disruptions—primarily a combination of planning
career has spanned the aviation, and insurance. They no longer have that luxury. Incidents are becoming
retail and financial services in- more common and less predictable, inside and outside the enterprise.
dustries, as well as numerous U.S. What’s needed is a way of managing any crisis, regardless of its source.
Government agencies.
People, processes and platforms are vital to managing a crisis success-
During her tenure at Northwest fully are. Underpinning these is the need to communicate effectively
Airlines, she worked on more than between all participants and stakeholders. Miss any of these and the
300 incidents and accident inves- crisis can rapidly escalate out of control, increasing the damage to assets,
tigations. She also built dedicated including people and brand.
crisis management teams at Target
Corporation and Ameriprise. If there was any doubt about the long term effects of a crisis on an or-
ganization, a study conducted by Oxford University and the Sedgwick
Group (now Marsh) will be interesting reading. The study analyzed the
impact of catastrophes on shareholder value, evaluating companies that
responded well to a crisis, as well as those that responded poorly. Not
surprisingly, companies that responded poorly suffered a decline in
stakeholder confidence. However, companies that recovered well saw a
22% positive difference in stock price.
Table of Contents
1. Introduction
What is Crisis Management?
2. What is Crisis
Management? “Hey, that’s my favorite store!” said the boy, pointing to the business
3. Bad Stuff Happens card ID tag on my briefcase as I settled in for the flight. Then he asked
“What’s crisis management?”
4. Preparedness
• People At the time, the Department of Homeland Security was in its infancy, the
• Program US Government was scrambling to hire Federal Air Marshals to protect
• Platform commercial aircraft, and I was one of a handful of people working in
the private sector with a job dedicated to crisis management. Tsunami,
5. Communication: Katrina and “bird flu” weren’t yet a part of anyone’s lexicon.
The Single Most
Important Element “Well,” I said, not wanting to keep him from his Harry Potter, “Most of
6. Critical Communications the time our stores run smoothly, and you can shop and get what you
Considerations want when you need it. But occasionally, when bad things happen, like
a hurricane or a major power outage, things get disrupted. That’s when
7. It’s Up To You
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
© Copyright 2010-2011, MissionMode Solutions
die” tabletop scenarios, I’m going to try to simplify it a bit.
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Corporate Crisis Management: How to Minimize the Chaos
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 cor-
porate lingo taken straight from emergency management and military
manuals. Days at the office are spent “fighting fires” (managing un-
expected 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-mor-
tem” 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.
Tsunamis, wildfires, earthquakes, hurricanes, floods and tornados
destroy entire communities. SARS takes lives and travels by jet to infect
other countries, and only hints at the horror of an eventual Pandemic In-
Prevent what you can, and invest fluenza. Bridges fail. Crazed shooters take aim at students or shoppers.
in mitigation efforts to minimize The electrical grid goes down across the North-Eastern quadrant of the
your overall risk. 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.
Crises vary in severity and frequency. They are at least somewhat unex-
pected and involve some risk of loss. Prevent what you can, and invest
Preparedness involves a great in mitigation efforts to minimize your overall risk. And carry a good
deal, principally people, a insurance policy, of course.
program, and a platform.
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 great
deal, 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.
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Corporate Crisis Management: How to Minimize the Chaos
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 pro-
vide risk assessment, planning, response training and incident coordina-
tion for “bad stuff”.
...it’s critical to have the best
people working with you, who I once attended a business continuity association meeting at which a
bring a variety of experience, State of Minnesota official presented “lessons learned” during the re-
talent and flexibility to get sponse and recovery to the complete collapse of a major interstate bridge
things done “on the fly”. that resulted in 13 fatalities and over 100 injuries. One of the points that
was 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 emer-
gency 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 devel-
oped 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 ser-
vices to ensure every business is made whole, free of charge, in the face
Of the myriad reasons prompting of disaster. And the majority of corporate crises don’t even require law
companies to take on crisis enforcement or fire department or other massive government response,
management, perhaps most as the source of the crisis as well as the loss are contained within the
painful are the “been there, company.
done that” examples. You are responsible for corporate preparedness.
The growing interest in enterprise risk management stems from mul-
tiple 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 manage-
ment, perhaps most painful are the “been there, done that” examples.
They are the ones who were caught unprepared and without contingen-
cies to support unusual, unexpected and unnerving situations.
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 conti-
nuity plans are comprehensive, tested and audited. You have the people,
and the plans. You’re close to being ready.
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Corporate Crisis Management: How to Minimize the Chaos
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
Even a seemingly insignificant strategy. Your people even like working for you. It’s all worth protect-
situation, unaddressed, can fester ing. Even a seemingly insignificant situation, unaddressed, can fester
and grow into a major threat. 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 people and plans to rely on.
But the plans do not specifically
tell you how to simultaneously
navigate the complexity and
chaos of these abnormal, and
often emotional, situations. The plans tell you what to do, and what you do in the hours and days
after a critical event will determine, in part, how successful you are at
managing back to normal operations, minimizing losses, and maintain-
ing value. But the plans do not specifically tell you how to simultane-
ously 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.
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Corporate Crisis Management: How to Minimize the Chaos
“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 need-
ed 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, some-
times from minute to minute.”
During the initial fast-paced,
high-stakes hours and days of Anyone who’s played a significant role in crisis response will tell you
a crisis, you need to have a solid they weren’t fully prepared when the real thing hit—even with robust
platform to support the response plans and hours of training and exercises to practice various scenarios.
and recovery efforts. Use your plans, experience and best judgment.
But the plans themselves are just the “what” of your response. During
the initial fast-paced, high-stakes hours and days of a crisis, you need to
have a solid platform to support the response and recovery efforts.
Your people are the who, your
Your people are the who, your program is the what, and the platform is
program is the what, and the
the how of crisis management. The platform includes how you assemble
platform is the how of crisis
the crisis teams, whether in one room (a million-dollar high-tech com-
management.
mand 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 messag-
ing, 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.
Communication: The Most Important Element
If you don’t get information
out quickly, people will create People need to know what’s going on, and you’re expected to provide
context through speculation direction. If you don’t get information out quickly, people will create
and even misinformation, if context through speculation and even misinformation, if necessary—
necessary—they won’t wait. 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 timeliness.
How do you get information? Validate the facts? Provide updates and
send out status reports? Make changes to the 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?
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Corporate Crisis Management: How to Minimize the Chaos
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 well—quickly, with
communicate.
reasonable accuracy, providing
frequent updates, and soliciting The single most important element in any crisis management program
input from various audiences— is always communication. Not leadership. Not a “hot site”. Not multiple
and the end result can be smooth redundancies. Communication—all kinds.
sailing once more.
You’ll need to navigate the tenuous elements that threaten your core
business. Communicate well—quickly, with reasonable accuracy, pro-
viding frequent updates, and soliciting input from various audiences—
and the end result can be smooth sailing once more.
Communicate poorly, and your
Communicate poorly, and your response to a bad situation may actually
response to a bad situation may
create more problems, perhaps even sinking the ship.
actually create more problems,
perhaps even sinking the ship. In a crisis, you communicate at multiple levels. Most critical is the in-
formation 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, partners, vendors, clients, shareholders, the board of direc-
tors, regulators, and perhaps even the media. The sooner you know
what needs attention the sooner you can address those needs and get
things back in order.
Communication is too broad a topic to tackle without some 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 con-
cerned, likely overwhelmed, and not able to answer all the questions.
Although crisis communications plans must include media relations ele-
ments, 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 communi-
cations. His candor is refreshing as he challenges corporate communi-
cators 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 com-
municate this content simply and effectively?
2. Logistics and media: How do we reach our audience with our
information content?
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Corporate Crisis Management: How to Minimize the Chaos
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 feed-
back 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 politi-
cal 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 com-
munication—within the organization, outside the organization—to help
get the right messages out. All six are important, but for this discussion,
Good leaders are able to distill I will focus on numbers one (the message), two (the mode), and one spe-
confidence even in difficult times. cific part of number six (the method). For more information, visit www.
psandman.com.
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 of the audience.
What you tell your Board of Directors and what you announce to your
employees via a memo at the time clock should not be in conflict, al-
though the tone and tenor or content may vary. “Transparency” is the
current buzzword that comes to mind.
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
To ensure a successful response
have an army of them: media relations managers, shareholder liaisons,
to any corporate crisis… you
associate/employee/team member or other “internal” communications
absolutely must ensure that
specialists.
everyone is on the same page.
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 “engage-
ment 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 created in your company,
you absolutely must ensure that everyone is “on the same page.”
Whether or not your crisis becomes public or is contained internally,
you must ensure factual accuracy, provide everyone with a common
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Corporate Crisis Management: How to Minimize the Chaos
plan, document and update your progress over and over and over
again—to confidently address the matter at hand and make sound deci-
sions.
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 Infor-
mation Content. You need to gather as much relevant information as
possible, and quickly, from your people and other sources. What’s hap-
pened? 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,
Most crises don’t happen take action. Create specific communications for various stakeholders,
conveniently in your head and distribute those in short order. As time goes on, you need to update
office when all your key your information, anticipate questions, and refresh your messaging ac-
players are waiting there for cordingly.
a crisis with nothing else
important to do. 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 mul-
tiple 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, mobile, VOIP,
or satellite), text messaging, fax, pager, e-mail, and web-based options.
Less common but worth considering are public address systems, mega-
phones, signs (electronic and old school), posters, billboards, newspa-
pers, 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 communi-
cate something to someone and the systems and networks can’t sup-
port the concurrent demand. Capacity isn’t the only limiter. Safe from a
tornado below ground level, you might find your phone service unavail-
able if a repeater hasn’t been installed.
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Corporate Crisis Management: How to Minimize the Chaos
So what’s working? To start with, determine how you got the informa-
tion, 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 ac-
tion is not taken. These most critical messages must be succinct, direc-
tive, 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
they descended the stairwells of the World Trade Center. In New Or-
leans after the flooding, satellite phones and ham radios were needed
and later billboards and newspaper ads.
If you’ve evacuated your offices and only the crisis team carries mobile
communication devices—with the rest of the employees relying on their
desktop PCs—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
How do you get people out of the The method is where you find the key to success. Your method for get-
nonstop game of catch up... ? The ting people on the same page, to share and discuss information, make
ideal solution is to have a web- decisions, and document your response, will provide the critical plat-
based, hosted service that notifies form mentioned earlier. Sandman wisely identifies self-assessment as a
your people, has your program key focus area for crisis communications, and begs the question “How
documents and plans at the ready, can we overcome the internal barriers to good crisis communication?”
and provides a 24/7 “one-stop- How do you get people out of the nonstop game of catch up with four
shop” crisis coordination center 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 pro-
vides 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 im-
mediately able to respond to a common physical location. Your ability
to convene and communicate may involve just one mode of communica-
tion 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 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 thou-
sands within a few minutes? That’s the difference between starting your
conference call in 5 minutes or 45 minutes from the word “go”.
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Corporate Crisis Management: How to Minimize the Chaos
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 critical decisions and task
assignments don’t get sent for more than 20 minutes after the call, and
valuable time is wasted. Email and voicemail are roadblocks for any cri-
Expect the critical information to
sis team trying to stay on top of a complex and changing situation. Web-
change—the crisis is dynamic.
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 stake-
Choose a secure system that allows
holders are kept in the loop. Choose a secure system that allows each
each stakeholder to directly input
stakeholder to directly input updates without an intermediary; this
updates without an intermediary;
reduces delays and increases accuracy.
this reduces delays and increases
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 oth-
ers. 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 plat-
form 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.
Page 11
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Page 12
The MissionMode Situation Center
A secure hub for communications, collaboration and control—anytime, anywhere
1
4
2
3
4. Users share information and come to informed decisions
“MissionMode radically reduces the
time it takes to get an overview of
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2. Monitor and assign tasks Group Business Risk Manager, TBI
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112811
Page 13
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