Best Practices for Crisis Management in Corporations
As we all learned from Covid-19, everything changes when a crisis occurs. In the case of Covid-19, the unexpected and immense changes that erupted as a direct result of the pandemic impacted the course of history forever. Some might say that the change was for the good (remote work and blended models are now widespread and we care more about personal and public health). Some might say that the change was meant to wake us up to environmental issues. Some would say that the mask policies that were put into place because of Covid tested the willingness of the common person to put up with temporary discomfort for the betterment of everyone (recovery from the pandemic and a return to normal). Many would say that it tested our response rate to a widespread crisis. The truth is that there is a lot we can learn from Covid-19 when it comes to crisis leadership and best practices for handling adversity & crisis. Naturally, there were a lot of questions and a lot of solutions that were enacted quickly (as a crisis response) when covid-19 emerged. After all, there was no choice but to respond (the world, the country, government officials, business leaders and, yes, each of us). And the best practices for crisis resolution were generally respected. Attempts were made to respond accurately, consistently, and quickly. Whether we took it seriously or not was up to us. With millions of Americans dead, the virus took a huge toll on American lives and not everyone agreed with the Covid-19 response. The good news was that we responded effectively enough to learn a great amount from Covid-19 – understandably, the debate will continue about how effectively. In truth, no one was adequately prepared for such a widespread event. Combine a lack of preparation with a huge need to respond and you get a great, but costly, learning experience. Questions like “How will the economy fare?”, and “How long will they quarantine?”, and “when students (and workers) should return to work?” erupted. They followed with “When should mask mandate policies be removed?” and “will everyone take the vaccine when it comes out or will incentives need to be put in place?” These questions and answers were naturally debated, and they caused controversy as not everything was perfect. Still, whether it was perfect or not, the truth is that there was a crisis and there was a response. The response was very fast as borders closed, and everyone was told to stay at home and situationally wear a mask. Store supply and demand was tested (items were off the shelves quickly and were replenished). Stimulus checks were given. Vaccines were developed very quickly, and while there were setbacks, the good news was that the rollout of the vaccines quickened, and they were available to the public free of cost. Healthcare workers did a phenomenal job and were heroes during this dire time. The public also did its part overall (even though many didn’t want to cooperate). Lastly, the spread of misinformation about the disease had to be scrutinized over, and journalists and scientists were on the job to make sure we knew what was true from what was false – again, some will continue to debate. At the end of the day, our response improved over time. What we’ve learned from the pandemic is that a massive and life-altering crisis can happen, and there’s going to be a lot of uncertainty (and fear) and that it can change our ‘normal.’ So, as everyone has learned (and been humbled by in terms of the pandemic), a crisis is an unexpected or smoldering event that results in an emergency response. Serious and potentially devastating crisis events must be prepared for. If not, there is potential for company embarrassment, loss of money, loss of time, and loss of company or personal morale and loss of life. The good news is that we can prepare for a crisis, and we can learn from how other companies handled crisis events. The bad news is that corporations have not been known for having the best responses to crisis. No, in fact an emergence in crisis management is the direct result of the shortage of effective crisis management. So, now that we know that our crisis response can improve, it’s good to know that there won’t be an excuse anymore not to prepare for the worst events. With enough literature, statistics, and research out on the topic however we all can be prepared to handle what comes our way. If we start with foresight and a predictive mindset, it’s a brilliant way to start. Some of the best plans include having the foresight so see what crisis might come, evaluating plans for each crisis, and of course electing the best leaders, teams and spokespeople to become directly involved with every step of the crisis. With the right recommendations and the right people, a crisis response will break down into before, during, and after crisis stages. There is no doubt organizations can turn short-term adversity into long-term advantage. When it comes to a crisis response, we can start by looking at the numbers, and see crisis management a little more clearly, but the most important statistics on crisis management are as follows: less than 30% of respondents in a recent global crisis survey felt that their businesses crisis management functions were well composed. Yes, and of course, over 70% of respondents said that technology would help significantly with the organization and outcome of a crisis response team. Most importantly, most (or over 70% of business leaders) reported having a crisis happen to them within a period of the last 5 years. Most of the individuals (more than 90% of those surveyed) believed that a crisis would happen to them within the next two years, but less than 35% of people believed that their company was prepared. According to these statistics, risk can’t be ignored. According to Deloitte, the areas that frequently involve
Male Student Success Initiative Making a Difference in Young Lives
Bottom line…the Community College of Baltimore County focuses on the improving the success rate of their male students and some renewed funding has given the program new life! The Male Student Success Initiative (MSSI) is a network of support for students who attend the Community College of Baltimore County. The initiative consists of men of color, with approximately 90% of those being African American men from the Baltimore Metropolitan area. The primary objectives of the initiative include, but are not limited to, providing dedicated mentorship, helping men to prepare for and obtain internships, and assisting with building brotherhood and community for students. All of these principles are closely correlated with successful graduation and effective transfer. Part of the uniqueness of MSSI is that students are organized into micro-brotherhoods which are focused on their respective majors or programs of study. For example, cohorts are curated by gentlemen who wish to pursue careers in business, healthcare, and engineering. Based on interests, these aspiring men work in distinct cohorts which are led by a dedicated mentor. Additionally, these cohorts work together to create and organize MSSI sponsored events which make a positive difference in the world we live in. One of these events was sponsored by STEMulating Minds (SM). SM invited Dean Oscar Barton, Jr. (Morgan State University’s School of Engineering) to speak to their cohort, and he did so by offering an MSSI bridge to Morgan with financial support, and assistance with helping student enrolment into the School of Engineering. The SM cohort has received more than $12,000.00 in grants that will allow students to join NSBE (National Society for Black Engineers) with the purpose of building and launching rockets. YES, launch rockets! Providing students with experiential learning opportunities and launching rockets is one of the examples that give our men opportunities that they would not encounter outside of MSSI. MSSI also has an Advisory Board. One of the primary components of the Board is to assist students with internship opportunities. Students have been able to garner internships with Stanley, Black and Decker and with various charter schools. To secure these interns, students must have a certain GPA, number of credits completed, and attend an information session. To continuously engage young men, speakers and other events are geared around student registration and orientation. Additionally, opportunities are provided for male students to attend statewide and national conferences with overnight stays. Within this realm, students gain experience in professional development settings – skills that will last a lifetime. To maintain engagement with the high school community, MSSI is working with the Baltimore County and Baltimore City School Systems, as well as other entities like CollegeBound Foundation, to orient male high school male students of color to the features and promises of MSSI. MSSI is working tirelessly to support and to promote exceptional opportunities for men of color at the Community College of Baltimore County. They do this with a wide approach to engagement, quality and accomplishment. If your company or organization offers internship opportunities, we encourage you to consider CCBC’s Male Student Success Initiatives. To learn more about this amazing program: https://www.ccbcmd.edu/Campus-Life-and-Activities/Male-Student-Success.aspx.
Peloton’s Lack of Planning
Amid the height of COVID in 2020, Peloton’s stocks skyrocketed and increased by almost 440%. While many consumers were investing strongly in at-home workout machines, Peloton continued to advance its business goals by producing more, creating a wider variety of product, and making business decisions for 2021 and the years so come. Ah, the power of business planning – where did Peloton go wrong? In 2021, stocks dropped 76% and most recently in Q4 of 2021, the numbers were their lowest growth quarter ever. Now, the CEO is under fire as Peloton is halting production in 2022 to remodel their production, prices, finances, and business plans to reflect a more accurate valuation, as COVID numbers decrease and people are going back to work and have less of a need for at-home fitness equipment, especially when gyms are opening back up world-wide. Many competitors have emerged in the marketplace, most notable – Lululemon and NordicTrack. The bottom line, Peloton projected their numbers at their highest value point and quite frankly, didn’t do what we tell every client – “plan for adversity”. It seems like common sense and can be seen as naïve to think production would maintain at the momentum it was during a time where everyone was forced to stay indoors, but the mistakes were made and now their reputation is on the line. Peloton is currently laying off employees and closing stores due to their misjudgment on projections and finances. Right now, the CEO is denying that they are halting productions but gave a vague statement regarding their efforts towards increasing margins and improving costs for the company (which creates a very selfish image). Wall Street and the court of public opinion are not reacting well. What could have been done differently and what can they do in the future? Peloton failed to plan for a time in which competitors and adversity would cast a shadow on their product. The mishaps in production and projections were discovered early enough to make changes sooner, and this was a smoldering issue that the corporate offices new about and tried to do small things to change a big mistake. They began to slash prices, sacrifice quality, but then increased prices for delivery and set up; it was a complete scramble to correct margins. There was a complete disregard to consumer impact, and people began to learn the smoldering issues of Peloton very quickly. There is a trust that the court of public opinion shares with companies, especially those that align themselves with that organization and actually work for them. These very people are being laid off due to the corporate failures, and the court of public opinion is waiting to see how they will handle it. Peloton needs to be transparent, take responsibility for their miscalculations, and ultimately ensure that the corporate office, the stores, employees, and consumers are all aligned in how they are going to maintain integrity and the steps they will take to prevent this from happening in the future.
The Inner Journey of Authenticity in The Age of Resignation
During the course of my executive coaching, I assign my clients a book by Parker J. Palmer Ph.D, entitled “Let Your Life Speak: Listening for the Voice of Vocation. The significance of this reading assignment is that the author captures introspective insights that are very applicable in connecting with one’s self-awareness and authenticity, which is an essential element to one’s growth as a leader. Many of the selected insights and perspectives provided in the passages below are to be credited directly to Dr. Palmer’s book, his personal journey shared, and ever so timely in this era of self-reflection and resignation. My intention in writing this blog is to recognize this body of work for others and further expound on these selected insights, by applying them in the form of the Five Tips for Leaders to Remain Authentic. As leaders, we wield the power of casting either shadows or light into peoples’ lives… Good leadership requires reconciling our own inner shadows and light to connect with those we lead with authenticity. Leadership is a journey that is not for the faint of heart. We learn to sustain ourselves with positive thinking and seek to project confidence by doing so. Consequently, we can often fail to look introspectively inward to our own shadows and light and lose touch with our selfhood. We find comfort in believing that our efforts are always well-intended and that our power is exercised with compassion. Moreover, we can reconcile ourselves to think that the problem is with those we are trying to lead versus our inability to connect with their needs. Leaders need professional skills to manage the external world and introspective skills to journey inward toward their own shadows and light to fully embrace the human condition of the people around them. Those of us who gravitate to leadership positions tend toward extroversion, often ignoring what is occurring within us as individuals. We excel at compartmentalizing our thoughts and fears and separating them from our leadership persona. In doing so, we lose our authenticity, humanity and create shadows that distort our understanding of the needs of those we impact. We try to compensate for this darkness with the power of positive thinking. After all, that is what is expected of conventional leaders. Though this is a time where conventional styles work the best. Amid what has become defined as the resignation age, in which people are recovering from a pandemic driven survival mode and increasingly seeking to find more fulfillment in their work, it is now more than ever vital that we as leaders understand our inner shadows, find our selfhood, and project the light that is within us as leaders with authenticity. Five tips for leaders to remain authentic: Reflect on what truths you embody and what values you represent. Remain conscious and aware of your own emotional and psychological needs. Remember that you, as a leader, are not defined by the title or position you hold but gifted with the opportunity to shed light through your unique inner wisdom. Remain mindful that our selfhood and being authentic requires us to embrace what makes us different from others, recognize our unique strengths and frailties, and acknowledge our own needs and goals. Remember that we are human beings and that it is import to not lose sight of our authenticity by embracing our selfhood and thereby shed light into the life of those around us. * Citation: Palmer, Parker J. Let Your Life Speak: Listening for the Voice of Vocation. Jossey-Bass, 2000
Is Your Organization Positioned to Build Reputation, Trust and Value?
We often say having a strong reputation builds trust and trust builds value. But what is the logic behind this statement? Today’s value of a company is based on the present value of its future cash flows. To establish this value, investors are usually pouring over a business’s results and future plans to establish their view on the future cash flows and value of the company. This is fundamental to being an investor and deciding which companies offer the most opportunity to invest in. A logical question that is asked in this analysis is how certain are the future cash flows and what could go wrong to cause them to change? If you look at Boeing’s bad experience with the 737 Max, the recognition of bad news detracted from their reputation and consequently their stock price declined from a mid-2019 closing high of $380/share to $150/share by January of 2020 – more than half the company’s value was lost. This deterioration of the stock price reflects investors putting a higher risk on their future cash flows than they had been assuming before the negative events. For example, would it be likely Boeing will sell less planes than previously planned? Will there be higher legal costs? How much uncertainty is there in the future? The stock price trading is now trading at approximately $230/share. This implies investors still do not have as much confidence in future value, certainly not to the levels they did before the 737 Max events. So how do organizations build reputation to protect against negative reputation events ….by focusing on the right things. Here are four key questions leaders should ask themselves. Does my organization have the right strategic focus? Is it based on the company’s core values and capabilities? And, does it have the integrity in its business plans to deliver on that strategy? Do the key leaders in the company have the right skills to be at their most effective leadership level, both externally and internally? Is there a routine to periodically examine areas of reputation risk for the business? Have you listened to where your employees think the risk is? What are the areas of risk for your business that need to be addressed, both internally and externally? Is my company well organized and prepared to respond in an effective way to reputation events? Are the key spokespeople “60 MINUTES” ready? With the beginning of the New Year, it is an ideal time for organizations to assess if they are poised to Build, Strengthen and Defend their reputation in 2022.
The Most Important Message is the Message Received
Most public speakers and performers work relentlessly to ensure they use the perfect words at the precise time and in the proper sequence to make people think, feel and act differently. Whether a media interview, keynote address, board meeting or sensitive family matter, we all find ourselves ‘on stage’ with the opportunity to impact. Most think about what they are going to say before an upcoming critical moment. And afterwards, many of us replay that critical moment in our minds, from every conceivable angle. Sometimes we celebrate victory, most times we worry about what we said and obsessively dwell on how we may have dramatically missed the mark. Our unrelenting inner voice delivers repeated gut punches for our perceived gaffes and incomprehensible botched communicative moments: ‘How could I have done that…’ ‘I wished I would have said…’ ‘I forgot to say…’ ‘That didn’t sound right…” ‘I sounded like a jerk…’ ‘I can’t believe I said…’ ‘They think I’m an idiot…’ ‘That landed wrong…’ ‘I didn’t mean it that way…’ ‘It sounded wrong…’ ‘Did you see their faces…’ ‘How come no one said anything…’ ‘You could’ve heard a pin drop…’ ‘I just want to curl up and…’ ‘I wish I didn’t say anything at all – UGH!’ WELL, IT REALLY WASN’T THAT BAD! Please show yourself some grace and realize that dizzying feeling doesn’t translate to a Southwest Airlines ‘wanna get away’ moment. In fact, during your quest to seek reassurance by those who were either there, or your trusted circle you are continuously seeking perspective from, you quickly learn it really wasn’t that bad! We are our own worst critics – snap it away and know the people you are empowering with your ‘world’s worst moment’ aren’t even talking or thinking about you. Really, they are consumed with themselves much the same way we are when we hyper-analyze each syllable. I offer a tip that has dramatically helped me. Before each speaking role, I pray that whatever I say positively impacts at least one person. Within that meditation, I ask for divine wisdom to find the right words, despite my human-doomed prepped remarks. You see, I’ve wrestled with everything I’ve described but have peacefully landed in a unique place – while my words may not have been delivered the way I rehearsed or had hoped, they may have cascaded out of my mouth in the perfect way that someone needed to hear them. You see, my sense of perfection isn’t perfect, despite my long-term belief. After all, we are supposed to be speaking in service of those listening. The beauty…we may never know if our words landed perfectly, words that may shape someone’s life. So, before you get anxious about your next speaking opportunity, realize the most important message is the message received. And that magnificent ripple effect you unwittingly create could be traveling the universe in ways you could never have imagined. Own the stage, have faith and believe in a power larger than the moment.
Smoldering Vs. Sudden
Bottom line – Protecting your company’s valuation depends on how well you are prepared to face the court of public opinion. Crisis happens to everyone. The difference is those who are prepared to address smoldering issues proactively can prevent them from erupting. When done well, you can turn short-term adversity into long-term advantage.
Reputation leads to Trust and Trust leads to Valuation… And, Not All Currency is Financial.
Successful leaders and organizations understand the value of building, strengthening, and defending their reputation. Reputation is defined as: the beliefs or opinions that are generally held about someone or something. If we take a broader look at society, we believe that consumers are morally aligned with the brands they invest in and purchase from, more than they ever have before. In fact, 92% of millennials prefer to purchase from companies they feel are ethical….and 70% of them will pay more for products and services from socially responsible companies. So, the question is…what is the real value of investing in your reputation? Our answer, priceless. It is crucial to establish a business with a healthy foundation that embraces sound leadership, strategy, and communications tenants, and enables a transparent relationship with your workforce and consumer base. The court of public opinion is interested in who you are and what you have to say as a brand – especially when crisis occurs. Remember, the court of public opinion renders judgments much more quickly than any other ‘court.’ Not too long ago, Wells Fargo was leading the headlines for creating fraudulent savings and checking account on behalf of clients without their consent. What happened? Misreported sales numbers, billions in settlements, significant stock underperformance, and a change in leadership at the top. In a different but related event with Boeing, investigators found faulty 737 Max designs and training manuals which contributed to hundreds of deaths and grounding of hundreds of aircrafts. Once the news broke, their CEO was terminated and numerous layoffs occurred. The lawsuits began to pile in, $18 billion earnings loss (2019), and again a significant drop in the stock price. We tell every client, “reputation leads to trust, and trust leads to valuation – and remember, not all currency is financial” – because it’s the truth. By creating a strong relationship with your stakeholder base, and proactively telling your story, you can maintain a brand with a healthy reputation that is essential for success in today’s world.
The Power of Crisis Leadership
The importance and value of crisis leadership has perhaps never been more apparent than it has been in 2021. Companies across the globe have been bombarded by one societal crisis after another. Every time a leader delivers a message—be it at a board meeting, media interview, keynote, all-staff meeting, community event, or on a social platform—the reputational piggy bank realizes a light deposit or heavy withdrawal. During times of crisis, it is critical for leaders to think strategically about what the right message is and how it will resonate with many micro, diverse communities. Doing so will help assure the firm’s reputational and cash balances pay incremental dividends over time. On the other end of the spectrum, mishandled crises can cost leaders time, money, stakeholder confidence and their careers. Bottom line, you don’t spin your way through crisis, you lead your way through. Over the past decade, Fallston Group has had the privilege of advising leaders in the auditing, accounting, legal and professional consulting verticals, along with many public, private, government and nonprofit entities who are fighting for marketplace trust, and their futures. The key is to understand each organization’s navigational fix—where’d they like to be—and then chart the path forward using a deep well of instinct and experience. Crisis leadership is an art, not a science. It’s laden in nuance—a predictive mindset is not negotiable. The right messageSome firms are quick to put their CEO at the center of the management of their public response. In tandem, decisions need to be made rapidly to clarify who the public spokesperson will be, starting with initial response and continuing as the story evolves. Messaging decisions and options must be carefully considered every step of the way. Sometimes a simple statement strategically detailed makes sense, especially in cases that may involve legal pursuits. In other situations, it makes more sense to arm the media with more detail and perspective. Sometimes that involves taking responsibility and proactively addressing what steps the organization will take to move forward. Much like a sprinter’s start, effective crisis leadership is about quickly getting out of the starting block and saying the right things for the right reasons at the right time. Winning comes down to sustaining the intense messaging tempo and making the proper leadership, strategy, and operating decisions that turn adversity into advantage. Leading through crisisBelow are a few best practices to bear in mind from a crisis leadership standpoint: Never erode your integrity. There can be immense pressure to “make your organization look good.” Do not cave-in to others who would like you to lie, distort the truth, or leave vital facts behind which alter messaging and perception—this is tantamount to a lie. Once it’s lost, you will never fully restore your integrity. Be responsive. These days, many leaders seem less inclined to return a reporter’s call, or otherwise seek to delay the release of information. By sticking their heads in the sand and not responding, businesses make themselves irrelevant and ineffective. If you don’t tell your story, someone else will. When someone else tells your story, it certainly won’t be the story you want told. Know the facts: Too many professionals jump on camera or in front of an audience with no substantive information or an unwillingness to engage with questions. Not knowing the facts or relying on the “no comment” phrase is unacceptable. Know your position, know your craft: it’s your legacy. Be predictive. When preparing to deliver a message, be certain to plan for every question and eventuality. There is often a tendency for people to want to go on camera without fully preparing because they are used to speaking publicly or know the organization very well. Push back and demand ample preparation. Don’t wing it; prepare for every interview no matter how mundane or harmless it may seem. Build media relationships. You want to get the benefit of the doubt when journalists tell your story. It’s not about an unfair advantage, but simply balance. When managing the media, gather intelligence from reporters and news organizations—ask them what angle they plan to cover, who they are speaking with and what their position is. You’d be amazed at what they will tell you, particularly if there is an existing relationship or future mutual need. Video doesn’t tell the whole story. A video account of what happened does not factor many variables—what each party said, body language from all angles, and what transpired before and after the footage. In today’s digital world, more is recorded and shared than at any other point in history. The emergence of video has changed all professions, but treat video for what it is: another tool in the search for the truth. Practice, practice, practice. It is essential to practice interviewing and public speaking. Know yourself, know your audience. Seek advice from colleagues. Take a look at how others have responded during times of crisis and leverage their lessons learned to your advantage. Your colleagues, peers and competitors are invaluable pools of knowledge and can serve as the single most important case study resource. Think about what you don’t know yet. During a crisis, it often takes time to know the exact fact pattern that is developing. These events often have many related stakeholders, and other third parties, that may have relevant information. One should try to clearly understand what is known with certainty and what is still not completely clear. This perspective should inform your public statements with the goal of maintaining integrity and marketplace trust. There two benchmarks of success which allow leaders to quickly maintain control and weather the storm. First, they put their hand in the air and recognize they are in trouble. Second, they ask for help from their trusted circle. Recognition of trouble and decisiveness in action will preserve your reputation and help you turn short-term adversity into long-term advantage. Author: Robert Weinhold, Chief Executive
“No Comment”
We’ve all heard an interviewee answer a difficult question with “no comment”. The question is, what is the message received when using this phrase? Kathleen Cairns, Fallston Group’s Communications Strategist, shares her insights on how effective “no comment” really is.
