Why every business needs to be prepared for a crisis

Don't get caught with your trousers down.

by Tim Jotischky
Last Updated: 26 Jan 2017

Once upon a time, a young entrepreneur was relaxing on his sun lounger in Barbados over Christmas, reflecting that life couldn’t possibly get much better. His business was growing faster than he could ever have dared hope, eating up his rivals’ market share, and his proprietary software was the envy of all his competitors. Then his phone rang.

The call was from a TV journalist. He had been talking to one of the entrepreneur’s former employees who had turned whistleblower and decided to lift the lid on some of the unethical practices he had witnessed at first-hand.

At first, the entrepreneur wasn’t worried. "It’s all nonsense, don’t believe a word of it," he assured the reporter. "Talk to my business partner if you need anything else, I’m on holiday".

He learned a salutary lesson that day. His business partner was also on holiday and equally disinclined to worry to trouble himself with the journalist’s inquiries. When the programme was duly broadcast, the allegations were so damaging they almost sank the business. Years later, they still appear prominently on the first page of Google, a stain on the company’s reputation he could only remove by re-naming it.

It can take a lifetime to build your company’s reputation, but it can be destroyed in the blink of an eye. Journalists rarely have a pre-conceived agenda; it’s almost never personal, it’s business. That’s why anyone running a company needs to treat it the same way and take a business-like approach to crisis management.

The first rule of crisis management is that if you only react when the crisis has hit it’s already too late. Though you often can’t anticipate where, how, why or when the storm will hit you can have a plan in place.

Every company needs a crisis template, which must include at least four key elements:

  • An escalation policy to help you differentiate between a little local difficulty and a serious threat to your reputation
  • A central command and control team, with clearly defined roles for each member of the leadership team, and all the logistical arrangements in place
  • Simple procedures for gathering information as quickly as possible and an agreed mechanism for keeping internal and external stakeholders informed
  • Designated spokespeople to lead the company’s public response

However, I would add a word of caution. There are plenty of credulous companies drowning under the weight of doorstopper crisis management plans foisted on them by consultants with little real-world media experience. They have never been read properly, let alone absorbed or understood, because they are formulaic, jargon-ridden and simply too big.

The reality is that every crisis is different and throws up a unique set of issues, which can’t be run entirely by the playbook. The answers won’t all be found in an 80-page crisis management manual. Sound judgement and cool heads are the pre-requisites for managing a crisis so the composition of your core team is crucial. Invariably, a bunker mentality can quickly set in; adding trusted external advisors to the mix can provide a fresh perspective and often proves invaluable.

In 2015, Thomas Cook was plunged into crisis mode after chief executive Peter Fankhauser refused to apologise at the inquest of two children who had died from carbon monoxide poisoning in Corfu nine years earlier. He was acting on legal advice, backed by his closest advisors, but the saga played out for a week, causing untold reputational damage. It was only allayed when he was encouraged to ignore the lawyers and follow his gut instinct, finally delivering a personal apology the family had waited almost a decade to hear.

Crises are unpredictable but one thing is certain: any business needs to have a public face to represent it. Yet too many companies fail to prepare for this eventuality. Fankauser was not a natural media performer and was given last-minute media training on the hoof before going on TV – hardly ideal preparation.

Similarly, former BP chief executive Tony Hayward had done very little media work and one of his first live TV interviews came in the aftermath of the 2010 Deepwater Horizon disaster in which 11 of his employees lost their lives. "There’s no one who wants this over more than I do, I’d like my life back," he said. Hayward’s reputation never recovered that disastrous slip of the tongue.

Any business leader should have been media trained before a crisis strikes, not when the company is already in crisis mode. But the most senior member of the leadership team is not always the best public face for the company as they might lack the necessary communication skills. That’s an easier observation for an outsider, than an insider, to make.

As well as being prepared for how to communicate you also need to prepare what to communicate. You can’t expect to deal with a crisis situation, which plays out in public, if you can’t articulate your company’s guiding principles. That may sound obvious, but it’s surprising how many business leaders cannot clearly articulate in a three-minute interview what they stand for.

Generally, a crisis comes when a company is knocked off on course by a sudden, unexpected event, or because fault lines in the way it operates are exposed. Either way, a crisis represents a deviation from the norm and being able to articulate what the business should stand for in a simple, intelligible way is crucial. The key to communicating effectively is making a personal connection with the audience and that means speaking human, not corporate speak.

An object lesson came from Nick Varney, chief executive of Merlin Entertainments, after a serious rollercoaster accident at Alton Towers. He got two things right. First, he immediately understood the risk to his company’s reputation and went to the scene himself, rather than leaving it to a colleague. Secondly, he didn’t try to hide behind process. He publicly apologized at the outset and promised the victims would be compensated without recourse to legal action. It didn’t mean the crisis was over, but it was immediately contained.

There was a communications plan in place and the right judgement was made at the outset in executing it. Get those two components right and a crisis can be managed, however severe.

Tim Jotischky is a Senior Consultant at leading London PR agency, PHA Media, specializing in strategic and crisis communications, and former Business Editor of the Daily Telegraph

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