Nothing damages reputation faster or deeper than a crisis or an issue mismanaged. Yet new Australian research suggests CEOs are not providing the leadership or priority needed for effective crisis preparedness and prevention.
The study by Tony Jaques paints a worrying picture of inexperience, inadequate risk awareness and only limited crisis preparedness, especially in smaller businesses. Some key findings from the research appear in the latest issue of The CEO Magazine.
The research focused on top executives from 12 multinational companies in the chemical and petrochemical industry, who provided a unique view of crisis management and crisis prevention in Australia as seen from the executive suite.
The CEOs interviewed believe top executive participation is the single most important element, and they characterised some essential leadership roles in crisis preparedness and crisis response, including to encourage a proactive crisis culture; to establish and enforce standards and processes; to set an example; to build relationships before the crisis; and to promote open communication and a learning environment.
Not surprisingly the participants were fairly upbeat about the capability of their own company, and their own industry. But when asked to assess the broader status of crisis management in Australia, they were much less confident and identified six common barriers faced by senior executives
(1) Denial and failure to prioritise. They said the idea that “it will never happen to me” persists among Australian managers, who often put off taking proper steps without fully contemplating what that means
(2) Lack of experience and full understanding of potential risks. Without having experienced a crisis, it is too easy to underestimate the threat from a wide range of risks, not just the obvious ones where managers feel more comfortable
(3) Inadequate systems processes and management discipline. Systems and discipline were seen as vital, but it was recognised they require work and effort with little obvious return
(4) Insufficient size and resources. While big companies usually have established structures and in-house crisis and risk expertise, smaller companies may think it’s too hard and too costly and therefore don’t do enough
(5) Unwillingness or inability of executives to share crisis experience. Because crises are so sensitive and risky, CEOs don’t always share experience with their peers. As a result organizations fail to learn from their own crises and the crises of others
(6) Failures of leadership and upward communication. As one CEO told me: “If leadership from the very top of the organization doesn’t give adequate focus to crisis management, then why would you expect that layers of leadership further down the organization would give it adequate focus?”
This study doesn’t suggest Australia is any worse than other countries when it comes to crisis management. However it highlights that Australian organizations remain vulnerable and there is a lot of work yet to do. For help to make your organization better crisis prepared – or for more details on this research – contact Tony Jaques