Most organisational crises are predictable and half are caused by management. So it’s logical that senior executives should play a leading role in crisis management and prevention.
Yet some CEOs still don’t regard crisis management as a priority – until after a crisis strikes. And even executives who are ‘crisis aware” may be unsure exactly what they need to do to protect the organisation from the terrible impacts of a crisis.
Crisis Proofing dictates that senior executives must play a more direct role in crisis preparedness and prevention rather than simply delegating responsibility and hoping for the best.
Any manager who says, “Let’s not over-plan for a crisis. I am sure we can respond well” should consider a study of Australian crises over a ten year period undertaken at Melbourne University. It revealed that one in four serious crises cost the organisation affected in excess of $100 million. In addition, more than 25 per cent of the organisations went out of business or ceased to exist in their current form.
If that wasn’t alarming enough, a famous Oxford University study disclosed that when a crisis struck, the share price of badly-prepared companies fell further and recovered slower than well-prepared companies. Twelve months after a crisis, the share price of well-prepared companies was, on average, 22 per cent ahead of the badly-prepared.
In the face of such stark numbers you’d think that crisis management would be fully recognised as a core leadership competency at executive and board level.
Yet damaging headlines regularly expose organisations which failed to properly prepare for even the most obvious crises. Worryingly, a recent survey of non-executive directors in Australia found only 11 per cent rated their own organisation’s ability to respond to a crisis as ‘very effective.’ And only three per cent felt their organisation was ‘very capable’ in crisis prevention.
For any manager who wants to Crisis Proof the organisation, these are some basic mistakes to avoid:
- No effective crisis plan in place – There must be an up-to-date and regularly tested crisis plan and a well-trained crisis management team.
- Inadequate issue management – Issue management is the essential process to identify and address risks and potential crises early.
- Over reliance on one spokesperson – Speaking with one voice does not mean only one spokesperson. The most appropriate spokesperson may not be the CEO.
- Over confidence in communication ability – Bad communication often does more damage in a crisis than the event itself. Yet some executives still say: “I don’t need media training. I can wing it.”
- Failure to set the right tone – If the CEO is not willing to genuinely apologise when appropriate, and is not committed to act in a crisis and lead by example, any other response is badly undermined.
- Unwillingness to hear bad news – In too many crises, bad news did not reach the top, or was deliberately ignored. There needs to be open, blame-free upward communication.
- Failure to assign priorities – If leaders don’t clearly position crisis management as a high priority, nor will others in the organisation.
- Reluctance to learn from past crises – Don’t say “Let’s not dwell on the past” and “Let’s keep focused on the future.” These are simply excuses for not facing up to what caused the crisis in the first place
Crisis Proofing demands executives and managers at all levels who understand the threat generated by crises and are prepared to work to protect their organisation. Clearly, success requires much more than just avoiding these eight mistakes . . . but it’s a pretty good place to start.