Last month the UK media was gripped by stories of an organisation in crisis. Kids Company was a charity founded in London in 1996 by Camila Batmanghelidjh, which gave financial and other help to troubled children.
Kids Company won many awards and the support of many of the UK’s most prominent people, and its founder had an extraordinary gift for getting money out of donors and the public purse, but the charity announced on 5th August that it would be permanently closing at 7pm that same day after running out of cash, with the loss of 600 jobs.
The charity was headline news for two days, with the founder alleging a political and media campaign of misinformation, and critics alleging a long history of financial irregularities and impulsive leadership.
As stories of Kids Company continue to develop, it’s worth thinking more generally about the nature of crisis and how corporate leaders can respond to it, as the chance is very high that somewhere, sometime, somehow, your corporate career will be touched by a crisis. Aggressive news media, low customer and investor loyalty and media-savvy regulators can escalate even minor organisational errors into crises.
Crises bring the level of publicity that organisational leaders dream of; the phone is constantly ringing, the organisation is centre-stage; everybody seems to be interested in you…but this publicity is of course not the right sort of publicity. The stories are not emerging from the organisation, but from outside.
"A career of dedicated service may be set aside by a single imperfect decision"
Crisis generates many hazards; a crisis has the potential to force leadership changes, it may affect revenues, it will certainly affect the stock price. Crisis emboldens the organisation’s existing critics, both internal and external. Crisis absorbs substantial amounts of management time, it brings back to the public memory previous organisational mistakes, and attracts the attention of lawyers and regulators.
Perhaps the most sobering thought about crisis, is that the actions of the people concerned will be judged in the unflattering light of hindsight, and a career of dedicated service may be set aside by a single imperfect decision.
Crisis, however, is also an opportunity to show your customers what kind of company you are, the values and experience of your management team, the effectiveness of organisational processes, and the goodwill that your organisation holds with key stakeholders.
This article examines the first steps in crisis response. The first few hours are particularly crucial because crisis moves quickly. The crisis manager must read the situation rapidly and initiate a number of work streams, in the presence of significant ambiguity and risk.
In order to have a hope of making the right decisions and the right communications in a crisis situation, an organisation has to deal with a trio of issues; organisational issues, legal issues and media issues. Each of these three worlds has its own constraints and its own principles, and the right approach must integrate all three.
Gathering the basic facts requires an understanding of “organisational logic”. Once this data is gathered it then needs supplementing by interpretations from legal and media specialists. Only then can the real position of the organisation be evaluated. Figure 1 shows how the three parts connect to produce a complete picture of the organisation’s position.
Figure 1 – Intelligence gathering in a crisis situation
Large organisations are prone to a number of administrative processes which may limit the accuracy of reported information:
- Corporate information typically gets “cleansed” as it passes up the organisation, with negative information being removed.
- Different parts of an organisation may see events very differently, and much of this specialist insight will be lost further up the organisation where high levels of deference, ambition and familiarity produce a conformist “groupthink” amongst senior leadership teams
- Mistakes made by the organisation (of commission or omission) are not discussed internally for fear of offending the mangers concerned. Organisations tend to stick by their staff, in large part because staff tend to stick by their colleagues, partly out of self-preservation and partly out of loyalty.
Therefore it is essential for the crisis team to have direct contact with employees who gather information, rather than relying on senior managers to provide them with processed and sanitised data. The crisis manager must have the organisational knowledge to know where information is collected and the authority to compel staff to provide information.
A few principles for dealing with corporate lawyers in crisis situations:
- Lawyers tend to operate on the basis of absolute clarity, this is why court cases take so long. Legal processes are slow, but crisis response has to be rapid; therefore normal corporate legal procedures cannot be followed in a crisis.
- Lawyers may possess an exaggerated respect for the law and underestimate the influence that media commentators, pressure groups and other channels of public opinion have on legal processes. A company in a strong legal position may still find themselves forced to give way to demands.
- Lawyers tend to word statements in impersonal and lifeless ways with ambiguity built in.
- Different lawyers will often interpret the same events in diverse ways; law is not a science.
For these and other reasons, lawyers do not make ideal crisis managers, but their contribution is vital, since the cost of legal action is one of the main risks of a crisis situation, and the organisation has a legal duty to make provision for the costs of litigation. Due to the speed required, and the level of risk involved, it is likely that external legal counsel will be required for the period of the crisis. All legal advice provided should be documented.
"it is essential for the crisis team to have direct contact with employees who gather information"
In a crisis situation, the law and the media are engaged in a similar pursuit, the attribution of blame. However, the gulf between how these two professions engage in this pursuit is vast. The media will usually identify a villain within hours, whilst the legal process operates at a much slower pace, generally measured in years. An organisation’s reputation could be ruined by negative stories long before a court makes a ruling, and so getting the media response right is of vital importance.
Communication is not just a channel for information, it creates reality. The first communication shapes the story. In a crisis, communication is a major part of the resolution of the crisis. Poor communication will create further crises. Journalists collect and arrange facts into structures called “stories”. Facts that are missing may be filled in with speculation or quotes. The personal opinions of individuals may be reported as facts.
Figure 2 – The three Vs of a media crisis story
The default tabloid news-media stance on a crisis is typically weighted against corporations and consists of a number of connected propositions:
- The victims are blameless
- The corporation is to blame for the harm (the villain)
- The management of the firm are incompetent
- The management of the firm are callous and crafty; they are putting profits first
- The news media are the vindicator, assisting the helpless victim
The firm has to work hard to ensure that this “david and goliath” type of story does not stick. Even the smallest evidence that supports these propositions will be marshalled to create the story, whilst conflicting information may be ignored or marginalised.
The error of many writers on corporate crisis communication is to promote the view that:
- All journalists want to do is report the facts. They are your friends.
- Open, rapid and frequent communication is essential
- Apologising at an early stage is essential to show sincerity
In fact, the media are often the greatest problem. You may be able to make friends with journalists, but you cannot assume this, you will have to work at this, and it’s an uphill struggle in many cases because of the dominant “media logic” which has an anti-corporate bias.
Communication is essential, but it has to be carefully controlled since miscommunication is fatal, and saying “sorry” prematurely may makes the company into the villain, putting them in a defensive posture, and encouraging legal actions and media attacks.
A crisis creates a different relationship between a firm and its journalists; with the journalists now having lot more power. In normal circumstances companies feed grateful journalists with stories, but in a crisis the story develops independently of the company. The company needs to show that is still master of its fate by gathering more information than the journalists have.
"In fact, the media are often the greatest problem"
While employees, suppliers and pressure groups may be feeding harmful facts to the press, the company must be gathering facts comprehensively, whilst monitoring what others are saying.
The tabloid media are rarely interested in presenting the detailed sequential facts of the case or in presenting the legal positon. The requirements of creating a simple story based on selected facts will predominate. It is the company’s duty to ensure that detailed facts and the legal duties are presented very early and persistently in the development of the story.
They must be presented repeatedly until they are picked up by journalists, and a counter story emerges. When the simplicity of a story is eroded by extra facts the media often lose interest and the story slips down the news agenda.
What do we want to convey in our messaging from the first moment:
- We are taking this seriously
- We have a plan; we are in control
- We will do everything that is necessary
- The firm is the solution rather than the problem
- The firm is the best source of information on the crisis
A suggested scheme of information gathering
Asking the right questions is an essential part of crisis resolution. Listed below is a sequence of questions, in approximate chronological order, which will help guide managers and advisors though the early stages of crisis response:
- Gathering information (The facts and legalities)
- What is the chain of events that provoked the crisis?
- What harm has been done?
- Which other organisations are involved?
- What further data do we need?
- Legal analysis
- Whose crisis is this? Which parties have responsibility?
- What is our role? What have we done wrong?
- Where does legal liability lie?
- Which organisations will be the financial target for the lawyers?
- What are the facts that a legal case would depend on?
- What are the best legal precedents?
- Do we have any blame? (accept it)
- Where does blame lie? (Employees / Management / Suppliers)
- Media analysis
- Which media have picked up the story and which angles are developing?
- To what extent has a consensus developed already vs a variety of views?
- Which misinformation is being disseminated and by whom?
- Where are journalists obtaining their information from?
- Do we have any media supporters?
- Who are the main critics of the organization? And what do they want?
- How motivated and resourceful are the antagonists?
- What is the reaction of the general public? (e.g. blog comments)
- What are the responses of the other organisations involved?
- How do the analyses of media and legal factors change our position?
- What action do we need to take? (The response)
- Crisis team formation and initiation of workstreams
- What action should we take:
- To meet all legal and regulatory requirements
- To keep people safe and remove risk
- To reassure the different stakeholders:
- To ensure this never happens again
- What are the estimated costs of the different responses??
3. How should we communicate? (Communicating the facts and the response)
- What timetable for announcements?
- Which audiences will need messaging?
- Investors via RNS/website/social media
- Employees via email/letter/stores/social media
- Customers via email/letter/stores/social media
- Public via media/social media
- Regulator via phone/email/meetings
- Management team via meetings/email
- Who should be the public spokesperson?
- Who will write the messaging? And who will edit/approve?
- What other corporate stories might interfere with the resolution of this issue?
- What messages do we need to refute?
- What information can we put in the public domain to change the story?
The role of consultants
Employing experienced public relations counsel the moment the crisis breaks is one of the most vital steps that distinguishes organisations that recover from organisations that don’t. Crisis PR consultancy is rather like medicine; it’s not something you need all the time, but is something that you need very rapidly at certain moments in life; delay may be fatal.
Executives in the first steps of crisis often either over-react, for instance by making public accusations against the organisation’s critics (such as mentioned in the article’s opening case) or under-react with the belief that “it will all blow over”. External counsel to the executive board is valuable both because of the experience and the objectivity that a consultant brings.
Crisis provides a window into an organisation; giving both supporters and critics insight into the values and effectiveness of the organisation. The early steps of crisis response are a most critical time and great care should be taken.
The possession of a carefully designed and regularly tested crisis plan (based on an understanding of the nature of crisis and the limits of legal counsel, news reporting and organisational processes) is an essential pre-requisite for making an effective crisis response that can protect organisational reputation, relationships, assets and careers.
Image: Flickr / Ken Teegardin