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Overcoming Typical Organizational Dysfunctions
in Managing Crisis Communications

by Helio Fred Garcia

Introduction

Much crisis communication is pattern recognition. One of the key tasks of a crisis manager - wherever he or she may reside within an organization's operation or among its advisors - is to anticipate what will happen next and to redirect resources so that what happens next is more likely positive. The challenge for crisis managers is to identify counterproductive behaviors early, and then to refocus an organization's energies on more productive pursuits.

In more than 20 years of advising clients and more than 13 years teaching about crisis communications, I have identified 9 typical institutional reactions that only serve to make matters worse. Avoiding these nine typical institutional dysfunctions is one key to successful management of a crisis. Because speed is critical in the early phases of a crisis, these dysfunctional behaviors are doubly damaging, first, because they cause reputational harm in the first place, and second because they crowd out more productive institutional responses. Left unchallenged too long, these dysfunctions can leave an institution with permanent reputational harm. Some companies engage in each of these one at a time, and end up in deep trouble. Others engage in several simultaneously. While this can be painful, it has the virtue of speed.

I have seen these dysfunctional behaviors in corporations, not-for-profit organizations, governments, and professional service firms. I have seen them in North America, Europe, Africa, Asia, Australia, and Latin America. They serve as a kind of common denominator in institutional responses to negative events. Enlightened institutions and their advisors are on guard against these behaviors, and act promptly to overcome them if they arise.

Common Institutional Dysfunctions
When Things Go Wrong

Here are some common ways companies mis-handle crises. Crisis communicators should be on their guard for signs of these common corporate behaviors.

1. Ignore the problem.

Many organizations simply fail to recognize that a given event or issue is likely to become a problem. Instead, management keeps blithely on its path while the problem gets worse. Whether the problem is staff disaffection, a defective product, or a troublesome agitator out to provoke a fight with management, the organization turns a blind eye and is then surprised when things blow up.

For example, according to news reports and congressional testimony, the U.S. National Highway Traffic Safety Administration (NHTSA) knew about problems with Firestone tires on Ford Explorer vehicles for more than one year before taking action and ordering a recall. Initially the agency was praised for ordering the recall. But when word got out that NHTSA had not acted promptly on the information in its possession, the agency came under sharp attack, and was even blamed for not preventing further deaths and injuries.

While the NHTSA case is in some ways extreme - lives are at stake - it can be instructive for less dramatic circumstances as well. One reason it is important for communications executives to be in the room when business decisions are made is because it is important to weight the reputational impact of decisions, including the decision to do nothing.

One reason crisis planning can be very helpful is that it generates corporate buy-in on the reality that things can become problems if left unattended, and awareness of the kinds of issues that may become crises if not addressed promptly. In addition, some kind of early warning mechanism, however informal, can help management assess the likely reputational fallout of non-routine events or of non-routine reactions to normal business operations.

When assessing the possible steps to take in reaction to a negative events, institutions always have the option of doing nothing. But this option should be exercised deliberately based on all available information, not taken by default because management doesn't even know it has a problem.

2. Deny that the problem exists.

A somewhat more subtle, and at times more destructive, behavior is denial that a problem exists. Unlike ignoring a problem, the denial is grounded on recognition that something is wrong, but refusing, for whatever reason, to take prompt and decisive action when it is required or when it can do the most good. Usually the refusal is based on the understandable human tendency to try to avoid confrontation, unpleasantness, and difficult decisions. Sometimes it is based simply on arrogance.

For example, in the early 1990s the U.S. investment bank Salomon Brothers, then a powerhouse in the market for U.S. government bonds, discovered that one of its traders had figured out a way to corner the market for new issues of government bonds - a clearly illegal activity. Rather than taking the actions called for when they found such a problem - including disciplining the employee and notifying the regulator - the firm gave the employee a slap on the wrist and sent him back to trade. Predictably, the suspect activity continued. When it was - also predictably - discovered by others outside the firm, the reaction from regulators and the company's board of directors was swift. Not only was the trader in question fired. Because the firm was seen to have ignored a fundamental compliance problem, the CEO - who had been dubbed "King of Wall Street" by Business Week magazine - was dismissed along with much of his management team. The firm went into a tailspin and had to be rescued by investor Warren Buffett, who became Chairman and put his own credibility on the line to save the firm. It never quite recovered its former stature, and was ultimately bought by what is now Citigroup.

While understandable, such self-deception is a harmful response to adversity, for several reasons. First, it makes a candid assessment of the situation, and the choice of options based on reality, less likely. Second, the denial may entrench managers into positions from which retreat may be politically difficult, preventing people from mobilizing quickly to solve the problem. Third, for as long as the problem is unresolved the company is at risk of having events careen out of its control. When it finally comes around to admitting that it has a problem, it may be too late to fix it without reputational damage.

3. Compartmentalize the problem.

A common reaction in large companies, or in any organization where fiefdoms or strong boundaries exist, is to compartmentalize a problem. While acknowledging that a problem exists, the institution that compartmentalizes sees the problem as falling into a convenient administrative category: It's not an agency problem, it's a media problem; it's not our problem, it's a supplier's problem; it's not a product problem, it's a packaging problem; it's not a corporate problem, it's a field office problem.

But the outside world rarely sees the company in unrelated administrative categories: to the outside world, your problem is your problem, period. Unlike ignoring or denying a problem, compartmentalization has the virtue at least of acknowledging that a problem exists. But it creates further difficulties. By insisting on a compartmentalized worldview, the institution risks seeming defensive or disingenuous. And the compartmentalization sometimes means that the resources of the whole organization are not available to solve the problem, often with disastrous consequences.

Several careful studies of Exxon's problems following the Exxon Valdez oil spill off the coast of Alaska point to a compartmentalized worldview within Exxon as responsible for the seemingly long delay in responding publicly to problems: Exxon knew of the spill, but relegated immediate reaction to its distribution subsidiary responsible for moving the oil. Only after customers started cutting their Exxon credit cards in two on television - to the puzzlement of Exxon executives who saw the credit cards as a refining and marketing subsidiary product - did the CEO of Exxon mobilize full corporate resources to deal with the problem. But by then, some ten days after the spill, the reputational damage had been done.

Another element of compartmentalization is the compartmentalizing the solution: When Firestone began the recall of its Wilderness tires, it initially established a timetable under which only tires in certain U.S. states - those deemed the hottest - would be exchanged quickly. Consumers in all other states would have to wait, some for up to a year. Predictably, the wait caused outrage among consumers, and Firestone was quickly forced to drop its plan and to offer fast exchanges in all states. But by then the reputational harm was done: Firestone was seen to be uninterested in its customers' safety. If it had been interested, the reasoning went, Firestone would have offered a prompt recall to everyone.

4. Lie about the problem.

One of the biggest mistakes an institution or individual can make is to lie about its problem. Experience shows that the lie is usually found out. And when it is, the liar has a double burden: to solve the original problem that caused the trouble in the first place; and to do so in an environment where credibility is diminished.

And once someone is seen to have lied about one problem, it will have great difficulty being believed in future crises. This is one of the many problems that plagued President Clinton during the Monica Lewinsky scandal. President Clinton lied about his involvement with Lewinsky repeatedly over many months. When he ultimately was forced to admit the truth, the damage was done, and impeachment proceedings followed. While he survived the impeachment, his reputation was permanently damaged. That damage is seen in ways both big and small.

For example, soon after he admitted his lie, the President ordered military action in the Persian Gulf. At the time there was some question as to whether he was to be believed. He was accused of engaging, in the phrase made popular by the movie of the same name, in "Wag the Dog" behavior, creating a military diversion to call attention away from unpleasantness.

Similar circumstances apply in the corporate sphere. I know of several companies that lied about their problems, got into trouble, and were unable to dig out; later, when the companies were being battered by rumors that were in fact false, they couldn't get anyone to believe them, and suffered unnecessarily.

5. Tell misleading half-truths.

While some companies rightly avoid telling outright lies, a large number have no qualms about telling half-truths that may be literally correct but that paint a very misleading picture. They behave much like President Clinton on the first days of the Monica Lewinsky scandal, when he used the present tense to assure TV news anchor Jim Lehrer that "there is no sexual relationship" with Ms. Lewinsky. Literally true, but misleading and irrelevant since the charge was of a past relationship. Caught in the half-truth, President Clinton several days later told the whopper of a lie, asserting that he never had sexual relations with that woman, Ms. Lewinsky. As President Clinton learned, a misleading half-truth, like the lie, is likely to be found out, and companies that are caught face the same kinds of problems as those caught in a lie.

The admonition against telling misleading half-truths doesn't suggest that a company shouldn't tell true statements that paint the company in a positive light. But the true statements a company tells should be grounded in a clear understanding of the reality of the situation, not on a deceptive foundation.

6. Tell only part of the story, letting bad news dribble out over time.

Another common error many companies make, which is reflective of their failure to take the pain, is to admit only the least amount of information they can. This is almost always self-defeating because the bad news will almost certainly get out eventually. When companies are parsimonious with the bad news, reports of problems tend to dribble out over an extended period of time. The result is a stream of negative rumor, news reports, and gossip that keeps the company's troubles on people's minds.

The operative principle in releasing information is to bundle bad news within a single news cycle, and to unbundle good news over multiple news cycles. The bundling of bad news results in everything that would otherwise become known coming out all at once, preferably with a strong statement detailing what the company is doing about its problems. This can expedite the rebuilding process.

7. Assign blame, internally or externally, rather than fix problem.

A natural human tendency is to look for someone to blame when things go wrong. While understandable, assigning blame in the early phase of a crisis can be very counterproductive, for several reasons. First, the media and industry gossips love conflict and clashes of personality. Assigning blame plays into these negative contexts, and keeps the focus on things other than what the company is doing to solve its problems. Second, time spent looking for and punishing a scapegoat could otherwise be better spent identifying the scope of the problem and taking steps to fix it. There will always be time to find and punish someone who is truly responsible for a problem. But the first task upon discovering a crisis should not be to find out who's at fault.

The one exception to this is when the problem involves malfeasance or other clearly inappropriate behavior by an individual, who is clearly responsible for his or her actions. In this case dismissal or some other form of punishment is appropriately seen to be part of the solution, not a diversion from finding and fixing the problem.

Both Ford and Firestone fell into the blame game during the early phases of the tire recall. Firestone initially blamed Ford for the tire tread separations, saying that Ford improperly advised customers to inflate their tires to a suboptimal pressure. Ford, for its part, refused initially to accept the criticism, and said that the entirety of the problem rested with Firestone. Both companies suffered reputational harm when they were seen as less interested in finding a solution than in deflecting attention to someone else.

8. Over-react: "Confess" to more than actually happened.

One curious institutional behavior is to overconfess, or to over-react to a contained incident or event. While not as common as the behaviors noted above, overconfessing is common enough to warrant some discussion.

Overconfession tends to occur when the crisis prompts in the mind of management many other, unrelated frustrations, problems, or issues. Management then is unable to draw a distinction between the present crisis and other everyday annoyances or unrelated problems, and proceeds to bare the company's soul about extraneous or petty issues that have no bearing on the crisis. The result can be focusing public attention on negative matters much broader than the crisis itself. More significant, the overconfession prevents management from focusing on the solution to the actual crisis, and can have a very negative impact on the morale of employees and on the confidence with which management is seen.

I have seen the overconfession manifest itself particularly in groups that are used to being seen as agents of good: religious organizations, charitable groups, or those who help others such as hospitals, or close-knit organizations such as partnerships. These groups are so unaccustomed to being seen in a negative light that they take the criticism as an opportunity for public, therapeutic discussion. While it may make them feel better, the therapeutic discussion tends to have universally negative consequences, and is better left to a private setting.

9. Panic, leading to bad decision-making,
unclear communications, or escalation.

The final predictable corporate mis-step in a crisis is panic. The panic can lead to a number of other problems. These can include paralysis, where people stop doing their jobs and where the company's work product and revenues grind to a halt. More commonly, panic leads to hastily-made and unproductive decisions that complicate or escalate the crisis. Panic can result in unclear internal and external communications, confusing people about what happened and what the company is doing about it.

Another manifestation of panic is the desire of many people to become instant crisis managers, and to focus all of their time on dealing with the crisis. This is understandable, since a crisis can be a refreshing break from routine work flow, and can cause adrenaline to pump in those handling the crisis. But too many people focusing on the crisis can cause two types of problems. On the one hand there's the risk of a confused chain of command and of imprecise or overly complex tasking of crisis activities. On the other hand, every person who works on the crisis is not working on his or her regular job, which will result in a backlog of important work.

I know of a professional services firm that allowed all of its partners to participate in brainstorming the solution to a crisis over a period of months. A large number spent virtually all of their time doing so, arguing among themselves over the desired course of action. The result was predictable: almost nothing got accomplished to solve the crisis, since each partner proposed a solution that cancelled out another partner's proposed solution. Worse, after several months without working for and billing clients, the firm became insolvent and had to sell itself to a bigger firm in order to meet its payroll and pay its bills. The desire to empower everyone to be a crisis manager cost the firm its independence. It isn't the crisis that brought down the firm: it's the firm's paralysis in the face of the crisis that did so.

Preventing and Overcoming Dysfunctions
and Acting Responsibly in a Crisis

As the list of mis-steps suggests, surviving a crisis is often determined by how a company responds to a crisis rather than by the event itself. If a company is nimble, thoughtful, and quick to take pre-emptive action before a potentially embarrassing or damaging event takes place, it can often prevent the event and the reputational damage altogether. Even if the event is unexpected, avoiding these unproductive behaviors allows a company to take responsible action quickly, before it suffers reputational harm.

Recognizing this, many companies go through a formal process of vulnerability analysis, crisis plan preparation, and crisis simulation. These can be very helpful exercises, mostly for concentrating management's minds on the need to act quickly and responsibly, and for identifying in advance the teams that will be mobilized to deal with threats when they arise.

Ideally companies will retain expert outside help to develop and implement the crisis plan and simulation. But success requires that management be fully invested in all elements of planning, so that the company can mobilize quickly when things go wrong. And while crisis experts are useful to advise before and during a crisis, they can't solve a company's problems by themselves. Success requires the company to take decisive action and to communicate well.

Most companies do not go through a formal crisis planning process, and end up dealing with potentially negative events as they happen. However useful a formal crisis planning process may be (and it can be very useful), such planning isn't the only way to anticipate and deal with a turning-point event that may become a crisis. In many cases a company will know in advance that it plans to do something controversial or that an event affecting its reputation will take place. During this period a company can anticipate the likely reputational impact of the event and take steps to neutralize the negative consequences of the event and, thereby, prevent a crisis from happening at all.

Even if prevention isn't possible, the time leading up to the event can be used to identify the crisis team, analyze the likely reputational fallout if the event plays out negatively, and develop a plan and message for dealing with the crisis when it happens.

As the list of dysfunctional institutional responses to crises shows, one of the key variables in planning to deal with a crisis and in managing actions and communications when the crisis occurs is the attitude of senior management. If management rises to the occasion and exercises leadership in a calm and deliberate way, it can often lead the company through difficult times and emerge relatively unscathed or even in better reputational shape than before the crisis - witness Johnson & Johnson's reputational boost for its handling of the Tylenol poisonings in the early 1980s.

Conversely, a management team that fails to act with calm and deliberate leadership, that fails to take the necessary actions and to communicate effectively, will likely find that the company's reputation will suffer as a result of the crisis and management's poor handling of it - witness, again, Exxon after the Valdez incident.

There are two rules for communicating in a crisis that, taken together, allow a management team to prevent the dysfunctional behaviors noted above. They are to think clearly, and to take the pain in the short term in order to protect the institution's reputation in the longer term.

Crisis Communications Rules

A prominent political scientist has written, "The first of all moral obligations is to think clearly." The very same applies to crisis communications: the first of all requirements in crisis communications is to think clearly. The greatest value one can bring to a crisis is clarity of thinking. Calm and quick deliberation and self-candor are far more important than industry expertise, media savvy, or bravado. But candor is rare, especially in a hierarchy where people are reluctant to pass bad news up a chain of command.

I believe that most of the tough decisions that need to be made in a crisis are of the sort my ten-year-old daughter could make, not because she's brilliant but because she's ten years old. Ten-year olds have a clarity of vision that allows them to see problems that adults often cannot. And because they haven't yet developed structures of deceit and self-deception that plague many adults, they have a refreshing sense of realism. For example, a ten-year old child has learned that covering up a mistake is worse than the mistake itself. A ten-year-old knows that if she is hurting someone she needs to stop it, acknowledge the harm, apologize for it, and make restitution. But adults, especially those used to getting their own way, lose sight of this.

So the first rule of crisis communications is Think clearly: Strip away the structures of deceit and self-deception, and candidly name the real problem. Until the problem is named it is very difficult to mobilize resources to solve it.

The second requirement in crisis communications is, upon identifying the problem and quickly assessing alternatives, to act quickly to lessen the impact of the problem on the institution's reputation. Very often this requires taking actions that in the short term may cause inconvenience, embarrassment, discomfort, or other distress. But done right, short-term pain now can prevent much greater pain later. The prominent 19th Century British social critic Thomas H. Huxley once admonished, "The most valuable result of all education is the ability to make yourself do the thing you have to do, when it ought to be done, whether you like it or not."

This is a good rule for crisis communicators: Take the pain. Do what you have to do, when it ought to be done, whether you like it or not. In other words, act responsibly now to prevent worse damage later. Of course this all seems like common sense. And it is. But common sense is in very short supply when things go wrong.

The lack of common sense - the inability to think clearly and failure to take the pain - are particularly visible when decisions are being made in an organizational hierarchy. In these cases, people are often afraid to speak candidly to superiors, resulting in managers making decisions based on faulty information or unrealistic expectations. More commonly subordinates are reluctant to challenge a course of action that may make the boss feel good but that is manifestly a bad idea.

In a "Business World" column in The Wall Street Journal, business columnist Holman Jenkins noted, "Organizations need defenses against their charismatic leaders. Otherwise such individuals can too readily bully or seduce others into supporting their vainglorious illusions."

This is one reason outsiders such as my firm are frequently called into crises. Yes, we have expertise in pattern recognition and rapid mobilization; yes we have strong technical skills; yes, we understand how different constituencies tend to behave; yes, we can focus totally on the problem. But as or even more important, we have the ability to tell the emperor that he has no clothes. As outsiders we can inject a common-sense view that insiders are often unable to do - not because they lack the ability but because either their view has become too institutionalized or they fear career consequence from second-guessing the boss. We are free of both of these burdens. And as outsiders we are often in a position to tell the boss unpleasant truths candidly or to ask, apparently naively, about unintended but fully predictable consequences of particular courses of action.

This latter course of action we have found to be particularly effective. When the client (usually the CEO) is set on a course of action we are certain is counterproductive, it is often more useful to engage the client in a form of Socratic questioning than merely asserting that we disagree. It can be more effective to have the CEO discover for himself (or herself) that the course of action being advocated will have far more unpleasant consequences than initially considered. The CEO can then take ownership of an alternative idea without being seen to be giving in to advisors or staff.

The lesson for crisis managers in all of this: Protect your organization from itself; from it's the impulses that get in the way of resolving reputational threats early, when the opportunity is the greatest.

About the Author

Helio Fred Garcia is Managing Director at Clark & Weinstock, New York, USA, and Adjunct Associate Professor of Management and Communications at New York University, USA. E-Mail: hfgarcia@cwnyc.com.

First published in Crisisnavigator (ISSN 1619-2400):
Volume 2 (2001) - Issue 8 (August)

German   /  English 

Last update: Sunday, 4. December 2016

       

© Crisisnavigator - Institute for Crisis Research / Crisisnavigator Consulting, Kiel / Hamburg.

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A "spin-off" of the University of Kiel (Germany).
Volume 17 (2016) - Issue 12 (December) - ISSN 1619-2400
 

Overcoming Typical Organizational Dysfunctions
in Managing Crisis Communications

by Helio Fred Garcia

Introduction

Much crisis communication is pattern recognition. One of the key tasks of a crisis manager - wherever he or she may reside within an organization's operation or among its advisors - is to anticipate what will happen next and to redirect resources so that what happens next is more likely positive. The challenge for crisis managers is to identify counterproductive behaviors early, and then to refocus an organization's energies on more productive pursuits.

In more than 20 years of advising clients and more than 13 years teaching about crisis communications, I have identified 9 typical institutional reactions that only serve to make matters worse. Avoiding these nine typical institutional dysfunctions is one key to successful management of a crisis. Because speed is critical in the early phases of a crisis, these dysfunctional behaviors are doubly damaging, first, because they cause reputational harm in the first place, and second because they crowd out more productive institutional responses. Left unchallenged too long, these dysfunctions can leave an institution with permanent reputational harm. Some companies engage in each of these one at a time, and end up in deep trouble. Others engage in several simultaneously. While this can be painful, it has the virtue of speed.

I have seen these dysfunctional behaviors in corporations, not-for-profit organizations, governments, and professional service firms. I have seen them in North America, Europe, Africa, Asia, Australia, and Latin America. They serve as a kind of common denominator in institutional responses to negative events. Enlightened institutions and their advisors are on guard against these behaviors, and act promptly to overcome them if they arise.

Common Institutional Dysfunctions
When Things Go Wrong

Here are some common ways companies mis-handle crises. Crisis communicators should be on their guard for signs of these common corporate behaviors.

1. Ignore the problem.

Many organizations simply fail to recognize that a given event or issue is likely to become a problem. Instead, management keeps blithely on its path while the problem gets worse. Whether the problem is staff disaffection, a defective product, or a troublesome agitator out to provoke a fight with management, the organization turns a blind eye and is then surprised when things blow up.

For example, according to news reports and congressional testimony, the U.S. National Highway Traffic Safety Administration (NHTSA) knew about problems with Firestone tires on Ford Explorer vehicles for more than one year before taking action and ordering a recall. Initially the agency was praised for ordering the recall. But when word got out that NHTSA had not acted promptly on the information in its possession, the agency came under sharp attack, and was even blamed for not preventing further deaths and injuries.

While the NHTSA case is in some ways extreme - lives are at stake - it can be instructive for less dramatic circumstances as well. One reason it is important for communications executives to be in the room when business decisions are made is because it is important to weight the reputational impact of decisions, including the decision to do nothing.

One reason crisis planning can be very helpful is that it generates corporate buy-in on the reality that things can become problems if left unattended, and awareness of the kinds of issues that may become crises if not addressed promptly. In addition, some kind of early warning mechanism, however informal, can help management assess the likely reputational fallout of non-routine events or of non-routine reactions to normal business operations.

When assessing the possible steps to take in reaction to a negative events, institutions always have the option of doing nothing. But this option should be exercised deliberately based on all available information, not taken by default because management doesn't even know it has a problem.

2. Deny that the problem exists.

A somewhat more subtle, and at times more destructive, behavior is denial that a problem exists. Unlike ignoring a problem, the denial is grounded on recognition that something is wrong, but refusing, for whatever reason, to take prompt and decisive action when it is required or when it can do the most good. Usually the refusal is based on the understandable human tendency to try to avoid confrontation, unpleasantness, and difficult decisions. Sometimes it is based simply on arrogance.

For example, in the early 1990s the U.S. investment bank Salomon Brothers, then a powerhouse in the market for U.S. government bonds, discovered that one of its traders had figured out a way to corner the market for new issues of government bonds - a clearly illegal activity. Rather than taking the actions called for when they found such a problem - including disciplining the employee and notifying the regulator - the firm gave the employee a slap on the wrist and sent him back to trade. Predictably, the suspect activity continued. When it was - also predictably - discovered by others outside the firm, the reaction from regulators and the company's board of directors was swift. Not only was the trader in question fired. Because the firm was seen to have ignored a fundamental compliance problem, the CEO - who had been dubbed "King of Wall Street" by Business Week magazine - was dismissed along with much of his management team. The firm went into a tailspin and had to be rescued by investor Warren Buffett, who became Chairman and put his own credibility on the line to save the firm. It never quite recovered its former stature, and was ultimately bought by what is now Citigroup.

While understandable, such self-deception is a harmful response to adversity, for several reasons. First, it makes a candid assessment of the situation, and the choice of options based on reality, less likely. Second, the denial may entrench managers into positions from which retreat may be politically difficult, preventing people from mobilizing quickly to solve the problem. Third, for as long as the problem is unresolved the company is at risk of having events careen out of its control. When it finally comes around to admitting that it has a problem, it may be too late to fix it without reputational damage.

3. Compartmentalize the problem.

A common reaction in large companies, or in any organization where fiefdoms or strong boundaries exist, is to compartmentalize a problem. While acknowledging that a problem exists, the institution that compartmentalizes sees the problem as falling into a convenient administrative category: It's not an agency problem, it's a media problem; it's not our problem, it's a supplier's problem; it's not a product problem, it's a packaging problem; it's not a corporate problem, it's a field office problem.

But the outside world rarely sees the company in unrelated administrative categories: to the outside world, your problem is your problem, period. Unlike ignoring or denying a problem, compartmentalization has the virtue at least of acknowledging that a problem exists. But it creates further difficulties. By insisting on a compartmentalized worldview, the institution risks seeming defensive or disingenuous. And the compartmentalization sometimes means that the resources of the whole organization are not available to solve the problem, often with disastrous consequences.

Several careful studies of Exxon's problems following the Exxon Valdez oil spill off the coast of Alaska point to a compartmentalized worldview within Exxon as responsible for the seemingly long delay in responding publicly to problems: Exxon knew of the spill, but relegated immediate reaction to its distribution subsidiary responsible for moving the oil. Only after customers started cutting their Exxon credit cards in two on television - to the puzzlement of Exxon executives who saw the credit cards as a refining and marketing subsidiary product - did the CEO of Exxon mobilize full corporate resources to deal with the problem. But by then, some ten days after the spill, the reputational damage had been done.

Another element of compartmentalization is the compartmentalizing the solution: When Firestone began the recall of its Wilderness tires, it initially established a timetable under which only tires in certain U.S. states - those deemed the hottest - would be exchanged quickly. Consumers in all other states would have to wait, some for up to a year. Predictably, the wait caused outrage among consumers, and Firestone was quickly forced to drop its plan and to offer fast exchanges in all states. But by then the reputational harm was done: Firestone was seen to be uninterested in its customers' safety. If it had been interested, the reasoning went, Firestone would have offered a prompt recall to everyone.

4. Lie about the problem.

One of the biggest mistakes an institution or individual can make is to lie about its problem. Experience shows that the lie is usually found out. And when it is, the liar has a double burden: to solve the original problem that caused the trouble in the first place; and to do so in an environment where credibility is diminished.

And once someone is seen to have lied about one problem, it will have great difficulty being believed in future crises. This is one of the many problems that plagued President Clinton during the Monica Lewinsky scandal. President Clinton lied about his involvement with Lewinsky repeatedly over many months. When he ultimately was forced to admit the truth, the damage was done, and impeachment proceedings followed. While he survived the impeachment, his reputation was permanently damaged. That damage is seen in ways both big and small.

For example, soon after he admitted his lie, the President ordered military action in the Persian Gulf. At the time there was some question as to whether he was to be believed. He was accused of engaging, in the phrase made popular by the movie of the same name, in "Wag the Dog" behavior, creating a military diversion to call attention away from unpleasantness.

Similar circumstances apply in the corporate sphere. I know of several companies that lied about their problems, got into trouble, and were unable to dig out; later, when the companies were being battered by rumors that were in fact false, they couldn't get anyone to believe them, and suffered unnecessarily.

5. Tell misleading half-truths.

While some companies rightly avoid telling outright lies, a large number have no qualms about telling half-truths that may be literally correct but that paint a very misleading picture. They behave much like President Clinton on the first days of the Monica Lewinsky scandal, when he used the present tense to assure TV news anchor Jim Lehrer that "there is no sexual relationship" with Ms. Lewinsky. Literally true, but misleading and irrelevant since the charge was of a past relationship. Caught in the half-truth, President Clinton several days later told the whopper of a lie, asserting that he never had sexual relations with that woman, Ms. Lewinsky. As President Clinton learned, a misleading half-truth, like the lie, is likely to be found out, and companies that are caught face the same kinds of problems as those caught in a lie.

The admonition against telling misleading half-truths doesn't suggest that a company shouldn't tell true statements that paint the company in a positive light. But the true statements a company tells should be grounded in a clear understanding of the reality of the situation, not on a deceptive foundation.

6. Tell only part of the story, letting bad news dribble out over time.

Another common error many companies make, which is reflective of their failure to take the pain, is to admit only the least amount of information they can. This is almost always self-defeating because the bad news will almost certainly get out eventually. When companies are parsimonious with the bad news, reports of problems tend to dribble out over an extended period of time. The result is a stream of negative rumor, news reports, and gossip that keeps the company's troubles on people's minds.

The operative principle in releasing information is to bundle bad news within a single news cycle, and to unbundle good news over multiple news cycles. The bundling of bad news results in everything that would otherwise become known coming out all at once, preferably with a strong statement detailing what the company is doing about its problems. This can expedite the rebuilding process.

7. Assign blame, internally or externally, rather than fix problem.

A natural human tendency is to look for someone to blame when things go wrong. While understandable, assigning blame in the early phase of a crisis can be very counterproductive, for several reasons. First, the media and industry gossips love conflict and clashes of personality. Assigning blame plays into these negative contexts, and keeps the focus on things other than what the company is doing to solve its problems. Second, time spent looking for and punishing a scapegoat could otherwise be better spent identifying the scope of the problem and taking steps to fix it. There will always be time to find and punish someone who is truly responsible for a problem. But the first task upon discovering a crisis should not be to find out who's at fault.

The one exception to this is when the problem involves malfeasance or other clearly inappropriate behavior by an individual, who is clearly responsible for his or her actions. In this case dismissal or some other form of punishment is appropriately seen to be part of the solution, not a diversion from finding and fixing the problem.

Both Ford and Firestone fell into the blame game during the early phases of the tire recall. Firestone initially blamed Ford for the tire tread separations, saying that Ford improperly advised customers to inflate their tires to a suboptimal pressure. Ford, for its part, refused initially to accept the criticism, and said that the entirety of the problem rested with Firestone. Both companies suffered reputational harm when they were seen as less interested in finding a solution than in deflecting attention to someone else.

8. Over-react: "Confess" to more than actually happened.

One curious institutional behavior is to overconfess, or to over-react to a contained incident or event. While not as common as the behaviors noted above, overconfessing is common enough to warrant some discussion.

Overconfession tends to occur when the crisis prompts in the mind of management many other, unrelated frustrations, problems, or issues. Management then is unable to draw a distinction between the present crisis and other everyday annoyances or unrelated problems, and proceeds to bare the company's soul about extraneous or petty issues that have no bearing on the crisis. The result can be focusing public attention on negative matters much broader than the crisis itself. More significant, the overconfession prevents management from focusing on the solution to the actual crisis, and can have a very negative impact on the morale of employees and on the confidence with which management is seen.

I have seen the overconfession manifest itself particularly in groups that are used to being seen as agents of good: religious organizations, charitable groups, or those who help others such as hospitals, or close-knit organizations such as partnerships. These groups are so unaccustomed to being seen in a negative light that they take the criticism as an opportunity for public, therapeutic discussion. While it may make them feel better, the therapeutic discussion tends to have universally negative consequences, and is better left to a private setting.

9. Panic, leading to bad decision-making,
unclear communications, or escalation.

The final predictable corporate mis-step in a crisis is panic. The panic can lead to a number of other problems. These can include paralysis, where people stop doing their jobs and where the company's work product and revenues grind to a halt. More commonly, panic leads to hastily-made and unproductive decisions that complicate or escalate the crisis. Panic can result in unclear internal and external communications, confusing people about what happened and what the company is doing about it.

Another manifestation of panic is the desire of many people to become instant crisis managers, and to focus all of their time on dealing with the crisis. This is understandable, since a crisis can be a refreshing break from routine work flow, and can cause adrenaline to pump in those handling the crisis. But too many people focusing on the crisis can cause two types of problems. On the one hand there's the risk of a confused chain of command and of imprecise or overly complex tasking of crisis activities. On the other hand, every person who works on the crisis is not working on his or her regular job, which will result in a backlog of important work.

I know of a professional services firm that allowed all of its partners to participate in brainstorming the solution to a crisis over a period of months. A large number spent virtually all of their time doing so, arguing among themselves over the desired course of action. The result was predictable: almost nothing got accomplished to solve the crisis, since each partner proposed a solution that cancelled out another partner's proposed solution. Worse, after several months without working for and billing clients, the firm became insolvent and had to sell itself to a bigger firm in order to meet its payroll and pay its bills. The desire to empower everyone to be a crisis manager cost the firm its independence. It isn't the crisis that brought down the firm: it's the firm's paralysis in the face of the crisis that did so.

Preventing and Overcoming Dysfunctions
and Acting Responsibly in a Crisis

As the list of mis-steps suggests, surviving a crisis is often determined by how a company responds to a crisis rather than by the event itself. If a company is nimble, thoughtful, and quick to take pre-emptive action before a potentially embarrassing or damaging event takes place, it can often prevent the event and the reputational damage altogether. Even if the event is unexpected, avoiding these unproductive behaviors allows a company to take responsible action quickly, before it suffers reputational harm.

Recognizing this, many companies go through a formal process of vulnerability analysis, crisis plan preparation, and crisis simulation. These can be very helpful exercises, mostly for concentrating management's minds on the need to act quickly and responsibly, and for identifying in advance the teams that will be mobilized to deal with threats when they arise.

Ideally companies will retain expert outside help to develop and implement the crisis plan and simulation. But success requires that management be fully invested in all elements of planning, so that the company can mobilize quickly when things go wrong. And while crisis experts are useful to advise before and during a crisis, they can't solve a company's problems by themselves. Success requires the company to take decisive action and to communicate well.

Most companies do not go through a formal crisis planning process, and end up dealing with potentially negative events as they happen. However useful a formal crisis planning process may be (and it can be very useful), such planning isn't the only way to anticipate and deal with a turning-point event that may become a crisis. In many cases a company will know in advance that it plans to do something controversial or that an event affecting its reputation will take place. During this period a company can anticipate the likely reputational impact of the event and take steps to neutralize the negative consequences of the event and, thereby, prevent a crisis from happening at all.

Even if prevention isn't possible, the time leading up to the event can be used to identify the crisis team, analyze the likely reputational fallout if the event plays out negatively, and develop a plan and message for dealing with the crisis when it happens.

As the list of dysfunctional institutional responses to crises shows, one of the key variables in planning to deal with a crisis and in managing actions and communications when the crisis occurs is the attitude of senior management. If management rises to the occasion and exercises leadership in a calm and deliberate way, it can often lead the company through difficult times and emerge relatively unscathed or even in better reputational shape than before the crisis - witness Johnson & Johnson's reputational boost for its handling of the Tylenol poisonings in the early 1980s.

Conversely, a management team that fails to act with calm and deliberate leadership, that fails to take the necessary actions and to communicate effectively, will likely find that the company's reputation will suffer as a result of the crisis and management's poor handling of it - witness, again, Exxon after the Valdez incident.

There are two rules for communicating in a crisis that, taken together, allow a management team to prevent the dysfunctional behaviors noted above. They are to think clearly, and to take the pain in the short term in order to protect the institution's reputation in the longer term.

Crisis Communications Rules

A prominent political scientist has written, "The first of all moral obligations is to think clearly." The very same applies to crisis communications: the first of all requirements in crisis communications is to think clearly. The greatest value one can bring to a crisis is clarity of thinking. Calm and quick deliberation and self-candor are far more important than industry expertise, media savvy, or bravado. But candor is rare, especially in a hierarchy where people are reluctant to pass bad news up a chain of command.

I believe that most of the tough decisions that need to be made in a crisis are of the sort my ten-year-old daughter could make, not because she's brilliant but because she's ten years old. Ten-year olds have a clarity of vision that allows them to see problems that adults often cannot. And because they haven't yet developed structures of deceit and self-deception that plague many adults, they have a refreshing sense of realism. For example, a ten-year old child has learned that covering up a mistake is worse than the mistake itself. A ten-year-old knows that if she is hurting someone she needs to stop it, acknowledge the harm, apologize for it, and make restitution. But adults, especially those used to getting their own way, lose sight of this.

So the first rule of crisis communications is Think clearly: Strip away the structures of deceit and self-deception, and candidly name the real problem. Until the problem is named it is very difficult to mobilize resources to solve it.

The second requirement in crisis communications is, upon identifying the problem and quickly assessing alternatives, to act quickly to lessen the impact of the problem on the institution's reputation. Very often this requires taking actions that in the short term may cause inconvenience, embarrassment, discomfort, or other distress. But done right, short-term pain now can prevent much greater pain later. The prominent 19th Century British social critic Thomas H. Huxley once admonished, "The most valuable result of all education is the ability to make yourself do the thing you have to do, when it ought to be done, whether you like it or not."

This is a good rule for crisis communicators: Take the pain. Do what you have to do, when it ought to be done, whether you like it or not. In other words, act responsibly now to prevent worse damage later. Of course this all seems like common sense. And it is. But common sense is in very short supply when things go wrong.

The lack of common sense - the inability to think clearly and failure to take the pain - are particularly visible when decisions are being made in an organizational hierarchy. In these cases, people are often afraid to speak candidly to superiors, resulting in managers making decisions based on faulty information or unrealistic expectations. More commonly subordinates are reluctant to challenge a course of action that may make the boss feel good but that is manifestly a bad idea.

In a "Business World" column in The Wall Street Journal, business columnist Holman Jenkins noted, "Organizations need defenses against their charismatic leaders. Otherwise such individuals can too readily bully or seduce others into supporting their vainglorious illusions."

This is one reason outsiders such as my firm are frequently called into crises. Yes, we have expertise in pattern recognition and rapid mobilization; yes we have strong technical skills; yes, we understand how different constituencies tend to behave; yes, we can focus totally on the problem. But as or even more important, we have the ability to tell the emperor that he has no clothes. As outsiders we can inject a common-sense view that insiders are often unable to do - not because they lack the ability but because either their view has become too institutionalized or they fear career consequence from second-guessing the boss. We are free of both of these burdens. And as outsiders we are often in a position to tell the boss unpleasant truths candidly or to ask, apparently naively, about unintended but fully predictable consequences of particular courses of action.

This latter course of action we have found to be particularly effective. When the client (usually the CEO) is set on a course of action we are certain is counterproductive, it is often more useful to engage the client in a form of Socratic questioning than merely asserting that we disagree. It can be more effective to have the CEO discover for himself (or herself) that the course of action being advocated will have far more unpleasant consequences than initially considered. The CEO can then take ownership of an alternative idea without being seen to be giving in to advisors or staff.

The lesson for crisis managers in all of this: Protect your organization from itself; from it's the impulses that get in the way of resolving reputational threats early, when the opportunity is the greatest.

About the Author

Helio Fred Garcia is Managing Director at Clark & Weinstock, New York, USA, and Adjunct Associate Professor of Management and Communications at New York University, USA. E-Mail: hfgarcia@cwnyc.com.

First published in Crisisnavigator (ISSN 1619-2400):
Volume 2 (2001) - Issue 8 (August)


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