Corporate Crisis Management 101 – The A, B, Cs of Lessons Learned.

May 7, 2014

INTRODUCTION:

This first full week of May is Emergency Preparedness Week (EP Week)[1] across Canada, as led by the federal government and coordinated with the provinces and territories. Everyone should be involved in assessing and testing their own preparedness – family contingency planning, businesses continuity planning, and disaster planning and preparedness at various levels of government. As part of these contingency plans and contingency preparations, it is highly advisable for both governments and businesses to also have a series of crisis management and crisis communication protocols in place.[2]

Let us take a very brief look at some best practices and lessons learned in Corporate Crisis Management.

 

LOGICAL STRATEGY PROGRESSION:

Crisis management for corporations is an art that can be done well, or badly. Specific examples abound, but whether dealing with adverse public events such as a food or vehicle recall, a transportation incident or disaster, a regulatory issue, industry mishaps in manufacturing or energy or natural resources – including spills and leaks, service outages, catastrophic fires and explosions, or suspected human error, the generalized strategy is the same and must be a logical progression of A, B-C, D, E, F&G, H-I.

– Advocacy,

– Building Coalitions,

– De-escalation,

– Ensuring Efficiency and Effectiveness,

– Funding and Guarantees, and

– Honest Interest.

The company should show honest interest in the event, finding the causes of the event, and ensuring the efficiency and effectiveness of a comprehensive response. Funding must be in place (in a combination of self-funding, insurance, and asset sales) to do this, and adequate guarantees against any recurrence – including through such corrective action as is necessary – should be provided to both the public and the regulator(s). Tensions and temperatures should be de-escalated, and the company should work very hard to build coalitions with all stakeholders from the very earliest point, as it advocates for both itself and the impacted (including through funding or support of victim services and social media campaigns).

However, those overall goals need not be achieved in that exact sequence, as the tactics to get there must first be operationalized.

 

TACTICS:

Tactics are and must always be, crisis-specific, and so they will vary greatly. However, the operationalization when everyone around you is unfocused, unbalanced, and under intense pressure, is always the same. Using the first letters of each of the eight tactical sub-operations …. CALM-DOWN!”

 

CAUTION your control persons:

This should go without saying. Too often, however, the Chief-something-officer will publicly speak-out on behalf of the company without knowing – either the background and underlying facts,[3] or the potential fallout that will eventually result from those inopportune words spoken, buried deep within written submissions and missed in the editing,[4] or placed in the public domain through social media;[5] even when apparently said in private.[6] It is better to have a dedicated spokesperson who is trained in media and public relations, and knows not to over-share or make inflammatory statements, despite intense public or media queries.

 

ALWAYS involve advisors:

Too many times you will see a company, even a sophisticated one,[7] stumble or make mis-steps in response to an adverse public event. Crisis consultants and advisors are there for a reason, and they can bring the accumulated (and updated as technology progresses and social sentiments change) body of knowledge (BOK), to bear in your efforts to: (i) devise a plan;[8] (ii) practice the plan; and (iii) make the process work, on point and on time, in your crisis management and crisis communications as essential components of any comprehensive Disaster Risk Reduction and Management (DRRM) strategy.

 

LITIGATION (and escalation) love leaks:

The advisors who “should” be consulted include legal advisors, of course, because certain practices may lead to problems; especially in the conduct of internal investigations.[9] The pretexting and email tracing tools used by one company in the course of its internal leak investigations in purported compliance with governing national laws, still landed it in hot water.[10] On the other hand, the highly-questionable and ultimately illegal, apparently standard business practices of yet another company that were leaked and escalated, brought a grinding and humiliating end to that malfeasing company.[11] Use extreme caution to create, customize, operate, and update all GRC (governance, risk, and compliance) programs.

 

MUTUALIZE the message:

Sometimes, different teams, groups, or geographical sub-divisions will operate with incomplete or a lack of information, and make public statements that are a little (or even, very) off-message. Having one dedicated source to which all the parts should defer (and know and acknowledge that they must defer), is critical to project a uniform and mutualized message across the company. People may need to be trained in place, pre-positioned, regularly rotated, or sent-out – depending on scope, size, and span.

“This is the new paradigm for compliance programs in modern business, but one should always bear in mind that any Compliance Program should be structured with due consideration for the Scope (range of products and/or services offered), Size (number of employees), and Span (geographic spread, and number and range of legal regimes to which it is subject) regarding the entity; including any and all subsidiaries and any cross-national requirements.”[12]

 

DEAL with the damage:

When companies delay in dealing swiftly, efficiently, and effectively with the damage caused by an adverse public event, they will feel the impact, although it might not be immediate. That blowback will be particularly harsh if media and social media latch-onto the aftermath,[13] and focus on the preventable additional suffering of the victims in the interim, the disparity in profits made vis-à-vis the damage actually done[14] and compensation costs promised, or both of these. If the event recurs, that media and social media mauling will be equally harsh, if not harsher. Whether that recurrence is in the same place and vicinity, or elsewhere, attention will definitely be drawn back to that earlier, other similar incident. A flash mob or a social media boycott call may not start right away. Once it does though, watch out!

 

OWN the outcomes:

Even when there has been a shoddy,[15] or a botched outright[16] initial response, all is not lost if the company at least owns the trilateral outcomes (victim services; investigations and changes to internal culture, chiefs, or controls; and the legal and regulatory impacts). Totally downplaying the event and outcomes (including the alleged or disputed disastrous outcomes of ongoing controversial practices with disputed science for- and against them),[17] trying to weasel-out, or simply closing-up shop and walking away, will not be very well accepted. Indeed, bad behaviour in one jurisdiction may well, thanks to the speed of modern communications, act as a calling card to have the entity disallowed into, disavowed by, or dismissed from, some other alert jurisdiction with an awake and internet-savvy population that does not want to be treated in that same way.[18] It pays to play fair everywhere; it costs to gloss over any ugly blotch – especially if it is in a disadvantaged or low-cost jurisdiction where you think nobody will notice.

 

WORK (and work well) with stakeholders:

Complex disasters caused by adverse events that are coupled with intervening natural events, are generally the most devastating when a failure to work well, or even work at all with stakeholders, occurs. Please note: this stakeholder group will (and must) by definition, ALWAYS, include the victims – along with traditional or tribal authorities; local governments and municipalities; regional, state, and provincial or prefecture governments; the business sector and charitable entities; federal authorities; and foreign nations to the extent that the victims include their Citizens, or they wish or are approached, to render assistance. The very broad range of victim services that can be made available by these many non-victim stakeholders, if and when working together in a coordinated way, includes combinations of:

(i) construction and demolition;

(ii) search and rescue, and salvage;

(iii) sanitation, nutrition, and shelter;

(iv) medical treatment and rehabilitation;

(v) debris removal and decontamination;

(vi) job training or retraining, and placement;

(vii) registration, and document replacement;

(iix) evacuation, relocation, and resettlement;

(ix) animal and wildlife services, and firefighting;

(x) legal and consular assistance, and financial aid;

(xi) interim and replacement goods and/or services;

(xii) movement control, security, and electronic security;

(xiii) crisis counseling, mortuary services, and clergy affairs;

(xiv) call centres and communications for victims, friends and relatives, or to coordinate reunification; and

(xv) media/social media relations, and public notices, alerts, or early warning of future/further perils.

Even while responding to an ongoing crisis on the spectrum of Disaster Risk Reduction and Management (DRRM), it is still possible, through horizon scanning and interaction with peers and stakeholders, to retain a good grasp of the bigger picture and work with them to plan for a far better result in the event of any future occurrence of a similar or dissimilar adverse event.[19] Others can then follow that positive lead to further grow the numbers, experiences, and geographic dispersion of contributors to a dynamic and responsive DRRM body of knowledge on proven, recommended, or potential best practices.[20]

 

NEVER run and hide:

When this occurs, the victims, the regulators and the public all join in escalating matters and unilaterally, jointly, and severally expanding that “A though I” strategy specified above, to go for J – meaning Justice (some might also term this as going for the jugular vein); and they will stop at nothing to reel-in and deal most resolutely and ruthlessly, with such a callous corporate entity that does not even care enough to show its face at or in relation to, the impacted space. Even when one is not literally running and hiding, but simply absent or so slow or uncoordinated in responsive action to the extent that the image given is one of running and hiding or being hopelessly ineffective (even if partly or mostly due to massive primary technology and utilities outages, failed or absent backup systems, and significant overloads and service delays in the barely functioning remnants of these critical items of public and business infrastructure), [21] then the end-results from both the long-suffering victims and actual or virtual onlookers with rising empathy and incivility to responsible responders, can be the same – (J)! This small step for the victims in one little letter of expansion, can mean a galaxy of problems for the allegedly offending and non-defending company (or government entity, as appropriate), and it may well have been avoided by taking time to CALM-DOWN, and making a concerted effort to properly prepare, practice, and put-into effect its contingency, crisis management, and crisis communication plans in Disaster Risk Reduction and Management (DRRM).

 

SUMMARY:

A logical, and effective approach such as the above becomes even more necessary with this week’s release of a United States government report showing that the increasingly severe impacts of Climate Change are already well underway on the North American continent, and globally.[22] Challenges will continue to mount as those conflicting, co-mingling, and increasingly calamitous effects increase. Everyone and every business must therefore play it part, and the leaders have to lead.

In Canada, Emergency Preparedness Week with its solid political support through Public Safety Canada and coordination at the highest levels across the nation, is indeed a good start. However, contingency planning and contingency preparation, with detailed crisis management and crisis communication protocols for more comprehensive and all-hazards[23] Disaster Risk Reduction and Management (DRRM), really and urgently need to become a 52-week affair, every day of every year.

 

*********************************************************************

Author:

Ekundayo George is a sociologist and a lawyer. He has also taken courses in organizational and micro-organizational behavior, and has significant experienced in business law and counseling (incorporations, business plans, contracts and non-disclosure agreements, teaming and joint venture agreements), diverse litigation, and regulatory compliance practice. He is licensed to practice law in Ontario, Canada, as well as in New York, New Jersey, and Washington, D.C., in the United States of America (U.S. business advising, outsourcing and cross-border trade, technology contracts, and U.S. financing). See, for example: http://www.ogalaws.com. A writer, blogger, and avid reader, Mr. George has sector experience in Technology (Telecommunications, eCommerce, Outsourcing, Cloud), Financial Services, Healthcare, Entertainment, Real Estate and Zoning, International/cross-border trade, other Services, and Environmental Law and Policy. He is a published author on the National Security aspects of Environmental Law, has represented clients in courts and before regulatory bodies in both Canada and the United States, and he enjoys complex systems analysis in legal, technological, and societal milieux.

Mr. George is also an experienced negotiator, facilitator, team leader, and strategic consultant- sourcing, managing, and delivering on large, strategic projects with multiple stakeholders and multidisciplinary teams. Our competencies include program investigation, sub-contracted procurement of personnel and materiel, and such diverse project deliverables as business process re-engineering, devising and delivering tailored training, and other targeted engagements through a highly-credentialed resource pool with several hundred years of combined expertise, in: Healthcare; Education & Training; Law & Regulation; Policy & Plans; Statistics, Economics, & Evaluations including feasibility studies; Infrastructure; and Information Technology/Information Systems (IT/IS) – sometimes also termed Information Communications Technologies, or ICT). See, for example: http://www.simprime-ca.com.

Hyperlinks to external sites are provided to readers of this blog as a courtesy and convenience, only, and no warranty is made or responsibility assumed by either or both of George Law Offices and Strategic IMPRIME Consulting & Advisory, Inc. (“S’imprime-ça”) including employees, agents, directors, officers, successors & assigns, in whole or in part for their content, accuracy, or availability.

This article creates no lawyer-client relationship, and is not intended or deemed legal advice, business advice, the rendering any professional service, or attorney advertising where restricted or barred. The author and affiliated entities specifically disclaim and reject any and all loss claimed, no matter howsoever resulting as alleged, due to any action or inaction done in reliance on the contents herein.

 

*******************************************************************

[1] Government of Canada. Emergency Preparedness Week (EP Week), May 4-10, 2014. Published on getprepared.gc.ca. Visited May 6, 2014. Online: >http://www.getprepared.gc.ca/cnt/rsrcs/ep-wk/index-eng.aspx<

[2] All of these terms, as used somewhat interchangeably her depending on the specific context, are a part of Disaster Risk Reduction and Management (DRRM), the increasingly common “catch-all” terminology.

[3] British Broadcasting Corporation (BBC). Lac-Megantic disaster: Engineer blamed for Canada blast. Posted on bbc.com, July 10, 2013. Online: >http://www.bbc.com/news/world-us-canada-23264397< Edward Burkhardt, the chief executive officer (CEO) of Rail World Inc., which owns Montreal, Maine & Atlantic Railway Ltd., first spent four days at the Rail World Inc. Chicago head office (saying he wanted to avoid causing a distraction), then traveled to the scene to speak with reporters and immediately blame both those same first responders, and his engineer employee, all before any investigation had taken place whatsoever.

[4] See e.g. Dene Moore. Kinder Morgan clarifies embarrassing oil spill benefits comments. Published on business.financialpost.com, May 6, 2014. Online: >http://business.financialpost.com/2014/05/06/kinder-morgan-clarifies-embarrassing-oil-spill-benefits-comments/?__lsa=d154-7461<

“Pipeline spills can have both positive and negative effects on local and regional economies, both in the short- and long-term, (…). Spill response and clean-up creates business and employment opportunities for affected communities, regions, and cleanup service providers.”

[5] See Contra Securities and Exchange Commission (SEC). Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: Netflix, Inc., and Reed Hastings. SECURITIES AND EXCHANGE ACT OF 1934

Release No. 69279/April 2, 2013 Release. Visited May 6, 2014. Online: >http://www.sec.gov/litigation/investreport/34-69279.pdf< Although drawing attention in an SEC investigation, the Netflix CEO’s inopportune Facebook post did not result in a harsh penalty.

[6] CBC News. Exclusive McDonald’s Canada CEO calls foreign worker controversy ‘bullshit’. Posted on cbc.ca, April 24, 2014. Online: >http://www.cbc.ca/news/canada/british-columbia/mcdonald-s-canada-ceo-calls-foreign-worker-controversy-bullshit-1.2621151<

[7] Anne C. Mulkern, of Greenwire. BP’s PR Blunders Mirror Exxon’s, Appear Destined for Record Book. Published on nytimes.com, June 10, 2010. Online: >http://www.nytimes.com/gwire/2010/06/10/10greenwire-bps-pr-blunders-mirror-exxons-appear-destined-98819.html?pagewanted=all<

[8] See e.g. Dr. Mark Cosby. Food Processors – Recovery Before a Recall. Published on domesticpreparedness.com, January 15, 2014. Online: >http://www.domesticpreparedness.com/Infrastructure/Building_Protection/Food_Processors_-_Recovery_Before_a_Recall/<

[9] Robert Mullins, IDGNS. Corporate leak probes walk a fine line. Debate swirls about the ethics of pretexting, investigating leaks. Published on infoworld.com, October 2, 2006. Online: >http://www.infoworld.com/d/security-central/corporate-leak-probes-walk-fine-line-144< See also Adam Widdoes, Association of Corporate Counsel (ACC). QuickCounsel: Privilege in a Global Landscape Part II: International In-house Counsel. Published on acc.com, May 10, 2013. Online: >http://www.acc.com/legalresources/quickcounsel/piaglpt.cfm< This article references the case: Akzo Nobel Chemicals and Akcros Chemicals v Commission, JUDGMENT OF 17. 9. 2007 — JOINED CASES T-125/03 AND T-253/03. Online: >http://curia.europa.eu/juris/liste.jsf?language=en&num=T-125/03< There, it was ruled that in-house counsel have no attorney-client privilege with regard to matters under European law or investigation. However, separate EU member states may still recognize an in-house legal privilege.

[10] Robert Mullins, IDGNS. HP lawyer gives blow-by-blow of leak probe.   Independent investigator determines Dunn authorized two separate investigations into leaks. Published on infoworld.com, September 25, 2006. Online: >http://www.infoworld.com/t/business/hp-lawyer-gives-blow-blow-leak-probe-992?page=0,1<

[11] British Broadcasting Corporation (BBC). Q&A: News of the World phone-hacking scandal. Published on bbc.com, August 4, 2012. Online: >http://www.bbc.com/news/uk-11195407<

[12] Ekundayo George. GRC: An Overview (Part 1). Published on ogalaws.wordpress.com, October 21, 2012. Online: >https://ogalaws.wordpress.com/2012/10/21/grc-an-overview-part-1/<

[13] Tanya Talaga. Rana Plaza survivors get first compensation payments. One year after deadly Bangladesh factory collapse, $700 payments seen as far too little, and clothing brands criticized for not contributing to trust fund. Online: >http://www.thestar.com/news/world/2014/04/24/rana_plaza_survivors_get_first_compensation_payments.html<

[14] Stella Kim, Jason Hanna and Ed Payne. Ferry disaster: Too much cargo contributed to sinking, police say. Published May 6, 2014, on cnn.com. Online: >http://www.cnn.com/2014/05/06/world/asia/south-korea-ship-sinking/<

“Since the Sewol began the Incheon-Jeju route in March 2013, the ferry carried excess cargo 139 times, investigators said. Cheonghaejin Marine earned an extra 62 million South Korean won ($62,000) for the excess cargo on the April 16 voyage, and nearly 3 billion South Korean won ($2.9 million) in extra profit for all of the excess cargo that the ferry carried since March 2013, investigators said.”

[15] See e.g. Micheline Maynard. 3 Things GM’s Mary Barra Must Do To End The Recall Crisis. Published on forbes.com, April 1, 2014. Online: >http://www.forbes.com/sites/michelinemaynard/2014/04/01/3-things-gms-mary-barra-must-do-to-end-the-recall-crisis/<

[16] Amber Hildebrandt. Malaysia Airlines MH370: How to make a crisis worse. Company needs to apologize for mistakes, give only the facts and liaise with governments. Published on cbc.ca, March 12, 2014. Online: >http://www.cbc.ca/news/world/malaysia-airlines-mh370-how-to-make-a-crisis-worse-1.2570213<

[17] Edward Broughton. The Bhopal disaster and its aftermath: a review. Published on ehjournal.net, May 10, 2005. Online: >http://www.ehjournal.net/content/4/1/6<

[18] Michael Shellenberger and Ted Nordhaus. Fracktivists for Global Warming: How Celebrity NIMBYism Turned Environmentalism Against Natural Gas. Published on newgeography.com, March 7, 2013. Online: >http://www.newgeography.com/content/003549-fracktivists-global-warming-how-celebrity-nimbyism-turned-environmentalism-against-natural-gas<

[19] See e.g. Santha Oorjitham. Japan reflects on triple disaster. Published April 4, 2012 on nst.com. Online: >http://www.nst.com.my/opinion/columnist/japan-reflects-on-triple-disaster-1.70726< While still dealing with the after-effects of the 2011 deep sea earthquake, tsunami, and Fukushima Daiichi radiological explosion and release, the Japanese government planned to host a July 3-4, 2012 “high-level international conference on large-scale natural disasters”. According to Kenji Hiramatsu, director-general for global issues at the Japanese Ministry of Foreign Affairs (MoFA), the conference would “look at both “hard” and “soft” infrastructure for disaster preparedness, business continuity planning and how to secure supply chains, and better international cooperation on such disasters”. See also Ministry of Foreign Affairs of Japan (MoFA). World Ministerial Conference on Disaster Reduction in Tohoku – Joint Endeavors for Solutions: Wisdom of the World to the Disaster-Affected Areas, Lessons of the Disaster-Affected Areas to the World (July 3 and 4, 2012). Published on mofa.go.jp. Online: >http://www.mofa.go.jp/policy/environment/warm/cop/wmcdr_2012/index.html<

[20] Asia-Europe Meeting (ASEM).  ASEM Manila Conference on Disaster Risk Reduction and Management (DRRM) –   Post-Haiyan – A Way Forward, on 04-06 June 2014, in Manila. Published on aseminfoboard.org. Visited May 6, 2014. Online: >http://www.aseminfoboard.org/upcoming-events/event/479-asem-conference-on-technology-and-innovation-for-disaster-risk-reduction-and-management-and-climate-change-adaptation.html<

“The Manila Conference aims to highlight the lessons learned from Haiyan and other mega disasters, identify gaps and challenges, share best practices in technology, innovation, systems and procedures and produce the “Tacloban Declaration” which will contain proposals for the Post-2015 Framework for Disaster Risk Reduction.”

[21] Paul Piper and Miguel Ramos. A Failure to Communicate Politics, Scams, and Information Flow During Hurricane Katrina. Published on infotoday.com; visited May 6, 2014. Original in: The Searcher, Vol. 14 No. 6 — June 2006.  Online: >http://www.infotoday.com/searcher/jun06/piper_ramos.shtml<

[22] United States of America, The Global Change Research Program. National Climate Assessment 2014, at Introduction. Published May, 2014, on globalchange.gov. Online: >http://nca2014.globalchange.gov/downloads<

“The observed warming and other climatic changes are triggering wide-ranging impacts in every region of our country and throughout our economy. Some of these changes can be beneficial over the short run, such as a longer growing season in some regions and a longer shipping season on the Great Lakes. But many more are detrimental, largely because our society and its infrastructure were designed for the climate that we have had, not the rapidly changing climate we now have and can expect in the future. In addition, climate change does not occur in isolation. Rather, it is superimposed on other stresses, which combine to create new challenges.”

[23] See generally Government of Canada. Emergency Preparedness Week (EP Week), May 4-10, 2014, at “Publications”. Published on getprepared.gc.ca. Visited May 6, 2014. Online: >http://www.getprepared.gc.ca/cnt/rsrcs/pblctns/index-eng.aspx<

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: