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Leaders should turn crisis into opportunity

“You never know until it happens!” This was the catchphrase of an advert touting the services of an insurance company ages ago, when stones were still soft. The same can be said about a crisis.

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It can hit an organisation any time, and an organisation’s staying power is measured by how best it deals with a major crisis. Staying power, to me, includes the leader’s ability to harness all the resources at their disposal to strategically tackle the issues and stop them from escalating to crisis levels.

“Organisations, whether public or private, are realising that a good reputation and stable relationships are critical in creating environments conducive for the success of any business,” says Thabisile Phumo, the president of the Public Relations Institute of Southern Africa (Prisa).

Public relations (PR) has become increasingly significant and strategic since emphasis is placed on image and reputation management in an ever competitive and complex business world.

I often advise clients that there has to be a sense of urgency when issues that have the potential of deteriorating into a crisis, negatively affecting the reputation of the organisation, are dealt with.

We need not go very far to see the dire consequences of ignoring this reality.

“Leading through a crisis is never easy, yet chief executive officers who take immediate action and follow a clear and transparent process can use the crisis to transform their institutions for the better and gain public respect through the process,” says Bill George, senior fellow at Harvard Business School.

This simple, yet critical, part of Crisis Management 101 seems to have been by-passed in the recent global disasters involving Volkswagen and more recently, Samsung and Wells Fargo.

These are once-great companies that failed to step up at the “moment of truth,”according to George.

And mishandling crises has consequences. Wells Fargo’s John Stumpf was “retired” after stoically attempting to shift blame at the United States congressional hearings, while Volkswagen’s Martin Winterkorn was nailed to the cross by his shareholders and regulators.

Samsung, being a family concern, won’t fire its chief executive officer Lee Jae-Yong, who until now refuses to take responsibility for their exploding phones.

All these companies easily fit into the “blue-chip” category, with reputations built over decades and based on integrity and excellent customer service. One can even imagine the billions spent on corporate advertising, marketing, customer and employee surveys.

However, when push came to shove, the CEOs in question “turned to half-truths” when under pressure. Stumpf shifted blame, Winterkorn lied, while Lee ducked into some corporate foxhole.

“The self-confident CEOs, who once ‘seemed everywhere’ when they were touting their companies’ successes, seemed to just disappear just when the public insists they step forward,” says George.

By contrast, Johnson and Johnson’s James Burke, in the wake of the Tylenol drug tampering disaster in 1982, charted a path in crisis management that all those mentioned above could have followed.

The “Burke Approach” to tackling a crisis involved stepping up with full public disclosure, identifying the root cause, and implementing disciplined plans to fix the problem permanently.

In applying this, Johnson and Johnson, which already enjoyed an excellent reputation, emerged from the crisis with even more consumer respect and confidence.

Some problems are known to emanate from defective internal organisational systems. This requires corporate introspection and effective issues management.

Having a competent PR professional as part of a senior-level team that re-examines the entire business and its culture, and endorse permanent solutions is recommended.

PR has its place around the boardroom table, fully represented at executive level. It has been proven pointless preparing communication plans without involving personnel knowledgeable enough to make them effective. It is their job to ensure that these are directly linked to the objectives of the business.

“Technically competent leaders must work together diligently to solve problems [even during a crisis] permanently. Only when they are capable, that they fully understand the issues, can they inform their customers and take full financial responsibility for the impact,” George says.

“While the people closest to the problem are searching for solutions, their CEO needs to be fully visible, holding daily or weekly press conferences to brief the media and all interested parties, and ensuring full transparency about what the company knows [and doesn’t know].”

PRs’ role is to advise the executive on issues related to the management of their reputation, and of course, media relations. There should be space created by management for PR to deliver informed counsel on issues that have the potential to cause damage to reputation.

The approach should be one that is pro-active rather than be reactive. The latter has been proven to be more costly and difficult to resolve.

Preventive interventions are informed by internal PR practitioners or external consultants being kept in the loop, rather than consulted on a need-to-know-basis.

It may be that a significant number of the issues the organisation has to deal with are of a highly sensitive nature. However, PRs are expected to be ethical in their approach and should be bound by confidentiality clauses in their mandate.

Consultants are most effective when they are involved at the highest level of consultation on issues. While the client might be uncomfortable, full disclosure does assist them to be in a position to provide informed counsel using an agency’s wide base of skills.

These range from advocacy to the handling of public affairs campaigns, and media training, among other areas where they can provide strategic advice.

The PR department of a company should be developed to provide such capacity. They should be able to cut through a bureaucratic organisational structure, and be able to recommend ways to overcome inertia. If not for the ease of managing reputation and image issues.

CEOs should demand from PR professionals a 360-degree stakeholder and influencer view about the perception of the company and the ability to analyse its reputation in the market. Using such abilities, PRs are able to access the boardroom and secure time from the executive and provide the necessary back up when a crisis flares.

PR professionals have evolved to become consultants or advisors to their CEOs by sharing creative ideas and recommendations to build brand visibility and awareness. However, companies are increasingly looking for PRs who are strategic partners.

Strategic partners think and act like the company’s CEO and are an integral part of the company. While each of their initiatives needs to have a Return On Investment (ROI) and contribute to the bottom line, the CEO should have the confidence in that when disaster strikes, they have the best hands on deck to tackle it.

The main lesson to be drawn from crisis management best practice, is that companies must communicate early and often with key stakeholders, and craft messages that speak to each group’s needs, wants, and interests. What a customer is concerned about during a crisis is very different from what an investor or shareholder cares about.

Lenox Mhlanga is a communication specialist. He is associate consultant with Magna Carta Reputation Management Consultants and has experience working with The World Bank Group. He also is a part-time public relations lecturer at the National University of Science and Technology. He can be reached at email: lenox@magnacarta.co.zw or Cell: 0772 400 656.

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