Monday, September 29, 2008

Current Financial Chaos Spotlights Ineffective Crisis Communications Planning

Bad news abounds. Banks are failing as in the case of WaMu. Lehman went bust. “Shotgun” mergers a la Bank of America’s recent takeover of Merrill Lynch have taken place. All at a dizzying pace. This has led me to wonder how prepared were our government officials and the managements of these companies to deal with these crisis situations? From where I sit, not very well.

Given the amount of money at their disposal it is inconceivable to think that those in charge of these entities could not have afforded to retain crisis communications specialists. If they did have access to such advisors, they probably weren’t used effectively. Often, bankers and investors can delude themselves into thinking that the good times will last forever, never planning for the inevitable downturn.

For nearly 30 years we have advised clients on how to navigate a crisis, many have been severe. Many of these clients did not have a crisis plan in place before coming to us. We prepare our clients for the worst case scenarios. We brainstorm with them and encourage them to think the unthinkable about every possible situation that could impact their businesses. Then we develop a plan. About half of what you need to navigate a crisis can be done well in advance of it hitting.

While I could fill pages with advice, I will offer a few helpful management tips:
  • Manage expectations – This might be too daunting a task given how rapidly things change in times of a crisis; however, communicating appropriate expectations about the degree of a problem on an ongoing basis will earn management a degree of credibility and speed the recovery process for the company’s reputation.

  • Know your stakeholders and rally the troops – Although it may be too late to build a relationship with key stakeholder groups once a crisis hits, it is not too late to reach out to them to reassure them and address their concerns. All stakeholders are important but employees are critical to the firm’s ability to weather the storm, therefore, special attention needs to be placed on employee communications during times of crisis.

  • Speak with “one voice” to all stakeholders – Simplicity, clarity and frequency are the name of the game here. Companies benefit from a consistent delivery of a message of stability, control and a plan to rectify the situation.

  • Increase management visibility – In times of crisis, the senior management team needs to be visible, project a level of control, tackle the tough questions, offer plans and solutions, and instill a level of confidence in all stakeholders to foster the belief that the company can emerge stronger than ever.

  • “We don’t comment on rumors” doesn’t apply in crisis situations – If unfounded rumors regarding the health of an organization are causing investors and other stakeholders to act irrationally, the firm has an obligation to publicly address their concerns for the benefit of all stakeholders.

A crisis plan is like your last will and testament; you need one but hope you never have to use it.

Technorati Tags: crisis communications planning, financial chaos, WaMu, Lehman Brothers, Bank of America, Merrill Lynch, mergers, crisis plan, management, stakeholders, business, communications, public relations


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