Crisis management: seven ways to deal with trouble

‘IT’S total crap” are the immortal, brash and arrogant words that ruined the reputation of Ratners, one of the world’s largest jewellery retailers.

When speaking at an Institute of Directors event in London in 1991, chief executive Gerald Ratner tried to jokingly explain why his company’s products were so cheap. He was eventually fired and the company renamed itself as the Signet Group. I had business dealings with him back then and I now criss-cross with him on the speaking circuit. His fall from grace has certainly humbled him.

Irish Ferries have recently been in the news, apparently due to no fault of their own. Having been let down by a major supplier, they will greatly disappoint 19,000 passengers. That has huge reputational damage for their brand, not to mention the financial blow. Kilkenny, the retailer, is having internal family squabbles. While their customers are not directly affected, the brand is associated with negative press. Aryzta, too, is trying to limit the damage of past decisions with the investment community.

There is a growing demand for crisis management today. During the difficult financial years, we saw lots of closures and downsizing where communities were shattered by unemployment. We’ve seen what seem like unfair and unreasonable decisions being taken in some corner of the US that results in the devastation for hundreds of families.

It’s not just about employment. A crisis can be caused by a product recall where there is a risk to safety, or by discovering that your supplier in some far-flung country is employing children to manufacture your products.

Sharon Bannerton is owner and managing director of Bannerton PR. She advises clients like B&Q and other major brands on how to proactively manage a crisis. “It takes years to build a brand, but it can be ruined in just a few days. There are so many ways a crisis can develop now, especially with the spontaneity of social media and fake news, it’s more important than ever to be well-prepared in advance,” she said.

CRISIS MANAGEMENT TIPS

1 Identify your risks. The best form of crisis management is prevention in the first place. Most crises seem to come out of nowhere. But, in reality, they are usually quite predictable. Look across every aspect of your business and future strategy. Include your people, products, supply chain, marketing, social presence, IT and financial management. Where are you making changes? When you identify your risks, plan ahead with prepared statements. (If you’d like a template to help you with this audit, email alan.oneill@kara.ie).

2 Consider your message. If you know a crisis is coming, get ahead of the story and get your point of view across quickly. Defending it is so much harder. Whether you had the time to prepare or if the crisis happens out of the blue, you need to get your message right. Here are some phrases that will help. “We have a plan to deal with...” (shows that you’re proactive). “We are sorry...” (shows compassion for those who have been hurt, lost their jobs, or simply inconvenienced). “We exhausted all options before arriving at this situation...” (in the case of closure or lay-offs. This is almost always true. You want people to understand that). “We have begun our own investigation to make sure we...” (in the case of a company error, you must commit to finding out what went wrong, and show you’re taking steps to ensure it doesn’t happen again.

3 Seek external views. When you’re so close to the business, it’s often hard to see the issue objectively. Emotions can be high, and you need to make decisions that are best for the business. If you haven’t already engaged a PR firm, seek legal advice if necessary. For example, if you’re letting people go, find a specialist in employee rights.

4 Prepare for difficult questions. You will be asked hard questions. They might come from your own people or the media. So consider if key people need media training, where they learn how to best represent the company while being questioned. They will learn about how to deliver the message, how to be authentic and not defensive. If your budget doesn’t stretch to training, have a colleague role-play it with you.

5 Decide who should deliver the message and who should hear it. When dealing with the media, it’s best if your most senior directors do it. If your message will negatively affect your people, tell them first.

6 Have a recovery plan. When the heat dies down, you will need to get back to business as usual as soon as possible. Be sensitive about this, as if you rush something that requires more grieving you’ll be accused of lacking compassion.

7 Check for lessons learned. When it’s all done and dusted, take time to reflect on the whole affair. Could the crisis have been prevented with more care and attention? And if not, are there lessons to be learned about who, what, when and how you dealt with it?

SUMMARY

In the past, the thinking was more about how to stay out of the headlines when a crisis strikes. People now realise that open and honest communication with all parties, from your own people to the media, is much more productive and authentic. It will also usually generate support and understanding. “In reality, the most important aspect of any PR campaign is getting ahead of the story,” said Sharon. That requires solid preparation in advance. Perhaps it’s time to conduct an audit of your PR risks.