Sometimes, a company’s response to a crisis is scrutinized more intensely than the crisis itself. In today’s digital age where social media plays a large role in public opinion, optics are everything. When a crisis breaks, companies need to have a comprehensive understanding of all the factors at play so they can respond appropriately. Otherwise they may put their reputations, and ultimately their business, at risk.
s fast as you can post a tweet, today’s corporate crises turn into front-page news. Consider the backlash some companies have faced, whether it’s a TV spot that trivialized a cultural movement or a PR nightmare in the wake of outright frightening customer service. A crisis can become so explosive that it takes years for a company to recover in the public eye.
In some cases, a company’s response to the crisis is more interesting to the public than the crisis itself. At a time when anyone with a social media feed and an opinion can and will scrutinize and critique every last detail of a company’s behavior in the wake of a scandal — with or without the appropriate context — crisis management is no longer an insider’s game.
Should they be unfortunate enough to find themselves in the middle of a media maelstrom, CEOs should consider five elements when crafting a response: scale, advice, sacrifice, stakeholders and perspective.
How bad is bad? When a crisis hits, this is the first question a CEO needs to answer to respond appropriately. An overly zealous response may seem less than credible, while a dismissive one may suggest that the company isn’t taking responsibility for the situation or simply doesn’t care about it. The right response must be in proportion to the size of the scandal.
Consider what happened when a popular drink purveyor was sluggish in their response to a British reporter’s inquiry about tax payments in 2014. Instead of confronting the issue head-on, the purveyors reticence gave journalists six months to construct a narrative so detrimental to the company’s reputation that consumers boycotted their stores, and Members of Parliament publicly reprimanded the company. The purveyor was forced to pledge a voluntary contribution of millions of British pounds to the British Treasury to halt the very public backlash. Shaping the narrative from the beginning would have been a lot cheaper.
Often executives at a company in crisis will find themselves in a tug of war between lawyers and communicators. Lawyers will want to admit as little as possible to protect the company from liability, while the communications department will want a full and frank response to safeguard the company’s reputation and credibility. Neither response is wrong, but figuring out how heavily to weight each approach requires a difficult balancing act.
The tug-of-war between lawyers and communicators arguably drew out one travel agency’s response to a tragic incident that resulted in death at one of their holiday homes. The company ultimately listened to its lawyers, but came off sounding insufficiently contrite and unfeeling. In contrast, a well-regarded oil company, took full responsibility for a fatal incident that occurred, and allocated billions of dollars to counteract claims brought upon them. That’s a hefty sum, but it could well be less than the losses the company could have suffered if its reputation had suffered a larger hit that caused a longer-lasting dip in its share price. Listen to the lawyers, or to the communicators? The answer will be different every time and in every situation, but companies can’t ignore either one.
Sometimes, the only response to a crisis is an offering at the altar of public opinion. Must a senior executive step down to appease angry consumers? Does the company need to issue a recall? Or does the crisis necessitate exiting from a part of the business altogether?
Companies have to proceed with caution when designating sacrificial lambs. For example, within a week of an emissions crisis becoming public, a German car company’s CEO stepped down. But it’s possible that move came too soon — after all, a tarnished figurehead can be an excellent lightning rod in the early days of a media storm.
No matter what acts of contrition a company contemplates in the immediate wake of a crisis, it’s important to remember that when the media have moved on to the next big thing, those left standing will have to rebuild both the firm’s reputation and employee confidence from scratch.
It’s a difficult truth, but in a crisis, some people matter more than others. Those that have been directly affected by the situation matter the most, and a company should engage them accordingly.
In the aforementioned travel agency case, for example, the company’s efforts to connect with the grieving family over the years were intermittent, sometimes ill-timed and often ill-judged. Yet, the family was at the crux of the crisis, and alleviating their grief should have been the main priority — not saving face.
During a crisis, it can feel as if the CEO of a company has a target on his or her back. But lashing out publicly rarely helps the situation, and usually makes it worse. Imagine a CEO publicly stating that he wants his "life back" after his company has a crisis resulting in fatality.
Such outbursts are avoidable, and in fact, companies and CEOs that respond with care, compassion, and contrition may actually win some grudging respect for their cool under fire. No company looks forward to a crisis, but those that are calm, diligent, and honest in the face of one may eventually come out stronger than they began.