Corporate Crisis: Lessons From an Insider

Your company may find itself one day peering down the barrel of a corporate crisis—and you may be asked to lead the company’s response.  No one can really be prepared for this.  But I thought it could be helpful to share some of the lessons I learned from the inside so when you get that call, you at least have a tool that you can read in about 10 minutes.  These lessons focus on the types of crises that relate directly to a company’s goods and services—those that will cause customers to shop elsewhere and threaten the very existence of the company.  These types of crises also tend to become multi-headed—Congress, Media, Attorneys General, Department of Justice and public anger.  We all hope never to face on of these crises, but as the great Yogi Berra once said: “hope is not a strategy.”

Know your data. Really??  Starting off with something so mundane??  Being able to access and understand your own data is critical.  It is the only way you can begin to answer the question “what did you know and when” and to hopefully put the events in a broader context. Your adversaries will be spinning the data they have every which way to put you in the worst light possible and the media or congress will be looking for your response. If you don’t know the data, your responses will appear to be dishonest or a cover-up.  The public expects you to understand your business, which includes why and how this event happened.  Some examples of data you need to marshal:  volume of customer complaints, claims or lawsuits; where were the products manufactured; how many people have been injured.

Hire Consultants. You will inevitably need to hire outside experts to help you navigate through the crisis. Political specialists, public relations firms and law firms.  You must remember that these outsiders will first and foremost be driven by what their relationship with you will do to their own reputation.   They want to help you, but will not put their own business model at jeopardy.  You will be abandoned if the sentiment is that you have become “too hot to handle.”  In hiring consultants, you may want to go smaller and nimbler—firms with maybe less to lose who really want to be on your team.

Develop Your Story. You must quickly understand the narrative of the crisis, in particular the “who knew what and when.”  This is a perfect example of when not to let “perfect” get in the way of “good.”  Speed is critical here.  80% of the relevant facts might need to be enough.  Just as important is who is going to tell your story.  Obviously, you need to stay away from lawyers and public relations professionals.  You need a business leader and if you don’t have one who is ready, get one ready fast.

Deal With Employees. Your employees will know very quickly that you have been chosen to lead the company’s response to the crisis.  Don’t let them see you sweat. They will watch every move you make.  If you come to work looking drawn and miserable, your employees will think the worst—the company is not going to make it and I will lose my job.  A positive front will build confidence and will prevent employees from abandoning ship.  This doesn’t mean that you should be a phony.  You can be serious without looking miserable; You can worry without fretting.

Don’t Let Bad Documents Define You.   This is inevitable.  There will be some bad emails.  Out of 10,000 emails, some will not put you in the best light.  This is where knowing your data really helps.  You will be prepared to respond to the emails the public has seized upon.  If you work for a manufacturer you know that producing a quality product is difficult.  The public doesn’t understand this, but you do.  Engineering trade-offs happen all the time.  Remember that you work for an ethical organization and you will make it right.

Independent Investigation? Many outside consultants will recommend that you hire someone to conduct an independent investigation.  For many public companies with many outside directors, this is de rigueur.  For me, this is a tough one.  You and your employees know your culture and the facts best.  Any independent investigator will be forced to develop a narrative based on conflicting facts and evidence.  Do you really want to cede control of this to an outsider who can’t possibly understand the complexities like you do?  If public trust in your company has eroded precipitously, you may not have a choice but to turn to an independent investigator.  But if there is still a residual of some good will with the public, I would think very hard about this one.

Find a Champion. In severe crises, the public will assume that your company is already dead, you just don’t know it yet.  The media will have quotes from experts claiming that your company could not possibly survive this crisis.  This is where an outsider can really help.  Is there a public figure trusted by the public who is willing to signal to the world that you are willing to fight?  The person does not need to be an expert on the narrative.  The role of the person is to say basically: “I have met with the management of this company.  They are good people.  There may have been mistakes, but they are willing to make things right.” Of course, you will have to pay dearly for this, but it could give you the time you need to get the crisis more under control.

It’s Not Just Politics. When in the midst of a crisis where politicians get involved, such as in the case of congressional hearings and the like, we can get very cynical.  We tend to see their involvement only as grandstanding and as an opportunity to seize the spotlight at our expense.  What we sometimes forget is that these politicians are responding to genuine constituent anger.  The public expects their representatives to “do something.”  In their own way, these politicians are looking for help from you.  No matter how publicly aggressive a political figure may be, don’t stop working with him or her behind the scenes.

Don’t Be Afraid to be Honest and Sincere. There will be lawsuits.  It is inevitable.  Often these lawsuits represent a serious threat to the company’s well-being.  That being said, you cannot make mealy mouthed statements about events because you are afraid any statement will be used against you.  If you are sorry about the events, say it.  If  mistakes were made, say it.  The lawyers will hate you, but you’ve got to survive to get to the point where you have the luxury of worrying about law suits.

Take Care of Yourself.  This is a difficult and painful duty and can last months if not years.  The third year into our crisis, I had a full blown panic attack—the kind where you are sitting in your bathtub with your suit on. You need to find some mental and emotional space.  Find someone you can talk to.  Take some time for yourself. And if you are a lawyer, remember that this was why you went to law school in the first place—to solve someone’s difficult problem.

For more information on handling corporate crises or other business consulting matters, contact Saul Solomon at Klein Bussell, PLLC.

*Photo Credit: naypong via freedigitalphotos.com

The information contained on this blog is not legal advice, nor does this blog create an attorney-client relationship. Klein Bussell attorneys do not blog about pending matters handled on behalf of our clients and will never disclose client confidences.