What Leaders Can Do in a Corporate Crisis

What Leaders Can Do in the Middle of a Corporate Crisis

Once there is a corporate crisis, there’s also a big threat to the financial fortunes of the company, as well as their relations and reputation with the world at large and the key stakeholders. For large organizations, such a crisis is likely to strike more than once and as often as every five years on average. That means that leaders of any company, especially the large ones, should expect to face a crisis at least once while holding their position, and that includes members of the board of directors. Having a plan to face this possibility is imperative.

Osler, Hoskin & Harcourt LLP’s 2016 report, The Board’s Role in Crisis Management, says in most cases, crises strike without warning – computer hacks, public health outbreaks, terrorist events, and natural disasters all fall in this category. The death of a leader may be sudden or have some warning, as may the possibility of unethical behavior by an employee. Crisis might also be a series of events within a short time such as the crisis faced by Chipotle in 2015.

Leaders Set the Tone

Leadership in larger organizations starts with the Board of Directors, and Caroline Oliver, governance consultant, feels the Board needs to provide “(i) a consistent hold on a clearly stated vision for how things should be; (ii) a clear, consistent and regular demand for accountability from the chief executive for the restoration of that vision as soon as possible; and (iii) an incisive understanding of where the organization is in the meantime.” She also said: “The board is the ‘setter of the tone at the top’ and, as such, when crises hit, it needs to keep its head, to hold its position, to stay in control. And what that means is that it must be clear what its own job is and not start trying to do other people’s jobs for them.”

Facing the Crisis

Once the leaders start taking action, there’s a list of things to be addressed through competent, straightforward, and conclusive strategies:

  • Address and handle the problem that caused the crisis
  • Help those affected, victims and other parties
  • Manage outsiders and media

But all of those things should be so well-rehearsed and practiced as to be second nature when the crisis hits. Protocols, templates, possible responses, and teams to do the front work should all be in place and ready for use. That’s because when a crisis hits, there will be so much happening that effective planning is almost impossible. Mr. Johnson says: “It is important that whatever crisis management mechanism is in place, it is aligned and integrated with broader risk and resilience management approaches, including incident management, business continuity, and crisis communication. This is less often the case than might be expected, but will ensure clearer understanding of roles and responsibilities.”

Board Efforts

You won’t get a second chance to avert a crisis in business, so work done before the crisis to prepare is not only a good idea, it is critical. Knowing who will be in charge of the media outreach, which responses will be used on social media, the plan of attack for each possible crisis situation, and having employees be experts on how to deal with the situation will probably make the difference on how soon you bounce back – if at all.

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