Management Matters with Mike Myatt: Making Crisis Management Profitable
- Mar 07, 2008
Crisis management can in fact be a profitable endeavour when handled properly. If you are in business for any length of time you will at some point in time be party–willing or unwilling–to a major crisis that can affect not only the company you work for, but your career as well. A large portion of my practice deals with advising corporations and executives during a crisis to protect the corporate brand and the personal reputations of senior executives and board members. Given that in today’s business world, the likelihood of crisis is much greater than it was in times past, it never ceases to amaze me that corporations don’t have a crisis management team assembled and on hand ready to deal with trouble when it rears its head. The reality is that the proper handling of a crisis, while never easy, can in fact be a very profitable endeavour. In this week’s column I’ll discuss the upside of crisis management.In previous columns I have addressed many of the basic benefits of a prudent crisis/reputation management initiative. However, this week I want to discuss the pure profit motive of a well conceived crisis management initiative. If you’ve paid any attention at all to how companies deal with bad news you’ll notice that in most cases when a company makes a public disclosure of an adverse event or unexpected news that there will be winners and losers associated with said disclosure. The are serious amounts of money to be won or lost based upon the decisions made in a moment of crisis.Companies that either don’t react, react slowly, or react improperly to adverse events will likely see an erosion in stock price, brand equity, and in many cases, see forced resignations and unexpected firings at the C-level. Contrast this with companies that react to a crisis in a swift and proactive fashion who can often see an immediate up-tick in stock price, a favourable boost in public opinion and brand equity, and substantial promotions in the executive ranks. Given the choice, which of the aforementioned scenarios would you prefer to be a part of? You see the bottom line is this…Wall Street analysts hate nothing more than the unknown. If the street knows of trouble, but doesn’t have visibility as to the likely outcome, your company’s stock, its corporate brand, and the personal brands of corporate executives and board members will be severely penalized. In this scenario Wall Street’s perception of your company and its leadership will begin to be shaped by the speculation and innuendo of third parties, which may differ radically from the facts of the situation. What Wall Street, the media, politicians, and regulatory agencies love is clear, concise, and open dialogue in times of trouble. Wouldn’t you rather proactively shape the opinions of others as opposed to sticking your head in the sand and watch others determine the public’s perception of your corporate and personal brand? By being proactive in your approach to crisis management you turn breaking news, speculation and innuendo into old news by putting a face to a position. By taking a visible and open position, you will take the media’s natural desire to create a corporate villain, and offer instead a refreshing breath of fresh air–a corporation and executive team operating in the light of day by taking swift, prudent, and corrective action to the problems at hand. When a crisis occurs you have a choice to make…you can do the things that appear right, or you can simply do the right things. Remember you can run but you cannot hide. Attempting to lull public opinion, or delay the inevitable will result in increased scrutiny and eventually have substantial negative financial consequences. Get the issues out in the open, adopt a position, do the right things regardless of short-term costs, and communicate, communicate, communicate. If you subscribe to the latter as opposed to the former, you will most likely come out on the right side of whatever problems you may face.