Strategic Partners – Regester Larkin

Virtually every crisis contains within itself the seeds of success as well as the roots of failure. The essence of crisis mismanagement is to make a bad situation worse. Successful management of a crisis situation is about recognising you may be about to have one, or indeed already have one, and taking the appropriate actions to remedy the situation. If an incident occurs, there will be little time to waste deciding whether or not it is a crisis and, if so, by whom and at what level it should be handled. A simple definition of a crisis is: an incident or development that occurs suddenly which must be actively managed to protect employees, customers, the environment, business continuity and corporate reputation.

In the following article, Michael Regester of Crisis and Issues Management consultancy Regester Larkin explores some of these issues.

The operational response is inevitably the first concern a company has in a crisis, but if it fails to assess the impact on people and the environment, or it fails to communicate what it is doing to manage the situation, then its reputation is immediately put at risk. All too often, companies misclassify a problem, focusing on the technical aspects and ignoring the people affected. In this age of corporate accountability and public scrutiny, crisis management is about being seen to take the appropriate action and being heard to express the appropriate sentiments and explanations.

Despite this, many companies continue to cite a variety of reasons that prevent them from addressing issues and preparing for crises before they occur. Some believe that their size, whether large or small, location, or even the type of business will protect them. Others believe that issues and crisis management is a luxury, and that if something goes wrong then they will just have to "muddle through". However, as the issues of corporate integrity, social responsibility and public accountability become common currency, being prepared for a crisis and its aftermath is becoming an essential part of being an ethical company today. Companies that choose to ignore this face a drop in share price, a loss of trust and ultimately their reputation. Loss of reputation can have a greater impact on the financial bottom line than the cost of the event itself.

So What is a Crisis?

Crises can take a number of different forms. They can be the unexpected development of a situation that requires an immediate response, such as a crash, earthquake, terrorist attack or they can be issues that are either ignored or underestimated, which we call "crisis creep". Although there is no one definition of a crisis they usually result from one or more of the following reputation risks:

• Safety
• Service shortfall often leading to service abandonment
• Unethical behaviour
• Public policy change
• Product/professional liability
• Major adverse event/publication
• Environmental damage
• Poor corporate governance
• Product recall/failure
• Litigation

However, it is major crises such as airplane and ferry disasters involving tragic loss of life which lead to greatest public interest. It is this type of crisis which leads to the most visible and measurable erosion of public confidence. The public perception of the risk of such events, fuelled by the disproportionate amount of negative publicity - is often out of kilter with the statistical evidence. For example, in the United States it would take two 747 airplane crashes per week to equal the number of people killed on US highways in the same period, but automobile crashes rarely make the headlines in the same way airplane crashes do.

The following case studies demonstrate how different companies' approaches to a crisis affected their reputation and financial bottom line.

Case Study: Pan Am

In the immediate aftermath of the Lockerbie disaster in 1989, Pan Am made a conscious decision to minimize communication with the media and with the relatives of those who had been killed in the tragedy. The airline believed a policy of non-communication would somehow distance Pan Am's name from the tragic consequences of the disaster. This would later prove a great error of judgment leading to a severe media backlash and protracted litigation from the victim's families.

When questioned about the warning of a possible terrorist attack, Pan Am initially said it was unaware of any warning. It was later revealed that all carriers operating in Europe, including Pan Am, had been informed. A core public relations principle had been breached. Concealing the truth is simply not an option. There are too many eager sources and too many eager reporters. In crisis situations, it is imperative to tell your own story, to tell it all and to tell it fast.

So did Pan Am's CEO, Thomas Plaskett, go to Lockerbie, apologise, attend memorial services and act responsibly in the aftermath of the tragedy? He did not. Nor was any help provided by the airline to the families of the victims wishing to visit Lockerbie to come to terms with their loss. Pan Am was already in financial difficulty and the transatlantic route was its only remaining profitable one. Its failure to communicate with those affected and with the media, meant that passengers lost confidence in the airline - in its willingness and ability to transport us safely from one side of the Atlantic to the other- and chose other airlines in preference. The boycott proved to be the final nail in the airline's financial coffin. It went bankrupt.

Case Study: JAL

In contrast to Pan Am, when JAL suffered its worst ever crash on 12 August 1985- 520 people died - the airline immediately followed an elaborate protocol it had put in place for such an eventuality.

The company's president made personal apologies, memorial services were held and financial reparations paid. For weeks, more than 400 airline employees helped bereaved relatives with everything from arranging funeral services to filling in insurance forms. All advertising was suspended voluntarily. Had JAL not made these acts of conciliation, it would have courted charges of inhumanity and irresponsibility.

At the memorial service JAL's president, Yasumoto Takagi, bowed low and long to relatives of the victims, and to a plaque bearing victim's names. He asked forgiveness, accepted responsibly and offered to resign. From the day of the accident, JAL had mobilised its staff, from the president down, to offer gestures of apology and regret. When family members had to travel to a small mountain village to identify bodies, airline staff accompanied them, paying all expenses, bringing them food and drinks and clean clothes. JAL spent $1.5 million on two elaborate memorial services and dispatched executives to every victim's funeral (although some were asked to leave). It also established a scholarship fund for children whose parents died in the crash. Importantly, JAL was quick to notify victim's families. Overnight it issued lists of passengers' names.

Although JAL did suffer some media criticism, and for a while lost market share, it eventually made a full recovery. Much of its response was driven by Japanese culture. But its response was seen, crucially by the media and other stakeholders, to be humane, caring and responsible.

Preparing for the Unexpected

Executives, preoccupied with the market pressures of the present quarter, are not inclined to pay much attention to planning for future crises. However it does well to remember that Noah started building the ark before it began to rain.

The principles applying to crisis management planning are broadly the same for virtually all types of crisis. Methods for implementing the plan will not vary greatly for different types of crisis. It is usually impossible to anticipate every crisis that may arise but there are steps every company can take to prepare for one.

A coherent approach begins with the identification of potential crises. These may include:

• Existing situations which have the potential to become crises
• Crises which have beset the company in the past - or other companies in the same industry - and might recur
• Planned company activity which may meet with opposition from stakeholder groups

Having identified likely areas of risk, the next questions to ask are:

• Does the company have policies and procedures in place to prevent a risk from turning into a crisis?
• Has it identified people to implement these policies and procedures and established a system for contacting them out of hours?
• Do plans exist for dealing with every aspect of the crisis?
• Have the plans been tested to ensure they work satisfactorily?

Various supplementary, but equally important, questions may be added. For example:

• Which audiences are most likely to be affected by the identified potential crises?
• Do plans include procedures for communicating effectively with stakeholders about what has happened and what is being done about it?
• Have the communications aspects of the plan been tested, as well as the company's operational response?
• Does the company have trained spokespeople for communicating with the media?
• Does it have trained people for dealing with those affected and their families and friends?

When planning crisis management it is helpful to do the following:

• Develop a positive attitude towards crisis management
• Bring the organisation's performance into line with public expectation
• Build credibility through a succession of responsible deeds
• Be prepared to act on the opportunities during a crisis
• Appoint appropriate teams to prevent, manage and control crisis situations
• Devise policies for their prevention
• Put the plan in writing
• Test, test and test again

When it's All Over

In the aftermath of the crisis the temptation is to forget all about is as quickly as possible; to resume normal life. But surviving a crisis provides a huge opportunity for the organisation to re-examine and reorganise itself to ensure it never again finds itself in a similar position.

Attention needs to be given to employees and their families in the aftermath of a crisis. Some may have been traumatised by the event. Some may want to leave the company because they cannot face the possibility of a similar event happening again. Families who have been bereaved will often feel colossal anger towards the organisation even though it may not have been at fault. Companies should always consider offering professional counselling. Sometimes it is possible to redirect anger felt for the loss of a loved one into a positive energy by channeling it into finding solutions to prevent the situation from happening again; to make sense of what has happened by helping others in the future.

The key to crisis management is crisis prevention, whether the vigilance and preparation is self-motivated or enforced by legislation. But if something does go wrong, comprehensive contingency planning can minimise the catastrophe; and a policy of open communication can minimise damage to corporate and individual reputations.

Michael Regester is a director of London-based reputation risk management consultancy, Regester Larkin Limited. He is the author, with Judy Larkin, of "Risk Issues and Crisis Management" published by Kogan Page.

For further information please see www.regesterlarkin.com.

Strategic Partners – Ability Healthcare

In a working culture which now seems to have an increasing focus on health and safety, what are you doing to protect and maintain the health of your workforce?

Do you know that certain health conditions can cause problems at work and that some working environments can exacerbate a pre-existing physical or mental health condition? Do you have the qualifications or experience to know and understand the difference?

Would you write to the employee’s GP and ask for the opinion on how this should be considered within the workplace? If yes, do you know that GP’s are not trained to give advice on health in work and even if they were, they are the advocate of their patient and would always do their best to support and protect their patient, regardless of your enquiry.

Did you know that within the Data Protection Act there are clear guidelines on the occupational health assessment of individuals which means that this should only be carried out by those trained and qualified to do so?

We can help you…

At Ability Healthcare we have a team of specially trained nurses and doctors who have a qualification in Occupational Health and will be able to give you advice throughout your employee’s time with you. The advice will best consider the information supplied by you and/or your employee and will offer appropriate recommendations in order to best support you and the employee and ensure that you do not fall foul of the Disability Discrimination Act, Employment law and health and safety legislation to name but a few considerations.

Please click on the link below to enter the main Ability Healthcare website or call us now on 01282 690440 to discuss how we can help you consider the occupational health of your employees.

For further information please see www.abilityhealthcare.co.uk.

Strategic Partners – Sunguard

We live in a world where the only constant is change.

Our businesses are continuously affected by change: they are dynamic, fast-moving environments that never stand still.

Globalisation, e-commerce, 24-hour operations, increased automation…with such factors accelerating an already daunting pace of change, how do you maintain competitive advantage and achieve profitability? It often seems that every business process could be regarded as equally important, equally "mission-critical".

And if business survival is challenging enough on a daily basis, what on earth do you do when something happens to interrupt the flow of normal operations? What then is the key to your business survival?

At SunGard Availability Services we know that your business depends on the availability of its processes and that often these processes constitute the very nature of the business itself. But these processes are only effective as long as the people and the information they depend upon are connected. Maintaining that vital connection, no matter what, we call information availability.

"The business continuity plans you choose are there to ensure continuity of communications systems, IT services and the availability of business premises. But it is no good having systems up if people are down". ( Martin Alderton, CCP Trauma Care Consultant). SunGard Availability Services, in collaboration with The Centre for CRISIS Psychology, offers to its clients psychological aftercare services following traumatic events

Since 1978, SunGard Availability Services has pioneered information availability and business continuity. We understand the enormous impact technology change has upon business and that any organisation's vital ingredients are its people and information.

That is why we developed a continuum of proactive, reactive and interactive information availability solutions comprising business continuity, disaster recovery and high availability/ managed services:

• Proactive:
• Professional Services
• Network Security
• Systems & Environmental Monitoring
• Vaulting Services
• Reactive
• Workplace Recovery
• Technology Recovery
• Mobile Recovery
• Interactive
• High Availability Recovery
• High Availability Host

10,000 customers worldwide trust us to keep them in business by keeping their people and information connected. Regardless of whether you measure your tolerance to disaster in seconds, minutes, hours or days; trust us to do the same for you.

Local Presence. Global Strength

• > 20,000 end-user positions
• > 60 locations
• > 3 million sq ft of secure dedicated operations space
• > 25,000 miles of dedicated network backbone
• > 50 mobile recovery units
• > 100,000 recovery tests undertaken
• > 10,000 business continuity projects undertaken
• > 10,000 clients worldwide
• > 2,500 information availability professionals at hand
• > 1,500 invocations supported with 100% success

For further information please see www.availability.sungard.com.