Prepare yourself for a crisis

Apr 03, 2018

Denis Reeves shares his thoughts on best practice crisis management planning, drawing on decades of experience as a Chartered Accountant working in management positions across the globe.

When KFC – a fast food outlet known primarily for its chicken – ran out of chicken last month, it resulted in the temporary closure of over 600 outlets across the UK. While a dearth of fried chicken isn’t a life or death situation, it was certainly a crisis for the US-owned franchise’s management team. Just days previously, on Valentine’s Day, DHL took over the logistics contract alongside Quick Service Logistics which, according to the Guardian, has supplied KFC in Europe since 2011. Four days later, only 266 of KFC’s 900 outlets in the UK were open.

The KFC brand ultimately weathered the storm thanks to an honest and apologetic crisis communications strategy, which has been described as a “masterclass in PR crisis management”. However, crisis communications is just one aspect of a holistic crisis management strategy according to Denis Reeves, a former Council member at Chartered Accountants Ireland.

“The Oxford Dictionary defines crisis as ‘a time of intense difficulty or danger’ and at an enterprise level, it will typically be a significant and unanticipated event that will demand the immediate and almost exclusive attention of the senior management team,” he said. “Depending on the severity of the issue, it could also require the immediate notification of the chairperson of the risk committee or even the chairperson of the board of directors.”

Known unknowns

Given the “unanticipated” nature of the potential crisis, it is not uncommon for managers to put crisis management planning on the long finger. After all, how does one prepare for the unknown?

“A crisis will mean different things to different businesses and it will usually be quite difficult to prepare fully for the exact crisis circumstances that unfold in an organisation,” said Denis. “But responses to crisis situations typically fall into two broad categories.”

Denis describes a “category one” level of preparedness as a situation where the organisation has given some, or substantial, consideration to crisis recognition and has identified a range of appropriate response actions. In this category, the organisation will have a range of pre-approved template responses available to assist the pre-defined crisis response team. A “category two” level of preparedness, on the other hand, can be described as a situation where organisations have given no prior consideration to crisis preparation and have no structured response plan in place.

According to Denis, many organisations will find that their level of preparedness lies somewhere between category one and category two.

Action points

While the KFC example above is a recent case of crisis management in action, other situations could include a major product recall, on-site fatalities, an event leading to the collapse of stakeholder confidence or the fall-out from an unanticipated high-profile executive departure.

While this list represents a diverse range of potential crises, Denis maintains that situations requiring crisis management intervention generally exhibit a number of consistent attributes such as a dip in the organisation’s share price, a collapse in trade enquiries, damage to goodwill and significant uncertainty among key stakeholders including customers, staff, suppliers and media.

In such situations, Denis advises management teams to back-fill some key roles on a short-term basis to allow the management team to focus exclusively on crisis management activity. Once the management team is freed-up to focus on the crisis at hand, Denis recommends a range of action issues:
 
  • Assemble and act: the nature of the event will dictate the required speed and intensity of response, and the skillset required to deal with the crisis;
  • Take a broader view: consider the impact of different time zones vis-à-vis the crisis communications strategy;
  • Access critical skills: a key factor in the success of crisis management activity is the identification of the skills or expertise required to supplement the organisation’s internal skills, and how to access them immediately;
  • Communicate: promptly issue a succinct stakeholder update across all suitable media platforms. To do this efficiently, organisations will need immediate access to passwords for social media accounts and the resources necessary to update their website(s). The initial phase of a crisis is often characterised by an overwhelming requirement to provide information to a range of stakeholders;
  • Be accurate: it is crucial that all information issued is correct. Frequent, accurate updates will prevent the creation of an information vacuum, which could lead to the spread of misinformation and ultimately sabotage the organisation’s crisis management strategy;
  • Know who to contact: always maintain up-to-date lists of key stakeholders with complete contact details, and circulate as appropriate;
  • Shorten the chain of command: in a crisis management situation, the decision chain needs to be much shorter than it otherwise would be. The imperative is to have all required personnel available as part of the crisis response team, and it should be noted that “required personnel” are often not found within standard reporting structures;
  • Establish a ‘command and control’ structure: some crisis management practitioners report difficulty in moving from a standard information-based approach to decision-making to that of a command and control approach that is more typically based on the imperative to execute tasks promptly and report on outcomes immediately;
  • Identify actions: establish an immediate task list and allocate tasks to the appropriate personnel; and
  • Think beyond the business: establish whether there is a requirement to activate business continuity or hot-site arrangements, or to notify insurance providers and other such third-parties. The requirement to notify State agencies should be assessed at an early stage.

Plan and prepare

The action list above details a whole swathe of activity for the management team. Despite their best intentions, Denis believes that a crisis management plan is unlikely to be executed smoothly if the management team hasn’t invested time in preparation and planning.

“Some organisations might find it useful to convene the core crisis management team on an infrequent basis to work through some potential scenarios,” he said. “It would also be prudent to review and refresh contact lists on a regular basis and reiterate the mechanism for communicating an urgent priority. Indeed, some organisations have a code word that basically means ‘drop everything’.

“And lastly, the team could consider any changes to the team’s composition and communicate those changes accordingly,” Denis added. “Once a crisis kicks off, however, and the parameters of the crisis become clearer, all the templates available to the crisis management team must be tailored to create a detailed and situation-specific action plan. This plan, by its very nature, will be fluid and resourced on a ‘skills required’ basis.”

Silver linings

While crises are typically viewed as negative events, Denis maintains that crisis situations can have a silver lining. “Crisis management typically involves superior problem-solving, communication and execution skills,” he said. “Crisis situations often allow personnel who were previously relatively unknown within the organisation to come to the fore, and management should recognise such talent for subsequent development.”
 
Denis Reeves FCA is Director of Bespoke Ventures Ltd., an experienced interim manager and a Chartered Director.