Emerging Markets Business Summer 2016 | Page 97

EMB PREVENTION IS BETTER THAN CURE For crises to be avoided in the first place, business leaders should consider the following: Do you run crisis management simulations? Do your team members know what their roles are or how they should respond in a crisis? Running crisis management simulations can limit real-life damage and improve decision-making ability. Do you acknowledge your vulnerabilities? Even in the good times, business leaders should recognize their organizations’ vulnerabilities and fallibility. Operating with invulnerability can lead to disaster down the line. Does your organization have crisis management capabilities independent from PR? Your public relations personnel may not be equipped to handle a reputational hit. A separate crisis management team, however, is there to manage and prevent exactly that. Do you have external expert counsel? Having the right in-house capabilities is vital, but external advice you can trust can provide crucial perspective to help avert a crisis. Have you developed a communications strategy? It is important to have a solid communications strategy in place long before a crisis calls for it. The right person must also be in place to communicate the message clearly and consistently. Are you on top of goings on? Stay informed about happenings across all your organization’s locations and departments to increase the chances of identifying and handling issues before they become problems. To restore confidence in leadership, an organization needs to fix its reputation, and fix it convincingly, in order to assure customers and other constituencies that positive change has occurred or that their original confidence was not misplaced. Often this is easier said than done. This is the challenge VW (at the time of this writing) is still wrestling with. With a situation as technologically complex as VW’s emissions systems cheating, it wasn’t readily apparent precisely how the fraud occurred or who in the organization was responsible. But to have the best chance of survival in dangerous waters, a company must be able to get to the bottom of the problem and repair its reputation, both inside and out, to right the ship. Inability to accomplish a clean fix also helps explain why organizations like FIFA and Petrobras, the state-run oil giant of Brazil, have lingering problems. While executives from both organizations have been accused of accepting bribes and money laundering, they’ve also contested the charges to varying degrees. While in some instances contesting charges may absolutely be the right thing to do (when a company is genuinely convinced it is innocent and charges are without merit), it’s hard to convince stakeholders that problems really have been resolved while legal wrangling is ongoing. Communicate effectively Once a problem has been resolved or a successful resolution is well underway, it’s time to communicate candidly, clearly and consistently. When a company’s reputation is called into question, there is no place for stonewalling. Again, my personal experience, which involved a CEO’s unexpected termination, taught me that repeating the same carefully honed and 100% accurate message over and over again to multiple audiences—customers, employees, sales force, etc.—was integral to restoring confidence in the organization, and hastened a complete recovery. Since all communications related to the situation in question will be scrutinized by multiple audiences including the media, credible, consistent communication is a vital element of any game plan to preserve reputation—and in the face of repeated damaging publicity, relaying the message once is not enough. For every instance of negative media coverage, a company must strike back with a positive story, told through one transparent voice. This explains in part why organizations like FIFA, which have spent years evading problems and issuing what, with the benefit of hindsight, now appear to be less-than-truthful denials, will have trouble regaining public trust. Establish controls to prevent recurrence Companies whose reputations have been tarnished or compromised need to convince multiple parties that not only has the problem been fixed or that allegations proved unfounded, but that such situations won’t recur. Leadership needs to credibly demonstrate that the issue has been constructively resolved for the long term. This is why Tylenol is the success story of this genre. In Johnson & Johnson’s case, the quick decision to create containers with tops sealed with unbroken plastic, not only saved the company but also in the process revolutionized pharmaceutical packaging for the good of the industry and the public at large. While Tylenol’s example goes above and beyond the solutions that most companies in crisis can reasonably hope to achieve, the point is, they need to show that their improvements are permanent, not merely a short-term fix. This is the challenge that organizations like Volkswagen, FIFA, Petrobras and MTN Nigeria are now dealing with. But for multinationals, the challenges don’t end there. Companies with a footprint in multiple territories must also consider the broader impact that a reputational crisis in one country has on their wider operations. For instance, with all eyes on Nigeria, MTN Group was distracted from its other key markets to its detriment. Whatever the location, reputational crises can occur in an instant, and fully restoring public trust is a lengthy process that often requires a thorough management housecleaning. The public needs to feel confident that the environment that gave rise to the problems in the first place no longer exists. Successful business invariably involves detailed planning and preparation. Reputational threats can lead to dangerous highstakes environments, but proper plann ing long before any action is actually needed can improve the odds of a positive outcome. While I hope this article will prove to be of interest and value, my larger hope is that you never have an emergency requiring you to use it. Victor Lipman. A former vice-president of corporate communications for a Fortune 500 company. He’s the author of The Type B Manager: Leading Successfully in a Type A World (Prentice Hall Press). He is a regular contributor to Forbes and Psychology Today on management topics, and has his own consulting firm, Howling Wolf Management Training. EMBreview.org  95