Issue:March 2015

EXTERNAL DELIVERY – Crisis Management

The saying, “when the going gets tough, the tough get going,” always comes to mind when I hear about the challenges facing many companies, particularly when the issue a company is facing turns out to be a full blown crisis.

Crisis management is not risk management. Risk management has to do with planning for certain situations that may occur in the future. Crisis management is reacting to an event once it has occurred.

If you are a CEO, this is not the time to go it alone in an effort to resolve the crisis. There is so much to do simultaneously that no one person can be effective trying to resolve the crisis on his/her own.

Obviously, you want to take immediate control of the situation and not let the crisis spin out of control. The natural reaction is to communicate externally to customers, vendors, the trade and consumer press, and others. There are plenty of companies that specialize in crisis management and external communications, and you should seriously consider retaining one as the good ones are worth every cent that you pay them.

Even with a crisis in full bloom, you still have a company to run. So as a CEO or senior manager, you must also focus internally. This is because the company crisis is also an employee crisis, and internal communications are equally important to the external communications.

If you have a Board of Directors, you must communicate with them first. You never want the directors of your company to be out of the loop on what you are planning. In addition, if you have a competent Board, they can be excellent advisors and sounding boards (no pun intended). You should also keep in mind that directors of a company, public or private, have a fiduciary responsibility to the investors, and the investors will want to know what is being done to save the company and their investment. Keeping directors out of the information loop can be a disaster for you.

Just as importantly, you must communicate internally to the people in your company to keep the rumor mill under control and the “hysteria factor” to a minimum. You will never be 100% in control of the rumor mill, but you can exert control over it through constant communication.

You should also consider holding weekly staff and town hall meetings to ensure that accurate information flows throughout the company. You should also maintain an open-door policy so that employees can ask you questions directly, especially from those who are suffering from the “hysteria factor.”

Many of the people in your company will be living paycheck to paycheck, and the thought of losing their jobs and incomes due to a company crisis is something that will keep a person awake all night. The last thing you want to do is not let people know where everything stands on a frequent, honest, and open basis.

Otherwise you may develop a bailout scenario in your company, and losing valuable people can rapidly exacerbate an already difficult situation. So in one word, you must exercise CONTROL.

It must be positive control but control nonetheless. Your people will be looking to you for strong leadership during this time. They will be depending on you to save the company and their jobs. Never forget, “when the going gets tough, the tough get going,” and communicate, communicate, communicate.

John A. Bermingham is former Executive Vice President & COO of 1st Light Energy & Conservation Lighting, Inc. and former Co-President and COO of AgraTech, a biotech enterprise. He was also President & CEO of Cord Crafts, LLC; President & CEO of Alco Consumer Products, Inc., Lang Holdings, Inc., and President, Chairman, and CEO of Ampad, all of which he turned around and successfully sold. With more than 20 years of turnaround experience, he also held the positions of Chairman, President, and CEO of Centis, Inc., Smith Corona, Corporation, and Rolodex Corporation as well as turning around several business units of AT&T Consumer Products Group and served as the EVP of the Electronics Group, and President of the Magnetic Products Group, Sony Corporation of America.