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How to minimize the damage

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Crisis managementA crisis can hit any company any time. In fact, it will hit - the only question is how hard. However, with a few simple steps you can be prepared and minimize the damage.


A crisis is defined as an unforeseen event that draws public interest and affects the business in a negative way. In plain English that means product recalls, a dramatic fall of the stock price, takeover, layoffs, work-related accidents, plant closures, or a regulatory investigations. The main thing to remember here is that crisis usually hits without warning.

The bad news travels very fast, and unfortunately for affected company, 24 hours a day, seven days a week. That in turn means that when in crisis we must follow the rule No1: Act now! We can't emphasize strong enough how important this is. If you are sitting and waiting for the crisis to go away even the relatively minor problem can hit your company very hard. In the other hand, a big and serious problem that threatens to destroy your company can be solved and you can pull the company out of dark waters with a minimal damage.

That brings the rule No2: you must have a plan. To successfully protect your company and its reputation you must create a plan how to deal with crisis situation and prepare your subordinates in advance. You should follow a few simple steps that will make your life more easier and bad situation less stressful.

The crisis plan should provide an action plan that can be adapted on the run. In peaceful times you management team should to think about possible scenarios (such as layoffs, a product recall, the attack of the competition...) and devise steps to defend the company with minimum efforts.

The plan should include the names of the members of the crisis response team, their responsibilities, assessment of damages, step-by-step action plan, crisis communications plan, a list of key media, and statements for a variety of risk scenarios. The most important thing here is to dedicate a highly-positioned executive who will be in charge for dealing with crisis.

It is important to have a single person who will communicate with media, investors and customers: those who ask for the information will know where to ask, and you will get more credibility because the messages to the public will be consistent all the time. This temporary "chief crisis officer" should be relieved of all duties as long as crisis lasts.

That in turn brings us the rule No3: your company should have a flexible management structure. The chief crisis officer will assemble his own team, from public relations specialist to chief engineer, and without a flexible structure your departments will be lost.

The rule No4: You should act simultaneously on two problems of the same priority - to bring the crisis under control, and to deal with the media (public). For example, if you are trying to fix recalled products and don't speak to the media, nobody will know about your efforts and buyers will turn to other company. Since every company tries for years and decades to gain customers' respect, it would not be wise to ruin all those efforts in a matter of days.

Media workers are under great stress: they need to publish information fast and they have deadlines to meet. So, make sure that you are there for media at any time (remember that there are time zones - someone will call you in the middle of the night). So, remember that media can write about you in a fair way or destroy you just like that. Like it or not, that's true in today's world.

When asked, give all information you have and if you don't know something, tell "We don't know yet and we are working on the problem very hard". That means that in the beginning you will have - and give - a small amount of information, but it is important to honestly say what's going on.

And remember: Act! Don't wait, waiting can bring your company in danger faster than any other problem.

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