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Leadership lessons in crisis prevention

August 2, 2010 Jonathan Hemus

Gerald Ratner - how not to do it

If creating the right corporate culture is the number one priority for the CEO in reputation protection, there are other ways in which they can help to prevent and prepare for potential crises.  Given that no CEO would welcome the drain on human and financial resources that a crisis brings – not to mention the potential damage to reputational value – focusing their attention in this area should be a no brainer.

The start point in reputation protection is for the CEO to emphasise the importance of crisis, risk and reputation management.  This means creating an expectation and accountability that crisis management will be done well, and checking regularly to ensure that this is happening in practice.  When the chief executive pays personal attention to a certain area of the business, it tends to focus the mind and ensure that the job gets done!

But real leadership is of course provided not just by what a CEO says, but more powerfully by what they do.  So, being first in the queue for regular crisis media training and not only ensuring that a crisis simulation happens every six months, but participating in every single one will send out a very clear message that more junior team members will undoubtedly follow.

Further reinforcement can be provided through “management by walking around”.  Regular visits to the shopfloor to check that people know what to do if they spot a problem and that they understand that communication channels are open will help to ensure that the boardroom principles of crisis management are making it through to the front-line.

There’s one other vital task that the CEO can undertake as chief reputation officer: ensuring that the reality of the business matches up with its brand promise.  This matters at all times, but it matters most in the event of a crisis.

How do we know this?  Well, when Oxford Metrica undertook its analysis of how crises affect the value of businesses, they discovered that the biggest value changes occurred when the crisis struck at the heart of the brand.  In other words, if the nature of the crisis or the way in which it is handled runs counter to the way that the company had positioned itself, the damage to reputational value will be especially severe.  So, if the brand is built on quality, a crisis that reveals shoddy products will be especially harmful.  If the brand is built on safety, a major accident will be especially damaging.  If the brand is built on integrity, a crisis that centres on corruption will be particularly hard to manage.  It is the CEO’s job to make sure that the organisation’s brand is much more than skin deep or else it leaves the long term value of the business perilously vulnerable to the wrong kind of crisis.

Crisis prevention can easily slip down the list of CEO priorities as tasks which seem more important – or certainly more urgent – take precedence.  Enlightened CEOs avoid this trap because they know that the time required to lead an effective approach to crisis prevention is not only tiny in comparison with that required to manage a live crisis, they also understand that to gamble with the corporate reputation is a risk too far.

Jonathan Hemus

  • Jonathan Hemus, Insignia Communications
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