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Effective Crisis & Reputation Management Strategies

The recent Penn State scandal had most people talking about the unspeakable actions of former football coach, Jerry Sandusky, but like many controversies, it sparked a different conversation among a variety of professionals about the steps taken (and not taken) by university officials to properly manage the crisis.

Organizational crises can “explode” in an instant. An experienced machinist ignores safety protocols and causes a fatal accident on the factory floor. A store clerk posts a video of a customer changing in a dressing room. A company driver is involved in a multi-vehicle accident that results in a toxic chemical spill on a major freeway. A young high school teacher has an affair with a student. An executive is caught skimming funds from company accounts.

Such incidents may briefly capture headlines, but the physical, physiological and financial repercussions can have a lasting impact on people and threaten an organization’s profitability, productivity and brand image indefinitely. Companies must act quickly to contain the damage and minimize the impact. An effective crisis management plan helps companies coordinate its response and prioritize concerns, focusing on the most pressing matters first, whether that involves protecting people, the environment, assets, or the company’s reputation.

A crisis plan should also outline all aspects of communication flow. If a crisis involves emergency workers, who will serve as their primary point of contact? Who will serve as the company’s spokesperson? Who will draft media statements, employee announcements or web updates? Who will be available to quickly review and approve those communications? (A well-drafted response is worthless if held up in a lengthy review process.) Who will contact loved ones in the event of an employee’s injury or death? Who will coordinate with regulatory agencies or respond to possible lawsuits? Those identified to serve on a crisis response team should be made familiar with the crisis plan. Some companies conduct practice drills to rehearse their procedures and identify weak spots in their plan.

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Needless to say, crises have a way of quickly unifying a company, bringing together a multitude of operational units and functional areas, such as Safety, Legal, Regulatory, IT, PR, and Human Resources, to tackle very immediate and tactical matters. However, when an employee’s actions, intentional or unintentional, contribute to or cause a crisis, HR often plays a more significant role, advising management on how to deal with employees involved as well as those impacted.

Immediate suspension of employees may be appropriate to allow time to investigate details or accusations. Consider too if authorities should be contacted. If a law has been broken, the company has an obligation to notify law enforcement officials. Management may be reluctant to move too hastily, but inaction or a delayed response can be perceived as ambivalence and do more damage to the company’s reputation.

Companies should have a policy in place that dictates the precise steps to be taken when there is suspected or alleged misconduct. This will afford management the excuse that they are following company policy as they continue to examine the matter.

Communicating, internally and externally, becomes paramount in a crisis. Prompt and proactive communication provides companies the opportunity to tell their side of the story. Unfortunately, some stories have bad facts – people are hurt, money is lost, damage is done. Ignoring or burying bad facts won’t change them, nor can any amount of spin, but open and honest communication can shape how the company is perceived during and after the crisis.

After the initial impact, managers need to consider what steps still need to be taken for the company to fully stabilize and ultimately recover. Certainly there could be ongoing investigations, questions of liability, or required actions involved with workers comp claims or potential lawsuits. And what additional employee assistance may be needed? Are employees feeling concerned, angry or fragile?

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It would be irresponsible to conclude a discussion on the topic of corporate crises without mentioning that, like many things in business, the best defense is often a good offense. By ensuring that employees are familiar with company policies and thoroughly trained on safety protocols, businesses can help prevent many mishaps and certain types of misconduct. And if things (or people) still go wrong, as they sometimes do, having provided the proper instruction may help mitigate some company liability.

Also, as was evident in the Penn State scandal, some ongoing abuse could be stopped and damage minimized if wrongdoing, once discovered, is immediately reported to appropriate authorities inside and outside the organization. Unfortunately, when an organization consistently protects its own interests above the wellbeing of others, fear can discourage employees from speaking out. Companies should have procedures in place that allow employees to anonymously report any incident without fear of retribution.

Make employees familiar with those procedures as well as possible disciplinary or legal ramifications for not reporting illegal activities. Finally, promote an open culture that encourages forthright communication and forbids collusion and cover ups.

The most visionary business managers could never predict the timing or the nature of their nextcompany crisis, but if they are smart, they will acknowledge that some sort of crisis will eventually occur. It is impossible for a company to execute a flawless crisis response, but mistakes in the heat of the moment and lapses in judgment can cause a crisis to escalate. Preparedness, precautions and practice can help companies respond promptly to crises and minimize the damage they can cause.

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