Friday, July 30, 2010

Final Thoughts on BP's Hayward, Hopefully!

Today, Tony Hayward, who resigned as CEO of BP, says he has been turned into a "villain for doing the right thing."

We don't know if he did any of "the right things" in the days leading up to the Deep Water Horizon explosion and sinking or the 100 days that followed. We do know that he kept saying things that did not play well with any of his important American audiences.

Hayward told the Wall Street Journal this week he did everything possible, including taking responsibility for the spill and committing billions of company dollars to the clean-up and efforts to cap the leak.

I've commented about Hayward's biggest, known mistake before. I am compelled to write about it one more time, because it is so important, and owners, managers and top executives of all kinds of companies fail to understand.

The top person in any organization should NOT be the on-going spokesperson in a crisis. There is almost always a time and place for the top dog to speak briefly and make a significant statement. But, never, never should that top leader take the chance of misspeaking on a continuing basis during a crisis.

Besides, the CEO has a big job managing the company through a significant disruption, and that usually takes all their time, focus and effort. A chief spokesperson has a big, all-consuming responsibility also. I don't know many people who can do both effectively.

Wednesday, July 21, 2010

Oops!

A rightwing blogger started it, some of the national media piled on, including FOX News, and then the Secretary of Agriculture and the President of the NAACP got sucked in.

And Mrs. Shirley Sherrod was the piƱata, getting smacked around by all of them.

The “former” USDA employee was forced to resign from the Agriculture Department almost immediately after Blogger Andrew Breitbart posted an edited and misleading video of comments Mrs. Sherrod made at a local NAACP meeting in Georgia last March.

The 2-minute, 38-second video was lifted out of a longer speech she made. It made it sound as if years ago, she failed to help a white farmer who was about to lose his farm. She said she was tempted to do less than was required by her job more than 20-years ago,to help the man because he was white and because whites in the South had treated blacks that way in the past.

Without hearing the rest of the “lesson” that she was trying to convey, the President of the National NAACP was put on the spot by reporters and he quickly condemned her statement as racist and called for her ouster. Agriculture Secretary Tom Vilsack quickly responded to the reports of her so-called “racists” remarks and had Mrs. Sherrod’s supervisor call her in her car and ask for her resignation.

The full video later turned up and was forward to the NAACP and some news rooms. NAACP President Benjamin Todd Jealous said his organization was “snookered” into reacting. And the Obama Administration, which publicly supported the Secretary’s actions, based on the misleading and out-of-context reporting by Fox and others, ended up with egg on its face, as did Jealous and Vilsack when the full story surfaced.

The next morning NBC Today Host Matt Lauer interviewed Mrs. Sherrod and asked her if this wasn’t an “oops” kind of moment for her former Agency, the White House and the NAACP.

She was very gracious and measured with her words. And before the day was over, the NAACP President, the White House and Secretary Vilsack publicly apologized and the Secretary offered her a new job with the USDA leading the agency on civil rights issues. She agreed to consider the offer.

The question is what happened? Who was responsible? Why did such an injustice occur?

Mrs. Sherrod came out the best. She never over-reacted. She was gracious in her response to media inquiries. She did not lash out at her critics or say anything inappropriate.

Vilsack was a little slow to fix a mess he helped make worse by jumping to a conclusion, but he did ultimately take responsibility and said, “She’s been put through hell and I could have done, and should have done, a better job.” And he added, “She was extraordinarily gracious.”

Of course it’s easy to blame the blogger who first posted the misleading video and equally easy to point a finger at FOX News and other rightwing leaning news shops who seem to always be looking for opportunities to pile-on, in what appears to be an ongoing attack on the “liberal” Democrats in Washington.

There are several lessons.
1. Make sure you have the facts before you insert foot in mouth and bite down hard!
2. Be careful and gracious when under attack – especially if you did nothing wrong.
3. When you over-react and speak out of turn, take responsibility and own-up as quickly as possible.
4. In spite of the preaching of one of our competitors who says apologies are over rated, apologize quickly and earnestly and then set about fixing whatever needs fixing.

Monday, July 19, 2010

What is the key to most disasters?

Seth Borenstein is an Associated Press reporter and could very easily be a spokesperson for the Institute for Crisis Management.

He researched and wrote a story that appeared in Sunday newspapers July 18. In our local newspaper –The Courier-Journal – the headline was “Key to most disasters? Human hubris”

The gist of his story was that most calamities follow ample warnings that are ignored, including the on-going BP crude oil disaster in the Gulf of Mexico. He recalled how the 1986 Space Shuttle Challenger explosion and the 2003 Shuttle Columbia crash were all preceded by multiple warnings that something was going wrong. And don't forget Massey Energy's Big Branch Coal Mine disaster.

Even BP’s 2005 Texas City, TX refinery explosion had multiple warnings that trouble was looming.

University of California-Berkley engineering professor Bob Bea says disasters do not happen because of what he calls “an evil empire,” instead, he says, “Its hubris, arrogance and indolence.”

If you read this blog semi-regularly, or check out our annual ICM Crisis Report, or even hear me speak, you know we maintain that two-thirds of all crises are preventable and I believe that many of the other one-third can also be avoided, if someone in the organization is paying attention, watching for signs of trouble and willing to do or say something about it.

Borenstein concluded in his article there is a “belief by those in charge that they are the experts, that they know what they’re doing is safe. Add to that the human weaknesses of avoidance, greed and sloppiness, say academics who study disasters.”

Rutgers University Professor Lee Clark, author of the book Worst Cases points out that safety costs money, or as we say, crisis prevention requires some time and costs some money, and as Clark observes, “you can’t get anybody to listen. We’re very reactive about disasters in the United States.”

It never ceases to amaze me how intelligent, successful and highly paid executives, managers and business owners, will ignore crisis management planning, training and prevention, but not hesitate to spend way too much money to fix a problem that could have been avoided for a lot less.

Motivational Speaker Scott McKain says, “It’s easier to Prepare and Prevent than to Repair and Repent.” My version is simply, “It is cheaper to prepare and prevent than to pay to repair and repent!”

It is so relatively easy and inexpensive to identify potential risks or crises in your organization, and prepare to prevent as many as possible and better manage those that cannot be avoided. The alternative is very expensive.

Monday, July 12, 2010

Do You Need a Social Media Policy?

Unless you’ve been vacationing in a cave or on a remote oil-free island for the past few months, you’ve heard about the Domino Pizza employees that posted a tasteless video on YouTube, and most recently four young TV news reporters and a photographer were fired at KARK TV for posting a profanity-laced video they thought was “funny.”

You also may have missed the various blog posts in recent weeks arguing for and against creation of a “social media” policy.

I used to have mixed feelings about a lot of “policy” stuff, but as I’ve gotten older and more experienced I have learned that fairly and carefully written policies can spare less experienced employees from potentially career ending blunders.

Unfortunately, those same policies will not likely save the careless and thoughtless employees, although a reasonable and documented policy saves management a lot of grief when they have to discipline or fire an offending worker.

I am old enough – I prefer to say experienced enough – to remember when I was one of the first TV news directors in the U.S. to computerize a newsroom. E-mail was not an issue, until later. I also remember when the workplace had policies about personal calls (on the company telephones), and when companies began to restrict access to the Internet and porn sites at work.

Now with Facebook, Twitter and a lot more, all organizations have a responsibility to their various constituents to do everything reasonably possible to protect their reputation and public persona.

Careless ramblings or contradictory statements on-line about an employer, a boss, business partner, customer, co-worker or even a competitor, that is not consistent with the organization’s public position, can be damaging.

A few companies have simple but excellent social media policies. Best Buy is one of those. The electronic retailer reminds its employees “whether you’re Twittering, talking with customers or chatting over the neighbor’s fence” good social media judgment applies.

And IBM urges its thousands of employees to be aware of their identification with IBM on-line. ”If you identify yourself as an IBMer, ensure your profile and related content is consistent with how you wish to present yourself with colleagues and clients.”

So what does this have to do with crisis management?

Two-thirds of all crises are what we at ICM call smoldering crises. They start out small, often internal, but not always, and they are the kind of issue that someone should spot and recognize as a potential future problem and fix it or tell someone who can fix it before it becomes a public embarrassment.

More and more “little” problems are getting started on-line and not recognized as the potential trouble they can become and then WHAM they hit a company or organization and all hell breaks loose.

Tuesday, July 6, 2010

You Knew It Was Gonna Happen

When soon to be retired Four-Star General Stanley McChrystal and some of his staff were quoted speaking "out of turn" in Rolling Stone Magazine and he was later forced to resign his position as top general in Afghanistan, you just knew there was going to be a crack-down on military officers talking to the media.

Unfortunately, in my opinion, it was the wrong thing to do.

General McChrystal's mistake -- and he made a big one -- was not in talking to the Rolling Stone reporter, it was his naivete and carelessness while talking to the reporter.

Defense Secretary Robert Gates would have been well advised to use McChrystal's experience as a "teaching moment" for all U.S. military officers already authorized, and hopefully trained, to deal with the media. The Army's embarrassment is also an excellent teaching-moment for corporate executives.

Don't avoid talking to the media. Look for every opportunity to tell your story, and do it according to "plan." Leave the jargon and "off-the-cuff" remarks back in the office. There is no place for such stuff in any conversation with a reporter -- on or off the record.

In the late-60's, I was assigned to a U.S. Air Force Wing Information Office and we worked for a one-star and then a two-star general. We looked for opportunities for the "boss" to talk to the media, but he was never left alone with a reporter. Just like later in my career I worked for a U.S. Senator and later another government official and there was always a staff person present when the "boss" met the press.

CEO's can learn from General McChrystal's experience and avoid the same mistakes.

And, stay sober when in the presence of the media and other publics.

Secretary Gates was not completely wrong in his attempt to "control" media encounters. It appears he just went a step too far in his directive.

Both in the military and the corporate world, persons at every level of an organization should be identified and trained as potential spokespersons. They should have limits on what subjects and details they are authorized to talk publicly about. They should always advise someone up the chain of command when they have a media encounter.

But, with few exceptions, including during a significant crisis, they should not have to go all the way to corporate headquarters or the Pentagon before they do an interview that falls within the parameters I just outlined above. If you can't trust a person to follow the guidelines, then they should NOT be authorized to speak to the media to begin with.

Thursday, July 1, 2010

Does The Board Have A Role In Crisis Planning

Gary Larkin, writing on the Governance Center Blog of The Conference Board website, raised a very important question. What is the role and responsibility of corporate board members when it comes to crisis planning, training and prevention?

I am sorry to admit that all too often I focus my writing on the C-Suite and only rarely comment about “the board.” The last time I had a client that had a board member concerned about crisis planning, it involved a CEO’s refusal to adopt a corporate travel policy. He loved to get his top three or four execs on a big silver bird, and “work” as they flew non-stop across the country, without any phone interruptions.

The board member was rightly worried. It was a publicly traded company and the sudden death of the entire top management team could be devastating. But, I digress.

Corporate executives AND boards should care about their companies’ crisis planning.

A crisis counselor in Australia recently asked me if I had any data indicating how many companies actually had any kind of a crisis plan. Alas, there is no verifiable answer to his question.

It’s hard to know, for sure, how many companies have useful and tested crisis plans. It’s like asking folks if they watch Public Television. Many say “yes.” But when the ratings come in, they don’t show up. Ask a corporate executive if she/he has a crisis plan and they’re likely to say “yes” because they don’t want to admit they don’t.

In Mr. Larkin’s post he referred to a survey of audit committee members and management of public companies conducted by KPMG’s Audit Committee Institute (The Audit Committee Journey: Adapting to Uncertainty, Focusing on Transparency) between January and March. 30% of the respondents said the greatest risk management challenge facing their companies is “understanding the velocity of risk events, and preparing for and responding to the impact. 20% said “understanding the link between strategy and risk,” 9 percent said “tracking and reporting on risks,” 13% said identification of risks,” and 14 % each said “mitigation of risks,” and “assessing risks.”

You may interpret those conclusions one way, but what I see is an attitude that crisis planning is still not high on many corporate agendas.

I recall a meeting a few years ago with a management team at an American pharmaceutical company. I was pitching them on crisis planning and how we could help them do that. A corporate executive stared at me and declared, “Mr. Smith, we don’t have crises. We manage our issues.” I, perhaps, was a little curt in my response. I told her I didn’t have a problem calling it issues instead of crises. Needless to say, we didn’t get hired at the time.

But, when management is not thinking about preventing crises or preparing to manage crises when they cannot be prevented, the Board could be.

Mr. Larkin poses a real challenge to corporate board members.

I would ask, are you content to have your board status on your resume and perhaps receive a nice check now and then, or do you care about the business you signed on to help lead? If your executive team is too busy or too distracted or too indifferent to care about crisis planning and training, are you sure you are associated with the right company? Or are you sure you have the best management?

Every company should have three crisis plans: (1) An operational crisis plan -- what do you do when someone pulls the fire alarm, or the tornado or hurricane is bearing down on your plant; (2) A crisis communication plan -- who says what, when and how do they deliver the message and to whom; and (3) A business recovery plan. In the best of all possible worlds, those three plans should be integrated into one comprehensive plan.

We can help you figure out what kind of plans you need, and help you create the communication plan to go with it.