Fixing The Crisis

November 3, 2006
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GRAND RAPIDS — This week, Venture International LLC principal and Aquinas College professor Curt Bechler is off to Kentucky, where a company president is in the midst of a very messy exit after crossing his board of directors.

A 16-year veteran of corporate crisis response, Bechler’s practice exposes him to companies at their worst moments: A CEO sleeping with a secretary, death threats or violence on a shop floor, embezzlement or fraud, labor disputes, and other issues that threaten the viability of an organization.

“Typically, there is a fear that you’re not going to survive or that there is going to be a significant loss,” said Bechler. “They’re afraid they’re not going to be able to sustain themselves as an organization.”

Although his task is often arduous and complex, the purpose of crisis management is relatively simple. The company must first respond to the problem, seeking out where the figurative bleeding originated and addressing that situation. Then, steps must be taken to fully understand how the crisis arose, and ensure that it will not happen again.

A recent scenario was the discovery of a high school teacher involved in a sexual relationship with a student. The response to such a situation, Bechler said, includes immediately contacting child protective services, suspension of the teacher and a dialogue with the family. Subsequently, an examination of root-cause pathology issues takes place: Did the administration’s hiring and management practices somehow facilitate the crisis? Were there warning signs that should have been detected?

In many cases, Bechler has seen dire situations become turning points for organizations, as they take the opportunity for strategic reorganization to better align with and promote confidence in managers, employees and stakeholders.

Ginny Seyferth, president of public relations firm Seyferth Spaulding Tennyson in Grand Rapids, is reluctant to identify situations that someone like Bechler would address as crises. To her, a crisis is an explosion, a toxic spill or a fire. Almost everything else is an issue.

Roughly 70 percent of her firm’s work is issue management, the largest such practice in the Midwest. More than 90 clients have retained Seyferth Spaulding in this arena, in addition to a dozen law firms across the Midwest. Fortunately, much of the work is training.

“In today’s world, because media and communication is at such high speed, you really can’t train for a particular what if,” said Seyferth. “You need to train management at all levels of an organization.”

Seyferth advises those involved in a crisis to first, stay calm — don’t respond until the situation is well understood. Human safety is always the top priority, and once that is assured, companies can take a methodical approach, Seyferth said. Taking time to decide the proper course of action will facilitate a clean and rapid response.

Determining who should be included in such a response is the initial concern, she explained. The company may need to quickly attain assets, such as additional security personnel. If it is a legal matter, the proper counsel should be directly involved. If authorities need to be notified, the appropriate organization should be contacted directly; a company should not allow itself to be routed through city and county officials if it knows it is a federal matter, for instance.

The same concerns apply to internal leaders. The individual leading the response should be empowered to make decisions. Where applicable, communications to employees, investors, media or the general public should be conducted by someone with specific understanding of the event and the response to it.

“You don’t want some P.R. person who doesn’t know what they’re talking about,” Seyferth said. “If it’s a chemical spill, get a chemical engineer who can explain that it’s a derivative of what’s in nail polish. Get the nutritionist that can tell you what is in the spinach, or a physician that can make it clear to everyone what happened in the procedure.”

And in doing so, care should be taken not to make the response worse than the issue. If the concern is a rumor read by 400 people on a blog, Seyferth said, publishing it for 4 million readers to see is not a wise response.

“Don’t overcomplicate it,” she said. “Don’t spin it.”

Tim Penning, a communications professor at GrandValleyStateUniversity, agreed with Seyferth, invoking the classic example of the Nixon-Watergate scandal, in which the cover-up was worse than the crime.

“The biggest part of proactive issue management is identifying potential issues and crises,” Penning said. “You think of accidents and acts of God, but data shows that 75 percent of crises are the result of management not doing the right thing to prevent the crisis in the first place.”

For Karen VanderWerff, an attorney specializing in crisis management at Warner Norcross & Judd LLP in Grand Rapids, public perception is a small portion of her work. Like Bechler, she is generally engaged during times of full-blown crisis. In these situations, ranging from toxic spills to product recalls, every action by the company could become a question in a court deposition.

The company’s immediate concerns are the safety of workers, the community and consumers, in conjunction with labor issues and liability. Many times, there are governmental agencies with which to liaison, such as the Michigan Occupational Safety and Health Administration, Michigan Fire Marshal, U.S. Environmental Protection Agency and others.

In one such event — a trucking accident that released a toxic gas — the National Transportation Safety Board conducted the investigation, prohibiting the company from accessing the scene.

“Everybody needs to prepare for a situation like this,” VanderWerff said. “If you’re not prepared, all you can try and do is limit the impact.”

There are a multitude of factors companies should consider for possible catastrophes. Redundancies must be built into business operations and supply chains. Insurance should be vetted for coverage gaps. A response team should be trained and in place long before a crisis arises. Communication should be established that is not reliant on the physical plant. Data and documents of all sorts should be accessible outside of the plant.

“If you have first responders that are going to be sending in people to handle hazardous materials, you don’t want to be telling them all the diagrams of your site are stored inside,” VanderWerff said. “So now you’re trying to sketch the locations of electrical and chemical pipes on the back of a brown paper bag.”

She also advises companies not to perform their own investigations. Instead, they should seek a third-party source protected by attorney-client privilege or work-product doctrine. Otherwise, that investigation could be “Exhibit A” in a suit against the company.

Often overlooked in the crisis response is the toll certain events can take on employees.

“If there is an accident or death on the plant floor, there will be a psychological effect on everyone,” said Ken Taber, a clinical therapist and principal of Ken Taber & Associates in Grand Rapids. “Everyone goes into shock, and there is fear, too. Everyone wants to know who it was and how it happened.”

While his firm’s primary offering is career and outplacement consulting, it often serves as part of companies’ trauma response teams. The same concerns of safety, communication and prevention seen in the larger organization response should be found in the company’s internal response. In addition, employees close to the incident will likely bear a psychological stress of which the company should be cognizant and address appropriately.    

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