Andrew Zezas, publisher of CFO Studio magazine moderates a discussion on how finance executives can manage crisis communicatons
A risk management plan generally falls under the purview of the CFO, when a company does not have another executive in charge of such matters, with crisis communications being part of that plan. Done well, crisis communications demonstrates a company’s integrity and promotes trust in a time of great difficulty or even chaos. How to plan for a crisis that convulses your business was the topic of a recent panel discussion sponsored by The CFO RoundTable.
Andrew Zezas, publisher of CFO Studio magazine, host of CFO Studio On-Camera, and CEO of Real Estate Strategies Corporation, moderated the discussion. Zezas questioned three experts on what CFOs should do to protect their companies; what a crisis management advisory company does; and what journalists look for and ask about in a crisis.
“What’s the most important piece of information for CFOs to take away from this meeting?” he asked Bernard Kilkelly, director and past president, National Investor Relations Institute, New York Chapter. “Financial executives need to realize,” Kilkelly replied, “that at some point in their career, it is almost inevitable that their company will be hit with a crisis. Be prepared. Have a plan, and as important as the plan is, have advisors in place that you trust: your law firm, public relations advisor, and if you’re a public company, a stock-watch firm. You need to have the relationships already in place so you can hit the ground running when the crisis occurs.”
Rhonda Barnat, managing director, Abernathy MacGregor, and co-head of that firm’s crisis management practice, described how she helped companies manage through issues in some of the most visible business crises of recent times. “Once a company focuses on speaking directly to those affected, and in particular ‘answering the first question’, the resolution of a crisis can be forthcoming. Often that first question is ‘am I safe?’ or ‘are my funds safe?’”
A key element that her company can bring to a client is a focus on truth telling inside the organization. She used the word “audit” in describing what Abernathy MacGregor can do.
“The term ‘audit’ is a great one,” said Kilkelly. “You go in and see what you’re dealing with: Is there a culture of denial? Is there a culture of lawyer-up every time a crisis hits? You can’t do an audit internally… Outside experts are best suited to complete a crisis management audit.”
Using examples from recent data breaches in the news, Barnat asserted that eBay handled its crisis well: No long letters, no obfuscation, just a simple email to its customers advising them to “Change your password today.”
In a data breach or any other crisis, “The first question is: ‘What does it mean to my company, its customers, etc.?’” she said. Once you understand that, the next step is to “tell the people affected what to do right now.”
When a crisis hits, journalists may very well ask questions, so part of your company’s plan must include advance decisions as to who will make public statements and communicate with the press.
Noelle Knox, CFO Journal editor, The Wall Street Journal, who has covered crises throughout the world in government and politics as well as the real estate, financial, and automotive industries, among others, said, “What I need as a journalist is to be able to communicate with the person who is the most informed about the problem. Someone who is sincere.… Giving me a professional spokesperson will not help your company.”
When Abernathy MacGregor represented a five-plus-star hotel with a Legionnaire Disease outbreak, the crisis communications team included someone who cleaned rooms. “We did the [communications] training in English, Creole, and Spanish,” said Barnat. “When guests asked, ‘What does this mean to me?’ they had the right answer.”
At the other end of the spectrum, companies that put their CEOs out front to speak about a crisis sometimes have reason to regret that choice. Zezas quoted Donald Trump’s comment, “When someone says something about me, I hit them back very hard,” and then asked the panelists, “In the event of a crisis, is that a recommendation you would make to your clients?”
Barnat replied, “We often get that kind of initial response to a crisis.” The chief executive may wish to handle everything because CEOs are driven by the entrepreneurial spirit they’ve drawn on to build a business. “They’re feeling, ‘I’ve got to get out there and tell the story.’”
Kilkelly agreed with Barnat that “crisis situations aren’t really confrontational. And managing the crisis is about making sure that your customers, your employees, and your brand survive the event. So it’s not a matter of fighting back.”
Zezas asked Barnat: “How do we know when the crisis is over?”
“You know when it’s over when your customers believe it’s over. When your employees feel it was well managed, when you’re not hearing about it in general conversation,” she said.
Zezas asked, “How important is it to have a crisis management plan in place before a crisis hits?”
All the panelists agreed that a plan will minimize damage to the company’s credibility — and likely to its financial health. Kilkelly’s answer: “Crisis planning is just simply part of running your business… akin to your IT plan. You need to have a plan, a detailed plan, in place to deal with the communications aspects of any events that could disrupt your company…. A successful plan must always be specific to the company in order for it to be effective.”