If you had $658 billion at risk would you make a plan?
With two thirds of companies unprepared for a crisis and a far greater number than that incorrectly wired to handle a crisis, it is time to wake up and make a plan.
Given that businesses are run by humans – at least for now – then the truisms applicable to human fallibility are equally applicable to businesses. The most obvious one in the context of Crisis Communications is that we just don’t believe it will happen to us and hence the fact that the vast majority of businesses, both big and small, haven’t made the effort to make sure they have the two magic ingredients to survive a crisis… a plan and a cultural DNA wired for radical honesty.
Given also that both good times AND bad times are INEVITABLE then you have to wonder why more senior executive attention is not paid to this. Yes, I know, because we are human! But this circular reference isn’t a good enough excuse when you have Mom’s and Pop’s pension invested in your business.
According to a recent and very large study by Reputation Institute, only 39% of CEOs are effective in putting governance structures in place. In other words, two thirds of companies are not ready for a crisis. Putting that into context, if you just looked at listed companies in SA, that means that about $658 billion is at risk. I think perhaps this is cause for concern…
Without getting too derailed into why this is the case, I think it is worth a slight transgression to explore the big hairy monster of ‘Reputational Risk’ that according to every recent study I have seen is one of the biggest sleep deprivers of board members. In my humble opinion it is because reputational risk is so omnipotent that no one properly plans for it. It just too big and hairy a monster so we prefer to look the other way. To be fair it is probably completely impossible in today’s day and age to cover every base here, but I do think proper scenario and contingency planning should be mandatory.
Anyway, back to point at hand. When the crisis does hit and you’re stuck up a creek without a paddle there is only one thing to do… radical honesty.
The problem is that few businesses can cope with this. Many are led by Baby Boomers who cut their teeth in the days of corporate excess and those old habits die hard. ‘Spin’ is not going to get you out of a crisis and will in fact just make it worse. Add to this the pattern of sanitising information as it gets to the top and the standard practice of sharing information only on a ‘need to know’ basis and you have a radically dishonest company even if one of the values on the boardroom wall is ‘transparency’.
So companies, both big and small, need to take a good hard look in the mirror and go through the pain of the cultural shift required to instill radical honesty into its DNA.
It’s no co-incidence that the Chair of one of the most successful companies on the planet ‘gets’ this. Eric Schmidt from Google shared on Twitter that leaders’ “default mode should be to share everything with as much of your organisation as you can”.
How brave are you?
Please make an appointment for a free consultation to assess your level of reputational risk and crisis preparedness.