Last year my colleague Annabel Wren wrote a paper on reputation management in a crisis that won the B2B award at the MRS Awards 2014. Unlike my posts, which have tended to focus on the communication aspects of managing a crisis, Annabel’s paper covers the whole spectrum of activities, starting with the most important: be prepared.
No one knows when a crisis could strike, but that is all the more reason to be prepared. Toyota, Air Malaysia and others have learned that a slow and confused response to a crisis can be very costly. Companies thinking about crisis management need to answer three important questions as part of their planning.
How big is the risk?
The higher the reliance on branding to drive sales, the more quickly a company needs to act to defend its asset. For many consumer-packaged goods, the majority of sales result from the appeal of the brand name, so food and drink brands are particularly vulnerable to negative consumer reaction following a crisis. However, a crisis can affect more than direct sales. Investor confidence, staff morale, talent acquisition and partner confidence can all take a hit when crisis strikes.
Is our crisis radar is working?
A crisis management plan can be effective only if it is put into action at the right time. General Motors’ 2014 ignition-switch crisis developed from over a decade of related incidents and failed attempts to investigate and remedy the problem.
Internally, company personnel must have incentive to follow escalation procedures rather than trying to deal with a problem themselves or hoping it will simply go away.
Where do we stand now?
Consumer tracking, media and social monitoring systems need to be in place ahead of time to highlight emerging issues quickly and ensure an appropriate response. Make sure you are not just monitoring the vocal minority on social media. In a crisis you need to know how all your customers and stakeholders are feeling. Once the worst is past, custom research can help refine the longer-term recovery strategy. As Annabel details in her paper, Millward Brown conducted research and analyzed tracking results to advise a major investment bank on key stakeholder opinion and inform their strategy for the following year.
No one running a large corporation can assume that it will be crisis free. Preparation is critical if a crisis is to be dealt with effectively, so why do so many corporations fail to do so?
Written by Nigel Hollis,Executive Vice President and Chief Global Analyst, Millward Brown
Source: Millward Brown