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The violent events we have recently witnessed serve as a reminder that all our contacts need to know how to minimize harm in the unlikely event they are around violent situations involving weapons. In the hope that it will save others from harm, we are sharing a two minute segment from one of our security training programs on the standard protocol for dealing with violent circumstances. Please share it with your friends and colleagues.

Global Operative Adventures – Crisis Investigation

Global Operative Adventures – Crisis Investigation

This is part two of our continuing crisis management global operative adventures. Have you ever worn your crisis management hat into an emergency response and follow-up investigation and discovered that what should have been simply a bad situation was really something much worse? I hope you haven’t experienced this, but this global operative has and you need to know that it happens. These situations often highlight the advantages of having corporate security and communications expertise along with your crisis management skills.

I realized some time ago that an emergency response often grows into corporate and stakeholder concerns requiring the broader corporate focus of crisis management and aligned expertise in communications and corporate security. In this latest global operative adventure, allow me to take you through one such example where we found the truly unexpected.

global operative crisis assessment

A few years back, I got a call asking me to travel to another country and conduct an operational incident investigation.  There had been a fire and even after the company, their contractors, and the local government conducted an exhaustive accident investigation, they couldn’t find the root cause. They asked if I’d conduct an independent investigation.  Part of the job of a global operative in crisis management is performing these seemingly routine assignments, while always being prepared for the unexpected.

This is where being on your game is important.  Why was it that seasoned investigators couldn’t determine the cause of the accident when there were two direct witnesses (both injured) and three others in the immediate area of the fire?  How could you have five employees involved and no one has any idea what went wrong?

Compounding the mystery, there was no camera video to review, all the equipment and other evidence from the fire had been moved out of the building, and nothing was photographed correctly prior to removal. There was nothing in a chain of custody, and everything had been rained on for over a week.  The physical evidence was a mess but there were still five witnesses who could be re-interviewed and that’s a tremendous amount to work with.

crisis incident

To the client, the issue was that their company facility had an equipment fire, employees were injured, production lost, and replacing the equipment and getting back into production would be time consuming and expensive.  To them, it seemed obvious that somehow the equipment had a critical failure and that liability must lie with the equipment manufacturer and not the company.  The equipment manufacturer vehemently disagreed and said it had to be something else but avoided blaming the company.  This was going to cost someone a lot of money and everyone was guarded, if not outright defensive.

In my work as a global operative, I’ve found that if you broaden your perspective beyond the operational and safety aspects of incidents, investigations can lead you down paths you would never have expected.  In this case, I was working with tainted evidence and memories that were 10 plus days old.  On the plus side, the previous interviews were conducted by highly trained and seasoned EHS professionals, with multiple certifications.  Their reports were complete with notes, diagrams, and photographs but after several long meetings where we went over all they had learned and what opinions they had, I noticed something interesting about their investigation.  They didn’t look for deception.

Given the circumstances, the interviews I was going to conduct were my most likely way of discovering what transpired, so I was very careful in how they were orchestrated and conducted.  I began the interviews at 09:30 and by lunch, I knew what had happened.

global operative crisis investigation

Image of worried male suspect during police hearing

What I discovered required a step back from the situation and involved a call to the top leadership in the company.  It wasn’t that the original investigation teams were incapable of finding a cause for the accident, but rather that their investigation was systematically and conspiratorially derailed from within.

The accident wasn’t so much of an accident as it was an outcome of gross mismanagement on the part of a local member of management who had coached their five direct reports (the witnesses) to mislead the investigators or face termination.  This is the point where you might say that this type of thing doesn’t happen, but it does, and it did.  What started out as an accident ended with the termination of both leadership and line workers.  It wasn’t an accident but a series of financial issues that had been obfuscated, with the cover-up involving intentional deception and dangerous high-risk shortcuts at multiple levels.

Now you might ask “where is the crisis here”.  In its purest sense, this was a corporate security rather than a crisis management issue. The point is that because our crisis management work included a corporate security perspective, we were able to resolve the problem for the client.

incident response investigation findings

In this situation, management was on their game when it was originally suggested that they simply let the risk management instruments do their job, and they decided against this convenient but indefensible position.  Instead, they chose to pursue outside perspectives and expertise to discover what truly happened.

Then, the company’s management fixed the problem and put in place policy and procedures that would prevent a similar occurrence.  The company avoided filing an embarrassing claim and adversarial legal engagement with a vendor, answered inquiries to the satisfaction of the media and the situation was put to bed.  The accident and issues surrounding it were expensive but much less expensive than the public scandal and stakeholder lawsuits that were avoided.

When things don’t seem to add up, there’s usually a reason.  If you find yourself without sleep amid uncertainty, feel something is wrong and out of place, or just want to verify that everything is as it should be, give us a call.  We’ve been there and done that.

Managing the Unthinkable

 

Managing Unthinkable

Even the unthinkable needs to be managed.

When your business depends upon it,

you can count on Corporate Crisis Group.

 

Transformational Crisis Issues

Transformational Crisis Issues

If managing the unfamiliar world of a transformational crisis keeps you awake at night, you’re not alone. Many top executives worry most about bet the company, reputation destroying problems and crisis issues they cannot anticipate or control. Part of the reason is they are dealing with the unknown. They can’t even know whether it will be a scandal, terrorism, a sudden change in public sentiment or some other unknown that will bring their company to possible ruin.

transformational crisis issues

Companies can face much worse, but you can be sure there has been much consternation at Facebook in recent weeks. One moment they seem to be handling the pesky problem of government concern, with a couple of officials even making petulant comments implying that the government just doesn’t get it. Then there were more revelations and soon the headlines included words such as Scandal and Game Changer.

One of the problems with a transformational crisis is that you really don’t know with certainty whether, when or where the next shoe will drop. It’s akin to an emergency response where you don’t want to state the reason for a major industrial incident before the investigation is completed, only it’s on steroids. At the same time, you need to do what you can. The best start is to have integrated crisis communications and crisis management programs in place.

In a previous post, we discussed ten crisis scenarios, but that only alluded to the kinds of surprises that await you in a transformational crisis and the crisis issues that may confront you. Now, to give you a head start we will give you some examples of the unexpected situations you may find in transformational crisis issues:

crisis issues transformational crisis

  1. Bankruptcy – You may just find it amusing when they pull the water cooler out of your breakroom, but that will change quickly when you learn that your PR firm won’t support you anymore and you can’t operate some of your communication channels without the “non-essential” support staff you lost. Many of your trusted vendors are not getting paid for past work and unless they understand what’s going on they may become your adversaries. The outside attorneys seem to be managing everything and they are now representing your company in Congressional inquiries. Their focus is on preventing greater legal risks rather than maintaining good relations. You can kiss goodbye the Congressional support you were getting in an international dispute.
  2. Litigation – Controlling the company’s legal risks has become the priority and outside counsel’s role has become increasingly important. Unless you have remarkably insightful counsel, your relationship preserving and building efforts will be pushed to the side. You may also find that some of your most trusted internal sources and even top executives are not as helpful because of their own personal jeopardy. They may be getting personal legal advice that is at odds with your view of the company’s best interests.
  3. Hostile takeovers/activist investors – With an activist investor or hostile takeover you can assume they have been carefully studying you for some time. They know what they are doing and have thought through the process many steps in advance. You seek additional support from firms or allies only to find them conflicted. You also need to consider how people’s short-term self-interest can override the long-term perspective you used to admire in them. If you address these assaults in the standard way, without entertaining creative thought and analysis, you may find that your every action has already been anticipated and successfully blocked.
  4. Third party incidents – If you are a business partner, customer, transporter, industry peer or otherwise associated with another company’s crisis, you will find yourself drawn in. Apple’s response to the Facebook scandal highlights this. Even in industries that consciously avoid criticizing other companies, something will slip. An intemperate comment from a lower level employee can draw you in. If the public reaction to their crisis is strong, you can be sure that there will be great interest by elected officials and this could result in punitive legislation that punishes everyone in your industry for your competitor’s failings.
  5. Corporate malfeasance/ government investigations – Prepare yourself for scorched earth. Many people will do anything to protect themselves and the things they value. Plea deals are just one example. You could also find that the good friends and government officials you helped elect have become your most vocal critics as they scramble to distance themselves from your growing scandal.
  6. Expropriations/ abrogation of contracts/ sanctions – Your ironclad contract that was carefully written and negotiated by some of the most brilliant legal minds in the world is enormously important until a sovereign government decides it is in their best interest not to comply. Oh sure, you can take it to international arbitration and enlist support from your government to pressure them, but don’t let yourself be fooled into thinking the other interested parties will see your position as their primary interest. In the game of international chess, even the biggest, most powerful companies can become pawns.
  7. Executive misconduct/sexual assault – Have you ever had someone you deeply trust and admire lie to you or even shift blame for their guilt onto you or another colleague? It is a horrible experience that shakes the very core of your beliefs and often lessens your ability to think clearly and respond appropriately. Just having to navigate through what and who is right is enormously challenging. Imagine how the complexity is magnified when one of the parties shifts the blame to you and the company for your actions or lack of action. Would it affect your judgment, if that person was likely the victim?
  8. Cyber-attacks/digital assaults – You learn that one of your trusted employees or vendors enabled a serious data breach. Was it an error or deliberate? Have you corrected every impact? Who and what was affected? How do you notify your stakeholders and what assistance do you offer? Consider what you would do if one of your predecessors authorized the payment of the Uber ransom.
  9. Mass shootings/ terrorism/ acts of war – Your company, employees, and customers are the victims of senseless violence and you’ve done everything within reason to prevent this, but some hold you responsible because you didn’t do enough. Hotels that were expected to prioritize guest comfort and privacy may now be expected to deliberately observe the behavior and actions of someone checking in a hotel. Previously accepted protocols with choke points to ensure screening and access control may now present opportunities to target terror and expose companies to new liabilities.
  10. Targeted reputational attacks – An activist group aggressively opposes one of your major operations and extensive research reveals that the funding allowing this expanded activity indirectly came from a foreign government intent on destabilizing our society. You’re both the target and collateral damage.  You’re doing business in that country and are reluctant to lose it. You also know that foreign interference has become so politicized that by revealing this information you risk more damage from the reactions of skeptics who won’t believe you.

overcoming transformational crisis issues

Sadly, this list only scratches the surface of the surprises you may encounter when you manage transformational crisis issues. We hope it will at least jump-start your thinking about necessary preparations before you encounter a transformational crisis. Your best bet is to identify sources and experts who have already dealt with many transformational crisis issues. Here we’re talking about professionals who have weathered the headline-grabbing, major issues that can ruin companies and reputations, as well as change entire industries. While they may not have handled every detail of a first-of-its-kind crisis perfectly, they learned a great deal about what works and doesn’t work in these extreme situations.

Managing transformational crisis issues is never easy and many fail, but if you line up the proper expert advisers and prepare to the best of your ability, you will get more right than wrong, impress your stakeholders with your resilience and ultimately succeed. Initially, managing the risk of a transformational crisis may still keep you up at night, but eventually, it will lead you to the constructive preparations that allow you to control the nightmares.

Crisis Manager – Global Operative’s Adventures

Crisis Manager – Global Operative’s Adventures

I really love what I do as an international crisis manager.  Over a lifetime of challenging experiences, I’ve learned how to protect owners and investors from unusual events that fall beyond the scope of normal operating environments and work to teach them to do the same.  That often means organizing and doing the things for which there may be little or no expertise within the company.

Crisis Manager Adventures as Global Operative

On any given day I could be managing an oil or chemical spill, building emergency management programs, managing security emergencies, training responders, leading investigations (accident, misconduct, or theft), orchestrating a product recall, conducting expat evacuations from threats in foreign countries, or helping facilitate the resolution to a kidnapping.  My job has highs and lows like every other kind of work, but it’s always interesting.

On one job you’re writing policy and procedures and the next, you’re on an island looking for a bomb in an industrial gasses plant.  I’ve consulted on civil unrest, natural disasters, counter-espionage, spills, releases, fires, explosions, blowouts, embezzlement, terrorism, trafficking, and executive protection.  Work has taken me to places like Gaza City, N’djamena Chad, Buenaventura Colombia, Cuiaba Brazil, Bangui CAR and countless unusual places around the world. They are all fascinating and important, but most are not likely to make it into the Lifestyles of the Rich and Famous. Somehow the problems I work rarely seem to require that I go to Phuket, Grindelwald or Monaco.

It’s always interesting with ever-changing companies, people, problems, locations, and emotions ranging from silly happy to multiple variations of misery and fear.  I may not strike you as being too exciting, but the people I’m privileged to work with and work for are some of the most interesting, intelligent and well-traveled people in the world.  They’re a mix of companies’ and organizations’ senior leadership and functional executives, domestic and foreign government representatives, public and private sector intelligence and security specialists, HSE heroes and IT cyberwizards.

complex intelligent

Then there’s the ridiculously smart international legal experts, financial gurus, forensic auditing technicians and a cornucopia of other brilliant specialists in various disciplines.  It’s sometimes like working on a movie set. You know you’re playing your role to the best of your ability, but all the main characters and heroes are Academy Award winners and the real thing.   You’d be right if you guessed that I have a lot of stories, but you’d be wrong if you thought I share many of them.

Most of the stories are confidential, so I’d have to scrub out the interesting details. Others are so extraordinary that people assume you’re grossly exaggerating, bragging or simply lying. To those who don’t know my world, it may seem like a fun, jet-setting life in the fast lane, but that’s not the case.

Escaping most is how you had to leave your wife’s birthday party without notice, travel 36 hours on no-name airlines to a place where they don’t want you and then spent 30 minutes on a dilapidated 50-year-old helicopter with no comms gear or ear protection.  They missed that you slept on a cot in an unairconditioned shipping container and that you were greeted by “don’t drink anything you didn’t bring”, “this place is dangerous for us and much worse for you.” Your companions are usually either those who had the problems or those who helped you resolve them.

Dangers for Crisis Manager

Dangerous and forbidden to enter sign

You might think being a crisis manager would make me a paranoid pessimist, who sees the worst possibilities for the future, but you’d be wrong.  I’m an incurable optimist.  The reality is that I’ve spent a lifetime traveling around the world managing bad situations and finding solutions that mitigate the effects of major events.  My experiences standing knee deep in big messes prepare me to anticipate and respond to problems while increasing my confidence in overcoming adversity.

Thankfully, most people only personally experience a few, if any, major disasters, accidents, terrorists, violent conflicts or other horrifically ugly events in their lifetime.  That limited experience tends to leave most with the belief that these events occur but that the experience is statistically unlikely.  Thus, when big events happen, most people are caught off-guard. You often hear comments like “I never thought this could happen here.”  That sentiment is universal. It’s in every culture and language; it’s the norm.

In contrast, if your life has revolved around preventing, managing and lessening the impact of these events, you are in-tune with the potential for such things to happen in any given situation.  I may attend a crowded performance and begin looking for crowd threats and individual safety issues with higher interest than for the artist or event.  I drive over dams wondering if they might fail and if there are functional alarms in place for warning the public of a breach. I proactively look for exits and often know how many steps they may be from me, so I can find them in the dark if needed.

I notice unwatched entrances, distracted guards, unfollowed protocols, and exposed bellies.  I look for the terrorist, watch for the thief, know who’s behind me, what’s in front of me and believe in having the right tools, extra supplies and being prepared.

So, if the job calls for routine, relatively low-risk work with minimal consequences when things go awry, you probably don’t need a crisis manager. But, if you want to avoid, prepare for and deal with the worst, you want an experienced crisis manager to guide you. Regardless of your risk or nightmare, they’ve likely experienced similar circumstances and can use that perspective to walk you through the situation, so you recover in a better position than from where you began.  Ideally, you’ll find someone like this with global crisis management experience who has overcome many obstacles and can help you deal with the contingencies you never even imagined.

No matter how chaotic the situation, and how desperate things seem amid angst and destruction, a top crisis manager must be able to coalesce resources, intellectual capital, and provide a way to survival and recovery.  To do that effectively, you must at least have thought about the myriad of possibilities ahead of time and considered the bad outcomes from any given situation.  I think that’s what I’m doing; always practicing situational awareness by constantly looking at the surrounding environment and analyzing it for risks.  That’s not paranoid. For an international crisis manager, that’s just prudent.

Crisis Stress – Managing 24/7 Adrenaline

Crisis Stress – Managing 24/7 Adrenaline

Crisis stress takes its toll on everyone. You can see this in the way that virtually every President of the United States has noticeably aged during the term in office. They simply cannot fully compartmentalize and control the enormous weight of responsibility and the frequent barrage of one crisis after another. The combination of mental, emotional and physical stresses will wear anyone down, as well as threaten performance.

Presidential stress

Some people seem to excel and even thrive in adverse, stressful circumstances. I used to stoically joke that I was an adrenaline junkie. Of course, that wasn’t true, but challenging situations allowed me to use quick wits, a wealth of experience and total determination to demonstrate an ability to solve major problems. However, over the years I’ve learned that the wisdom from objectively and dispassionately considering a crisis can provide better results than just bluster and around the clock enthusiasm.

Of course, members of the team need to show that managing the crisis is their top priority and they will use their full energies to accomplish that. It’s important to demonstrate your commitment, but you also want to be careful not to be so passionate and driven that you ignore all else. Being solely in the moment leads to limited thinking and significant crisis stress. For a brief time, emergency responders can handle the stress of a crisis, but even basic issues such as sleep deprivation, poor diet and lack of exercise soon take a toll.

In an operational or corporate crisis, a host of actions can result in crisis stress:

  • You learn of the crisis and realize that the business, people, financials, and reputation are at risk.
  • You drop or cancel every activity that had been most important to you just moments before.
  • You mobilize people and resources to respond,
  • You grab plans, people, and supplies and usually go to a new location.
  • You do your best to let family, friends, staff, management, and stakeholders know what you can when you can while trying to manage the crisis.
  • You start getting inquiries, unsolicited advice and pressure from dozens of internal and external sources, including media, government officials and the neighbor who has been ignored for too long.
  • To maintain control, you may keep information close only to find that reporters are airing reports from uninformed sources.
  • You have reporters entering secure areas and interviewing employees who are not informed or trained.
  • You spar with local, state and federal officials to see who controls your crisis at your facility.
  • You haven’t had a crisis drill for 18 months, so your plan and the assignments haven’t been updated since your downsizing and several of the key responsibilities are not assigned.
  • You’re working in a conference room that hasn’t been refreshed in years so computer software and equipment, office supplies, food, refreshments and even toilet paper supplies are inadequate for the number of people responding to the crisis.
  • You have people working overnight, through the weekend and from out of town, but there aren’t rooms or even showers available for them.
  • There’s always something that requires your attention, so you haven’t slept more than a few minutes for days.
  • The board wants hourly updates, twice daily reports and is second-guessing your actions.
  • A close relative is hospitalized, and your family thinks you should leave work to be at the bedside.
crisis stress

Stressed Business Man In Office surrounded by worried colleagues 

The list can go on and on, but this should give you a feel for the circumstances and pressures many emergency response managers encounter in one crisis after another. When you combine these with sustained stress and separation from stabilizing influences such as family, friends and routine, there is a real risk that your performance and health will suffer. The trick is handling crisis stress in a way that your performance doesn’t suffer, and you minimize mistakes.

Of course, no one is suggesting that we don’t handle a crisis. An emergency requires a response and a crisis needs to be managed. You want to have your best people handling it, otherwise, the damage may be much greater than a little crisis stress. We just want to prepare and respond in a way that ensures the best results for the business and the least harm to the people and environment. In fact, if done right, it might be self-actualizing for the participants.

Here are three things you can do to reduce crisis stress. Importantly, they also significantly increase your prospects for successfully resolving the crisis.

  1. The best way to reduce crisis stress and improve performance is through planning and training before the crisis occurs. This planning will decide who is responsible for what ensures you have the people and resources you will need, and clearly defines a chain of command. Through exercises, drills and training, the plans are tested, people become proficient in their roles and you make the adjustments needed to improve performance. You also will ensure logistical support and preapproval of statements and strategies, so you’re not distracted by these during the crisis. The forethought and confidence you gain will dramatically reduce crisis stress.
  2. Stay focused on the problem and not on personal considerations. Recognize that crises often sew political discord. Do your best to avoid being drawn into internal political jockeying. At the same time, be open to good ideas and use your knowledge and common sense to advance the best solutions.  Ultimately, use your knowledge and training to be professionally deliberate.
  3. Use experienced consultants to give you an outside perspective and the benefit of their knowledge from other crisis situations. Their slight bit of detachment from the crisis may give you the perspective and assistance you might have missed from your internally focused team. They also allow you to bounce ideas off an expert in real time. This helps ensure that judgment is not clouded by fears of the repercussions from the crisis.

A career international Crisis Manager once recounted the words his first boss told him.  “Don’t get stressed over politics or people.  Assume you’re going to be fired regardless of how things turn out.  Be the best professionally and always do the right thing.  You can defend doing the right thing forever into the future but not so lapses in common sense or professionalism.”

Government Relations – Five Basics

Government Relations – Five Basics

Businesses depend upon a social license to operate and government relations should be an essential component of protecting and even advancing those interests. While government relations efforts can range from the very elaborate to do-it-yourself, there are five key initiatives that will strengthen any program.

In our increasingly polarized and contentious political world, even the most sophisticated businesses are finding it difficult to anticipate and respond to government actions. Some may think of government relations as a political exercise and try to bolster their connections with either Republicans or Democrats in anticipation of the next election. Others look at government relations as a public policy exercise and do their best to objectively inform government officials about the impact of issues. Small businesses may have the owner periodically inform local elected officials about their concerns, rather than dedicate staff to government relations.

government relations discussion

Regardless of size, every business should prepare itself for an uncertain future. By taking these five basic actions now, scaled to the resources and needs of your business, you can dramatically improve your business’ ability to protect and even enhance its future, whether you have a formal government relations function or are a one-person shop.

  1. Inform – The most fundamental need is to stay informed about developments, policy alternatives and the potential impact on your business. For the small business, this may be limited to following the news and participating in a business or professional organization. For a large business, it’s the same plus deep analysis by experts, intelligence gathering by trade associations, consultants, and your own professionals. If you don’t want unpleasant surprises or missed opportunities, you need to know what is happening and how it will affect your business.
  2. Interact – Large businesses likely have a Washington office with a team of government relations professionals and/or outside lobbyists. You will likely be a member and involved in major trade associations such as the U.S. Chamber of Commerce, National Association of Manufacturers, American Petroleum Institute, American Hospital Association or Association of American Railroads. Small and large businesses may also belong to state and local associations such as the Texas Farm Bureau or Greater Houston Partnership. These are great sources of information, and they provide opportunities to collaborate with like-minded businesses and directly express your business’ views to government officials.

You, your government relations professionals, trade associations, employees and other stakeholders can also develop relationships with elected officials by attending events, writing and meeting with them. If you share substantive information, your elected representative may be better informed, share insights and become more supportive of your position. Don’t overestimate your influence, however, since the average Congressional district has about 650,000 residents, with conflicting demands for representatives’ time and energy.

  1. Impress – If you don’t want your business to be left out of positive legislation or the target of attacks, it’s important that you curate the best possible reputation for your company. How others view your company, its value to the business community and economy, as well as its contributions to society, will influence government officials’ disposition. A strong brand and reputation help ensure a more attentive audience.
  2. Involve – Inform and engage your stakeholders. Your employees, who understand and care about your business, need to be kept informed about issues and opportunities to share their views with elected officials. Elected officials care what people think. Also, consider keeping other stakeholders such as suppliers or business partners informed and engaged.
  3. Integrate – It’s always important to have consistent messaging to all stakeholder groups. Avoid conflicting messages and be sure to coordinate your company’s outreach efforts on policy matters. The government relations and communication teams need to synchronize their efforts so stakeholders’ grassroots activation complements your other legislative and administration contacts.

While we may not be able to predict the future, we can prepare for and influence it. Take these steps now and you will have a say in how government policy affects your business.

Bankruptcy Communications – Don’t Give Up

Bankruptcy Communications – Don’t Give Up

This is an experienced layman’s look at the hard reality of bankruptcy, the unexpected consequences and how bankruptcy communications can help. If you work, own or invest in a company, you are always at risk of being pulled into a corporate bankruptcy. Some of our most successful business have used bankruptcy to deal with difficult issues. You can lose control and have your business dissolved, but you can also reorganize and emerge as a much-improved enterprise. Even the President (Trump) has taken businesses into bankruptcy. Now you can even get past the stigma of bankruptcy.

Bankruptcy communications or not

Bankruptcy

If you think it will never happen to you, let me caution you that it happened where I worked twice in my professional life and both of those companies were in the Fortune 10  when they filed for bankruptcy protection. The first was because of a $13 billion tortious interference judgment in a state court and the second stemmed from insufficient liquidity and other controversial issues. We’ve also witnessed scores of transportation, energy, banking, real estate, retail and technology companies go through bankruptcy.

So, if bankruptcy is a legal proceeding where lawyers, accountants, creditors and restructuring specialists seem to drive the process, why even bother with bankruptcy communications? Much of the reason is that there are so many processes that the uninitiated find strange and difficult. If you explain them, then you have a chance that the bankruptcy will run more effectively and retain greater value for the owners.

Let’s start with the fundamental change in who controls the business. Virtually overnight the control of the business shifts from stockholders and the management team to the creditors and the court. Of course, management has an opportunity to convince the court that it can successfully reorganize the company and it should drive the process as the debtor in possession, but if liabilities far exceed assets, this becomes more difficult. There are even different classes of debtors that drive the process.

A $100 billion-dollar enterprise could lose more than two-thirds of its employees in one day, have remaining employees and vendors wonder if they’ll get paid for past and future work and even have vendors pull water coolers out of the executive offices the day after a filing. If the company’s ability to emerge from bankruptcy depends on ongoing operations, these issues need to be resolved quickly so workers are productive, and the operating businesses continue to generate revenue. Even if the business will be dissolved, you want to preserve value so ongoing businesses can be sold or spun off.

Instead of enriching stockholders, the bankruptcy’s focus is on repaying creditors. You usually want to maximize the value of the bankruptcy estate so there is more money for creditors and the possibility that stockholders will get something. An engaged workforce can help you drive greater value. The remaining workers need to know where they stand, what is happening and what they should do.

This calls for strong coordination and effective bankruptcy communications. People can handle bad news, but they have a very difficult time coping with no news. Unfortunately, many bankrupt companies fail to recognize the internal communication needs and eliminate the capability as a non-essential expense.

If you put yourself in the shoes of the worker, you’ll understand what’s driving them. They’ve likely lost much of their life savings. If they invested in company stock, it may be worthless. In many bankruptcies, there aren’t enough assets to repay creditors and still have something left for stockholders. Yet people continue to invest, hoping for the best.

Workers’ loyalty to management and the company may shift to loyalty to their coworkers, but they are capable of continued loyalty. They need to have enough information to make reasonable decisions about whether to stay and help the company operate through the process. This uncertainty is compounded when workers learn more about their livelihoods from the news than from the company.

A solid bankruptcy communications program that blends bankruptcy experience, internal communications, and crisis communications can make an enormous difference in these times. Understand that workers may not have received all past pay and they may even be subject to a clawback of their past bonuses. They need to know as much as possible to confirm future income and the viability of the ongoing enterprise, since they may have lost so much of what they thought they had.

Bankruptcy sharks in the water

Bankruptcy Communications vs Shark Attack

Even the most prized and highly compensated employees can feel shocks. Did you know that your investments in a nonqualified retirement savings plan, such as in many executive compensation plans, are probably not protected in bankruptcy? Likewise, even though there are federal pension guarantees, they do not necessarily ensure dollar for dollar coverage.

What happens when your most essential workers are distracted by personal financial ruin as well as the demise of their company? Communication from management can help. You may also want to rethink some of your own retirement saving strategy.

In the case of continuing to operate the business as the debtor in possession, bankruptcy communications can prove to be essential to preserving the reputation and the market value of the business, as well. The lawyers who are protecting client legal interests are not necessarily focused on the niceties of preserving relationships with the company’s stakeholders. However, if government officials or community leaders are alienated and become adversaries, the proceeding and likelihood of maximizing value are diminished. A little professional focus on bankruptcy communications with external audiences, as well as internal stakeholders, can cut through enormous difficulties.

A member of Congress who attacks a company because of past board or management decisions may continue to damage the reputation and correspondingly reduce the value of the enterprise. If you reach out and explain that the remaining business is owned by the creditors who were harmed, and the bad actors are no longer involved, that member of Congress could become an advocate.

Things change in bankruptcy. Even the reporters who cover the business may change. So, the needs and techniques for bankruptcy communications also change. With insight, experience and a relatively modest effort, a bankruptcy communications program can make it all easier and more productive.

Media Training – Yes, They Can Print That

Media Training – Yes, They Can Print That

Why bother with media training for executives, operational managers or first responders? Well, there’s an enormous difference between reading or listening to the news and being the news. Perhaps the following story will help explain why being prepared is essential.

An operational executive had been frustrated by protesters slowing progress on his major new project. As he was about to enter the site, a reporter asked if he would like to comment on the protests. He had been coached to refer them to the public relations department, but he was frustrated and didn’t want to wait. So, he blurted out “sure, there’s been a lot of fake news about this project and it’s about time you people got it right!”

Media training

Media

He then proceeded to tell the reporter about the importance of the project to the company’s bottom line and how the protesters were agitators who didn’t want anyone to make a buck. He then proceeded to name big banks and politicians who fully supported the project.  “Of course, there are risks, but you can’t ever accomplish anything without taking a risk,” he said. “I’m not going to be intimidated by these local hayseeds who don’t know anything but their family farms. Progress always has a cost.”

The story wasn’t pretty. He let his anger get the best of him and undermined weeks of careful messaging. Worse yet for the PR department, he was furious that they allowed the story to be published. It became a political battle between the executive and PR, but the company was the clear loser. Overnight they became the company that couldn’t care less about people or the communities they harmed. The formerly supportive politicians were forced to come out against the project and the banks responded that they were reviewing their lending decisions.

The PR department knew the executive could be a loose cannon, but he was an important executive and they thought they had protected the company by speaking for him. Unfortunately, ignorance is not bliss and avoidance was a major mistake.

Why did this happen?

The executive had never been media trained and he thought reporters had to submit their stories for edits and approval by the company before the story could be published.  Sadly, in a world where many executives control their day-to-day world through budgets and delegation of authority, he may well have assumed his company could control a free press just like the ad copy he occasionally approved.

So what’s the lesson for those who are more aware of the way media relations works and the ground rules?  Don’t expect others to understand what you know. When the impact on corporate reputation is so great, we shouldn’t just assume that they have the proper grounding in media relations or be too afraid to recommend media training.

What needs to be corrected?

The solution is to provide media training appropriate to the executive’s position. Ideally, anyone who may need to talk with reporters should be media trained. In large organizations, this can be dozens of people and they can be efficiently trained in groups of four to eight people. However, it is often best to train senior executives on a one-on-one basis.

Dedicated media training is particularly important for high-level executives. A bad media encounter can be disastrous for both the executive’s reputation and the company. Every media encounter can be a career limiting opportunity, even for those who are very experienced. That’s why refresher media training can also be important for PR professionals and spokespeople.

To see the risks, watch this clip of the disastrous Tony Hayward comment on May 31, 2010. The soon to be replaced CEO said “There’s no one who wants this over more than I do. I would like my life back.” He had started to say he was sorry for the harm caused to so many, but the self-centered comment quickly ruined any sympathy that might have existed for him or his company.

How to proceed

Media training can usually be arranged through crisis communications consultants, your current PR firm or communication agencies with established training programs. Most high-level executives will appreciate the opportunity to improve their presentation and interview skills.  Media training generally lets them know what to expect, explains tricks of the trade for reporters, helps craft and deliver key messages, reinforces the need for appropriate attitude and compassion, and includes the all-important on-camera mock interviews so executives can see their own performances.

Be sure the executive knows the media training is confidential and recordings will not be shared with others. You may even want to schedule the training in a location away from the office, to reduce the risk of interruptions.

It’s a Win-Win. Media training is an important professional development opportunity that helps the individual stay on message and project an even more polished executive presence with higher management, boards and key stakeholders. If he appreciates the importance and complexity of media interactions, the media trained executive will be better prepared to articulate and advance the company’s interests.

This operational executive example is a fictional account drawn from decades of real-world experiences.

Change of Control – Losing Everyone; Keeping Everything

Change of Control – Losing Everyone; Keeping Everything

How companies manage a change of control can make an enormous difference in the value and viability of the operations being acquired, merged or reorganized. It’s natural that companies will want to reduce costs and redeploy resources when they make the decision to dispose of assets or operations. After all, these are no longer considered core assets, so why continue dedicating corporate resources to protecting them as if they were still core.

Of course, companies will be sure to fulfill contractual obligations and protect the integrity of the operation until the change of control, but they will often reduce or eliminate areas that are considered nonessential. Those numbers vary depending on the reason for the personnel reduction with some departments being impacted more than others.

In some instances, entire Health, Safety, Security, Environmental, and Communications departments have been dissolved leaving no one assigned to what were once considered critical roles.  Emergency response capacity, security integrity, EHS, community relations, government affairs and related fields can be heavily impacted.  This type of significant paradigm shift can result in heavy losses of intellectual, operational and procedural capital.

Business Negotiations change of control

Change of Control Negotiations

As an example, a European energy company (strategically motivated) with businesses and assets dispersed globally, sold one of its overseas divisions to an Asian company (financially motivated) whose intent was to restructure and repackage the assets for a future sale.  In the process, the entire division management staff was reduced from over 100 professionals to 4.

The positions remaining were solely for optimizing cost, efficiency and preparing the assets for future new ownership.  The buyer would either merge the assets into an existing portfolio with established central controls and authority or build a new management team to operate their new assets.

This isn’t an unusual story and it happens frequently.  What doesn’t happen frequently is a good plan to retain the wisdom, experience and intellectual capital from past employees for use after the transition.  Assets have a valuable operational history and culture both independently and in the context of a larger organization.  This is especially true if the parent company, owner or operator is from one social culture and the assets are located within others.

Beyond social cultures are the asset group cultures, asset individual cultures, and the adaptive culture of being from one type culture and working under the operational rules of another.  These cultural understandings facilitate processes, procedures and community relationships that have immense value regardless of changing management structures, ownership or evolving business values.

In the European company example listed above, there was a cumulative loss of over two thousand years of experience.  Within one month of the sale announcement, many of the remaining employees were “checked out” and preoccupied with their employment prospects rather than putting the company in shape to make the transition successful.  This isn’t an unexpected behavior.  What was unexpected was that the buyers didn’t anticipate this reaction and left itself very vulnerable during and after the transition.

Since emergency response, crisis communications, security integrity and crisis management are designed to protect against infrequent threats, they are often the first to go during a change of control. They are also difficult to quickly replicate and essential to ensuring the continued viability of a business. A poorly handled crisis can taint assets for years, dramatically reducing their value. In this example, the buyer plans to restructure and repackage the assets for sale would have been undermined if it had encountered a crisis without support after the change of control.

This is all avoidable with some planning prior to the signing of the purchase agreement and announcement of the sale.  The planning should begin during buyer qualification and finalize during the transaction structure.  By the time the deal is done, the plan should be well underway.

When the transition phase begins, missing internal capabilities are outsourced on an on-demand basis consistent with established protocols ensuring continuity and consistency until new capabilities are put in place by the buyer after the change of control.  In most cases, the services you typically require can be temporarily outsourced to reliable, professional firms that will be engaged for the duration. In this way both the buyer and seller protect their interests, retaining interim capacity without the obligations associated with dedicated personnel.

A little forethought and planning before rushing to cut can protect everyone’s interests and ensure a successful transaction.

Positive Cause Analysis – What to do After a Crisis

Positive Cause Analysis – What to do After a Crisis

Few feel they have the time or energy to conduct a positive cause analysis after a crisis. Suppose you’ve just finished the concluding press conference where the Governor praised your company for your selfless dedication to protecting the community, safely resolving the crisis and setting a new standard for a transparent and compassionate response. What more could you do? You’ve set the example for others and you’ve already been asked to speak at an industry conference. If anything, your company’s reputation is even better now than before the crisis.

The entire team and you are exhausted! You’ve been working around the clock, under extreme pressure and you dropped everything so you could successfully manage this crisis. While there always seem to be a few slips in a crisis, by all standards, you and the team did a remarkable job. In fact, in most situations, you worked together just as you planned and trained.

You saved the company, your employees and the surrounding community from a catastrophe that wasn’t even your fault. Yet, you’re tired, your family is wondering where you are, customers are complaining, and your full-time job is about to fall apart from neglect.

Tired executive after a crisis

Unemployed Tired or stressed businessman sitting on the walkway after work Stressed businessman concept

“The results speak for themselves, so why would we subject our team to second-guessing every action,” you tell yourself. “We’ve already learned so much from this real-life exercise. Why demoralize our team by auditing their actions at the very time when we should be celebrating them?”

The simple answer is that you need to capture all the lessons learned after a crisis, while memories are fresh, and position yourself to do even better next time. And, don’t fool yourself, there will be a next time!

There are two reasons to conduct a positive cause analysis. The first is for continuous improvement, ensuring that you institutionalize the best practices and prevent errors. The other is because the latest great performance has set the new expectations from those who will be watching your next crisis. If you don’t do as well or better next time, they may perceive your emergency response as flawed, inadequate and a reflection of your failure as a corporation.  No one needs that!

So, you really need to do something. A real crisis is the best way to test and improve your plans. If you don’t squander this opportunity, it can help you become the best of the best. Initiate a positive cause analysis as quickly as possible after a crisis and do your best to have results back within two to three months, so the crisis is fresh enough to study and for your management and board to easily understand the findings.

Next, you need to determine how you position the lessons learned exercise and even what you call it. If it is a crisis post-mortem, participants will look for causes of the crisis and not what was done right. If you call it an audit, it will be perceived as looking for errors and people will be defensive. We prefer positioning it as a positive cause analysis. This places the emphasis on identifying and reinforcing what worked well. While you will also identify problems in the crisis response, the emphasis should be on enhancing procedures for future responses rather than finding fault.

The other important consideration is who does the post-crisis work:

  • You can do it yourself. While you need to be careful not to let your own biases cloud the information, your first-hand knowledge, perspective and expertise are relevant and do not have an out-of-pocket cost. Just be sure you can dedicate the time to do a thorough job in a timely manner.
  • You could assign this to more junior staff, but make sure they have the knowledge and wisdom to make sound judgments.
  • Internal auditing or similar corporate functions can be very comprehensive in their review. Just bear in mind that they do not have expertise in the area and will require your team to collect information and brief them on all related matters.
  • A functional group such as operations, communications or safety could conduct the review. Their limitation would be their comprehension of work outside their areas and the distraction from their other responsibilities.
  • A cross-functional team may not be the most efficient structure, but it would improve the prospects for capturing lessons learned and the broader corporate perspective on the crisis.
  • If you can find a crisis management, communications or emergency response firm that conducts after a crisis reviews, this can allow you to capture lessons and even update plans without a significant drain on your time and staff resources. Corporate Crisis Group will conduct a positive cause analysis for its clients, but we limit the number to ensure availability of the experienced professionals needed for a thorough analysis. There may also be other firms that can bring crisis, emergency response and communication expertise together in such analyses.

You may be surprised by how much you will learn and how much more proficiently your team performs if you make a habit of conducting a positive cause analysis after a crisis. If you don’t want to risk waiting for a crisis, you could even conduct a positive cause analysis on another organization after a crisis at their company and then apply the learnings and exercises to your crisis plan and team. Just do your best to update plans and conduct drills before your next crisis hits.

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