Crisis Management 5 Tips for CEOs

Companies, big, medium, small or startups, have one thing in common – try as hard as they might, they can be, at any point of time, get hit by a crisis. The crisis or problem can strike at any time, in any form – be it product-related, financial, human resource, public relations, legal, market driven or internal.

"If anything can go wrong, it will," states Murphy’s Law. Hence, despite taking all necessary measures and management strategies, a crisis may catch a firm completely unawares and unprepared. Crisis management thus becomes an essential management technique to handle, ward off or solve a critical situation.

Crisis management has several definitions
According to Barron's Business Dictionary: “Management system developed for the purpose of diminishing potentially serious outcomes in certain targeted situations. Examples include aircraft and naval disaster management, fire and emergency evacuation procedures, and flood protection.”

The Gale Encyclopedia of Small Business says: “Crisis management is a business plan of action that is implemented quickly when a negative situation occurs. The Institute for Crisis Management defines a business crisis as a problem that: 1) disrupts the way an organization conducts business, and 2) attracts significant new media coverage and/or public scrutiny. Typically, these crises have the capacity to visit negative financial, legal, political, or governmental repercussions on the company, especially if they are not dealt with in a prompt and effective manner.”

The negative publicity that ensues from a crisis is a tricky part to handle. Just as it is important to take immediate and effective steps to resolve the problem, it is just as crucial to efficiently handle media attention and queries from customers, creditors and dealers. Here are some useful tips for CEOs, business managers and entrepreneurs on how to handle crisis management:

1. Keep your cool
A crisis situation is by nature, sudden and panic-creating. As the CEO, you will find yourself in the hot seat, badgered by questions, doubts, grievances and negativity as you struggle to lead your team and your company out of the morass.

Keep your head and nerves in place and do not succumb to anger and frustrations as your team will be looking up to you to find a solution. Keep a level tone, take some firm and immediate decisions to stem the crisis and lead from the front to get the situation back in control.

2. Do not stonewall the press or queries
The media persons may ask uncomfortable questions and customers may choke the phone lines with queries. Do not avoid the public glare. Speak the truth, share the facts and avoid cooking up stories. It is logical for the media, the public and your customers to demand answers and want to know what happened, why it happened and what is being done to fix the issue.

3. Do not conceal facts but do not share internal information
This is a tough bit. Concealing facts does not help because if they are eventually unearthed by the media or third parties, they backfire into disasters. Be upfront and truthful, avoid speculations and assumptions and if it is a tricky legal issue, make sure you consult your legal counsel first before issuing any statements. And make sure internal information is shared only within the crisis management team.

4. Draft a new, more comprehensive guarantee of products and or services
If the crisis is on account of an affected product or service, you need to take remedial steps to inspire customer confidence. Whatever steps you take, such as recalling the product or refunding customers or compensating damages – announce the remedial steps as a company policy. Also make sure to announce the steps you are taking to prevent a recurrence of the problem. If need be, you can even issue an apology for any inconvenience caused by the crisis and offer some new guarantees.

5. Confer with other CEO and peers
You are not the first CEO to have faced a crisis in your company. Your peers may have had similar experiences. Confer and consult with other CEOs, especially if you are a member of a CEO association or CEO club on how your peers have handled and resolved similar situations. You will get some deep insights and valuable practical advice on how to handle crisis management.

Do not lose your calm and confidence when you find yourself in the middle of rocky waters. Your calm will rub off on everyone else involved in the crisis management team.