Business Outlook

Before Covid-19 took over the 24×7 news cycle, public relations nightmares—à la Boeing, WeWork, and Theranos—were fodder for the type of headlines the business world feared most. Rather than the word "coronavirus," it was phrases like "whistleblower complaint" and "data breach" that sent shudders down the spines of corporate boards and C-suites from coast-to-coast.

While the current pandemic is sure to dominate our collective headspace for the foreseeable future, corporate PR debacles of the "ordinary" kind—read: fraud, shareholder disputes, employment and #MeToo issues, etc.—will regain their place in the news before we know it. Until then, there is a lot to be learned from certain of our federal and state governments that have been caught seemingly flat-footed by—and in some cases unprepared for—our current healthcare and economic disaster. The most basic lesson: Advanced crisis management planning, stress testing, and strategy are critical for any entity that could find itself staring down the barrel of a catastrophe, no matter the scale.

To avoid the wrath now reserved for our elected leaders, company chiefs must be able to answer the following questions: In the face of a brewing mess that may be played out in public, when should crisis management begin (short answer: yesterday), and to whom should corporate leaders turn to handle potential calamities (well, it depends on severity)?

Crisis Management Methods, Old and New

Traditionally, crisis management is set into motion after the hint of an issue, be it sexually inappropriate conduct by someone in management, a product recall, companywide fraud, or financial misconduct at the C-suite or board level. And when such a predicament is discovered—or worse, made public—what do corporations do? They react.

Many companies, to their credit, solve for problems that rise to the level of a crisis by initiating investigations. But they do so on their heels, while absorbing the blows that come along with adverse publicity (and never really knowing exactly what is in front of them) pending the completion of internal inquiries. Until then, the damage is done in the form of hits to the business's reputation, the morale of its workforce, and oftentimes its revenue. There is a smarter way.

As the outbreak of Covid-19 has made abundantly clear, it is simply not necessary, nor is it ideal, to wait for a crisis to happen before planning for its solution. This old-fashioned approach puts entities that are unprepared in a needlessly defensive posture. Instead, companies should proactively build response plans before they end up face-to-face with a developing catastrophe. By employing this more preemptive take on crisis management, businesses can get ahead of potentially devastating narratives and better manage inevitable collateral damage.

The Crisis Management A-Team

When it comes to run-of-the-mill operational problems—say, fairly benign supply chain disruptions, market uncertainty, or management retention and turnover issues—board oversight and C-suite intervention is ordinarily sufficient to quell lingering concerns. But for next-level corporate trauma—like cyberattacks, environmental disasters, executive controversy, and social media backlash—crisis management will likely be required. And as was the case with the risk of a global pandemic that should have been flashing red on our government's radar screen, these are among the universe of conditions that companies should plan for in advance. That is not enough—the right team must be assembled to do the necessary planning.

Position players on a corporation's crisis management lineup should include communications experts, PR specialists, and finance advisers. Quarterbacking the group should be independent outside counsel who not only understands the company's business and operations, but also is trusted by internal stakeholders. Indeed, crisis management planning should be framed through a legal lens because the byproduct of most every corporate train wreck is exposure to legal liability.

Together, these professionals can work to foresee situations and events that could knock a company off its axis. With this information in hand, they are equipped to then compile response and risk mitigation strategies tailored to particular occurrences, but all geared to preserve the business's goodwill, reputation, and revenue, while shielding it from legal liability to the extent possible. And when an actual full-blown crisis comes to pass, the crisis management A-team—one that has a pre-existing working relationship and can cooperatively control a given situation—can spring into action, having anticipated (at least within the margins) the scope and nuances of the fiasco at hand, with the appropriate response at the ready.

By attacking crisis management in such a forward-looking manner—with a designated band of legal, comms, PR, and finance pros reporting to the company's officers and directors, and prepared to act on behalf of a corporation under siege—management is freed up to do what it does best: run the business so it can remain viable—and even thrive—despite any crisis in its midst.

Seth Darmstadter is a member of Michelman & Robinson, and managing partner of the national law firm's Chicago office. An experienced and accomplished commercial litigator, Seth is also a crisis management specialist, having guided companies, large and small, through tumultuous and business-threatening events. He can be contacted at 312-706-7746 or sdarmstadter@mrllp.com.

From: CorporateCounsel

Crisis Management Methods, Old and New

See also:

The Crisis Management A-Team

Instant Insights /

A Lesson from Covid-19: Why Wait for a Crisis To Begin Managing It?

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