Wednesday, December 19, 2012

A Week After The Newtown School Tragedy

I have labored over what I want to say and what needs to be said, and how to say it ever since the first news bulletins hit my computer screen.

I've shed my share of tears.  Talked with ICM associates about how it was being handled and continually was astounded by misinformation that was being reported by reputable news organizations and reporters.

I watched with amazement as a CNN reporter referred to the "Bushwacker" rifle. And for hours after the shooting many national media kept reporting there were two, then four handguns in the school and a Bushmaster rifle in the shooter's car in the parking lot.

It was a relatively long time after news broke of the attack before the media reported the shooter had used the assault rifle to kill everyone.

(Just for the record:  I worked 30 years as a reporter, photographer, anchor, editor and news director before I joined the Institute for Crisis Management almost 20-years ago.)

I understand how easy it is to get in a hurry and report inaccurate details.  There is still no excuse for it.

But I decided yesterday evening there was something that really needed to be said.

Connecticut State Police Lt. Paul Vance has done a consistently outstanding job as spokesperson for the joint law enforcement team in Newtown, CT 

For years, since April 1999, my police spokesman idol has been Sgt. Steve Davis of the Jefferson County Sheriff's Department, who managed the media briefings the afternoon of the Columbine High School Shooting and then dealt with the media for months afterward.

Both men were calm, authoritative and when they spoke you felt you could believe them.

Just a little personal "thing" I have about Police PIO's -- and we do media training for many -- is what I call "police speak."   One of my favorite examples is the officer who responded to a reporter's inquiry saying, "We apprehended two female women subjects."

How many people watching the local news from their homes or offices talk like that?  Why couldn't the officer have simply said, "We arrested two women, today"?

Lt. Vance's only slip (from my"thing") was the occasional use of the word "pursuant."  When was the last time you used that word.

I was  leading a media/spokesperson training for a Midwest city Police Department command team earlier this year and their Public Information Officer did three on-camera exercises and never once
used words like "subject," apprehended, or pursuant.  I told the PIO's chief he was a keeper and then I asked the young man where he learned to speak plainly and so well.  He said when he was promoted to PIO his wife told him if she ever heard him on TV talking in "police speak" he would pay dearly!

I immediately invited her to join our media/spokesperson training team.

I am the father of three grown children and grandfather to two boys.  One of my grandsons died a year ago at age 21.  It was heartbreaking, but expected.  I can't imagine the grief the parents and grandparents of 20 six and seven-year-olds are suffering, but they are in my prayers/

Wednesday, December 5, 2012

Christmas Is Approaching It Must Be Layoff Time!

As December appears on the calendar and Christmas is just weeks away, one of the most awful things companies can do is lay-off workers.

I know the reason. I've heard executives make the argument for December job cuts for nearly 20 years.  It's all about the fiscal calendar, they say.

It may be, but it is also one of the most reputation damaging things an organization can do.

For example, the banking behemoth Citigroup announced today -- 20 days before the Christmas holiday--they are laying off 11,000 workers.  Workers, as in people -- people with families -- and little or no prospects for employment and a paycheck.

This is the time of year when "them that has" worry more about their bottom line and profitability than about the other 98 or 99%.

I have unsuccessfully argued for years that holiday layoffs cause more harm and damage than carrying the costs of those employees into one more quarter.

Dolly Madison dumped 18,000 employees four weeks before Christmas. Cummins Engine Company announced the elimination of 1,500 jobs by the end of December and  Pfizer Pharmaceuticals is expected to eliminate more employees this holiday season.


Friday, November 23, 2012

Are You Ready For A Workstoppage or Strike?

Are you ready to manage a labor dispute, whether your employees are unionized or not?

Labor disruptions have been few and far between in recent years. In 1990, according to the annual ICM Crisis Report, just over 10-percent of crises that year involved labor disputes and strikes.
The most recent annual ICM Crisis Report for 2011 indicated 8-percent of all crises were labor related and that number was the same in 2009 and 2010.

Union work stoppages of 1,000 employees or more hit an all time low in 2009 with just five work stoppages.  The first 10 months of this year, there were 13 significant work stoppages.

Walmart was the focus of major work disruptions approaching the "Black Friday" holiday shopping period.  Our Walmart which has been trying to unionize Walmart employees claimed there would be demonstrations at 1,000 North American Walmart stores, but late Friday a company spokesman claimed there were only small demonstrations at 26 of the company's 4,000 US stores, and an estimated 50 employees participating.

At mid-November nurses were striking at hospitals operated by Sutter Health in California, and several thousand employees at Hostess Brands had triggered a shutdown of the maker of Twinkies.

American Airline pilots have been disrupting that airline's flights for weeks.

Every company with more than a handful of employees should have a section in their crisis plan to help if/when a work stoppage or slow-down hits.  The plan should spell out:

           1.  At what point management and supervisors can no long keep the business operating
           2.  Who will speak for the organization
           3.  What steps the company will take to deal with violence
           4.  What and how to communicate with vendors and customers
           5.  And, a commitment to maintain calm during the strike or work stoppage, never forgetting that most strikes end and you will want to be able to resume reasonable working relationships with everyone involved

A wildcat walkout can be more disruptive and damaging than an anticipated every three year contract renewal dispute.  Working cooperatively to resolve disagreements and new contracts should always be the goal, but when something goes wrong with that idea, having a plan is essential

Friday, November 9, 2012

Not All Hospitals & Police Departments Are Ready for a Crisis

Yes, I know, hospital administrators and police chiefs will react strongly to the title of today's blog.

The problem is, we're not talking about the same kind of "ready."

Most hospitals have disaster plans. That is a plan or plans to cope with a disaster in the community they serve.  Just like many police departments that have plans for disasters, demonstrations and other disruptions in their communities.

BUT, most do NOT have a crisis plan for a crisis that strikes their facility or department.

We have worked with some very good hospitals, big and small, since the Institute for Crisis Management was born in 1989.  Most of them could rise to the challenge when disaster struck the communities they served.

Disasters like tornadoes, flooding, a major airplane crash, a mass shooting, and a bus crash with many victims, usually bring out the best in the staff and leadership of hospitals and the leadership and beat cops of police departments.

But, what if the crisis is within the hospital or department?  Then they are not so prepared.

Hurricane Sandy hammered that lesson home in New York City. New York University Hospital and Bellevue Hospital could not take care of their patients when their power and back-up power systems failed.

A few years ago flash flooding closed a regional hospital in Columbus, Indiana and forced the evacuation of hundreds of patients.  The hospital administrators had plans for many of the things that could go wrong in the community they served, but had never stepped back and examined all of the things that could go wrong in their own facility.

Their medical records, the hospital lab, the pharmacy were all in the lowest part of the facility and below the level of a nearby creek.  Heavy rains led to flash flooding around and in the medical center.

It was months before the hospital was back in full operation.

The leaders of every kind of organization should regularly step back and consider what could go wrong and what "must" be done to prevent that, or at least minimize the recovery time.

Thursday, November 1, 2012

ATTENTION: University/College Presidents and Leaders of Other Organizations

The other shoe dropped today, with the indictments of the former President, Vice-President and Athletic Director of Penn State University, charged with perjury, obstruction of justice and endangering the welfare of children abused by the school's former assistant football coach Jerry Sandusky.

Pennsylvania state prosecutors, led by State Attorney General Linda Kelly, accused the trio of using their positions to conceal and cover-up the actions of a child predator.  Kelly said, "This was not a mistake, an oversight or a misjudgement.  This was a conspiracy of silence by top officials at Penn State, working to conceal the truth with total disregard for the suffering of children."

Graham Spanier, former President of Penn State for 16-years, was fired nearly a year ago, when the Board was faced with evidence he had covered up what he had been told about Sandusky's involvement with young boys.

Spanier now faces eight criminal charges, including five felonies, each of which carry a maximum prison sentence of seven years.

Here at the Institute for Crisis Management we constantly preach the concept of "doing the right thing."   When you do the right thing to begin with you narrow the range of "what else can go wrong."  And, when you take responsibility quickly for things that go wrong, you take the "gotcha" out of the "news coverage" and significantly reduce the backlash from friends and foes.

And, in this case, you don't have to worry about getting caught breaking the law. 

There are two lessons in today's news out of Harrisburg, PA.  Doing the right thing, or in this case the results of NOT doing the right thing is very clear. 

The other valuable lesson is admitting in e-mail and other written documents, that you know what you are doing is wrong. Prosecutors revealed an e-mail exchange between former President Spanier and former AD Tim Curley in which Spanier wrote:  "The only downside for us ...we then become vulnerable for not having reported it. But that can be assessed down the road."

Friday, October 12, 2012

First Lawsuit Comes Fast

In only about a month 14 meningitis deaths have been reported nationwide, 185 confirmed cases have been reported and the first lawsuit was filed Thursday in a federal court in Minnesota.

Nearly 14,000 patients have been injected with suspected tainted pain medication and the first lawsuit was filed by a woman who said she was given a steroid injection to relieve back pain and within two weeks had symptoms of fungal meningitis.

She didn't wait to get confirmation of her tests before she filed suit.

New England Compounding Center of Massachusetts is the suspected source of the contaminated pain medicine and has begun a recall of the unused steroids and has suspended operations. 

Late in the week it was reported that the same company was sued for selling a contaminated steroid  shot that killed a Rochester, NY man in 2004. The company reached an out-of-court settlement in 2007.

Connecticut Senator Richard Blumenthal has called for a criminal investigation of the Framingham, MA company.  The International Academy of Compounding Pharmacists say there may be as many as 3,000 companies in the U.S. mixing and dispensing steroid injection medicines.

The New England Compounding Center had shipped similar medications to 23 states and at least eleven of those states have reported fungal meningitis cases.

I was administered two similar steroid injections a year ago, as treatment for very painful sciatic nerve pain.  But the real reason I'm writing about this today is to ask a simple question, directed at owners and executives of companies that make anything that could hurt or kill their customers:

Why take the chance to cut corners, be careless or ignore the risk you impose on customers?

Having asked the question, unfortunately, I already know the answer.  Many people gamble every day; some in casinos, some in backroom  poker rooms, some on the highway, some with their businesses.  They know they can possibly make a lot of easy money.  If something goes wrong, what do they have to lose?  They can close down, hide their past profits, and if the plaintiffs cannot "find" those past profits, they can get away without paying anything.

Typically they wait a few months, change their business name and location and gamble some more.

Friday, September 21, 2012

$7.2-Million for Popcorn Lung?

Where could your next lawsuit come from?

Whether you make a product or provide a service, and you do that in the good old United States, there's someone out there trying to figure out how to make money the old fashion way -- by suing you.

This past week a federal court awarded a Denver man a $7.2-million settlement in a lawsuit alleging a microwave popcorn company and a division of Kroger Supermarkets  sold him popcorn that made him sick.

ABC news reported Wayne Watson claimed to suffer from "popcorn lung" after eating two bags of microwave popcorn every day for ten years.  Watson told reporters he might look like a fairly healthy man, but ". . . on a good day" I only have "about 53-percent lung capacity."

The maker of the popcorn, Glister-Mary Lee and Kroger say they will appeal. Watson was a furniture salesman and the defendants argued his work with carpet cleaning chemicals caused his illness.

The issue is really about DIACETYL, a chemical used to give popcorn its butter flavoring without using any dairy products at all.  Until recently, "popcorn lung" disease was only found in plant workers who worked with the chemical flavoring.  Popcorn plant unions have been trying to get the chemical banned for years and regulators have never decided on how much exposure is unsafe.

You don't have to package or sell popcorn to become the target of plaintiff's attorneys.

Every business, in fact every organization, should always be evaluating their risks and then striving to minimize those risks -- whether you make a product that has potentially dangerous chemicals in it, or a design that could contribute to the death of an infant, or put others at risk by unscreened predators that work for you -- think Boy Scouts, the Catholic Church, a neighborhood nursery school, a discount store that sells baby cribs, infant car seats or toys that can come apart and choke a child.

When you quit looking for risks and where the next problem might come from, you might as well call your lawyer and put him/her on retainer.

Thursday, September 6, 2012

BP Still Under Fire Two Years Later

Another good reason to prevent crises reared its ugly head in recent days.

The United States Department of Justice has accused BP Oil Company of corporate recklessness and gross negligence for its part in the 2010 Gulf oil disaster.

You've seen the TV commercials touting how the Gulf region has recovered and what a great place it is to vacation.  But in a federal court filing last week federal prosecutors urged the Federal Court in Louisiana to ignore BP's claim the region is "undergoing a robust recovery."

Federal prosecutors said some of BP's earlier court documents were "plainly misleading."

Transocean, the actual owner and operator of the oil rig that exploded, was also accused of gross negligence by the feds.  "BP did not act alone, by any means, and its gross negligence and willful misconduct are inextricably joined with the acts and omissions of Transocean."

Beyond the reputation and public perception of the two companies, the latest dust up in federal court is all about money -- billions of dollars of real money.

BP has already settled with lawyers representing some victims of the spill, but if the latest allegations stand up in court, BP could be facing as much as another $21-billion in damages in addition to compensatory and punitive damages.

BP boldly disputes the allegations of gross negligence and says it is looking forward to presenting its own evidence at trial in January of next year.

If you think, for a minute, that something like this could never happen to your business, think again.

Monday, August 20, 2012

People Are Still Staying Away From Theaters

It's been four weeks since the theater massacre in Aurora, CO, and a new survey found 17-percent of potential movie goers are still hesitant to visit their neighborhood movie house.

Consulting company Screen Engine has been polling potential audiences each week since the shooting left 12 people dead and 59 injured.

The first week after the shootings 21-percent of those surveyed said they were reluctant to go to a move theater.

There is a broader lesson for crisis management teams from all kinds of businesses and organizations.

You must regularly evaluate what it is you do -- make something, provide a service, care for patients, educate -- or whatever, and then ask yourself, "If someone else has a crisis while doing what we do, how likely are we to be affected and how would we handle that?"

It is common for organizations to face their own challenges when someone in a similar business has a crisis.  Take the movie houses, for example!

Planning includes looking at the bigger picture and the broader threat than just what might happen in your own office, plant, hospital, school or other facilities.

But, there's another issue I'll address in greater detail later, but I feel compelled to call your attention to it today.

If you work in Tampa, FL or Charlotte, NC, your city will soon host one of the two national political conventions.  You should already have plans for disruptions in and around your work/school/health care site, as well as alternate routes to get to and from work, and where possible work-at-home alternatives for as many employees as possible.

Wednesday, August 15, 2012

What Did YOU Learn From Aurora Shootings?

"The media seems to move on from mass killings more quickly nowadays than they used to," according to Edward Wasserman, Knight professor of journalism at Washington and Lee University.

Writing for the McClatchy Newspapers, Wasserman added, ". . . within three days of the Aurora, CO cinema massacre the killer's first appearance in court didn't (even) make the front page of the New York Times."

He concluded "once (the) slaying (of) 12 innocents would have touched off a national wave of introspection and debate." 

He went on to touch on media/film induced violence, among other important points.

But, I fear the owners, executives and managers of companies and organizations are just as jaded as the public. And instead of working harder to prevent workplace and school place violence, and be prepared to manage such horrific crises when they cannot be avoided, those same leaders are finding it easier to block those awful stories from their minds.

I can hear them repeating, over and over to themselves, "That will never happen here."

Dr. Marc McElhaney of Critical Response Associates in Atlanta says workplace violence is not an event.  It is a process.  I agree and I have seen it played out in workplaces and schools across the country and around the world.

We had a call this week from a trade organization looking for information about workplace violence.

We will probably not get another call about workplace violence until after the shooting stops someplace and we get a desperate call for help.

I will never forget answering the phone, "Institute for Crisis Management, this is Larry Smith" and the person on the other end of the phone line did not say hello or identify herself, she just screamed into the phone, "Are you watching CNN?  That's us!"

We began working with that company two hours later and on a plane to their headquarters later that evening.

Please, don't think for a minute that someone will never attack your office, plant, school, hospital or store.  Be on the lookout for changes in behavior and attitude.  Have a plan to deal with that and a plan to manage an attack and its aftermath.

Call us if you have questions:  1-502-587-0328.

Friday, August 3, 2012

Don't Forget, The Next Pandemic Is Coming

Some of our clients get really nervous when I start talking about the “next pandemic.” Some say I’ve gone off the deep end, again.  Others take it seriously, and some have had Pandemic Crisis Plans in place since at least 2005.

In 1998 and 1999, some of our largest clients ever, retained ICM to help them develop Y2K Crisis Plans.  Remember the concern that when the calendar turned over to January 1, 2000 all computers in the world might go bonkers and bring the world’s business to a halt?
It was a possibility – somewhat remote – but still a possibility.  And good companies knew better than to take a chance.  All the clients we worked with, prepared, planned and practiced for what could go wrong, and took steps to prevent as much as they could anticipate.

And at 12:01 AM that night, all their hard work and preparation paid off and nothing major went haywire.
So what does that have to do with the next pandemic?

Flu pandemics strike about every 40 to 50 years.  The worst in modern times was the 1918/1919 Spanish Flu pandemic. Close to 675,000 people died in the United States in the fall and winter between those two years. That was compared to an estimated 50-million people who died around the world.

In 1957/58 a relatively small pandemic originated in the Far East and before it was over 69,800 people died in the U.S.

The Hong Kong Flu pandemic struck in 1968/69 killing “only” 33,800.
The most recent Swine Flu Pandemic claimed about 18,000 American lives in 2009/10.  Researchers reacted quickly and 61-million flu vaccine doses were administered, keeping the death toll so low.

Here at the Institute for Crisis Management we began to advocate for organizations of all kinds and size to develop a pandemic plan. Historically 20-to-40-percent of the population can be infected and unable to work for days and weeks.

What business can function successfully with a third or more of the workforce out sick?  We had great concern for hospitals and law enforcement and fire departments.  I spoke from Halifax, Nova Scotia to Sao Paulo, Brazil and everywhere in between.
Researchers continue to anticipate what type and when the next pandemic flu will strike. Federal health authorities announced 29 human cases of a new strain of swine flu have been confirmed in recent months, including 12 this week.  Ten of those cases were linked to the Butler County Fair in southwest Ohio. 

Four cases of a new strain of swine flu have been confirmed in recent days by Pennsylvania officials.  And to compound the problem, since September of last year 162 dead or dying harbor seals have washed up along the New England coast.  Animal health experts say they were suffering from a new type of influenza they caught from birds.

Migratory birds are almost always the source of transmission of pandemic flu viruses.
If you have a pandemic plan for your business or organization, dust it off and update it.

If you don’t have one, today is a good day to start working on one.

Just one example of the things you have to plan for:  Say you are a municipal police department or sheriff’s department.  It’s one thing to have 20-to-40-percent of your officers and staff out sick at the same time, but what about the source of the gasoline that fuels your patrol cars?  If your supplier has a third of their delivery drivers out sick and can’t make timely deliveries of gasoline, do you have back-up bicycles or horses or can you cover your area on foot?

Health care providers are another source of concern for me.  Almost every hospital has a plan to deal with mass casualties in their community, but very few hospitals have plans for when they are the crisis.
In a pandemic with up to 40-percent of the population sick and in need of medical care, what happens when 40-percent of the hospital’s doctors, nurses and technicians are too sick to work or afraid to come to work?

Monday, July 23, 2012

Penn State Will "PAY"

Whether you agree, or not, Penn State is going to "pay" in more ways than one for the decisions that were made by top administrators between 1998 and 2011.

A $60-million fine from the NCAA, the loss of 20 scholarships per year for four years, five years' probation, and a four-year ban on post-season games is serious.

And, you would think, a deterrent to other colleges and universities from similar mistakes and indiscretions.

NCAA President Mark Emmert said, "Football will never again be placed ahead of educating, nurturing and protecting young people."

Sadly, I doubt it will be a wake-up call to very many presidents of colleges and universities, their athletic directors and some coaches who believe they are above the standards that everyone else is expected to meet.

When athletic programs bring in millions of dollars, and feed the egos of the coaches and the people that depend on them, it becomes much easier to believe that you can get away with it, or that what you are doing is really justified.

For the rest of the world, this is a reminder that doing the right thing is almost always the right thing to do, and when something still goes terribly wrong, doing the right thing to fix it, is the second best thing to do.

Thursday, July 12, 2012

So Far So Good At Penn State

While the Special Investigative Report was "scathing" as so many pundits dubbed it, the University's response was exceptional -- particularly in comparison to everything they did wrong until today.

The three speakers, representing the Penn State Board and Administration, said everything I would have recommended.

They took responsibility, they apologized for past mistakes and pledged to make changes to prevent another disaster like the Jerry Sandusky child sex abuse scandal.

The only thing I would have recommended they do different was to NOT take questions.

In delicate and legally charged environments like this one, the Institute for Crisis Management frequently suggests the client identify everything that is possible to talk about -- talk about it up front and then thank the media and leave.

We start out by making a list of every possible question reporters may ask.  Identify the ones we can answer, and make notes accordingly.  Then figure out which ones we cannot answer and prepare an explanation for why not -- we don't know, yet; that is a question better left to answer in the court of law, rather than in the court of public opinion;  etc.

Then advise the media  of your news event and tell them up front you're gonna tell them everything you can and as a result there will be no need to take questions.

This Is Gonna Hurt

The bottom line, from the just released Penn State sexual abuse investigation, concludes:

"Taking into account the available witness statements and evidence, it is more reasonable to conclude that, in order to avoid the consequences of bad publicity, the most powerful leaders at Penn State University – Messrs. Spanier, Schultz, Paterno and Curley – repeatedly concealed critical facts relating to Sandusky’s child abuse from the authorities, the Board of Trustees, Penn State community, and the public at large.”
If that were confirmed in a court of law, it would amount to serious criminal behavior on the part of the former University President, Athletic Director, the late Head Coach and the now retired Senior Vice-President of Finance and Business.

The report added:  “These men concealed Sandusky's activities from the Board of Trustees, the University community and authorities. They exhibited a striking lack of empathy for Sandusky's victims by failing to inquire as to their safety and well-being, especially by not attempting to determine the identity of the child who Sandusky assaulted in the Lasch Building in 2001.

The report also concluded:  "The most saddening finding by the Special Investigative Counsel is the total and consistent disregard by the most senior leaders at Penn State for the safety and welfare of Sandusky's child victims. As the Grand Jury similarly noted in its presentment, there was no "attempt to investigate, to identify Victim 2, or to protect that child or any others from similar conduct except as related to preventing its re-occurrence on University property.”

Now the University has got to get its response perfect on the first go.
This is another example of my “management rule number 1” – do the RIGHT THING to begin with and then you won’t have to worry about doing the RIGHT THING later.

Penn State must pick the proper spokesperson and acknowledge everything that was not done right, and pledge to make sure it never happens again. Once they make that straight forward statement, then they must buckle down and deliver.

The lesson is here for every other college, university, non-profit and business – when anything goes wrong, deal with it, don’t ignore it or try to cover it up.  The initial “pain” will almost always be far less severe than the ultimate damage compounded by denial and/or a cover up.

Wednesday, July 11, 2012

The NCAA Death Penalty?

The call is already sounding for the "Death Penalty"  against Penn State University on the eve of the release of a months long investigation into the Penn State handling of the Jerry Sandusky sex scandal.

The University hired a Public Relations Agency to help them manage the crisis that began with the revelation that an assistant football coach had been called out for molesting teenage boys and Head Coach Joe Patnero and University administrators did nothing to stop him.

CNN has reported there are e-mails from 2001 that allegedly confirm that.

A former FBI Director was hired by the University to lead a "thorough" investigation of what happened, who knew, and what they did or did not do about it.  That report will be released Thursday (July 12) morning.

You would have to assume that the Penn State Crisis Team has anticipated what could be the worst revelations and what their response should be.

Meanwhile, sports writers and others NOT directly associated with the University are talking about the NCAA instituting the "death penalty" for at least a year, barring the PS football team from playing any other NCAA schools for a season.

Ironically, the University of Kentucky was the first school dealt the death penalty in 1952-53. It began with a point-shaving scandal in 1951 when three players were charged with taking bribes to shave points, and then in 1952 ten Kentucky basketball players were accused of receiving illegal financial aid  and the NCAA found that Coach Adolph Rupp and his staff knew the players were ineligible and allowed them to play anyway.

The next few weeks will see just how much power Penn State alumni have and whether they can stave off an NCAA investigation and ultimate penalty.

Friday, July 6, 2012

Wonder How That Conversation Went?

Don’t you wish you could have been hiding in the corner when the bean counters at American International Group (AIG) went to senior management and said we want to sue the Internal Revenue Service because they owe us $30.2 million in interest from an overpayment of taxes in 1991.

That alone would not have been worth much, but just imagine – did anyone at AIG dare ask – what about the $17.5 billion the company, still owes the American taxpayers?
The U.S. Treasury Department, which runs the IRS, still owns about 70% of AIG common stock after bailing out the giant insurance company in the humongous federal bailout two years ago.

If you were responsible for the company’s Community and Public Relations, would you have, at least, pointed out how the American public might react to such a move?

The public perception is these big companies don’t care about anything but their over-sized compensation packages and to heck with the other 99%.

The sad part is they get away with it.

I am sure, if it did come up, someone said, “we’re just playing by the rules . . . we overpaid and it is our responsibility to get that money back . . . even if it is 21-years after the fact and we would not still be in business if the American taxpayers had not bailed us out.

Thursday, June 28, 2012

Another Survey Confirms You Need To Be Prepared

The fourth annual “Rising CCO” survey conducted by Weber Shandwick and executive search firm Spencer Stuart confirms the value of crisis management experience has almost doubled since the first survey in 2007.

More than 70 percent of chief communications officers surveyed, report their companies experienced some kind of threat or disruption in the past two years, so it should not come as a surprise that 65 percent of CCOs say improvement and protection of their corporate reputations is one of their top priorities.

Three-quarters of CEOs are estimated to spend time on managing crises that strike their organizations. And, it takes approximately 15 months to get past the initial crisis and as we have been saying for years, most crises are like earthquakes – there’s the initial problem, followed by “after-shocks.”  Sometimes those after-shocks do more damage than the original crisis.

The Rising CCO survey identified some of those after-shocks including 60% more media attention, 51-percent more governmental scrutiny and a 42-% drop in employee morale.

"The global business events of the past few years have demonstrated in stark clarity the cost of damage to corporate reputation," declared George Jamison, who leads Spencer Stuart's corporate communications business

Jamison added, "experience in crisis management is essentially a mandatory requirement for CCOs today. As our 2012 research shows, crises take time to fade and CEOs are right in wanting the best talent with them in the bunker when they find themselves in the media and political spotlight."

If you're a CEO, President or owner of a business, big or small, and dollars and cents are more important to you than your organization's reputation, just substitute "dollars" for "reputation" and you should come to the same conclusion.  You can't afford to have a crisis, whether it is in terms of money or reputation.

We’re always ready to help organizations of any size identify the things that can go wrong and then build a crisis communication plan to help get them started when one of those crises strike. 

We’re just as ready to respond 24/7 if you don’t have a plan and still have a crisis and need help working your way through it. 

Monday, June 18, 2012

More Than Cars Get Recalled

RedPrairie and Gateway Research surveyed 130 consumer product, life sciences and food and beverage companies to see how well prepared they are to track, trace and recall products and report  72-percent were not confident in their companies’ recall and tracing abilities.

Only 51-percent of the companies surveyed believed they could initiate a recall within hours while almost 70-percent were very concerned about coordinating recalls with suppliers and distributors and more than half worry about their ability to find and isolate items within their own supply chain.

IDC Manufacturing Insights practice director Simon Ellis says a recall costs an average of $10-million.

86-percent of the executives surveyed recognized the seriousness of their financial liability if a product recall is initiated and even more if something goes wrong with the recall itself. Another 25-percent recognized potential brand reputation damage if they have a recall and it doesn’t go well.

We’ve assisted with major product recalls, and when the companies involved are committed to doing the right thing, taking responsibility quickly, and reacting fast, the long-term damage is minimal, or almost non-existent.

We assisted with a recall a few years ago and the only publicity was a trade publication article after it was over and it was about how well the companies involved had handled it.

The potential was for millions of dollars in financial liability.  The manufacturer of one component of a major household appliance discovered one of their suppliers had substituted a defective “washer” that had been built into half-a-million components that they delivered to their customers.  Their customers built the final product and had sold and installed almost all of those items, when the original parts maker discovered the defect and called us.

The end user product would likely fail in a few months. 

We helped them develop a communication strategy to alert their customers of the problem and a communication plan for the end user manufacturer to use to notify their customers. Meanwhile our client went to three shifts a day, seven days a week, to make replacement components, and committed to pay for the cost of delivery and installation of the replacement parts.

There was cooperation up and down the product chain and there was no evidence any of the original appliances failed before the homeowners were notified and scheduled their repairs.

We wrote a few weeks ago about the hazards of the supply chain.  This is just another link in that chain.

Monday, June 11, 2012

No Wait, There's More!

Former Penn State Assitant Football Coach Jerry Sandusky's trial began this morning (6-11-12) with the announcement he would testify in his own behalf, followed by a report from NBC News that their sources say more charges against more Penn State administrators or former administrators is likely.

NBC says former Penn State president Graham Spanier is the subject of “major new evidence” about his involvement in the Sandusky scandal, including emails exchanged in 2001 by Spanier and former university official Gary Schultz and athletic director Tim Curley.

NBC reported there were e-mails that have surfaced between former President Spanier and Schultz that contained conversations in which the two agreed it would be "humane" to Sandusky to "not involve" legal authorities.

And, later in the day, Penn State spokesman David La Torre issued a statement that confirmed e-mails had been discovered and turned over to the State Attorney General.

Schultz and Curley already face perjury charges.

There are two lessons in today's development.

1.  What people write and exchange in e-mails and other digital media can get you in a lot of trouble.

2.  And every crisis has "after-shocks" and sometimes the after-shocks can do more harm than the initial crisis event.

Tuesday, June 5, 2012

Bet You Haven't Planned for This One!

You run a restaurant, a retail shop, a department store, a sporting goods store, a grocery story, a pharmacy -- just to name a few -- and you have a "rent-a-cop" or in-house "loss prevention" security officer on duty.

Someone tries to skip out without paying or is suspected of shoplifting, and your employee follows them outside and stops them.  A scuffle ensues -- that's police talk--and your employee "detains" -- more police talk -- the suspect -- still more police talk -- and city or county law enforcement officers are called.

When the first officer arrives to assist your "loss prevention" person he/she notices that the "suspect" is having trouble breathing or showing signs of medical distress.

Just imagine the questions that generates.  Imagine how much worse it might get, after the police call emergency medical services and the "suspect" dies on the way to a hospital.

You don't have to imagine it.  It happed Friday, June 1, at a Southern California Walmart Store.

The Los Angeles County coroner's spokesperson said they don't know yet if the man died as a result of the struggle or from some pre-existing medical condition.

Do you have a PLAN for that?  What would you do, what could you say?  What are the odds a family member will file a lawsuit against you?  What if the "loss prevention" officer was white and the alleged shoplifter was not?  What if there was no sign that anything had been taken from the store?

You can take a lesson from Walmart.  The company spokesperson got off to a good start. Her comments were timely.  She explained the "loss prevention" employee is suspended pending an investigation.  She extended the company's sympathy -- or at least she observed "it's a sad situation" anytime "there's a loss of life."  And she added the company was cooperating with law enforcement.

What would you do?  What would you say?

Wednesday, May 30, 2012

Do we not care anymore about ethics in business?

            Someone asked recently if anyone cares, anymore, when a company blunders, or even commits a crime with the intent to profit from it.
            In fact I’ve been asked that question recently by a couple of news service business reporters. One was doing a story about Goldman Sachs and the other was following up on the latest JP Morgan Chase Bank $2-billion trading loss.
            And more recently, Aaron Kwittken, CEO of Kwittken Company wrote an article on in which he raised the question, can companies like Walmart and Apple recover from really negative media coverage of their sweat shops in foreign factories and paying bribes in Mexico.
            There was a time when behavior like those would cause serious business damage, if not force the company out of business.  Today, there seems to be almost no consequences to the Apple and Walmart news.
            Mr. Kwittken concluded in his article that Walmart’s average customer is “less concerned with the allegations of the retailer’s shady international business practices than the steep discounts on toothpaste, DVDs, French fires and the like.”
            Sadly, I have to agree, but I think his assessment doesn’t go far enough.
            The public reacts the same to retailers as it does to local, state and federal governments and the politicians that populate those offices.  We talk about greedy retailers and politicians, but many of us never bother to go to the polls. We complain about the banks and investment houses, but if we have a mortgage and no one is threatening to throw us out of OUR home, we don’t worry about the couple across town who may be about to lose theirs.
            I’m old enough to remember when customers and constituents, who saw something wrong, not only complained about it, they did something.  They took action.  They took their business down the street to a competitor, or they got out and campaigned for a candidate they had more confidence in – and they didn’t fail to vote.
            I don’t have a clue how to overcome our nation's self-centered lives, but I do still feel strongly that businesses (and politicians, too) who get into trouble still need to take responsibility for it, identify what went wrong and publicly commit to fix it and take action to prevent it from happening again.
            Chase and Walmart have done that, to a degree, and that may have something to do with why they seem to be weathering their latest storms without any major loss, yet.


Tuesday, May 22, 2012

CEO’s Are Not Exempt From Jail Time

            White collar crime and mismanagement have consistently been the biggest of the 16 broad crisis categories the Institute for Crisis Management tracks year after year.

The first year for the Annual ICM Crisis Report in 1990 Mismanagement led the list accounting for 24 percent of all crisis types and White Collar Crime was right behind totaling 20 percent of crises that year.
            The new 2011/2012 Annual ICM Crisis Report has White Collar Crime in first place with 19 percent and Mismanagement in second place with 11 percent.

In 2009 Mismanagement was in second place with 16 percent and White Collar Crime was in first place with 18 percent.  On average, people in decision making/management positions are credited with triggering half of all business and organizational crises. has just published an article “10 CEOs Who Went From The Boardroom To the Cell Block” and identified their top ten list of Fortune 500 CEOs who have been arrested and ousted in the past 12 years.

Martin Grass, son of the founder of the drugstore chain Rite-Aid and several other executives were indicted on charges of conspiracy to defraud, making false statements and accounting fraud. He reached a plea agreement that called for 8 years in prison, a half-million dollar fine and giving up $3-million salary.  The company survived, barely.

  Joseph Nacchio, CEO of telecommunications giant Qwest was charged by the Securities Exchange Commission with inflating revenue estimates, lying about non-existent contracts and profiting from his illegal deeds. He was sentenced to six years and fined $19-million and forfeited $52-million in profits from illegal trading.  The company was sold.

Another of the top ten CEO crooks was Richard Scrushy, longtime CEO of HealthSouth.   In 2003 he was indicted on charges of conspiracy, securities fraud, money laundering and mail fraud. At trial he was acquitted.  Four months later he was indicted on 30 counts of extortion, obstruction of justice, money laundering, racketeering and bribery.  He was sentenced to six years in prison.

The company survived but its reputation was tarnished.

Bernie Ebbers, former CEO of WorldCom and Jeffrey Skilling of Enron were both accused of “cooking the books” and both companies did not survive.

Another example of misbehaving executives and their terrible impact on the company that trusted them was John Rigas who was forced at as CEO of cable TV provider Adelphia after he and six others, including two of his sons were convicted of securities, bank and wire fraud. The company ended up in bankruptcy and Rigas ended up in prison and is not scheduled to get out until 2018.
     You can read the whole report at:   
      And download the latest ICM Annual Crisis Report at:  

Friday, May 11, 2012

20th Annual ICM Crisis Report

It was a "relatively peaceful" year for business and organizational crises -- but the crises that did strike were whoppers!

The 20th Annual ICM Crisis Report was published this week, with the airline/air transport industry leading the Top Ten Most Crisis Prone Industry list and, no surprise, News Corporation, Ltd., at number one on the Most Crisis Prone Business List for 2011.  BP, PLC was number two, Transocean at number eight, both still reeling from the Gulf Oil disaster from the year before.

BP/Transocean reinforce our argument that major crises never really end, at least not quickly.

The data for 2011 shows only a minor fluctuation in the average of two-thirds of all crisis that are what we call "smoldering crises" -- the kind of things that start out small, and usually internal, but not always, and should be recognized by someone as a potentially serious problem and fixed before it becomes a public embarrassment, or worse, a public disaster.

And, the more things change, the more some things stay the same.  Managers and executives continue to ignore those smoldering issues, or hope that if they ignore them they will go away.  And, they don't.

People with decision making responsibilities are still responsible for half of all crises while, on average over the past ten years, 32-percent of all crises were caused by "employees" and 18-percent were caused by outside forces, such as activists, disgruntled customers/patients/employees and natural disasters.

White Collar Crime accounted for 19-percent of all business crises, mismanagement for 11-percent, workplace violence for 10-percent and defects/recalls for 5-percent.

And the 2011/2012 ICM Crisis Report includes an example of how "not" having a crisis "crisis" cost Taco Bell at least $3-million to defend itself!

Read the complete report:

Wednesday, May 9, 2012

Good Call, Churchill Downs

We don't get the opportunity, often, to give an atta-boy to organizations that do something right and ultimately prevent or avoid a crisis.

But, this week, we can single out the management at Churchill Downs in Louisville, KY for their smart decision to evacuate the in-field last Friday, Oaks Day, when a potentially nasty thunderstorm bore down on the 112,500 gathered to enjoy the "day before" the Derby.

Churchill Downs' management has been a leader in many aspects of big event execution. And that was demonstrated by the decision making process and then the relatively orderly movement of thousands of people safely to shelter until the short-lived storm passed by.

It was just as well executed when those same thousands of fans, some inebriated, were invited back to their favorite spots in the infield to continue their revelry.

It was just a couple of weeks earlier that one man died, 16 were hospitalized and another 100 were treated at the scene when a sudden storm with winds exceeding 60-miles an hour downed a beer tent and tossed metal folding chairs through the air like missles following a Saturday afternoon baseball game at nearby Busch Stadium.

Friday, April 27, 2012

Atta boy!!!! Beef Industry

We spend so much time critiquing companies and organizations that get it wrong, so it's special when we can give an "atta boy" to someone who does it right and avoids a costly business crisis.

The beef industry responded quickly and effectively this week following word that a case of mad cow disease had been found in California.

American cattle farmers and beef processors have been hit with one crisis after another in recent years, including the most recent "pink slime" crisis.  Critics of the "lean finally textured beef" had a field day piling on while the beef industry was slow to react.

The report of a case of mad cow or bovine spongiform encephalopathy broke on Tuesday and within hours the United Sates Department of Agriculture, the meat industry and the American Veterinary Medical Association went on the offense issuing statements, doing interviews and updating web sites.

There were mad cow scares in the U.S. in 2003 and 2006 and it cost the industry billions of dollars.

This time consumers were reassured quickly the one "case" was a rare form of the disease that did not threaten the food supply and the on-going testing of about 40,000 cows a year was doing its job and spotting problems before they became a threat to the industry or the consuming public.

Now, if we could get every decision maker, in every kind of business, to react as quickly and positively as the beef folks did, we would see far fewer business disruptions and financial losses in all other  categories.

Monday, April 23, 2012

Wal-Mart Working On Another Top 10 Most Crisis Prone Business Ranking

Wal-Mart de Mexico, the largest international division of Wal-Mart, has been accused of bribery to speed the growth of the company in Mexico, and then a cover-up by top American executives.

The New York Times published the allegations and now legal scholars and former Securities and Exchange Commission officials are predicting the retail giant could be hit with $1-billion in fines and settlements and legal fees if the Times report turns out to be true.

The Institute for Crisis Management's 2011/2012 Annual Crisis Report is due to be published in two weeks and it will reveal that Wal-Mart dropped off the top-ten most crisis prone companies' list in 2011, after making the top-ten list six times since 2003.

Wal-Mart was #5 in 2003, #2 in 2004, #8 in 2005, #4 in 2006 and 2007 and #9 in 2010.

Experts who have weighed in since the initial Times story, predict that, if true, the bribery and cover-up will haunt Wal-Mart for years and likely result in whopping financial penalties by U.S. regulators and the ultimate downfall of top company executives.

Wal-Mart made the ICM Top Ten list repeatedly since 2003, while also being named one of the "best" companies in the U.S. at the same time.  Wal-Mart made the ICM list mostly because it is one of the biggest companies in America and by its very size, generates tons of good and bad news every year.

However, it's one thing to deal with a job discrimination lawsuit, and another to face federal bribery charges and the prospect that more than one senior executive could end up in a federal penitentiary for a few years.

And to add insult to injury, critics of Wal-Mart will use the allegations to hammer the company every time they have a chance.


Thursday, April 12, 2012

Chicken Leg In Mouth

There's much to be said about Facebook, YouTube and Tweeting -- some of it's even good.

But, take for example, when it's not.

Following the big earthquake off the coast of Indonesia recently, two things happened.  People panicked and there was an assumption that a tsunami was on its way.

Someone with KFC Thailand was moved -- no pun intended -- okay the pun was intended -- to take advantage of the anticipated disaster and TWEETED this marketing message:  "Let's hurry home and follow the earthquake news. And don't forget to order your favorite KFC menu."

If you saw the video and still pictures from the region shortly after the first windows cracked and buildings began to shake, you saw faces of stark terror, fleeing from the cities and villages, and I dare say, fried chicken was the farthest thing from their minds.

Public reaction was almost as fast as the first tremors and some thought as threatening.

KFC Thailand took down the post and apologized on Twitter.

The Associated Press tried to get a comment from KFC parent company, YUM Brands here in Louisville, KY.  The AP reported there was "no immediate response."

A few companies have successfully tweeted in the wake of bad news events, but some have "stepped in it" even worse than KFC Thailand.

When the violent uprising in Cairo was filling TV screens around the world, someone at designer Kenneth Cole  tweeted "Millions are in uproar . . .Rumor is they heard our new spring collection is now available online."

Reaction was fast and unkind.  The company eventually issued an on-line apology, but not before the thoughtless marketing mistake made negative news around the globe.

Skittles was one of the latest to let someone in the company use their twisted sense of humor on Twitter asking "what fans would do for their last bag" of Skittles, after Trayvon Martin was shot and killed while returning from the store with a freshly purchased bag of the candy.

Executives, managers, marketers, make sure your employees are "thinking" before they unleash their 140-characters on Twitter.  There needs to be a "sniff test" in most organizations. If a Tweet might stink to someone, think twice about hitting  "tweet" in the lower right hand corner of the new message box.

Thursday, April 5, 2012

Hold Your Partners Accountable

As we put the finishing touches on the 2011/2012 ICM Annual Crisis Report there are some lessons from last year that businesses around the world cannot afford to ignore.

Natural disasters, cyber crime and supply chain disruptions top the list and the first two are significant contributors to the latter.

In December 2004 a massive earthquake in the Indian Ocean triggered a tsunami that killed an estimated 230,000 people.  It also impacted the supply chain of a number of U.S. businesses.  I was flying home from the west coast and my seatmate was obviously distressed.  She was on her way to her corporate headquarters in the middle of America to tell her CEO that an entire season of hunting and sportswear had been washed out to sea and it would take at least half-a-year for their suppliers to make and ship replacement product for their chain of big-name stores.

2011 drove home the danger of today's supply chains. More and more companies in one part of the world -- the U.S. for example -- depend on parts or finished products supplied from the far reaches of the globe.  Even if the supplier is a state or two away, there are still so many things that can prevent timely delivery.

Today's business leaders MUST anticipate all the things that can go wrong and disrupt their supply chains.  No longer is it enough to acknowledge that there could be a disruption.  The old idea that
it won't happen to us and if it does there is nothing we can do about it anyway, just isn't good enough.

Someone in every organization has to anticipate the possible loss of critical parts or goods and develop a solution, just in case.

Not just manufacturers or retailers -- but what about health care providers.  Hospitals ran out of critical medications in 2011, because pharmaceutical companies could not meet the need. 

What if you run a small neighborhood restaurant.  What would happen if your supplier could not deliver the steaks or salad ingredients that your customers have come to expect from you?  How long could you survive if your prime source of food or supplies or car parts, or medicines were not going to be available for months?

Crisis planning is not something you should do, it is a MUST do for any and every organization.

The new ICM Annual Crisis Report should be available later in April.

Friday, March 30, 2012

What Were They Thinking?

The Sanford, Florida police department hired a public relations company to help them deal with the news media in the wake of the Trayvon Martin shooting.

This statement was apparently prepared by the PR agency and released by the Sanford Police
Department March 28:

Sanford, Fl – March 28, 2012 — The City of Sanford kindly requests that members of the media refrain from approaching, phoning or emailing city employees when they are in their roles as private citizens. It has come to light that there have been a few incidents where city staff were followed and approached at their home or in settings outside of working hours.

Law enforcement officials will not hesitate to make an arrest for stalking.

I spent 35 years as a reporter, anchor and news manager before joining the Institute for Crisis Management almost 20-years ago.  I was never threatened with arrest while trying to get a public official to answer questions while at work or any other time or place.

I suppose you could make an argument that any reporter who covers Mitt Romney or Newt Gingrich from state to state covering their campaign for the presidential nomination is “stalking” them and if the coverage is unfavorable have them arrested!
It was no surprise that 24-hours later, the city issued this statement:

On March 28, 2012 the City of Sanford issued Media Advisory Number 23 (Press Release 23). Upon reevaluation, it is clear that portions of that Advisory were improvidently issued. The first two paragraphs of that Advisory are hereby rescinded.

I considered a career in law enforcement – worked with law enforcement off and on over the years and admire the young men and women who seek a career in law enforcement because they want to help people.
I worry myself sick, sometimes, when I encounter young people who go into law enforcement because they want a “power trip.”

We get called to help city, county and state governments from time to time, and when the first Sanford news release was posted I thought – what are they thinking?  I included the Mayor as well as the Chief of Police.

Then, the following day I got that question answered—they were not thinking.  Thank goodness the decision maker’s brain kicked into gear before the community suffered another permanent black eye.

Tuesday, March 20, 2012

Stress Tests for Your Business/Organization

If a "stress test" is good enough for big U.S. banks, why not a stress test for your business or organization?

Three years ago U.S. regulators forced big financial companies to be evaluated with a so-called stress test, which was designed to evaluate if they might fail or come close IF the stock market dropped 50%, or home prices sank another 21% or the unemployment rate hit 13%.

I am not suggesting your business or not-for-profit be measured against those standards, but I am suggesting the leaders of most organizations make a list of the kinds of things that have gone wrong among their peers and competitors and then ask themselves, "if that happened to us could we survive?"

If any of those things happened to us, are we prepared?  Do we know what to do (and not do) to get through and return to a "new" normal?

Some experts call what I'm talking about a risk assessment.  We at the Institute for Crisis Management call it a vulnerability study.  Stress test, risk assessment, vulnerability assessment -- they are all basically the same thing.  What can go wrong?  What would we do if it did?  How would we react?

What would our customers/clients/patients, suppliers, financial sources, employees and their families think, do, say, react?

No organization or business is immune from a crisis or disruption of operations or services. 

If you have not anticipated all those things that can go wrong and practiced with a plan to manage all of those possibilities, you may be gambling about your future, and if you face the facts, gamblers lose more often than they win.  Remember, the game is designed for the "house" to win more often than the folks like you and me.

Here at the Institute for Crisis Management, one of the services we offer is a custom Vulnerability Study to look internally at what could go wrong as well as a review of our Negative News Crisis Data Base, usually for the past ten years, to see what kinds of organizations like yours have faced crises and how well they responded publicly, if at all.

Call for details and the cost.

Thursday, March 15, 2012

A Perceptual Crisis Cost Goldman Sachs $2-Billion So Far

A company doesn't have to do anything wrong to pay dearly for a disgruntled employee.

It costs about the same, or more, if the company actually does something wrong and gets called out by a disgruntled employee.

This week a disgruntled former executive director at Goldman Sachs submitted an op-ed piece to the New York Times....claiming the "environment" at Goldman Sachs is as "toxic and destructive as I have ever seen it."  Greg Smith (no relation) joined GS right out of college and most recently was responsible for the company's U.S. equity derivatives business in Europe, the Middle East and Africa.

Diane Schwartz, my friend and PRNews Publisher and Blogger wrote yesterday, "what a 'get" for the New York Times, what a forum for Smith and what a HR and PR nightmare for Goldman Sachs."

Couldn't have summoned it up any better.

Except today, we now know that in just over 24-hours one disgruntled, former employee has cost Goldman Sachs about $2-billion in market value. The bank's shares plummeted 3.3 percent in trading Wednesday in the wake of the NYT's op ed article.

Now, it is important to remember that Goldman is not a "bank" the 99% keep their savings and checking accounts in.  It is an investment bank that offers services to its clients that most of us could never afford nor understand.

There are some crisis management steps the company should be taking to reassure internal and external audiences that the former director was just an unhappy former employee -- if that is all there is to it.

However, the former banker and his venue, the New York Times, have left some bruises. He talked about the "decline in the firms moral fiber" and claims bank officials referred to their clients as "Muppet's"

Every organization, even mom and pop businesses, are subject to an unhappy employee now and then. The first thing good leaders must do is keep their door and ears open to those unhappy workers BEFORE they go public and try to fix the problems rather than force a potential trouble-maker out.

A Bizarre Crisis

At the Institute for Crisis Management we maintain there are four types of crises you will experience at some time in your career.

1. Sudden Crises -- fires, explosions, natural disasters and workplace violence

2. Smoldering Crises -- two thirds of all crises are the smoldering type -- they start out small, usually internal, but not always, and they are the kind of things someone should recognize as a potential problem and either fix them or report it to someone who can.  You can plan for both of these types and even if you can't prevent them, you can be prepared to minimize the damage of each type.

3.  Perceptual Crises -- the classic example is the old Proctor & Gamble corporate logo that included a half-moon and some stars.  Every few years someone would look at that logo and declare it was a symbol of devil worship and try to organize a boycott of P & G products. 

4.  The fourth crisis type we call the Bizarre Crisis.  You cannot plan for nor anticipate a perceptual or bizarre crisis but you still have to manage them when they rear their ugly heads.

Today, there is a report from New York City about a bizarre crisis.

An 88-year-old woman was on her way to visit her daughter in another part of the city, and was on the escalator at the Long Island Railroad Lindenhurst Station when she fell and her clothes became entangled in the escalator mechanism and asphyxiated her.

You might argue that the Railroad should have anticipated such an accident, but it is still an unusual disruption and has already triggered negative national media attention and most certainly will result in a lawsuit.

Monday, March 12, 2012

It's Never Over 'til the Judge Sings

It's been five years since Seung-Hui Cho went on a killing rampage shooting 32 Virginia Tech students and faculty before killing himself.

And last week a jury was impaneled to hear testimony in a civil trial brought by parents of two victims.  The two families allege in their "wrongful death" lawsuit that Tech administrators were slow to alert students of the first killing on campus and their lawyers painted a picture of campus police as "plodding" and inexperienced.

In their opening statements the plaintiffs' attorneys criticized school administrators for waiting more than two hours before warning the campus a gunman had already killed two women and was thought to be still on campus.

I can't think of a better example of how a mismanaged "crisis" can haunt an organization and its leadership for years.

Doing the right things from the beginning is often difficult, but failing to do the right things from the beginning costs more and costs more for a long time.

If Tech had an operational crisis plan in place, and had practiced with it, and also had a communication plan and practiced with it, this month's lawsuits might never have been filed, and some if not most of the victims would not have died that day.

Thursday, March 8, 2012

Can You Guarantee Clients/Customers Their Information Is Safe With You?

A new study confirms what we should have known all along -- data security and privacy can make you or break you.

A just released Edelman study, "Privacy and Security: The New Drivers of Brand, Reputation and Action Global Insights 2012" underscores the belief that people all over the world are worried that their personal information is not properly protected and that is a significant motivator driving where they shop and who they do business with.

Edelman's study says people around the world are reluctant to do business with any company they think may not keep their personal information or "data" safe.

46% of respondents said they would avoid or leave a company that had experienced a security breach.  Many said they would quit a company they trusted, if/when they learned of a data breach.

Americans tend to be most loyal to companies they like, but one in two said they would likely take their business elsewhere if their first choice had a data breach.  For those who didn't really have any loyalty to a specific company, 70% said they would not hesitate to go elsewhere, after a loss of personal information or other data.

Shopping and banking are two businesses that people want to trust, but only 69% trust financial institutions to protect their personal information. Only 33% trust on-line retailers to protect their information.

Thursday, March 1, 2012

Costa Crociere Is Already Paying For Latest Crisis

With two disasters on two cruise liners in less than six weeks, Costa Crociere, a subsidiary of Carnival Cruise Lines, and the largest business of its kind in Europe, had already lost more than a third of its anticipated bookings after the Costa Concordia ran aground, killing at least 32 passengers and crew January 13.

Then, this week, an engine room fire left more than 600 passengers and 400 crew members adrift in the Indian Ocean with no electricity, no running water and no hot food.

Lawsuits and negative public relations are swirling around the company, which, so far, has mismanaged both incidents -- blaming the first on the captain and failing to be forthright about the conditions on the ship in the second case.

Industry experts are already speculating that Costa Crociere could face a troublesome future if it doesn't change its name or get a lot of help from its parent company in the U.S.

The lesson for all organizations is simple:  you can survive and recover from even a terrible business or organizational disruption, IF you respond quickly, effectively, with empathy for employees and customers/clients, and take responsibility for what happened and be honest about it.

Wednesday, February 29, 2012

Costa Crociere Still Doesn't Get It

Two days ago the engine room of the cruise ship Costa Allegra erupted in flames, leaving the liner and its 636 passengers and 413 crew members adrift.

The Allegra is a sister ship to the Costa Concordia that is still lying on its side on rocks off the coast of Italy, with some of its 32 victims still unaccounted for.

People are still talking about all the things the Italian subsidiary of Carnival Cruise Lines did wrong.

Within hours of the shipboard fire, Costa Cruises posted a brief "Press Release" on its website confirming there had been a fire and it was out, a distress signal was transmitted and everyone was safe.

The only other "fact" included in the buried announcement on the company's website was a statement that "tugboats and other naval and aerial units have been dispatched to Costa Allegra."

The next "announcement" on the website said the first boat should reach the liner in few hours, and then boldly concluded "Costa Allegra is in compliance with all certificates required by both national and international regulations."

Still no word about what caused the fire, how much damage there was, what the conditions were like on board.  The next day, the company announced "helicopters will ensure a continuous supply of food, comfort items and flashlights in order to mitigate guests' discomfort given the difficult conditions on board."

What conditions on board?

That last "release" estimated the ship would reach a safe port in two more days.

On the second day and the seventh "release" on the website, the company announced a 14 member "Costa Cruises' Care Team had arrived at the port awaiting the arrival of the disabled (they didn't call it that) cruise liner.

The eighth "release" proudly declared the latest contact with "Costa Allega, currently under tow to Mahe, Seychelles, (that) Costa Cruises reports that the situation on board is stable and weather conditions are good."

There were few details from Costa Cruise Lines --but that didn't mean word was not spreading around the globe about conditions on the ship.

Each "release" from the company carried the name and phone number of a Miami, FL based public relations company.  I can only assume that the company refused to take their advice, because a PR company qualified to help a company with this much negative news attention, would surely have advised them to be a little more forthcoming and show some concern and empathy for their passengers and their passengers' families.

Friday, February 24, 2012

If You Backup Data But Don't Have A Backup Place To Work

We had a client not too long ago that backed up their data every day and stored it "off site."

Their idea of "off site" was about 80-yards across the management parking lot, in a small house they had purchased.  If there had been an explosion in the plant, or in the research lab, or a tornado had roared across the site, their back-up would have been destroyed or at least inaccessible.

And more recently we heard about a small start-up company that backed up their customer data and stored it off site.  A fire broke out in the building where they had rented office space and the fire destroyed almost everything including their computers and servers.

It took them weeks to find new office space and get computers and a server and some office furniture. In the meantime their clients couldn't wait for them and went elsewhere.  And it wasn't many months before the business collapsed.

There are a number of lessons in these two examples.

A business without an operational crisis plan, a communication plan AND a recovery plan is a business waiting to fail.

A few years ago, you might have survived a business interruption that lasted weeks or longer, but today, competition being what it is, a competitor is quick to pounce on your customers/clients/patients and an interruption of service for more than a day or two is more likely to be fatal.

Ten years ago, Edgewater Technology of suburban Boston was the victim of an employee that went on a shooting spree and killed seven co-workers.  The business was a crime scene for nearly a week and it was almost two weeks before work resumed.  It could have been a business ending event, but management did  all the right things -- communicating with employees quickly and frequently; contacting customers and suppliers and treating the victim families with care, compassion and support.

The company not only survived but has flourished.  But, Edgewater is an exception.

If your facility is heavily damaged or destroyed, I don't care how big or small, if you don't have a plan and back-up place to work, your days may be numbered.

We have a manufacturing client that has worked hard to reduce redundancy in their operations and hold down costs.  But, when we started working with them I ask management what would happen if a storm, fire or other disaster leveled one of their plants?  Each plant makes a different household product and is sold in store chains all over North America.

I was assured that was never going to be a problem.  However, one of the operations managers called a couple of months later and said I had caused him to explore the "what ifs."  He concluded that if a plant were destroyed there was only one company that could build the replacement production line equipment and it was located in Europe.  He talked to them and they said it would take about six months to design a new production line, then the project would wait its turn to be manufactured in their facilities.  It would take nearly a year to make and another six months to ship it to the US and several months to install it.

The good news was that a new building could be up and ready for the production equipment long before it was ready to install!