Monday, February 20, 2012

CEOs Are The Backbone Of Crisis Management -- Or Not!

CEOs in a dozen Australian multinational chemical and petroleum industries were recently interviewed by Tony Jaques, Director of Issues Outcomes, and he found two themes consistent with similar industrial leaders in the U.S.

His study, as it appeared in The CEO Magazine, concluded that the more successful leaders in his country agreed "top executive participation" is the single most important element to good crisis prevention and management.

The same executives, however, voiced concern that many corporate leaders -- particularly those in smaller companies -- were not as aware or as committed to crisis planning and leadership, partly because of inexperience, lack of risk awareness and limited crisis preparedness.

Tony's report concluded that CEOs need to encourage a proactive crisis culture, establish and enforce standards and processes, set an example to build relationships before a crisis, and promote open communication and a learning environment.

The 12 CEOs were relatively confident of their own companies and industries, but identified six common short-comings demonstrated by other senior decision makers:

(1) Denial and failure to prioritise. They said the idea that “it will never happen to me” persists among Australian managers, who often put off taking proper steps without fully contemplating what that means

(2) Lack of experience and full understanding of potential risks. Without having experienced a crisis, it is too easy to underestimate the threat from a wide range of risks, not just the obvious ones where managers feel more comfortable

(3) Inadequate systems processes and management discipline. Systems and discipline were seen as vital, but it was recognised they require work and effort with little obvious return

(4) Insufficient size and resources. While big companies usually have established structures and in-house crisis and risk expertise, smaller companies may think it's too hard and too costly and therefore don’t do enough

(5) Unwillingness or inability of executives to share crisis experience. Because crises are so sensitive and risky, CEOs don’t always share experience with their peers. As a result organizations fail to learn from their own crises and the crises of others

(6) Failures of leadership and upward communication. As one CEO told me: “If leadership from the very top of the organization doesn’t give adequate focus to crisis management, then why would you expect that layers of leadership further down the organization would give it adequate focus?”

To read the whole report:

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