October 11th, 2018

It’s no longer a matter of if companies will face a crisis, but when they will, where it will happen, and how they will respond. But millions of organizations do not have the knowledge, skills, or resources to face or recover from a crisis; millions more do not have a crisis plan in place or, even if they do, have not tested it to see how it would hold up in the real world.

Increased Public Scrutiny

Businesses are under public scrutiny as never before. Author Andrew Winston, writing in a 2017 blog for the Harvard Business Review, noted that “All companies now operate in a world that’s closely watching their policies, actions, and how they handle themselves when things go wrong. When literally anyone can simultaneously act as a customer, a protester, a critic, and a muckraking reporter with a video camera, executives have zero room for error.”

News organizations are all too ready to report the next company crisis. In 2017 there were more than 800,000 stories around the world about a range of corporate crisis situations, a 25% increase over the previous year. (Source: Institute for Crisis Management)

A crisis can take many forms, depending on the company. But some crisis situations, such as allegations of sexual abuse, could strike any organization. As noted on Forbes.com earlier this year: “Decades of sexual misbehavior in the workplace are coming to the fore with fearsome velocity. No organization can feel immune, as long-buried cases are being revived alongside current ones. And while corporate directors and CEOs, as well as nonprofit and education leaders, may be hoping for absolution, or that the waves will miss them, deep down they fear they will not.”

Millions of Companies are Unprepared

Given the impact that a crisis can have on a company’s image, reputation, employee morale, and relationships with customers and vendors. it’s surprising to learn that millions of organizations are still not prepared for an emergency.

According to a survey recently conducted by Deloitte Global, only 17 percent of the organizations they contacted had tested their ability to respond to a scandal. A similar study conducted in 2015 found that less than half of the companies contacted by Deloitte “have taken steps to be truly crisis-ready.”

“Recent studies indicate that only about half of North American companies have a crisis plan, and of those, only one-third have confidence that their plan will work effectively. A survey of corporate directors found that more than 40% want to devote more time to crisis communications planning, and nearly one-third said that they do not have a solid understanding of their company’s crisis communications plan,” according to the Institute for Crisis Management.

“One of the problem companies face is that [even if] they have a plan in place [and] all their workbooks are done up.they have never tested that plan,” Deloitte Global’ s crisis management leader Peter Dent said in an interview with Compliance Week in July 2018.

“They may have done some training, but they never tested the plan with a live simulation. That can be where that disconnect between confidence and preparedness comes from. They are not testing the actual preparedness of the whole team. There might be a good policy in place. There might be a good roadmap. It just sits on someone’s shelf.”

Having and testing a crisis plan is one thing. But handling a crisis the right way is something entirely different.

“I can count on one hand crises that have been well handled over the last three or four years,” says Paul Holmes, founder of The Holmes Report, which tracks the public relations industry and publishes an annual list of the worst PR crises. “But that may be because when they’re handled well they never become a crisis,” he told Adweek magazine last March.

Not all companies have the skills or resources to prevent, or recover from a crisis, or even know where to turn to for help when they need it.

For information about Edward Segal’s crisis communication expertise, experience, and services, please click here.