Holmes Report 13 Apr 2014 // 7:02PM GMT
Most of the work done in the name of crisis management is in fact crisis preparedness.
Smart organisations recognise that it is impossible to eliminate the emergence of issues or the occurrence of incidents that could become crises. When boards, regulators, governments and investors ask businesses ‘Are you ready to face the worst?’ they’re really asking whether an organisation and its senior management are in an advanced state of crisis preparedness.
When helping clients review and improve their crisis capabilities, a question we are almost always asked is: where should crisis preparedness be owned and managed? Some larger organisations have a dedicated crisis preparedness unit but, in most organisations, crisis preparedness is given to an existing function or unit to manage. Should it be operations, HSSE, risk, legal, corporate affairs? Does it matter?
Crisis preparedness does not always have a happy home. This is because a crisis could arise in any part of a business, could have consequences for the entire organisation and requires cross-business and cross-functional response. It is potentially all-encompassing. But someone must own it and someone must take responsibility for driving preparedness.
Two functions stand out as ‘homes’ for these risks: corporate affairs (issues) and HSSE (incidents).
Where it is found in corporate affairs, it is driven by reputational resilience; where it is found in HSSE, it is driven by operational resilience. In large engineering or other companies that have major physical risks, crisis management is more likely to sit within HSSE alongside incident response, emergency response and business continuity. In consumer goods, healthcare, financial and service companies, it is more likely to sit in corporate affairs.
But where a crisis comes from is not where it is managed. What identifies a crisis is not the nature of what has happened but what is at stake – reputation, the bottom line, the license to operate, the ability to continue operating with consumer and employee confidence, and the future of the organisation – and the immediacy of the threat.
And it’s important to remember that crisis management is not the same as crisis communications. There is much communication in a crisis, and there is no doubt that a crisis-ready organisation needs to be ready to communicate with its key internal and external stakeholders and the media. But, there is much more to crisis management than communications. Crisis management is about long-term reputational, financial, commercial and strategic decision making; communication plays an integral role but is supportive rather than leading.
With this in mind, the crisis preparedness function needs to prepare people (and primarily leaders) across functions, geographies and businesses to face extraordinary challenges. This will require policy, structure and procedures; it will also require training, exercising and cultural interventions. These preparations create confidence and resilience within an organisation.
There are dangers of ghettoising crisis management capability in one function when it should be strategic and high-level. Organisations that have evolved their crisis management capabilities from their incident management capabilities, and failed along the way to demerge the two, can fall into the trap of turning something that is strategic and emotional into something that is over-processed, tactical and rigid. Many fail to bring slow-burn or rising tide crises into their planning. On the other hand, companies that have come to crisis management from a communications perspective can wrongly believe that crisis management is about spin rather than substance.
But it has to be managed somewhere. The decision on where to house crisis preparedness should rest on pragmatism rather than purism. The pragmatic questions to ask are:
• which function is most strategic in its outlook and makeup?
• which function is most likely to drive a cross-functional approach to crisis management?
• which function has the best appreciation of the organisation’s entire risk landscape?
• which function has the support of and the greatest influence in the wider organisation?
• which function has the best access to senior decision makers?
• which function is most representative of the organisation’s culture?
It is unlikely that the answers to all these questions will be the same. The best overall answer, therefore, is that crisis preparedness is genuinely cross functional, with corporate affairs and HSSE working together and with others such as HR, risk and legal to drive crisis preparedness. Those organisations that have dedicated crisis preparedness functions should ensure that they are staffed with people from different functional backgrounds. And if this dedicated function reports directly to the office of the Chief Executive, this sends a signal that crisis management is strategic, vitally important and transcends functions and businesses.
But even in this case, it must have a ‘dotted line’ into the business. And all other considerations being equal, I would strongly recommend that crisis management be housed in corporate affairs. An effective corporate affairs team will enjoy close proximity to senior leadership and also have the ability to access and influence the wider organisation. From experience, people with a corporate affairs background will, on the whole, have higher levels of emotional intelligence (remember that crises are emotional, illogical and unstructured) and can better identify strategic threats and issues of which operational functions will have less knowledge or experience.
Most importantly, as many corporate affairs managers would attest, their department is rarely where a crisis is caused, but always where it is felt. As the focus of strategic crisis management is managing impacts rather than finding tactical solutions, it follows that preparedness should find its home nearer the consequence than the cause.
Andrew Griffin is CEO of Regester Larkin and author of “Crisis, Issues and Reputation management.” The book is available here, with a special discount for Holmes Report readers. Discount code: RL25.