Corporate Boards and Crisis Management

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Does your company, whether public or private or nonprofit, have a crisis management plan? An expert panel convened by the National Association of Corporate Directors in Boston on May 9, 2017 all agree that a plan is necessary; they also agree that it is very hard to follow.

A written plan defines actions to be taken by lawyers, management, public relations, crisis management experts and the like. The first message from the company is very important as it sets the stage for a public understanding of the issues. This first statement must be immediate and is often at a time when all the facts are not known. The key things to remember in this first statement: a tone of concern, and a plan to mitigate or repair the damage.

If things are going well, the role of directors is to make sure that the crisis plan is in place and not to interface directly with implementation. If things are not going well, such as the recent United Airlines flap about injuring a removed passenger or the Wells Fargo flap about improper opening of customer accounts, boards have been known to make public statements.  Once you are in a crisis, boards should be busy monitoring. You can’t monitor a true crisis with weekly meetings; in the heat of things, daily attention is the order of the day.

One thing for boards to remember is that social media is very important for many companies, certainly those which are public-facing. It is important for someone understanding social media to advise the board in this regard, particularly because boards tend to be older and not skilled in this space.  It is also important to identify those constituencies most impacted so that your response addresses their concerns. Are you most interested in public consumers, employees, customers, or executives?

It was noted that many small tech companies, growing quickly, in fact do not have crisis management plans. Things are moving too fast and attention is diverted to growth. The obvious consensus: you nonetheless should have something in place.

One interesting omission in the discussion: when there is a crisis, lawyers often tell companies that the first people to contact are the lawyers, so that the lawyers can investigate, retain experts, and thereby maintain confidentiality of information based upon the lawyer-client privilege. This advice may be difficult to implement in the intense hours following the surfacing of a crisis.

Finally, a word about claims of sexual harassment from the top. There was unanimous sense that this must be, for all companies, a “zero tolerance moment” where the board must make sure that “the right thing” is done for the benefit of the company. Personal allegiances between senior management and the board may make difficult the enforcement of this fundamental position.

 


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