Top 7 Myths of an Organizational Crisis
The MSBA hosted a few talented experts, as part of the Legal Summit Series 2021, who know a whole lot about crisis management.
This article is the second of a 13-part series that will educate general counsel and outside counsel who advise organizations on how to successfully manage a crisis. Our experts first identified 7 myths of a crisis and then shared their excellent expert experience on how to manage a crisis. Our focus in this article is to discuss the panel’s excellent advice and counsel on the Top 7 Myths of a Crisis and how to remedy those myths for your client.
A crisis is always negative to business. False. As we learned during COVID, as people were getting on Zoom and seeing themselves remotely, the demand in the cosmetic/aesthetic business increased. We also saw an uptick in demand in the cleaning supply industry and food delivery services. Thus, supply increased accordingly for those types of products and services. Needless to say, some industries benefited from the COVID crisis while others floundered. There are some crises that can be negative, but there are ways to thwart that negativity. That negativity can be managed through the panel’s recommendations on Top 10 Tips to Manage a Crisis. In sum: a crisis may actually benefit your business. Watch the expert’s presentation on the first myth:
The crisis management manual should always be followed. False. The expert panelists strongly advised that development of a crisis management manual should occur before the crisis hits. Great managers have to be nimble, and it is no different in terms of managing a crisis. The crisis management manual should be considered a fluid document that evolves depending upon the particular impact of the crisis at hand. Of course, many companies tweaked their crisis management manual when COVID hit because the COVID crisis did not specifically fit the type of crisis that the manual was developed to handle. In sum, develop the crisis management manual before the inevitable crisis arrives, but recognize the manual will need to be tweaked to uniquely fit the crisis situation. You may watch the video on Myth #2 here:
A crisis for a competitor is good for my business. False, it could be, but not all the time. In the specific example discussed by the experts, a regulatory issue can be industry-wide. A faulty product made by more than one business impacts everyone in the business. And we can’t forget COVID. During the initial months of COVID many businesses in the same type of industry suffered and are continuing to suffer regardless of the quality of service, i.e., restaurants and movie theaters, box clothing stores. In sum: your competitor’s crisis may also be your crisis. The Myth #3 video may be watched below:
Silence with the media neither hurts nor helps. False. In fact, one of the first steps you should take is handling the media. The media may actually be the entity that calls your attention to the “crisis” through social media or a cold phone call for an interview request. Consult with a public relations consultant. There are pitfalls to media outreach, such as inadvertently waiving privileges, so it is important that you consider media outreach carefully. We will address in detail the danger of waiving privileges in a few weeks as part of this series. In sum: engage the media on your terms. The video for Myth #4 may be found below:
You cannot trust anyone in a crisis. False. A crisis management team is your backbone in a crisis. That is who you need to lean on, but it is important to get the best of the best to serve on your team on every front. Examples of ideal candidates to serve on a crisis management team are experts inside or outside of your organization on the particular subject matter of the crisis, legal experts, and a good quarterback. You have to trust everyone on the team to follow through and carry out their specific responsibilities because one person simply can’t manage the entire crisis. In sum: build a Superbowl or “SWAT” crisis management team and trust everyone and their expertise. Myth #5 video is below:
Crises occur during working hours. Rarely! is the answer. You have to be on your toes and ready for a crisis at any time. And you need your team in place to hit the ground running so that you are at the ready when the calamity hits. In sum: be ready at all times. Listen to the expert here:
You can rely on the government for help. False. Many times it is the government that creates the crisis. Examples include regulatory issues, governmental investigations or inspections, and product recalls. In sum: rely on your organization’s competence and ability to manage the crisis instead of relying on Uncle Sam. The video for Myth #7 is below:
This is the second of a 13-week part series that will discuss in detail how counsel can help their clients create a crisis management strategy. This series is designed to assist you, as counsel, in weathering a crisis when it comes knocking. Last week, we provided a comprehensive overview of the program. This week, we’ve focused on the 7 Myths of a Crisis. Next week, the MSBA will kick off the first of ten tips to manage a crisis with comprehensive suggestions and actions for implementation. The immediate next nine weeks will address, individually, the other nine tips to manage a crisis. The final week will include a comprehensive summation of all the myths and tips including the advice and counsel of the professional panelists listed below. The MSBA wishes to express sincere gratitude to the professional panelists, without whom it would not be possible to offer this series.
Join us in the coming weeks as we will cover in detail the 10 Steps in Managing a Crisis listed below.
10 Steps in Managing a Crisis:
- Determine What Activates the Crisis Management Plan
- Formulate the Crisis Management Team
- Assess the Crisis
- The Initial Response
- Manage the External Appearance: Public Relations, Media, and Customers
- Manage the Internal Appearance – Advising Employees and Communicating with Key Opinion Leaders
- Adjust the Company’s Promotional & Sales Practices
- Response to Regulatory/Law Enforcement
- Concluding the Plan
Aaron C. Burton, CEO of Sciton, Inc. Sciton, Inc. is the largest privately held dermatological and medical device laser manufacturer. Aaron shared his experience as CEO and especially the crisis that developed at Sciton during his first year. Aaron also generously shared how Sciton handled and endured the COVID crisis.
Linda Lenrow Lopez, Director of Operations, Risk Alternatives, L3 Management Innovations, LLC. Linda has more than 25 years of experience in private and non-private sector risk management. Linda shared her experience as a project manager and Director of Operations at Bechtel Corporation. Other roles Linda served at Bechtel include corporate risk manager for a global business unit and project risk manager. Linda currently works at L3 Management Innovations and draws upon her years of professional experience in this area to share with the group.
Robert E. Scott, Jr., partner at Wilson Elser Moskowitz Edelman & Dicker, LLP. Robert handles litigation on insurance coverage, drug and medical devices and many other areas. Robert shared his expertise on crisis management and his insights on planning ahead to control future crises.
Sam Terzich, Gallagher Bassett. Sam is a current director of the company and manages specialty claims including product liability, cyber, environmental, pollution and product recall. Sam has been in the claims industry for 25 years and will address the insurance issues that arise during a company crisis.
Marisa Trasatti, Esquire, partner at Wilson Elser Moskowitz Edelman & Dicker, LLP, and also General Counsel to Sciton, Inc. Marisa is the moderator of the Top Ten Tips to Manage a Crisis. Marisa shares her unique experiences of managing a crisis as General Counsel for Sciton along with valuable lessons learned as counsel for an organization in the midst of a crisis. Marisa’s practice focuses primarily on civil litigation, with an emphasis on product liability litigation, including cases involving drugs and medical devices. She is a past president of Maryland Defense Counsel and served as the DRI Maryland State Representative.