Share your knowledge and expertise: Be a speaker at Legal Summit. CLICK TO SUBMIT YOUR PROGRAM BY JAN 31!
 

Top Ten Tips on How to Manage a Company Crisis

Fourth Tip:  Initial Response 

The inevitable crisis is coming.  Sometimes it’s not the event of a crisis that will cripple your company, it is your company’s response to the crisis that will determine success or failure.  

This week we will be discussing the fourth of ten tips on how to manage a company crisis identified by a panelist of crisis management experts at the MSBA Legal Summit Series, “Top Ten Tips on How to Manage a Crisis” and moderated by Marisa Trasatti, Esquire, partner at Wilson, Elser, Moskowitz, Edelman & Dicker, LLP.  The top ten tips on how to manage a company crisis identified by the panel of crisis experts are as follows:

  • Determine What Activates the Crisis Management Plan (Before the Crisis)
  • Formulate the Crisis Management Team 
  • Assess the Crisis 
  • The Initial Response 
  • Insurance
  • 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

Fourth Tip – Initial Response

When a crisis hits there are a myriad of challenges to weathering the crisis successfully.  Don’t fall into the trap of overlooking the company’s response and allowing internal or external forces to control the message.  

The first internal response to a crisis should be the swift formation and conference of the crisis management team.  The team should thoroughly and robustly discuss all possible responses and ways to move the company forward. After healthy deliberation an agreed upon response that is accurate and on point should be executed in accordance with the crisis management team’s recommendation.   

There is a huge amount of pressure placed on the crisis management team at this stage simply to have a message ready.  There is value in pre-planning and preparing templates for possible future responses to a crisis.  The key points the executives want to convey about the crisis to stockholders and the public should be included clearly in the initial response.  If a clear, concise initial response is not conveyed then your competitors or the media will fill the information vacuum. 

Don’t forget to lock down the internal and external communication message. Only one spokesperson should be allowed to handle the external communications.  No employee regardless of level should discuss the crisis or respond to internal or external questions without first acquiring approval of the crisis management team. Everyone including top management all the way down to lower-level employees should all be on the same page. The spokesperson for the crisis management team should be kept informed of critical stages during the crisis.  

Internal communication is just as important.  If an initial response message is not distributed to your employees, then the information vacuum will be filled by someone other than your crisis management team.  Linda Lenrow-Lopez, Director of Operations, Risk Alternatives, L3 Management Innovations, LLC has more than 25 years’ experience in crisis management, and recommends that the crisis management team develop a “very succinct and short blurb” that your employees or sales representatives are allowed to repeat to get the message out to your customers and the public.  But limit the message, keep it on point for that particular phase of the crisis, she said. 

As part of the crisis management team’s analysis before deciding on an initial response, Marisa Trasatti, General Counsel of Sciton, Inc., recommends that the crisis management team analyze case studies on how the company’s competitors handled similar crises. While preparing to respond to a letter from the FDA regarding Sciton’s marketing practices, “it was critical in our response to study how the FDA treated our competitors because their marketing was drastically different from ours.”  Those case studies played into Sciton’s analysis of the crisis and in preparation of their response and reaction to the FDA’s letter.  

Finally, the experts cautioned that a crisis for a competitor is not necessarily a good thing for your company.  When a crisis happens, it may affect the entire industry.  Shareholders become wary of investing when crises are not managed well and a big part of managing a crisis well is an accurate, quick and succinct response that will give your shareholders and the public confidence that the company’s management will address the crisis and find solutions.  People are also hesitant to donate money to nonprofits when crises are not managed well.  Ms. Lopez who works closely with non-profits added that “when a crisis occurs to any non-profit it tarnishes all non-profits.”  Therefore, it is critical to develop an accurate and consistent message to distribute externally and internally to successfully manage the crisis.    

Ensure that your crisis management team is qualified to navigate through the particular crisis that your company is faced with.  Pre-plan for the inevitable crisis by creating initial response templates to distribute to your employees and the press.  Lock down your communications. Ensure that your initial response is accurate, on point, and limited to the particular phase of the crisis.  If not, others including the press are more than happy to fill the information void.  Cautiously study similar crises that your competitor’s have been faced with as a component of preparing your company’s initial response.   

If you want to watch the experts discuss the Fourth Tip – Initial Response, you may watch the below video:  

Join us in the coming weeks as we continue to cover in detail the Top Ten Tips on How to Manage a Company Crisis.    

This article is the sixth 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 company crisis.  Last week, the MSBA discussed the third of ten tips on how to manage a company crisis. Next week, the MSBA will discuss the fifth of ten tips to manage a company crisis with comprehensive suggestions and actions for implementation.  The immediate next five weeks will address, individually, the other five tips to manage a company 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.  In week one of the series, the MSBA generally discussed the top ten tips on how to manage a company crisis.  Week two was a detailed summary of the 7 myths of a company crisis. The MSBA wishes to express sincere gratitude to the professional panelists, without whom it would not be possible to offer this series.

Panelists:                                                                    

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.