Taking the Emotion out of Crisis Situations

One of the biggest obstacles to overcome in any organization undergoing a crisis is emotion: Stakeholders, especially management and employees, often become defensive because their livelihood may be at stake. It’s basic human nature.

When defensiveness rules, the lawyers are usually put in charge. Virtually all outside communication is then shut down or limited to stilted legalese, the goal being to limit discoverable materials and protect the organization from lawsuits. The problem with this sort of response is that it smacks of a cover-up. Unanswered questions lead to speculation and speculation leads to rumor and eventually, perception can become reality and you’re doomed.

Consider Arthur Andersen. When representatives of that firm aided and abetted Enron in perpetrating its massive fraud on investors and energy consumers, AA adopted a purely defensive posture. Andersen’s legal team and managers couldn’t see the forest for the trees. The central issue was not protecting the company against lawsuits by angry investors who had relied on its audit opinions regarding Enron’s financial situation, it was preserving the franchise itself. But AA’S lawyers, senior management and Board of Directors never realized what was at stake until it was too late. As a result, the franchise that had been built up over 89 years was destroyed, along with 85,000 jobs.

AA could have weathered the fallout. A new leadership team, headed by some prominent person with impeccable credentials, could then have launched an internal investigation into how the AA-Enron scandal came to be and into how conflicts of interest among Andersen’s different lines of business might have contributed to the scandal. Changes in policies and procedures, divestiture of conflicting lines of business, full cooperation with the authorities and perhaps a name change might even have saved the firm.

Crises that threaten an organization’s reputation or franchise are essentially public relations problems. A good consultant will put all emotion aside, examine the situation as a detached observer and thereby identify the essence of the crisis, the true costs involved (both short- and long-term) and what it will take to fix the problem at hand. Sure, they may have legal implications that could cost significant money over the short term, and the lawyers have their job to do in limiting that liability. But this short-term focus can lead to winning the battle but losing the war.

-Posted by Tony Lentini 11/9/09