Black Broker’s Bribe” was the newspaper headline that shocked Bernard Beal. In the mid-1990s, the chairman and CEO of M.R. Beal & Co. (No. 6 on the be investment banks list with $40.9 billion in total managed issues) found out his firm, along with several other minority investment companies, was accused of bribing public officials in Wisconsin in exchange for help landing bond underwriting contracts. “I knew we hadn’t done anything wrong,” recalls Beal. “But the situation started to adversely affect our business and morale.”
Facing the problem head-on, Beal appointed a company spokesperson who was adept at communicating messages to various groups. In addition, he kept clients as well as employees abreast of the matter and remained forthcoming with subpoenas and other legal documents. Beal says it was necessary to keep the lines of communication open as well as remain truthful at all times throughout the ordeal. Though the firm was eventually cleared of all wrongdoing, the accusations adversely affected the firm, with several major clients leaving. Beal says he diffused the crisis by “owning up to it and moving on.”
“The initial moments of a crisis are critical,” says Maurice Ramirez, founder of Disaster Life Support International L.L.C., a Florida-based provider of disaster planning and recovery education. Ramirez stresses that business owners should not get caught up in the emotions of the moment; doing so will cause you to lose time, control, and maybe even credibility.
Judy Smith, founder of Washington, D.C.-based Impact Strategies L.L.C., a full-service communications, public affairs, and research firm, says every company should be prepared to deal with a crisis situation. “And, they should be ready to have their actions intensely scrutinized by the media, shareholders, and corporate watchdog groups,” she adds.
The most common crises affecting businesses, Smith says, include regulatory action, shareholder lawsuits, financial mismanagement, downsizing, or issues resulting from a merger or an acquisition.
There are a myriad of hypothetical crises that can impact a business at any time. Of course, no matter the situation, having a plan can mean the difference between a company’s rebound-or its demise.
What to do when a crisis affects your company
Know the facts. Compare what is being said about your company with what is true. Accuracy or lack thereof can be the difference between a one-day story and a month-long ordeal. And miscommunication could stifle recovery, so make sure the messages sent to the public match those shared in-house.
Be adaptable and calm. A plan does not always fit the crisis perfectly. “Be flexible and able to switch strategies as your climate changes,” advises Smith. And strive to keep your perspective, remaining in control at all times.
Be honest. Do not lie to your stakeholders. “It doesn’t matter what the crisis,” says Ramirez. “Be truthful, commit to what you will do, and leave the door open for further information.”
Redeem yourself. When things settle, reassess what, if any, areas need to be revamped to recoup the company’s reputation, image, and bottom line. “This is often the most difficult phase,” continues Smith. “Because it