SAN DIEGO — Managers often panic when a company finds itself in a crisis if they do not know how to respond, which in turn can lead to a loss of control, a siege mentality and sometimes a beating in the media, according to one veteran of the process.
"A crisis is anything out of the ordinary which a company is not prepared for," said James Lee, founder of Los Angeles-based The Lee Strategy Group. "For credit unions, that could mean a member who is unhappy about the way he was treated setting up a protest in front of the branch."
How a CU responds to a protest, or any other type of crisis, dictates its survival, Lee told attendees of WesCorp's recent Future Forum conference here. He said the first four reactions to crisis are: surprise, a feeling of insufficient information being available, an escalating flow of events, and, intense public scrutiny.
To deal with a crisis, Lee recommended following three key principles:
- Define the "real" problem.
- Manage the flow of information.
- Adopt a "team" approach.
Understanding the root of the crisis is the first step, he explained. Once management knows what it is dealing with, it should set measurable business objectives and define its strategy.Second, Lee continued, CUs should take steps to know every bit of information that goes in or out the door. "If management does not talk to employees, or if the frontline staff doesn't tell management what is going on, it can create a bottleneck."
Third, all employees should know in advance what to do in a crisis. Lee said CUs should pre-assign responsibilities on a redundant basis, to account for people being ill or on vacation.
According to Lee, when TWA Flight 800 exploded shortly after takeoff from JFK Airport in New York City on July 17, 1996, the airline's CEO forbade all employees from discussing the crash with anyone until he could catch a plane from Paris to New York.
"The CEO wanted to be on the ground, taking charge, but not allowing anyone to talk about the incident during the four hours he was in the air created a problem," Lee assessed.
Understanding The Media's Mission
All companies need to understand the media's mission during a crisis, Lee stressed. He noted reporters feel intense competitive pressure to deliver a written story or a video report. And while reporters are accustomed to a crisis environment and the news cycle, they might not know or understand the industry in question if it is not part of their regular beat.
"Know that the media is looking for the three Vs — victims, villains and visuals," he said. "Be prepared for three questions: 'What happened?' 'Who is to blame?' and 'What are you going to do to fix it and/or make sure it never happens again?' The media wants the end to a story, and the credit union must provide it."
Lee said attacks can come from just about anywhere — disgruntled current or former employees, unhappy members/customers, third parties, competitors or even "outside groups looking to profit from your misfortune." As a result, credit unions facing a crisis must communicate directly with every person or entity that might be affected, including employees, volunteers, phone representatives, members, suppliers, neighbors, elected officials and regulators.
"Any business or organization that misdefines the problem will fail," Lee said. "Get ahead of the curve. Don't base your strategy on an initial, knee-jerk reaction to media coverage.
"It also is important not to obsess over one issue," he added. "Continue to conduct business, and don't get overly focused on short-term goals. The key is preparation, so you are ready to meet challenges."
(c) 2008
