Coping with a crisis

Slow-moving catastrophes such as the ongoing pandemic and intermittent lockdowns are forcing a rethink of crisis communications. Experts say a more effective response requires clear messaging.

The COVID-19 pandemic has proven to be the ultimate global crisis, with lockdowns across several Australian states for much of the past 18 months. Has this extraordinary, ongoing event modified the conventional wisdom on crisis management, and do the fundamentals still hold true?

“I don’t think we’ve had a crisis of this magnitude since World War II,” says Luis Garcia MAICD, CEO of Cannings Strategic Communications. “The COVID-19 pandemic has been very painful and hugely destructive and it has occurred over an extended period of time. In many countries, including Australia, the social and economic impacts are still being felt 18 months after the pandemic began. That’s the big difference, where most crises are short, sharp and painful, this one is long- running. It therefore requires a different approach — and very clear and consistent messages.”

Fundamentals hold true

Every crisis is unique, but the response must always begin with addressing the pain points, says Peter Wilkinson GAICD, managing director of Wilkinson Group, which specialises in crisis public relations, and also chair of corporate affairs agency Wilkinson Butler. He believes “honesty, early” still holds true and that transparency must be paramount. “A convincing spokesperson is critical to mitigate the loss of trust,” he says. “The pain is often from the media, but with a COVID-19 outbreak in an aged care facility, it includes family members and distressed staff, plus an anxious minister for health. In a financial collapse, it’s investors; and with sex abuse, it is internal relations.

Once the initial crisis has passed, the next step is to fix the root cause. That often occurs at the board or executive level, says Wilkinson. “Most crises are avoidable, so if there hasn’t been a change at the top, it’s probably past due.” He points to recent incidents at Parliament House in Canberra that revealed a systemic cultural issue. In a company, it would be a cultural issue within the board. Once the root cause has been addressed, it is time to begin the long process of repairing the damaged reputation.

Managing long-term vs short-term crises

“When it comes to a crisis, we often talk about the three Rs: regret, reassurance and redemption,” says Garcia. “In this case, it’s much more about reassurance and recovery, because redemption is still a long time away. It’s amazing we’ve got, in effect, the CEO of NSW and the chair of Victoria facing the public every day via the media. That’s quite unusual. Anyone who’s had to face a media scrum, let alone a daily one, will confirm it isn’t an easy thing to do.”

Big shifts in crisis management

“Social media and the excellence of Australian investigative journalism are the change drivers,” says Wilkinson. “That puts pressure on directors and executives. There is reduced tolerance for poor spokespeople who can’t speak to stakeholders in their language. The expectation on the spokesperson is to be understood, not interpreted. In the corporate world these days, directors and executives, must be understood.”

Corporate reputation is being recognised by the vast majority of organisations as a primary asset, says Anna Whitlam GAICD, MD of corporate affairs executive recruitment firm Anna Whitlam People. However, she cites studies showing the majority of senior executives consider reputation as harder to manage than any other form of risk. It is getting more difficult, as a result of the increasingly important trends of ESG and the need for a “social licence” to operate.

“If we can learn anything from some of the high- profile corporate reputational crises of recent years, it is that a company’s response to a crisis has more impact on an organisation’s value than the crisis itself,” says Whitlam. “Today’s stakeholders expect brave leadership, humility and integrity from corporations. The shared tragedies and challenges of the past 18 months have intensified this focus.”

What can boards rethink?

“A big no-no is directors thinking they can wing it. There are simply too many unknowns where past crisis experience is invaluable,” says Wilkinson. “It can’t be learned from a book and it’s not always common sense.”

Boards have long had to be accountable to regulators and their shareholders — and nothing has changed in that regard, believes Garcia. However, boards must now also be accountable to external stakeholders — whether media, politicians, community groups or environmental activists. “In the past decade, business leaders — chairs, directors, CEOs — have come under increasing public, political and media scrutiny,” he says. “Nowadays, for example, chairs and CEOs of all the major banks and insurance companies are regularly called to give evidence before parliamentary inquiries. It’s a different ballgame, and what it means is, as a director or CEO, you have to be able to demonstrate the values your company subscribes to. It cannot be a hollow promise.”

“In the past, the function of communications was viewed as a tactical output — which hung off the decisions made around the executive or boardroom table,” says Whitlam. “Today, activist investors and keyboard warriors can take down a company’s reputation quicker than you can say ‘scandal’ — and drag the share price with it.” She believes the role of the corporate affairs function needs to be part of key business decisions and should participate in discussions around the long-term sustainability and reputation of an organisation.