Page 101 - Crisis Communication Practical PR Strategies

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8 82 Crisis Communication
The initial communication

Management face two imperatives when crisis strikes. They must
resolve the crisis and create the perception that they are doing so. The
two can be very different. During the Valdez oil spill, Exxon probably
did a decent job working to contain the environmental damage on
Prince William Sound, but did a horrible job creating the perception
that it was doing so. As a result, its name became synonymous with
environmental catastrophe.
During financial crises, the perception of management competence
and candour represents a bulwark against early selling of the stock,
which can be self-perpetuating once it gets started. Most big
investors/analysts will give management the opportunity to make their
case before they decide on reducing their stake or initiating a down-
grade. And even if early sell-offs weaken the stock, management can
facilitate recovery (assuming they have a case to make) if they set the
right tone at the outset with shareholders and analysts, and then show
signs of delivering on what they promised.
Here are some of the important observations to keep in mind about
communication during the first moments of a financial crisis:

Do a conference call/webcast, and do it quickly. As alluded to
earlier, the debate is usually lively about whether to risk a live audi-
ence before investors in the first 24 hours of a crisis. The question
is valid because there are more uncertainties than facts in the early
phases of most crises. A company must also weigh the peculiar cir-
cumstances and magnitude of a crisis, the skill level of its spokes-
people, and the legal ramifications of speaking out. But as a rule of
thumb, a company usually has more to lose at the outset by not
communicating to investors in some real-time forum than by
doing so. Put simply, investors want to hear from management in
the immediate aftershock of a crisis. They want to be reassured
‘eyeball-to-eyeball’ that the company’s leadership is prepared to
resolve the problem and recover from it. These emotions, which
are critical in enlisting support, cannot be replicated through pre-
pared statements. In the absence of live communication, company
statements often suggest that there is something to hide. Ideally,
the CEO, CFO and other relevant corporate executives should be
speaking live to financial audiences the day after a crisis breaks.
Err on the side of caution. People tend to remember what they
hear first and what they hear last. This is why, as noted earlier,
unwarranted assurances and speculation in the early days of a
crisis often dig spokespeople into a hole. Never say more than you
know for certain. Build confidence by letting actions speak louder