Corporate leaders are faced with a major challenge: how to effectively manage the complex and intertwined internal and external risks that can quickly turn into a crisis. Throughout history, companies and organizations have employed various approaches to crisis management, with varying levels of success. But one thing is clear: the way in which leaders and boards choose to manage crises can have a significant impact on a company’s stock and reputation. Therefore, it’s crucial that leaders carefully consider the potential implications of their decisions.
It’s important to note that no single approach is suitable for managing all crises. However, by following certain dos and don’ts, boards can help preserve the value and reputation of their companies.
The dos include:
- Immediately assembling the management and board teams to plan a response.
- Utilizing the diversity of board members to gain a variety of perspectives on the situation.
- Recognizing that reputation is directly linked to market value.
- Making a statement when facing multiple crises in quick succession.
- Gathering all facts before making any decisions to avoid multiple statements and apologies.
- Continuously monitor the reaction to your response and reassemble to decide on further action.
- Monitoring the company’s financial ratings after a crisis.
The don’ts include:
- Ignoring the situation and not remaining silent about it.
- Ignoring the speed of social media and how it can be a positive or negative force.
- Making excuses for poor choices or behavior.
- Underestimating the interconnectedness of systems.
It’s crucial for boards to remember that crises can have a significant impact on a company’s reputation and market value. By following the dos and don’ts listed above, boards can help minimize this impact and preserve the value of their companies. Proper preparation is key in effectively managing a crisis. It’s essential to have a crisis management plan in place and to review it periodically, as well as to train employees on how to respond in case of a crisis. Partner with us to develop a comprehensive plan that will set your business up for success. Contact us today to schedule your complimentary consultation or book your appointment here.