Scores of advisors, meetings, hours and approvals have historically gone into developing an organization’s crisis plan, with many left bound on a shelf untouched and unproven. These days, organizations are making better, if still erratic, commitments to implementing more sophisticated crisis plans by investing in technology to help better anticipate and manage issues and keeping plans and leaders nimble through simulation drills. However, many companies still fail to embed the collective responsibility of crisis management across the organization, unfairly leaving it up to a chosen few to cover the waterfront of risk.
It’s becoming increasingly important to take a culture-driven approach to crisis preparedness, regardless of the industry. Organizations of all sorts should take a page from businesses with robust operational risk by establishing risk mitigation mindsets, tying preparedness and risk mitigation to business objectives and building a company-wide culture around it.
Components of a crisis-ready and risk-oriented culture
Organizations can encourage employees to take ownership of risk mitigation and better manage issues that arise by:
- Defining “crisis” in a meaningful way with clearly delineated crisis severity levels and specific examples relevant to both the company and an individual’s role.
- Demonstrating how issues evolve and escalate.
- Showing employees how to identify issues, how they can be mitigated, and when and how they should be escalated.
- Making risk management part of a job description, with roles and responsibilities clearly defined.
- Conducting regular trainings to keep themes and protocols fresh in employees’ minds and to address new and evolving industry and company dynamics.
- Ensuring crisis plans and trainings reach across functions and teams.
- Developing incentive schemes to promote a risk-free working culture.
|This article is featured in O'Dwyer's Jan. '23 Crisis Communications & PR Buyer's Guide Magazine
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Implications of culture failures
There’s a lot at stake. We’ve all heard of or witnessed the impact of a failed culture, including:
- Low morale and employee turnover.
- Defective products or services and the resulting loss of customer loyalty.
- Fines, stock price impact and bankruptcy.
- Regulatory scrutiny and sanctions.
- Significant, long-lasting reputational damage.
Boeing and Volkswagen experienced many of these implications as they navigated recent crises, and their culture failures came to light. In Boeing’s case, a 117-page internal document the company provided to Congress revealed much about its culture, including how senior employees questioned the competence of their own colleagues and the quality of the company’s engineering without raising a flag. Similarly, government and shareholder lawsuits called out Volkswagen executives who’d claimed ignorance of emissions oversights and cited the deeper cultural issues at play.
With those examples and the costs of culture failure in mind, business leaders along with the legal, risk and communications functions should be viewing their operational priorities through a culture lens—with crisis readiness, risk awareness, culture of compliance—and acting with culture and company values—like ESG and social impact—in mind. Now more than ever, we’re seeing generational shifts in how people care about the type of company they work for, the standards to which they hold their company and their comfort level speaking out about concerns or injustices, particularly on social media. There’s both inherent risk and opportunity in this generational investment in a company’s operations.
Of course, building or changing a culture is no small feat, and it helps to know the keys to success in advance.
A holistic, enterprise-wide approach
Everyone—not just those in leadership positions—has a role to play in identifying and mitigating threats and protecting the company’s reputation and its ability to operate. Moreover, cultural expectations, and how a company communicates these expectations, need to be so pervasive and engrained in the company’s operations that they become a natural part of how people think and make decisions every day. To achieve this, companies must dedicate resources and ensure the functions and business units most often involved in risk and crisis management—such as legal, communications, compliance, ESG and HR—are aligned. From there, leaders should include and train other personnel to consider how seemingly routine issues may have broader, enterprise-wide implications. Cutting a corner on a safety check can result in an injured customer, not adhering to auditing best practices can result in shareholder loss, not understanding local regulations can result in the inability to operate in that market, turning a blind eye to harassment can result in morale decline and employee defection and so on. Ensuring personnel feel confident in their ability to identify and escalate these issues can help mitigate crises in the long run.
Behavioral modeling from the top … and middle
Consistent and intentional behavior modeling from the top is imperative to setting the tone for culture within an organization. Employees across organizations look up to leaders as examples of how to behave and exemplify the company’s values. But it’s just as critical that managers at all levels—not just the top—are committed to modeling the behavior on a daily basis. For example, creating a “safety moment” at the beginning of all meetings has been a simple and effective tool for leaders at any level to instill the concept that safety comes before all else.
Additionally, these leaders must ensure that toxic subcultures aren’t allowed to thrive. In another well-known example of culture failure, Wells Fargo admitted that employees trying to meet excessive sales targets opened millions of customer accounts without customer consent and by misusing identities, revealing a subculture within the bank that prized financial performance over compliance and ethical conduct.
Ownership and accountability
In the end, it comes down to individual choices and decisions. Two keys to getting someone to invest in a perspective and behave in a certain way are ownership and accountability. Employees at all levels in an organization need to understand the role they’re expected to play, as well as the benefits of meeting those expectations—and the consequences of not. This is when communicating the business imperative of risk identification and mitigation, complying with laws and regulations and effectively managing issues is critical. In court testimony, a former Volkswagen manager blamed company culture for his and others’ complicity in the emissions scandal and said he would have acted differently if he knew the consequences. Some organizations make a “safety bonus” so core to the compensation of all employees, that it’s hard for the workforce to ignore even the smallest of safety infractions. Employees must understand the imperative to achieve success by doing right and the cost of cutting corners or acting unethically—and personally be held accountable when they fall short.
The culture imperative
It probably goes without saying that clear, consistent and two-way communications are an essential aspect of implementing and maintaining cultural change. Even the most employee-focused, communication-heavy organization will need an added level of investment and discipline to do it right. It’s also critical to regularly assess and course correct when needed. And therefore, crisis communications and preparedness advisors—and the clients we advise in the legal, communications, risk and HR functions—must prioritize culture and communicate accordingly.
Getting an organization’s culture right is a significant undertaking, but the reward is managing risk and handling issues more effectively, protecting the business’s reputation—and ultimately setting it up for success.
Elizabeth Cholis is a Partner at Dentons Global Advisors.