Moving through crises

AUTHOR │ Monique Verduyn

The COVID-19 pandemic, a global health emergency with profound economic and social ramifications, has shown us the importance of being prepared when crises hit

Like an earthquake, in its wake the COVID-19 crisis will result in aftershocks that will permanently reshape the world. It’s also a defining moment for humanity in which we can look further into the distance to imagine what the world may be like in the coming weeks and months, and perhaps see a turning point which will help form our longer-term future.

From a corporate perspective, a crisis is any event which has the ability to significantly disrupt a company or its business. Depending on their nature, intensity and extent, some crises may render a company or its business dysfunctional, as opposed to merely disrupting it. ‘The global COVID-19 pandemic, for example, is a crisis which may lead to widespread dysfunctionality amongst corporates in many countries,’ says Koos Pretorius, Corporate Commercial Director at ENSafrica.

Financial distress, white-collar fraud, significant lapses in corporate governance, material litigation, regulatory interventions (such as dawn raids and the imposition of hefty fines by the competition authorities or forensic clampdowns and investigations by the FSCA), food contamination, product defects/recalls, environmental disasters (such as oil spills) and infrastructural failures (such as the collapse of a bridge, building, mineshaft or dam wall) are other examples of events which may lead to a corporate crisis.

Every organisation will be hit by a corporate crisis at some time – it’s not a question of “if” but rather “what”, “how” and “when”,’ Pretorius says. “According to the PWC Global Crisis Survey 2019, nearly 7 in 10 (69%) senior executives have experienced at least one corporate crisis in the last five years — with the average number of crises experienced being three.

Pretorius says that a responsible organisation will identify in advance both known threats and ‘black swan’ events – rare and unexpected events with severe consequences – while it still has the luxury of planning ahead for the contingency.

Known threats should be addressed and planned for in line with the company’s crisis-readiness programme and revised and revisited annually. Unforeseen events typically have to be dealt with in real time and it’s important to have the right people in the room when the organisation’s response to a “black swan” crisis is planned and executed.

In any crisis, it is useful to separate the ‘primary threat’ (the core of the crisis) from the ‘secondary threat’ (the reaction of key stakeholders to the primary threat). The primary threat must be addressed but addressing the secondary threat early on will buy the organisation time. Both primary and secondary threats must be identified and dealt with simultaneously.

‘For example, in the case of large-scale hazardous food contamination across many retail stores, the retailer in question naturally has to deal with the ‘primary threat’ by way of a comprehensive product recall, but of equal importance is communications with and managing the perceptions of customers and consumers,’ Pretorius says.

The first step in responding to a crisis is to establish an all-inclusive crisis response team and to centralise all decisions and responses. For this team to be efficient, Pretorius adds, you need a plan, a centralised crisis centre, stakeholder relations officers and a media relations manager. Certain PR companies have media and public communication experts who specialise in managing corporate crises.

The primary legal risk is potential personal liability for directors and officers who do not deal with and respond to a corporate crisis responsibly. ‘For example, allowing a financially distressed company to trade in insolvent circumstances may give rise to personal liability on the part of directors,’ says Pretorius. ‘A legal solution to this risk would be for the directors to make application for the company to be placed in business rescue, as was recently done with South African Airways.’

Communicating during a crisis

Communication plays a critical role in crisis management. Mixed or inconsistent messages regarding the cause of a crisis or the company’s response to the crisis are an absolute no-no. Every message that leaves the organisation or reaches any of its stakeholders must be clear, consistent, and in line with the crisis containment strategy.

The response of the organisation must be honest and transparent,’ Pretorius says. ‘In dealing with the “primary threat” it is important to avoid over-promising on timelines and solutions, to allow the technical or operational reaction team to slow down the investigation in order to speed up the response.

Teams will be under enough pressure to perform, without the additional burden of impossible deadlines. It’s important to avoid the temptation to respond quickly at the expense of being accurate and reliable. It’s always advisable to help people to help themselves. The public must be furnished with enough information to know what to do to avoid the risks associated with or triggered by the crisis.

Leadership is key during any crisis. The organisation must have visible leadership who are available, consistent, and candid. ‘It’s important to identify key stakeholders, who in the organisation is responsible for those relationships, and to devise a consistent message to keep those stakeholders informed and apprised of all developments relative to the crisis,’ says Pretorius. ‘Listen. Don’t assume anything. Develop a protocol in advance which is designed to deal with the problem, the public and key stakeholders.’

Making sure key messages are integrated across multiple platforms ensures that people hear those messages, understand them, and engage enough times to understand them.

In any crisis, there are broad principles that apply to every company, government, or institution: get the facts, communicate them responsibly, and know your audience. The first thing to do in an emergency is to understand the facts of the situation. While our instinct may be to panic and respond, the number one thing not to do is communicate when you are unsure of the information.

‘Crisis situations are often framed by media coverage, which means reporters are typically the first audience considered,’ says Janine Hills, CEO of Janine Hills Authentic Leadership and founder of Vuma Reputation Management. ‘One of the advantages of the Internet, e-mail, mobile phones, and more, is the capacity to communicate in direct ways to each of your audiences. Communication is evolving quickly, offering us more options than ever before, including verbal or audio (radio), written (print and online media, social media), and visual (television, video).

In communicating about a crisis situation, there are three types of audience: the early adopters, who listen and absorb what is being said, the majority who tend to take in information as it comes and have no real need to keep their finger on the pulse, and the laggards who tend to listen only when they are forced to, and often propagate fake news, which can spread around the world faster than ever before, feeding the fear, anxiety, and mental stress that many people are experiencing, which is why ongoing, consistent messaging is critical.

Hills cautions that a classic mistake is to focus on early adopters and to inadvertently ignore the laggards. To ensure that the message reaches people as efficiently as possible, it is vital to be succinct, to repeat the message continually, and to use different platforms to reach different audiences.

Right now, in the midst of the COVID-19 crisis, sustainability is the biggest threat to communities, businesses, the economy and the country. ‘Because we already have an extreme unemployment rate, South Africa is a high-risk zone,’ says Janine Hills. ‘Leadership needs to step in, be sensitive to the situation, and lead with integrity, transparency and compassion. There is much support for the Solidarity Fund, which is raising money to combat the pandemic, but leaders must also ensure that their employees have food on the table and that they are safe at home, including being cognisant of the number of gender-based violence cases reported to the police. We need to be realistic about what is happening on the ground, and to take a holistic approach to how we respond to the needs of our employees.’

This entails networking with employees, asking the hard questions. It’s about really knowing what is going on with your people, reading the nuances, and keeping the relationships going and flowing.

It’s not over until it’s over,’ says Hills. ‘Never assume a crisis is finished; manage the aftermath. The government will undoubtedly know to prepare for a swell of emotions and for possible public scrutiny about how it handled things. We all need to listen, monitor media and social media, and respond accordingly.

Looking to the future

True recovery from the current crisis will take years, but in the meantime the coronavirus is changing how we work. Remote work was accelerating even before the pandemic and it’s now an imperative for knowledge workers. Employees in office-based environments are working from home and communicating with colleagues via email, instant messaging, and teleconferencing applications. Tech giants like Google and Microsoft long ago established the infrastructure for remote working, laying the foundations we now need for social distancing.

Researcher, futurist and CA(SA) Gideon Botha says the situation is leading people to question the need for huge corporate premises. ‘As companies realise their workers do not all need to be on-premises to do their jobs, they may start to think about downscaling or even repurposing. We have an enormous need for social housing in this country, and it would be interesting to see if any of our big corporations consider this moment as an opportunity to take spaces they no longer need and turn them into accommodation for people who would then not have to spend time on money on commuting great distances.’

He says we can also expect many countries to become stricter about border controls so as to not import additional infection risk from other countries. In South Africa, limited resources play a key role too. ‘Poverty and social unrest may give rise to greater levels of xenophobia, nationally, regionally and locally.’

For example, two doctors were forced into quarantine after being accused of bringing the virus to Limpopo by Health MEC Phophi Ramathuba who said they ‘should have stayed where they were’, despite them living in the province. In Khayelitsha, a family of a young mother who contracted the virus said they had endured a flood of hateful social media posts and voice notes.

Rising nationalism, Botha says, can lead to populism, and when it comes to the major issues facing the world today, populist movements are more influential than ever. Populists have a tendency to introduce legislation that infringes human rights and restricts the independence of the media, the judiciary and democratic institutions, all fundamental pillars of the rule of law. It tends to denounce international cooperation and espouse xenophobic and intolerant ideas.

Botha stresses that the pandemic, in various ways, is forcing us to question what it means to be human. ‘Being confined to our homes requires us to stand still, to eat regularly with our families, to consider people who are less fortunate, to question how we can support others, to think about the greater good and to even interrogate what it means to be South African. We can choose to look upon this moment in history with fear and frustration, or we can approach it with a new sense of openness and a willingness to think about how we can reshape our society.’