How to create and sell an awkward crisis exercise scenario
It’s often the case that the most severe crises that cause lasting harm to a company’s brand and valuation are internally generated. These crises are the result of wrong-doing, sometimes even outright criminal behavior, by members of the C-suite, all the way up to the CEO. Crises caused by deeply flawed leaders also occur frequently in non-profits, government, religious and educational institutions.
The question for crisis managers tasked with planning exercises and drills is this: How can you possibly sell the idea of a crisis exercise whose scenario explicitly implicates your organization’s top leadership with serious criminal offenses? And if you think that kind of an exercise is unnecessary or not worth the heartache of convincing others that it’s an important exercise scenario, consider the following:
In the corporate world, take VW’s “dieselgate” as Exhibit A. Here the highest echelons of the company were involved in an elaborate deceit of entire governments and their regulators around the world as well as millions of international customers. VW’s stock has yet to recover from the 30 percent drop it experienced overnight when the deceit first became known. While this unprecedented auto industry crisis began in 2015, the effects continue unabated to today. Billions of dollars more in fines are now being levied, and more top heads are being arrested and jailed. Most recently, Audi’s CEO Rupert Stadler was arrested for his alleged role in the diesel scandal.
Related: VW’s Dieselgate Crisis Continues — Nine Lessons for Crisis Response Teams
Exhibit B might well be Wells Fargo. In April the company was fined $1 billion by federal regulators for scamming its customers on car insurance and charging unfair fees to mortgage borrowers. This latest fine came well after the bank “admitted to creating fake accounts, hitting customers with unfair mortgage fees and charging people for car insurance they didn’t need,” according to CNN.
Exhibits C, D, E, …. Z? You could argue any number of egregious crises where the problems stemmed from those highest of offices where the buck stops. Take Facebook’s continuing crisis. Its leadership was aware that Russians were using their platform to spread fake news and meddle in elections more than a year before they reported it. CEO Mark Zuckerberg and COO Sheryl Sandberg “ignored warning signs and then sought to conceal them from public view,” according to the New York Time’s investigative report. Zuckerberg and Sandberg also tried to deflect blame for massive customer privacy breaches by Cambridge Analytica, a UK-based company with deep ties to Steve Bannon, the former White House chief strategist. To continue shooting themselves and the Facebook brand in the foot, the company went on to use questionable lobbying tactics while attacking its critics with the help of political dirty trickster consultants.
Most recently there’s J&J’s baby powder, Nissan’s CEO, Goldman Sachs. The beat goes on.
A Dirty, Rotten Job Somebody’s Got to Do
Even after the companies’ leaders’ heads roll, or they stay but are hobbled by legal and regulatory scrutiny, there will be other executives and board members who will necessarily be left to pick up the pieces and try to manage the crisis. After all, there’s still a company with a reputation to salvage, shareholders to sooth, customers to continuing selling to and regulators to negotiate with.
As uncomfortable as it may be for crisis managers to develop an exercise scenario that impugns the integrity of the company’s leadership, the frequency and enormous damage that can come from this kind of crisis makes it worth the discomfiting effort. While admittedly awkward to sell upward, such an exercise could go a long way toward preventing egregious wrongdoing from happening in the first place.
Now back to our original question: How can you sell the idea of a crisis exercise whose scenario explicitly implicates your organization’s top leadership with serious criminal offenses?
Short answer: Very carefully. Longer answer — Here’s how:
Plan a scenario where a fictitious leader in the company, emphasis on fictitious, turns renegade and undermines the company through actions unbeknownst, of course, to the good and ethical people of the C-suite until the damage comes to light. Give the leader in the scenario a title, but create one that doesn’t exist in the company. Give that “leader” generic responsibilities.
Scenario example:
“The company’s CEO learns through a whistleblower, that Mia Swindler, Chief Marketing Strategist, has been creating and paying fake invoices, thereby steering millions into her off-shore accounts. Soon the story is leaked to news and social media with cries that the C-suite’s lack of oversight enabled her criminality.”
Obviously, creating such an exercise scenario and submitting it to C-suite participants could get tricky if the rogue behavior and alleged abetting by the leadership in the exercise scenario is too reminiscent of situations currently occurring in the company. One thinks of the case with CBS, whose board members, according to the Wall Street Journal, had been alerted to the sexual misconduct of its Chief Executive Les Moonves, but originally dismissed the allegations. The company only took action six months later after the New Yorker published a scathing exposé of Moonves’ offenses. That’s also the situation with the Catholic Church in the US that remains in crisis following years of sexual abuse of children by priests that had been repeatedly covered up by bishops and other Church authorities. A crisis exercise rehashing these problems and implicating current leadership would be a tough sell.
The simulated wrongdoing by a fictitious leader should be something analogous to, but far different from, the organization’s known questionable behaviors. If, for example, it’s known or suspected that the company has been slow to act, say, on sexual harassment claims against a CEO or priest or professor, create a seemingly different but analogous scenario. Make it about claims that a fictitious leader in the company is responsible for product failures, improper waste disposal or pilfering funds and the organization’s leadership is being accused (falsely of course) of looking the other way. The scenario is seemingly far different from sexual harassment, but as an internally generated crisis, the processes of managing the exercise crisis would be very similar.
Keeping the scenario analogous to, but distinct from, any actual current problem would avoid awkwardness while getting the crisis team practiced and crisis ready for the all-too-common internally caused crisis. As the scenario intensifies during the exercise, team members may become enlightened that the unspoken crisis threat they may actually face has to be dealt with.
David Kalson is an expert in issues and crisis management. He has more than 25 years experience providing strategic communications counsel, on-the-ground assistance and highly targeted media relations and “new media” programs to manage issues and crises as well as reputation enhancement for both profit and not-for-profit organizations. Business sectors he has counseled include energy, food and beverage, financial services, healthcare, consumer products and technology. He has designed and implemented communication / media relations programs, often emphasizing Web-based strategies, to address issues including data security breaches, environmental accidents, product recalls, financial problems, high-profile lawsuits, corporate governance issues, criminal behavior, attacks by opposition groups, government/regulatory challenges, competitive challenges and labor disputes. Companies he has counseled in relation to crisis drills, plans and crisis management include Cargill, Dunkin’ Brands, Cadbury Schweppes, Staples, Entergy, Eli Lilly, Canaport LNG and the American Automobile Association (AAA)
Great post, David! While these kinds of exercises are difficult, it is more important than ever to be prepared to communicate effectively if an executive is accused of wrongdoing. When we write a crisis communication plan, we include numerous potential scenarios including accusations of wrongdoing, with quick response guides that anticipate who needs to be communicated with and what they will want to know.