Are CEOs Crisis Ready?
When it comes to crisis management and preparedness, some senior corporate leaders are only paying lip service.
Some executives, managing directors, and other senior business leaders are at risk of undermining their organization's ability to manage crises, because they are not taking crisis preparedness as seriously as they should, according to a recent crisis management survey of large firms in 27 countries around the world.
The study was conducted by Regester Larkin and Steelhenge Consulting. It found that corporate leaders appear to understand the need to prepare for a crisis. In the study, 86 percent of the respondents said they have a crisis management plan, and 59 percent carry out crisis training at least annually.
At the same time, the study found that senior leaders frequently decline to participate in training or crisis exercises. Of the companies that had conducted crisis exercises in the past year, 45 percent said they had not involved their chief executive. "Obviously, it's a very disappointing statistic," says Dominic Cockram, a Regester Larkin director and managing director of Steelhenge.
Cockram offers four reasons why almost half of the survey respondents said that their chief executive was not involved in crisis exercises. The first is that some leaders feel their schedules are too tight to attend. "Senior executives, in particular, are very time-short," he says.
The second is overconfidence. Some chief executives deal often with the media, and subsequently feel that they could handle crisis communication without taking part in an exercise. "They tend to be the more naive ones. They don't understand that it is different when you have a crisis," he says.
The third is inaccessibility. With some firms, people organizing the exercises have trouble reaching up to the CEO's office. For example, in places where the CEO is the active public face of the organization, nonparticipation may be considered normal since he or she is "out and about doing the job," Cockram explains.
Fourth—and the least common, but still common enough to list, Cockram says—is a misunderstanding among some chief executives that crisis management, like emergency response, is conducted on the operations level, and therefore does not need to involve the C-suite, which is focused on strategy.
Whatever the reason, this nonparticipation is part of a wider problem, the study found. Almost half of the respondents, 46 percent, identified "lack of senior management buy-in and support" as the biggest challenge to effectively preparing their organizations for a crisis.
"If leaders are not fully brought into crisis preparedness, any good work put into crisis structure, process, and capability building will be critically undermined," Cockram says. "There is little point attempting to be 'crisis ready' when the core individuals responsible for managing a crisis will not know what to do."
The findings were based on responses from 170 large organizations from a range of industries and sectors. More than half of the respondents in the survey, which was released last November, had more than 5,000 employees.
The study found that many companies struggle with coordinating crisis management response with suppliers. Only 27 percent of respondents said they involve key supply chain partners in crisis preparedness programs.
"Crises do not occur in a vacuum," Cockram explains. "We know from experience that one of the most challenging aspects of managing a crisis is to work harmoniously with partners or suppliers, especially when the media and others are looking for a clear villain."
The study also seemingly found a reason why crisis management is important—crises happen more frequently than one might imagine. According to the results, a majority of respondents (52 percent) said that their firm had mobilized a crisis response team within the last year.
However, many organizations are failing to identify lessons and to learn from their crisis experiences. Only 40 percent of those organizations that had responded to a crisis in the last year said that they had reviewed their plans after an incident or issue. And only 13 percent said they reviewed their plans after a "near miss," or a crisis that almost occurred.
In contrast, Cockram says that Regester Larkin recommends that, after any crisis, response actions be reviewed, with gaps and weaknesses identified and an effort made to improve the plan. The post-crisis period is a window of opportunity, because crisis management will be high on an organization's radar, and that opportunity should be taken, he adds.
Overall, two survey results surprised Cockram most. One was the aforementioned finding that a majority of respondents, or 52 percent, said that their firm had mobilized a crisis response team within the last year. "I was quite surprised how high that was," he says.
The second surprising finding was that 14 percent of respondents did not have crisis plans at all. "That surprised, and quite worried me," he says.