On Wednesday, October 25, Logos president Helio Fred Garcia‘s conversation with award-winning advisor and trainer of NBAU Consulting Natalia Smalyuk on core principles of crisis response was published on the NBAU Consulting website. Their conversation was part of Smalyuk’s Coffee-Break Q&A series. Garcia and Smalyuk discussed the need for mental readiness in a crisis, the importance of defining a crisis clearly, and some of the predictable patterns of crisis and crisis response.

Below is an excerpt from their conversation:

Natalia

Fred, one of your books is called “The Agony of Decision: Mental Readiness and Leadership in a Crisis.” In my experience, mental readiness is not something we hear a lot about in the offerings of the PR firms, which is the world I am coming from. Is there a gap in the preparation of leaders for high-stakes scenarios?

Fred

I came out of the PR firms, too. They can be really good at executing communications, but not necessarily helping leaders avoid wrong choices. And if you execute wrong choices, you are making the crisis worse.

The firm I run, Logos Consulting Group, is a management consulting firm. We counsel leaders on how to make smart choices under stress, and how to execute them in a way that maintains or restores trust. As a professor of management, leadership and communication at several universities, I tell my students that crises follow predictable patterns, and patterns have two kinds of power – explanatory and predictive. First, they help us make sense of what happened in the past. Second, they give us the power to predict what might play out in the future. Knowing the pattern, we can tell the leader that, if they do A, here’s the likely consequence. If they do B, here’s what they can expect. In a crisis, we know things are going to be bad. The leadership discipline is about finding the “less bad” outcome and then making choices that get you closer to that “less bad” outcome.

Natalia

In our earlier conversation, you said that, to put crisis management on the right track, it’s important to ask: “What problem are we trying to solve?” How do you get decision-makers to think clearly in the heat of the storm?

Fred

The best way to get leaders to make good choices in a crisis is to have a really thoughtful crisis planning process that defines a crisis and has a sequence of questions to ask. Here’s an example. A client approached me with what they called a “60 Minutes problem.” Their PR people defined it as a news media enquiry leading to an embarrassing story. I asked a series of questions about what was happening and ultimately told the client: “You don’t have a 60 Minutes problem.”

The company was discovered to have systematically cheated customers and was being sued for this. Essentially, lawyers were trying the case in the media. Hypothetically, it was possible to get 60 Minutes to walk away, but the lawyers would just give the story to the Wall Street Journal or someone else.

I told the client they needed to recognize several things:

a)       The company had committed misconduct.

b)      Their customers had been cheated.

c)       As soon as this became public, the regulators would be all over them. They would sanction the company and might hand this over to criminal investigation.

So, I told the client they had a business problem.

My advice: stop the business practice that is dishonest and possibly illegal. Remediate the customers that were cheated. Fire those who allowed the practice to happen. Hire a high-quality auditing firm to monitor behaviour. Then take all this to the regulators and tell 60 Minutes that you’ve done all that.

The client was horrified that I was that candid, but the CEO and the board took my advice to heart and followed it. The regulators thanked them for bringing the issue to their attention, put investigators on the premises and ultimately sanctioned the firm. However, that outcome was far less severe than it could have been, and regulators commended the company for self-reporting. The story on 60 Minutes was still horrible. The customers talked about all the ways they had been cheated. However, the company’s side of the story was there, too: “We screwed up. We fixed it. We apologized. We self-reported to regulators. We are working closely with them.”

The bottom line is that every crisis is a business problem before it is a communication problem.

Similarly, every crisis is a business problem before it is a legal problem.

The United States is the most litigious country in the world. When the lawyers hear a company is or may be sued, they worry that anything you say will increase your liability in litigation. Here’s a paradox. If you can show that you take the issue seriously and are committed to fixing it, instead of creating legal liability, you are keeping the company healthy.

Here’s what I’d tell the CEO: “For what I know, you’ve gotten excellent legal advice. However, you don’t have a legal problem. You have a business problem. Whatever legal problem may emerge in the future, you have shareholders, employees and customers now, and you have the control of how they think about you. So please don’t make a legal decision. Make a business decision.”

When the lawyer says “you can’t say anything,” I believe what they actually mean is: “don’t say anything dumb.” We don’t want the company to say something dumb. Quite the opposite. We want it to say something smart and helpful. So, here’s how a series of questions with the lawyer might unfold.

I’d ask: “Can we acknowledge that we are aware of this problem?” The lawyer may say: “Yes, but we have to do it very carefully.” Great. We can very carefully acknowledge that we are aware of the issue.

Next question: “Can we express empathy for those who were disadvantaged by this?” The lawyer might say: “We can’t admit guilt.” Well, I am not asking to admit guilt. I am asking to express empathy. The lawyer’s response: “We have to do it very carefully.” Great. We can very carefully express empathy.

Next question: “Can we declare the values that drive us in this crisis?” It’s hard to say no to this – even though, in my experience, one lawyer did. After all, values are on the company’s website. The lawyer might again say: “We have to do it very carefully.”

Can we describe the process we have begun and will continue to get through the crisis? Yes – if we do it carefully.

Finally, can we make some form of commitment?  Yes. It could be a procedural commitment, such as: “We’ll update you at 3:00 p.m.” or a substantive commitment, such as: “We’ll get to the bottom of this and we’ll fix it.”

These five questions are five elements of a well-structured stand-by statement. 1) Acknowledge the problem – or at least your awareness of it. 2) Express empathy. 3) Declare your values. 4) Say what you are doing to fix the problem. 5) Make a commitment.

Between self-defeating silence, which is what the lawyer is suggesting, and self-destructive blabbering, which is what the lawyer fears, there’s a lot of room to maneuver.

Read their full conversation here.