Management of crises requires strong organisational leadership to effectively coordinate various processes, internal and external communication channels, and rally leaders at various positions for strategic crisis management. Every crisis requires a tailor-made solution that is managed less and led more. But a crisis can present itself as more than an operational or a strategic one. An organization can face a crisis of public perception and reputation.
Operational crises require the crisis response teams’ intervention, while crises involving an organization’s reputation are usually handled by the manager close to the concern. However, in times of such crises, a company’s brand typically gets affected on two fronts, which, although similar, have different impacts:
- Change in the Public Perception of the Company
- Frayed Investor Relations and Potential Loss of Faith in the Company
Changes in the Public Perception of the Company
In times of crisis, organizations employ social actors who act as the face of the company in handling the situations as they unfold. They try to save face by employing these social actors to issue statements — called social accounts — that try to explain the unanticipated and untoward behavior of the organization.
When such unanticipated situations happen, organizations usually tend to either offer an excuse or acknowledge the situation and apologize. Both have their positive effects, and both affect people’s perception of the organization. But, both cases assume that the organization enters the foray and acts in response to the crisis. The problem arises if companies don’t jump in on the action happening about them.
Given the number of things that happen concerning the business, their natural tendency can be to assume that the problems will subside on their own. This could lead them to focus exclusively on customers without really addressing the elephant in the room. A large enough crisis has aftershocks where people suffer more because they know that the crisis could happen again.
Customer Perception During a Crisis
The economic crisis that the coronavirus-induced pandemic created has wreaked havoc on every economy worldwide. Organizations had to rethink their strategies and replan their business strategies. The focus has suddenly shifted to rapid revenue models. Many businesses soon realized that, to mitigate the damage the crisis has caused to public perception, companies must rethink their business model.
Businesses need to be adaptable, both in their supply chain management and customer retention. One change that we’ve been seeing is how companies reevaluate what their customers value during these trying times, and tailor experiences that are designed using those insights.
Employee Perception During a Crisis
Managing communication channels with the employees can be difficult because of the diverse strategic choices and channels that leaders should navigate. This challenging task is further aggravated by the possibility that this communication could birth a confrontation in the organization.
Organizations stand to benefit from using different channels while communicating with employees. The mentor-mentee relationship is something that organizations can leverage to placate and assuage their employees. A study by Columbia University showed that people were more accepting of an unfavourable outcome if they feel that the decision-making process is fair, and there was no other way the organization could have done things differently. This is where the role of a mentor becomes paramount.
Mentors are in a unique position to mould employees to the mission statement of the organization. As such, they have a pivotal role in employee retention and satisfaction. This, indirectly, translates to employee commitment to the organization.
The key when communicating with employees is transparency. But, whatever channels organizations may decide to use, they shouldn’t assume to understand employees’ condition. An honest two-way discussion will go a long way in managing employee relations
Changes in Public Sentiments
Sometimes, when an organization communicates with the public, the feeling that it is still in control can be more effective than what the organization is actually saying.
When organizations reach out to help the victims and use their PR strategies to focus on helping the people involved, the organization is generally seen in a positive light. However, these efforts can be tricky because the default opinion for the public is skepticism. When an organization tries hard to make amends or jumps in and helps the victims, the public wonders what’s in it for the organization.
Strategic communication goes a long way in influencing public perception towards the organization. Three questions are important to determine what approach an organization should take towards the public.
- Is the accusation made against the company true?
- How severe is the accusation against the company, whether true or not?
- Has the company already established itself as a brand that customers identify with?
Whatever the approach used, organizations must act — even if it is to vilify the accuser. Lack of any response is always viewed as a confession. Take the cases of Toyota or Volkswagen. When embroiled in the public safety scandal where its cars were accelerating on their own, irrespective of the strategy it took, it ended up recalling several vehicles. This tarnished its reputation. Volkswagen had a similar thing happening to them. When it turned out that they were illegally programming their software to meet emission requirements, they ended up having to pay hefty fines and recall several vehicles.
Attribution Theory
When exposed to anger-inducing news about a crisis, participants in a study read the news less closely but reacted negatively towards the company compared to those exposed to sadness-inducing news about a crisis. One conclusion that we can draw from this is to understand the role that the media plays in framing the public’s emotional appeal about the crisis.
Entman’s 1993 Framing Theory talks about the same thing. It discusses how people’s emotional anchors can be manipulated by taking some aspects of the perceived reality and making them more salient. This can be done by using metaphors, examples, catchphrases, depictions, or visual images.
From a purely academic point of view, the attribution theory assumes signification. In times of a crisis, organizations can employ five broad strategies when faced with a branding crisis.
- Deny the accusation
- Evade responsibility and make someone else the scapegoat
- Mitigate the extent of damage by public interaction
- Employ corrective action
- Issue a full apology.
Under the attribution theory, the organization’s responsibility varies. The theory outlines three major crisis types:
- Victim Crisis: In this, the organization has a weak connection to the crisis and is generally considered a victim of the events
- Accidental Crisis: The organization has a minimal connection, and the crisis is largely considered unintentional
- Intentional Crisis: The organization, or its brand, has a high connection to the crisis-causing event, and the crisis is considered intentional.
In any of these types of crises, vilifying the accuser or questioning the claim’s validity is a risky game to play. If done incorrectly, it could backfire in their face and cost them public goodwill. At the end of the day, the consumers’ relationships with the brand affect how they receive the organization’s response strategies.
Frayed Investor Relationships
Investor confidence is required to ensure that the company can survive in the long run. In times of a crisis, it is easy to divert all resources to manage it. This poses the definite risk that a company could sideline parts of the business and its objectives, originally meant for the long term, while focusing on short term goals. People on teams that work on achieving long term objectives should be allowed to do so without worrying about their job securities. It isn’t prudent to rope teams that focus on long term sustainability to address the current day-by-day crisis response processes. Long term policies can’t leak into short term processes.
Even in a crisis, we need organizations to think about the long term.
Even before the current crisis, CEOs had to address a world that was VUCA — Volatile, Uncertain, Complex, and Ambiguous. Addressing that world takes a courageous CEO who would be willing to make bold decisions. The problem is that most CEO candidates don’t want to risk their reputation by making these risky choices. That is the paradox that companies have to face when dealing with stakeholders.
On the one hand, companies need someone who can call the shots when they need to be called, but on the other hand, making risky choices is a good reason to oust a CEO, as American Airlines’ ex-CEO, Donald J. Carty can attest. This paradox is exactly why CEO candidates in the pipeline will refrain from taking risky choices even when their investors expect them to make bold decisions to address a crisis.
All stakeholders expect proof that a company is resilient — that the company can adjust positively in the current challenging condition. Communication and display of actionable activities is key. As discussed above, sometimes, it is the sense of control that an organization portrays carries more weight than what is actually being said.
One good way to tell the investors what you’re doing is by making the best use of your website. Your website should include relevant information for current, potential, and long-term investors. All of them have a different reason for checking the website, and an organization must ensure it meets the goals. A good website must highlight the vision for the investors. But, not every investor will take the time out to go through the website entirely.
So what should an investor relations website page do?
- It should include an ‘At a Glance’ section
- It should highlight what the company’s key players are doing and that they are still focussed on the long-term strategy
- Summarize a ‘Why Invest’ page by
- Building a robust homepage that provides instant access to key content
- Adding a section on ‘What’s New’, and what the company is doing
- Giving the details of operational performance that investors feel are most relevant
How can Technology help in this process?
- The home page can use Flash strategically to highlight the top performances in the organization
- Customize the Investor Relations page so that all types of investors will find value there
- Using Sort and Filter options on the page for easy access
- Leverage social media to organize business by types and information that each investor requires. Verizon’s social media channel is a good example of that.
One good way to gauge investor confidence is to ask them directly. United States Trust Company frequently surveys America’s wealthiest 1%.
Investors have a longer memory than the sell side of the market.
Conclusion
A company should identify different reviving methods because reputation is in the delivery and not in promise. In times of crisis, the best way forward is candour. Companies must leverage social media to contain the carnage a public perception crisis has caused. Now, however, as COVID-19 and the resultant economic crisis threatens to cripple the global economy, we can only wait to see how companies around the world will function and how their strategies will play out.