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July 28, 2009

Planning for Crisis Communications

By Kennedy Maize

Does your business have a communications plan to deal with a catastrophe? The lack of one could cost your business its corporate reputation and the value of your shares on the market.

Everyday business communications—talking to customers, stakeholders, employees, the media, the financial community, and even to other corporate leaders—is an ongoing challenge. But that challenge ramps up considerably when there is a corporate crisis that requires an immediate response in a chaotic communications environment.

Three Mile Island: A Communications Meltdown

Consider the nuclear meltdown at Three Mile Island Unit 2 (TMI-2) in March 1979. As Sam Walker, a Nuclear Regulatory Commission (NRC) historian, described the immediate aftermath of the TMI-2 accident, communications among federal and state officials and the public were simply awful. Wrote Walker, “The information available was sketchy, and communications with Three Mile Island remained abysmal.”

As the event unfolded, communications with the information media were atrocious—filled with errors from the regulators and misstatements and outright lies from the utility. The utility ended up with essentially no credibility with the media and, as a result, the public. The company’s stock price tanked. It took years to figure out exactly what happened at TMI-2, how serious the problems were, and who was to blame.

Sure, it was a unique event. But the utility company dug in its corporate heels for months to prevent information from emerging, making understanding of the accident and its consequences far less clear and timely. That company, General Public Utilities, no longer exists—arguably a market judgment of the company’s response and a reflection of the importance of transparency in managing power plants.

Practice Makes Perfect

According to a new book (Crisis Management Guidebook, Vol. 3—a compilation of articles from PRNews), being prepared for managing the public relations and communications aspects of a crisis is more relevant today than ever before (TMI-2 in 1979, Chernobyl in 1986, Enron in 2001, Bear Stearns in 2008).

The book cites the 2009 Edelman Trust Barometer, a somewhat crude but useful measure of trust among “global elites.” According to the most recent Edelman analysis, “Trust in business plummeted to its lowest level in 10 years, with 62% of respondents globally claiming to trust corporations less than a year ago, and a staggering 77% agreeing with that sentiment in the U.S. When asked if they trusted U.S. business to do the right thing, only 38% responded affirmatively, down from the 58% who did so last year.”

There are reasons to take these poll results with a skeptical grain of salt. The sponsor of the poll, a major public relations firm, surely hopes the results will generate more business for its PR practice.

But the results are instructive. They point to a need to bolster public support for essential businesses during a crisis. Companies that generate power or distribute it, or both, need to be aware of the problems of crisis communications. As the PRNews book points out, it is crucial to develop a crisis communications plan in advance of a catastrophe, in order to figure out how to respond when the stuff hits the fan.

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