The role of stakeholders in a crisis: from liabilities to assets.

An interview with Professor Timothy Coombs

15.07.2014

 Timothy Coombs, professor of Crisis Communications at the University of Central Florida, Nicholson School of Communication, gives us insights on crisis communication with a specific focus on the different roles that stakeholders may play in challenging situations.

How would you define a “crisis” and in what ways is crisis management a critical organizational function?
I would define a crisis as a significant disruption to operations and/or the perception by stakeholders that the organization has violated important expectancies. Crisis management is rooted in operational disruptions and those are easy to see such as a fire, explosion, or strike. Many crises are more perceptual in nature. Stakeholders are upset because they believe the organization has violated their expectations. Examples would include the inappropriate treatment of workers or the irresponsible sourcing of raw materials. Crisis management is critical to business continuity (for operations) and for protecting the extremely valuable reputational assets of an organization. Given the central value of reputations in modern organizations, crisis management as reputational defense is a critical organizational function.

Which kind of crisis is the most difficult to manage?
The most difficult type of crisis to management is what I term management misconduct. In these crises, managers knowingly place stakeholders at risk or knowingly violate the law. Stakeholders are most upset by the management misconduct crises resulting in these crises inflicting the most damage on an organization’s reputation and purchase intentions as well as leading to increased negative word-of-mouth. Essentially the management misconduct crises can inflict the most damage on organizations. Stakeholders do not like the fact that the managers’ actions created a crisis that the stakeholders feel could and should have been avoided.

What are the three (?) key aspects of an effective crisis communication program? In addition, how important is the pre-crisis phase?
The three key aspects would be (1) thorough scanning, (2) regular training, and (3) pre-drafting messages. Organizations must have a thorough system that scans relevant areas for potential crisis warning signs. Finding warning signs can prevent a crisis or limit the damage if the crisis does occur. Regular training means the crisis team has some type of training activity at least once year. Moreover, regular training would imply a regular updating of the crisis plan as well. Finally, crisis teams should pre-draft messages for the most likely crises they are to encounter. These holding statements allow for a quicker crisis response and reinforced the organization’s crisis management competence. All three of these points are part of the pre-crisis phase, thus, I would say the pre-crisis phase is critical to the effectiveness of a crisis management effort.

Does the role of stakeholders change depending on the kind of crisis? If so, how?
The role of stakeholders can shift slightly depending on the nature of the crisis. The stakeholder role shifts depending on whether they are victims/potential victims or simply observers of a crisis. For instance, customers are victims or potential victims in a product harm crisis but simply observe when there is an industrial accident. The role can create different expectations and level of involvement from stakeholders. However, what remains constant is that stakeholders can help to support an organization during a crisis or work against it.

How do stakeholders react when experiencing a crisis and how can their reaction affect the organization’s reputation?
The critical stakeholder reactions seems to be their emotional reaction. There are three emotions that tend to dominate crises: anger, sympathy, and anxiety. If stakeholders are angry about the crisis and direct that anger toward the organization, the crisis will inflict maximum damage on an organization. Anger motivates stakeholders to act against an organization. Sympathy for the organization during a crisis can lead stakeholders to engage in supportive behaviors during a crisis. They feel sorry for the organization and try to help in some way. Anxiety is common in product harm or other crises that threaten stakeholders. The key in these crises is to establish effective corrective actions to prevent a repeat of the crisis that harmed or threatened to harm the stakeholders.

How does the cultural setting affect the stakeholders’ reactions and perceptions in a crisis, especially in multinational companies? At the same time, how does this define the internal crisis management strategy?
Cultures vary in their tolerance of risk and ambiguity. Less tolerant cultures will react more negatively to crises and the related risks. The greatest internal challenge is to remain sensitive to the lower tolerance cultures. Managers may have to act on a situation they do not consider a serious risk if the stakeholders are defining the situation as a major risk.

How can companies effectively manage their crisis communication to handle the stakeholders’ perception and to transform them from liabilities to assets?
One key to creating stakeholders as assets is keeping them informed. If information is lacking, stakeholders will join those calling for more information and claiming communication effort is a failure.  Uninformed stakeholders are liabilities. Teams can get too focused on the crisis and forget to communicate with any stakeholders very effectively. Crisis communication must be open and avoid statements that provoke or antagonize stakeholders. For instance, do not get into an argument with the news media or customers. If there is incorrect information, simply correct it and move on. Also find a way to validate customer concerns event if you seek to correct a misperception on their part. Provoking stakeholders is the quickest way to make them liabilities.

How important is the role of employees and other internal stakeholders during a crisis?
Employees are critical during a crisis. They are a very credible source of information about an organization. Friends and family members will ask them about the crisis. If the employees are uninformed, that creates a negative perception of the organization. Employees are significant communication asset that should be leveraged rather than ignored during a crisis.

What is the role of the internet and new media in an effective crisis response?
The internet and the digital environment are essential to monitoring for crisis risks and should be used as part of an effective response. Stakeholders, including the news media go to digital sources during a crisis. Those digital sources include the organization’s web site and social media channels. By using the digital communication channels, the organization can keep stakeholders informed about the crisis, especially if the crisis is changing. Too often an organization is in crisis and there is no mention of the crisis on the organization’s web site or social media. These leads stakeholders to question the competence of the crisis communication and to wonder if the organization has something to hide by ignoring the crisis in its own digital channels. Modern crisis communication is incomplete and less effective it does not integrate existing organizational web sites and social media into the crisis response.