Chief executives, managing directors and other senior business leaders are failing to engage fully in crisis preparedness and risk undermining their organisation’s ability to manage crises, according to Steelhenge and Regester Larkin’s latest crisis management survey.
The survey of 170 large companies from 27 countries revealed that big business understands the need to prepare for a crisis, with 86 per cent of respondents owning a crisis management plan, 59 per cent carrying out crisis training and 68 per cent conducting crisis exercises at least annually. It is clear that crisis preparedness is high on the agenda.
It was concerning, however, that when asked about senior management engagement, there are significant challenges. Of the companies that had run crisis exercises in the past year, almost half (45 per cent) did not involve their chief executive. Other key senior business roles (51 per cent of legal and finance heads, and 59 per cent of board and non-executive directors) also failed to take part in a crisis exercise in the last year.
This was seen as part of a wider problem, with 46 per cent of respondents identifying ‘lack of senior management buy-in and support’ as the biggest challenge to effective crisis preparedness.
If leaders are not brought into crisis preparedness personally, crisis structures, process and capability building can be undermined and ineffective in a crisis. There is little point attempting to be ‘crisis ready’ when those responsible for leading the crisis response don’t know what to do.
Why does it matter?
Reputation is invariably at stake in a crisis. Yet, managed well, crises can enhance reputation and present great opportunities. Nick Varney, chief executive of Merlin Entertainments, was praised for his leadership and media handling skills following the tragic roller coaster crash at Alton Towers in 2015.
Any business leader who has managed a crisis, major incident or issue, will say that time preparing is time well spent. When a crisis hits, it is not the moment to reach for the plan and learn how the organisation’s crisis response works. The pace and complexity can be overwhelming even if well prepared.
Awareness of your organisation’s crisis structures, processes, roles and responsibilities is central to an effective response. Senior teams need to know what support they will have to help them act decisively and communicate quickly. It’s important to establish clarity on reporting, decision-making, and where authority, responsibility and accountability lie ‘in peacetime’.
Decision-making by the crisis management team is one of the most critical but challenging non-technical skills required. Good decision-making can safely steer an organisation out of a crisis and on to future success. Bad decision-making can exacerbate a difficult situation and have long-term negative impacts on the reputation and value of the organisation.
Observing crisis teams at work, I’ve seen the psychological impact uncertainty has on the efficiency and effectiveness of decision-making. Even the most clear-headed and decisive senior executive in day-to-day settings can be overwhelmed in a crisis, leading to uncharacteristic errors, decision avoidance or delays.
How to engage senior executives in crisis preparedness
Take small steps
Initially aim to engage the top team in bite-size activities rather than a huge programme. One hour best practice sessions, sharing a relevant case study and short scenario exercises can build awareness of its necessity and encourage further engagement.
Use the cyber imperative
Preparing for cyber risk is on almost every executive team’s agenda. Use this imperative to focus minds on the broader aspects of crisis management.
Build through governance
The UK Financial Conduct Authority and other regulators have brought crisis management into their governance regimes and it is a growing expectation that executives are prepared and professional. Use this as a prop to build engagement.
Use high profile examples of businesses facing crises to show the likely scrutiny they would face and how lack of preparedness can lead to great vulnerability – personally and corporately.
Give them a crisis… simulation
Senior executives are often disengaged because they do not realise the extent of the complexities and challenges presented in a crisis. A fully immersive simulation exercise exposes just how uncomfortable it can be.
Not everyone is cut out to be a crisis leader. Sometimes those who lead during ‘business as usual’ find it challenging to turn their skills to a live crisis, where decision making needs to be quick, done under pressure, and with limited information, high risk and accountability. Identify your crisis champions early.
It is crucial to prepare crisis leaders for their role; to build and develop their crisis capabilities. An effective way is experiential learning such as crisis simulations and training which focus on building self-awareness of strengths and weaknesses. A mature crisis-ready organisation will have a bank of leaders to take on a crisis leadership role in their function, business, geography or at the most senior level. Ensuring the right people -with the right experience and skills, and trained in the right processes – occupy the right roles.
Crisis preparedness is about having teams at every level prepared to respond to and manage the worst case situations. Develop the executive team crisis response capability to face the unique challenges of a crisis and to make critical decisions with insufficient information, not enough time and with the world watching.
To download a copy of our latest Crisis Management Insight Survey please visit our website.