Crisis communications

 Instituto Superior da Maia Public Relations Crisis Communications Martynas Orlauskas N◦ 22469 2009, Maia Table of Contents Introduction 3 Brief definition of public relations 4 The need for PR 4 Public relations and business 5 Financial public relations 5 Distribution of financial information 6 Definition of a crisis and crisis communications 8 Crisis management in terms of PR 8 Pre-crisis phase 8 Crisis response 11 Post-crisis phase 15 Conclusion 17 References 18 INTRODUCTION The nature and scope of public relations are difficult to categorize. People tend to supply their own meanings to the term, interpreting its functions according to their own experiences and biases. The title itself is used indiscriminately, the duties encompassed by the practice are expanding, and the many uninformed criticisms often obscure the true role of public relations. Although many observers would deny the status of “profession” to public relations, claiming it doesn't meet the usual professional requirements of a specific body of knowledge, a unified set of standards, and an appropriate testing procedure, there are those who would contend that PR, properly practiced, is a profession, demanding as many skills and insights as most other professions. Increasing academic attention to public relations courses and degrees, the existence of a Code of Conduct, and the promotion of accreditation procedures seem, to these adherents, to meet professional qualifications. They point out that the practice can have a positive effect on society by presenting a deeper view of various social entities. Public relations can calm dissidents, squelch harmful rumors, promote decent health habit, argue for safety, or abet progressive political notions. It can be rewarding to the practitioner, essential to the manager, efficient for the consumer. BRIEF DEFINITION OF PUBLIC RELATIONS Encarta World English Dictionary defines public relations as “the practice or profession of establishing, maintaining, or improving a favorable relationship between an institution or person and the public”. “Public relations” can mean a course of action, or a state of acceptance or nonacceptance, or it can describe an entire profession. It also seems to expand or contract with organizations, depending on whether others seek to use the PR budget for their projects – which are invariably defined as “excellent public relations” - or whether they want to protect their own domain, in which case “public relations” is given its narrowest scope. Some practitioners also point out that there is no such thing as “PR problem.” Every difficulty involves other areas. THE NEED FOR PR Few organizations argue against the wisdom of including public relations in their plans. It wasn't always this way. Some firms used to believe they could survive on good product and fair price alone. Others thought the public could be trusted to ultimately realize the right stance in any given situation. Today, even the smallest firms try to present some sort of PR program. Why? Simply because public relations works. Even when a company is performing well, the public needs to be told about it. And when an organization has problems, the PR function has proved its ability to provide solutions or, at the very least, to ensure that the client firm is able to tell its version of the debate. With the increase in corporate, even conglomerate, structure, interpersonal relations are bound to suffer. It's a long way from the person at the desk to the person at the machine, or from nurse in the ward to the chief of staff. Communication gaps are vast, and the human touch is difficult to simulate. Public relations programs can help shorten the distance between executive and subordinate. Externally, relationships are even more complicated. The average citizen understands less and less about government, education, space, economics, and dozens of other complex subjects. And this confusion has occurred at a time when we boast the most sophisticated and far-reaching communication systems in history. The public relations professional seeks to cut through to your consciousness, providing you with a message you will understand and retain. PUBLIC RELATIONS AND BUSINESS The most common application of public relations skills occurs in the multifaceted business world. Each of these assignments is just a bit different, and no formula can cover all problems or anticipate all situations. The public relations constants, however, remain solid research, thorough planning, imaginative execution, and faithful evaluation. In this era of conglomerates and multinational firms, business seems to have become more and more complicated. And yet, some things never change. The aim continues to be the efficient production of a quality product or service that will attract and satisfy customers and result in a profit for the company. To achieve this aim takes a variety of departments and individuals, from competent technical help to quality control, and from aggressive sales staffs to creative advertising.. Public relations also has its role. FINANCIAL PUBLIC RELATIONS Financial public relations, also commonly called investor relations, is an important part of any major business's public relations strategy. Investor relations professional must have a working knowledge of economics, be attuned to the psychology of shareholders and analysts, and be conversant with the body of law and learning associated with the financial community. As far as financial public relations is concerned, the focus is on informing actual and potential shareholders about a specific company. Even the best public relations practitioners can't promise an increase in the value of stock under their professional aegis. Many factors cause the stock to go up and down, and no amount of publicity can protect a company whose profits are declining. Investor relations are nor as simple as calculating profit and loss, or reading columns in the financial section. Shrewd analysts look at performance, potential, the quality of management, and the possibility of some complication, like the scarcity of a necessary raw material or the likelihood of a crippling strike. Practitioners do the same sort of research in order to anticipate the queries of the experts and satisfy the expectations of the shareholder. Even though the practice of financial public relations can be one of the more complicated aspects of the profession, the tenets upon which effective work is based are relatively simple. The practitioner is expected to be honest, accurate, and prudent. He or she should also be knowledgeable in this specific phase of communication, have the ability to convince and motivate others, and have the planning skills that can be translated into immediate action. In financial public relations, several primary audiences must be considered: • The company's executives • The company's employees • The shareholders • The prospective shareholders • The security analysts • Financial publications • The Securities and Exchange Commission or equivalent agencies DISTRIBUTION OF FINANCIAL INFORMATION The financial PR person's job is to see that material information is released promptly. The public must be informed. The safest way to proceed is to notify all pertinent members of the financial press at the same time. This routine is often reminiscent of World War II films. Many PR firms synchronize the watches of persons assigned to call the various media. Calls will be placed at exactly the same time and identical information dictated. The financial news release shares most points in common with the regular news release. There are, however, some major differences. Overall, the mood and concept are different. This is not the place to be clever, to insert catchy leads, or to dress up quotes. The object of a financial news release is clarity and completeness. Don't worry about repeating words or phrases if they are needed for clarification. Stick to workable, familiar formulas for listing data. Remember that the readers are really interested only in the firm's sales volume, its net income, and the earnings per share – and in any other items that influence these three things, either now or in the future. Financial releases are pretty straight, even dull, by other release standards. You begin with the statement concerning the reason for the release – the publication of an annual or quarterly report, the annual meeting, a speech by the president, or whatever. Then, if financial data are included, you get right to them. The way such details are normally cited is sales or income (or other gross figures as in the case of banks, utilities, and other specialized reports), net earnings, and earnings per share. If one of this trio is significant enough to deserve a lead, you may alter the listing. Each of these figures is compared with the figure for the same period in the preceding year. When doing this, be sure to give the closing date for the information cited, since not all companies compute their quarters and years on the same basis. Since national and local media also have their own financial editors and writers, some business news will result from investigative reporting as well as from the traditional PR release. As with all media relations, the PR person should be helpful and cooperative with the financial reporter, guarding, however, against any premature disclosure. The practitioner should also watch for distortions in the publishing of information, whether conscious or unconscious. Financial press relations, then, seems to resemble two lawyers talking to one another more than it does two communicators. It is probably wise to think this way and to keep such relationships on an extremely professional level. DEFINITION OF A CRISIS AND CRISIS COMMUNICATIONS Encarta World English Dictionary defines crisis as a dangerous or worrying time: a situation or period in which things are very uncertain, difficult, or painful, especially a time when action must be taken to avoid complete disaster or breakdown. Crisis communications can be defined as communications about a crisis for stakeholders and the public. A crisis is any situation that threatens the integrity or reputation of an organization, usually brought on by adverse or negative media attention. These situations can be any kind of legal dispute, theft, accident, fire, flood or man-made disaster that could be attributed to the organization. It can also be a situation where in the eyes of the media or general public the organization did not react to one of the above situations in the appropriate manner. CRISIS MANAGEMENT IN TERMS OF PR Crisis management is a process designed to prevent or lessen the damage a crisis can inflict on an organization and its stakeholders. As a process, crisis management is not just one thing. Crisis management can be divided into three phases: (1) pre-crisis, (2) crisis response, and (3) post-crisis. The pre-crisis phase is concerned with prevention and preparation. The crisis response phase is when management must actually respond to a crisis. The post-crisis phase looks for ways to better prepare for the next crisis and fulfills commitments made during the crisis phase including follow-up information. PRE-CRISIS PHASE Prevention involves seeking to reduce known risks that could lead to a crisis. This is part of an organization’s risk management program. Preparation involves creating the crisis management plan, selecting and training the crisis management team, and conducting exercises to test the crisis management plan and crisis management team. Organizations are better able to handle crises when they (1) have a crisis management plan that is updated at least annually, (2) have a designated crisis management team, (3) conduct exercises to test the plans and teams at least annually, and (4) pre-draft some crisis messages. The planning and preparation allow crisis teams to react faster and to make more effective decisions. Crisis management plan A crisis management plan (CMP) is a reference tool, not a blueprint. A CMP provides lists of key contact information, reminders of what typically should be done in a crisis, and forms to be used to document the crisis response. A CMP is not a step-by-step guide to how to manage a crisis. A CMP saves time during a crisis by pre-assigning some tasks, pre-collecting some information, and serving as a reference source. Pre-assigning tasks presumes there is a designated crisis team. The team members should know what tasks and responsibilities they have during a crisis. Crisis management team The common members of the crisis team are public relations, legal, security, operations, finance, and human resources specialists. However, the composition will vary based on the nature of the crisis. For instance, information technology expert would be required if the crisis involved the computer system. Time is saved because the team has already decided on who will do the basic tasks required in a crisis. Plans and teams are of little value if they are never tested. Management does not know if or how well an untested crisis management plan will work or if the crisis team can perform to expectations. Training is needed so that team members can practice making decisions in a crisis situation. As noted earlier, a CMP serves only as a rough guide. Each crisis is unique and requires the crisis teams to make decisions. A key component of crisis team training is spokesperson training. Organizational members must be prepared to talk to the news media during a crisis. Media training should be provided before a crisis hits. Public relations play a critical role in preparing spokespersons for handling questions from the news media. The media relations element of public relations is a highly valued skill in crisis management. The public relations personnel can provide training and support because in most cases they are not the spokesperson during the crises. Finally, crisis managers can pre-draft messages that will be used during a crisis. More accurately, crisis managers create templates for crisis messages. Templates include statements by top management, news releases, and dark web sites. The templates leave blank spots where key information is inserted once it is known. Public relations personnel can help to draft these messages. The legal department can then pre-approve the use of the messages. Time is saved during a crisis as specific information is simply inserted and messages sent and/or made available on a web site. Communication channels An organization may create a separate web site for the crisis or designate a section of its current web site for the crisis. Having a crisis web sites is a best practice for using an Internet during a crisis. The site should be designed prior to the crisis. This requires the crisis team to anticipate the types of crises an organization will face and the types of information needed for the web site. For instance, any organization that makes consumer goods is likely to have a product harm crisis that will require a recall. Stakeholders, including the news media, will turn to the Internet during a crisis. Crisis managers should utilize some form of web-based response or risk appearing to be ineffective. Of course not placing information on the web site can be strategic. An organization may not want to publicize the crisis by placing information about it on the web site. This assumes the crisis is very small and that stakeholders are unlikely to hear about it from another source. In today’s traditional and online media environment, that is a misguided if not dangerous assumption. A web site is another means for an organization to present its side of the story and not using it creates a risk of losing how the crisis story is told. Intranet sites can also be used during a crisis. Intranet sites limit access, typically to employees only though some will include suppliers and customers. Intranet sites provide direct access to specific stakeholders so long as those stakeholders have access to the Intranet. The communication value of an Intranet site is increased when used in conjunction with mass notification systems designed to reach employees and other key stakeholders. With a mass notification system, contact information (phones numbers, e-mail, etc.) are programmed in prior to a crisis. Contacts can be any group that can be affected by the crisis including employees, customers, and community members living near a facility. Crisis managers can enter short messages into the system then tell the mass notification system who should receive which messages and which channel or channels to use for the delivery. The mass notification system provides a mechanism for people to respond to messages as well. The response feature is critical when crisis managers want to verify that the target has received the message. CRISIS RESPONSE The crisis response is what management does and says after the crisis hits. Public relations plays a critical role in the crisis response by helping to develop the messages that are sent to various parts of the public. A great deal of research has examined the crisis response. That research has been divided into two sections: (1) the initial crisis response and (2) reputation repair and behavioral intentions. Initial response Practitioner experience and academic research have combined to create a clear set of guidelines for how to respond once a crisis hits. The initial crisis response guidelines focus on three points: (1) be quick, (2) be accurate, and (3) be consistent. Be quick seems rather simple. The organization should provide a response in the first hour after the crisis occurs. That puts a great deal of pressure on crisis managers to have a message ready in a short period of time. Again, we can appreciate the value of preparation and templates. The rationale behind being quick is the need for the organization to tell its side of the story. In reality, the organization’s side of the story are the key points management wants to convey about the crisis to its stakeholders. When a crisis occurs, people want to know what happened. Crisis experts often talk of an information vacuum being created by a crisis. The news media will lead the charge to fill the information vacuum and be a key source of initial crisis information. (We will consider shortly the use of the Internet as well). If the organization having the crisis does not speak to the news media, other people will be happy to talk to the media. These people may have inaccurate information or may try to use the crisis as an opportunity to attack the organization. As a result, crisis managers must have a quick response. An early response may not have much “new” information but the organization positions itself as a source and begins to present its side of the story. Quick response is active and shows that the organization is in control. Silence is passive, it lets others control the story and suggests the organization has yet to gain control of the situation. Quick, early response allows an organization to generate greater credibility than a slow response. Crisis preparation will make it easier for crisis managers to respond quickly. Obviously accuracy is important anytime an organization communicates with the public. People want accurate information about what happened and how that event might affect them. Because of the time pressure in a crisis, there is a risk of inaccurate information. If mistakes are made, they must be corrected. However, inaccuracies make an organization look inconsistent. Incorrect statements must be corrected making an organization appear to be incompetent. The philosophy of speaking with one voice in a crisis is a way to maintain accuracy. Speaking with one voice does not mean only one person speaks for the organization for the duration of the crisis. It is physically impossible to expect one person to speak for an organization if a crisis lasts for over a day. Watch news coverage of a crisis and you most likely will see multiple people speak. The news media want to ask questions of experts so they may need to talk to a person in operations or one from security. That is why the public relations department plays more of a support role rather than being “the” crisis spokespersons. The crisis team needs to share information so that different people can still convey a consistent message. The spokespersons should be briefed on the same information and the key points the organization is trying to convey in the messages. The public relations department should be instrumental in preparing the spokespersons. Ideally, potential spokespersons are trained and practice media relations skills prior to any crisis. The focus during a crisis then should be on the key information to be delivered rather than how to handle the media. Again, preparation helps by making sure the various spokespersons have the proper media relations training and skills. The news media are drawn to crises and are a useful way to reach large parts of the population quickly. So it is logical that crisis response research has devoted considerable attention to media relations. Media relations allows crisis managers to reach a wide range of stakeholders fast. Fast and wide ranging is perfect for public safety—get the message out quickly and to as many people as possible. Clearly there is waste as non-targets receive the message but speed and reach are more important at the initial stage of the crisis. However, the news media is not the only channel crisis managers can and should use to reach stakeholders. Web sites, Intranet sites, and mass notification systems add to the news media coverage and help to provide a quick response. Crisis managers can supply greater amounts of their own information on a web site. Not all targets will use the web site but enough do to justify the inclusion of web-based communication in a crisis response. Mass notification systems deliver short messages to specific individuals through a mix of phone, text messaging, voice messages, and e-mail. The systems also allow people to send responses. In organizations with effective Intranet systems, the Intranet is a useful vehicle for reaching employees as well. If an organization integrates its Intranet with suppliers and customers, these stakeholders can be reached as well. As the crisis management effort progresses, the channels can be more selective. More recently, crisis experts have recommended a third component to an initial crisis response – crisis managers should express concern/sympathy for any victims of the crisis. Victims are the people that are hurt or inconvenienced in some way by the crisis. Victims might have lost money, become ill, had to evacuate, or suffered property damage. Expressions of concern help to lessen reputation damage and to reduce financial losses. Early expressions of concern help to reduce the number and amount of claims made against an organization for the crisis. However, there are limits to expressions of concern. Lawyers may try to use expressions of concern as admissions of guilt. A number of states have laws that protect expressions of concern from being used against an organization. Another concern is that as more crisis managers express concern, the expressions of concern may lose their effect on people. Expressions of concern sometimes might seem too routine. Still, a failure to provide a routine response could hurt an organization. Hence, expressions of concern may be expected and provide little benefit when used but can inflict damage when not used. Crisis managers should never forget employees are important during a crisis. Employees need to know what happened, what they should do, and how the crisis will affect them. The earlier discussions of mass notification systems and the Intranet are examples of how to reach employees with information. Well informed employees provide an additional channel of communication for reaching other stakeholders. When the crisis results in serious injuries or deaths, crisis management must include stress and trauma counseling for employees and other victims. One illustration is the trauma teams dispatched by airlines following a plane crash. The trauma teams address the needs of employees as well as victims’ families. Crisis managers must consider how the crisis stress might affect the employees, victims, and their families. Organizations must provide the necessary resources to help these groups cope. Reputation repair A number of researchers in public relations, communication, and marketing have shed light on how to repair the reputation damage a crisis inflicts on an organization. At the center of this research is a list of reputation repair strategies. The reputation repair strategies vary in terms of how much they accommodate victims of this crisis (those at risk or harmed by the crisis). Accommodation means that the response focuses more on helping the victims than on addressing organizational concerns. It should be noted that reputation repair can be used in the crisis response phase, post-crisis phase, or both. Not all crises need reputation repair efforts. Frequently the instructing information and expressions of concern are enough to protect the reputation. When a strong reputation repair effort is required, that effort will carry over into the post-crisis phase. Or, crisis managers may feel more comfortable waiting until the post-crisis phase to address reputation concerns. Attribution theory believes that people try to explain why events happen, especially events that are sudden and negative. Generally, people either attribute responsibility for the event to the situation or the person in the situation. Attributions generate emotions and affect how people interact with those involved in the event. Crises are negative (create damage or threat of damage) and are often sudden so they create attributions of responsibility. People either blame the organization in crisis or the situation. If people blame the organization, anger is created and people react negatively toward the organization. Three negative reactions to attributing crisis responsibility to an organization have been documented: (1) increased damage to an organization’s reputation, (2) reduced purchase intentions and (3) increased likelihood of engaging in negative word-of-mouth. Crisis managers follow a two-step process to assess the reputation threat of a crisis. The first step is to determine the basic crisis type. Crisis managers consider how the news media and other stakeholders are defining the crisis. The second step is to review the intensifying factors of crisis history and prior reputation. If an organization has a history of similar crises or has a negative prior reputation, the reputation threat is intensified. The organization is much more likely to have damage on its reputation if the crisis is not the first one of its kind, e.g., another product recall. In general, a reputation is how stakeholders perceive the organization. Reputation is widely recognized as a valuable, intangible asset for an organization and is worth protecting. But the threat posed by a crisis extends to behavioral intentions as well. Increased attributions of organizational responsibility for a crisis might result in a greater likelihood of negative word-of-mouth about the organization and reduced purchase intention from the organization. POST-CRISIS PHASE In the post-crisis phase, the organization is returning to business as usual. The crisis is no longer the focal point of management’s attention but still requires some attention. As noted earlier, reputation repair may be continued or initiated during this phase. There is important follow-up communication that is required. First, crisis managers often promise to provide additional information during the crisis phase. The crisis managers must deliver on those informational promises or risk losing the trust of the public. Second, the organization needs to release updates on the recovery process, corrective actions, and/or investigations of the crisis. The amount of follow-up communication required depends on the amount of information promised during the crisis and the length of time it takes to complete the recovery process. If you promised a reporter a damage estimate, for example, be sure to deliver that estimate when it is ready. Intranets are an excellent way to keep employees updated, if the employees have ways to access the site. Mass notification systems can be used as well to deliver update messages to employees and other parts of population via phones, text messages, voice messages, and e-mail. Personal e-mails and phone calls can be used too. Crisis managers agree that a crisis should be a learning experience. The crisis management effort needs to be evaluated to see what is working and what needs improvement. The same holds true for exercises. Every crisis management exercise should be carefully dissected as a learning experience. The organization should seek ways to improve prevention, preparation, and/or the response. As most books on crisis management note, those lessons are then integrated into the pre-crisis and crisis response phases. That is how management learns and improves its crisis management process. CONCLUSION While crises begin as a negative/threat, effective crisis management can minimize the damage and in some case allow an organization to emerge stronger than before the crisis. However, crises are not the ideal way to improve an organization. But no organization is immune from a crisis so all must do their best to prepare for one. WORKS CITED Graves, Joseph J. Managing Investor Relations: Strategies and Techniques. Homewood, IL: Dow Jones-Irwin, 1984. "MSN Encarta Dictionary".

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