Cross functional teams with communications at the core key to overcoming a crisis

Cross functional teams with communications at the core key to overcoming a crisis

Michael Skapinker’s recent Financial Times opinion piece, which looks at the dynamics between company executives, legal advisors and PR practitioners during a crisis, makes for an interesting read. Among other things it focuses on what are the perceived stereotypical defaults of lawyers’ “say nothing to nobody about anything” approach versus PR practitioners’ eagerness for engagement.

The instinct, and indeed the role of lawyers is to minimize a company’s legal exposure where an issue or crisis arises by avoiding admission of liability. Meanwhile the communications advisor is focused on protecting the company’s reputation which requires proactive communications. It’s hard to argue against the underlying rationale of both perspectives.

The dynamics of what makes up a company’s valuation though has changed dramatically in recent years and this dictates a radically different approach in responding to an issue or crisis. Some thirty years ago company valuations were almost entirely reliant on fixed assets with almost 80% of business worth tied up in its tangible assets. Fast forward to today and the reverse is now the norm with the vast majority of company valuations accounted for in its brand, reputation and goodwill.

That’s a gamechanger in driving a strategic response to managing an issue or a crisis from both a communications and legal perspective. As a communications advisor to companies dealing with an issue or a crisis and who works regularly as part of multi-disciplinary teams including legal advisors I’m loathed to position it as contest of ‘who wins’. However, in real terms protecting the reputation, brand and goodwill in the short-term (and ultimately the long-run) is likely to trump what are ultimately longer-term considerations that may or may not come before the courts for adjudication.

It may be overly simplistic to characterize it as a company potentially winning a legal battle and in doing so losing the reputational war. However, if 80% of a company’s value is ultimately tied up in its intangible assets and suffers significant erosion of its reputation in short-term it has the possibility of being much more damaging to the long-term sustainability of an organisation. As one of the contributors to the article notes, “most companies can withstand a major financial impact, but a reputational disaster will take years to recover from.”

The lawyers come in for quite a bit of flack in the piece with references by company executives to them “messing things up” in the desire to avoid admission of liability at all costs and watering down company statements to the point they are worse than useless by being so halfhearted or mealy-mouthed. The point that was missed by the executives making the criticism was that they acted more on the instructions of lawyers than their communications advisors. So who’s at fault in that situation?

Ultimately though, one of best pieces of advice in the article is the need to prepare properly for a crisis with the development of crisis communications plans and undertaking simulations exercises that bring together the many disciplines that need to work together in the overall interest of a company and its stakeholders; be it managerial, operational, communications, HR, not forgetting legal advisors. As the seanfhocail says, Ní neart go cur le chéile. There’s strength in unity.

For those with more interest in Niall’s perspectives on the importance of planning for a potential crisis he contributed an article to a recent edition of Accountancy Ireland which can be read here: https://thereputationsagency.ie/latest/news-and-thinking/2019/02/15/planning-is-the-best-insurance-policy-for-protecting-a-companys-most-valuable-asset-its-brand-and-reputation

The Financial Times’ article referenced can be accessed via the following link: https://www.ft.com/content/ea03792c-7895-11e9-bbad-7c18c0ea0201

Niall Quinn is Deputy Managing Director and leads the Corporate and Financial PR advisory practice at The Reputations Agency. A qualified barrister and lecturer in Crisis Communications and Strategic Communications, Niall is also a former President of the Public Relations Institute of Ireland.