When signs of impending crisis appear, it’s no time for patchwork fixes
Often, long before a major crisis strikes, there is some sort of indication that trouble’s brewing. In the case of the Texas fertilizer facility that exploded this week, a report from USAToday’s Chuck Raasch and Sharon Jayson indicates that the company may have been lax regarding safety and maintenance procedures as far back as 2006. Here’s a quote:
The fertilizer plant that exploded in West, Texas, killing more than 30 people and causing widespread damage was cited and fined in 2006 for federal environmental violations, the Environmental Protection Agency said Thursday.
West Chemical and Fertilizer was fined $2,300 in March 2006 for failing to update a risk management plan and for having poor employee-training records and no formal written maintenance program, according to the EPA. The company later certified it had corrected the deficiencies, the EPA said.
Thing is, sometimes, even when you’re making your best effort to do the right thing, smoldering crises can go unnoticed until events send a little red flag up. Whatever your business, it’s critical to keep an eye out for indicators, whether in the form of regulatory violations, stakeholder unrest, negative media coverage or internal reports that show something just isn’t quite as it should be.
Once you’ve had a mounting issue pointed out, Crisis Management 101 dictates that you should not only patch it to the satisfaction of regulators (the public, employees, media, whoever), but actually dig to the root of the issue and fix it there.
Will it take some extra effort? Yes. Will it save your organization’s reputation, and, depending on the crisis, huge sums of money, or even human lives? Absolutely.
Put that way, do you have any good excuse not to make that effort?
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For more resources, see the Free Management Library topic: Crisis Management
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[Jonathan Bernstein is president of Bernstein Crisis Management, Inc., an international crisis management consultancy, author of Manager’s Guide to Crisis Management and Keeping the Wolves at Bay – Media Training. Erik Bernstein is Social Media Manager for the firm, and also editor of its newsletter, Crisis Manager]
We had a similar and fascinating example of that with Canada’s largest bank, RBC. It’s hard to imagine that no manager detected any employee dissatisfaction when 45 middle-class people were losing their jobs to foreign replacement workers from India AND required to train those workers on the tasks.
RBC (Royal Bank of Canada) was caught completely off-guard when one of the fired employees went public. The crisis management failure was epic: The bank sent out an untrained HR executive who spouted jargon, made distracting gestures, and stumbled badly on inconsistencies when challenged (fairly) by a well-informed interviewer.
The issue created a firestorm in the media and especially social media. (Full Disclosure: I’m actively protesting and have stopped doing business with RBC.) Here was an extremely profitable bank sending quality Canadian IT jobs to India to make even more money. (Unfortunate timing saw RBC customers getting notices of banking fee increases at the same time.)
RBC sent out CEO Gord Nixon to selected media. He quickly became suspect by denying that RBC had hired temporary foreign workers. The public saw this as disingenuous because RBC was partnering with outsourcing company iGate who technically employed the foreign workers installed (and being trained) in RBC’s Toronto offices.
Eventually, Nixon issued a vague apology centered on the insensitive treatment of the RBC employees and his assurance the company would assist them in finding jobs elsewhere in the organization. He promised a review of external procurement policies.
Canadians reacted strongly to the bank’s failure to reverse the outsourcing project, the perceived abuse of the temporary foreign worker program, and the increasing revelations as to the extent RBC and other banks had secretly gutted hundreds (or thousands) of knowledge worker jobs in IT departments, auditing functions, etc.
The firestorm has abated somewhat, but the RBC brand is turning toxic in the social media – including the company’s Facebook page. There’s general outrage at what many of us see as anti-Canadian behaviour and general bank greed.
For it’s part, the bank went dark. At this point it’s true that anything they say – short of swearing off outsourcing – would just re-ignite the flames.
It was a PR disaster that embarrassed not only RBC but the bank-friendly Canadian government.
I’d appreciate your analysis on what – if anything – RBC should have done differently. It seems RBC simply disagrees with public opinion about the morality of sending good jobs to India. The concept of getting services at the lowest possible cost is a hard sell in a tough economy.
Ken
The RBC situation was a tough one because outsourcing is such a common occurrence in all types of business today, but the crisis would likely have blown over by now (or at least be nowhere near the magnitude) if the bank had made a statement to the effect of, “Regretfully, that’s the cost of doing business today.” What really caused a problem for the bank wasn’t the outsourcing, but, as you mentioned, the dishonesty/”spin” attempted by both the initial spokesperson and then CEO Nixon himself. As RBC is finding out, even if you’ve done something you’re ashamed of, you never, ever try to cover it up. The days of corporate misdirection are gone, and if stakeholders catch even a hint of trickery they are going to ferret it out and plaster proof everywhere they can.
Now, given commitment and the right moves, this could be a “lemons into lemonade” type of crisis with RBC creating new programs to very publicly hire more Canadians on, but given how the bank has reacted thus far I wouldn’t hold my breath for that to happen.