The 6 Common Mistakes Or 6 Best Practices That Will Hurt Or Save A Compnay
A crisis happens quickly. Speed, knowledge and communication are vital if a crisis is to be handled correctly with minimal impact on a company’s bottom line or reputation. Unfortunately, some companies fail to resolve the crisis and fall into the trap of the 6 deadly mistakes. Those that successfully resolve the crisis instead, follow the pattern of using the 6 basic crisis management steps. In essence, it is 6 behaviors or steps that will dictate how a company reacts to a crisis and whether it emerges unscathed or mortally wounded.
There are 6 basic common, predictable and avoidable mistakes that companies or organizations make during a crisis that will have a major negative impact on the company’s reputation or brand. The mistakes cause negative effects including making the crisis worse and failing to solve the crisis which in turn has major legal and reputational implications. The 6 common mistakes are:
Other companies, that don’t fall into the trap of 6 common mistakes, survive an international crisis situation by following the 6 basic steps for crisis resolution- or the 6 best practices of crisis management. The 6 steps to a successful resolution are:
An example of a crisis that involved most of the 6 basic or common mistakes centers on a recent acceleration/gas pedal recall involving a car manufacturer. The manufacturer was apparently put on notice of a large number of complaints involving acceleration/gas pedal problems. However, it did nothing to thoroughly investigate the issues or communicate to the public that it was seriously investigating the issue (It ignored the problem). It denied such problems were due to mechanical issues. Several years after it first became aware of the potential acceleration issues, it was forced to seriously investigate the matter because of several fatal car crashes potentially involving unintended acceleration. The car crashes were widely reported in the media. Because it failed to handle the crisis properly at the beginning, the car manufacturer was severely criticized in the media for its lack of response and apparent disregard of its customers' safety (Management had become paralyzed). The public became outraged when it learned the car maker began investigating the acceleration problems in earnest only after the fatal car crashes- 2 years after numerous reports had been made ( It didn’t tell the whole story). The US Congress then got into the act holding hearings on the acceleration issue.( It didnt understand the cross border issues). The company ended up recalling over 8 Million cars worldwide and finally appointing a safety officer, etc. in the US. Though it began to communicate more effectively, the car maker's penchant for secrecy, failed communications and lack of a crisis management plan at the beginning severely impacted the company (It didn’t reach out to its Stakeholders).
In the end, the company was hit with over 130 class action lawsuits in the US. Billions of dollars in share value evaporated due to its stock's decreased share value. Because of its failure to properly manage the crisis, it lost almost 6% market share in the US - reflecting a tarnished reputation. Though it is now regaining market share, it continues to have recall problems and brand issues.
So, whether a company survives a crisis intact depends to a certain degree of whether it makes the 6 basic common mistakes or uses the 6 best practices of crisis management. Either way, it’s a 6 step process to defeat or victory.