Stakeholders in a Business Crisis

With all of the focus in crisis management on disasters, news media reactions and contingency planning, an essential consideration often is overlooked. The severity of the crisis is not determined by the problem itself but by the stakeholders who are affected and how they react as a result of what has happened.

The Apgar test is used to measure how well newborn babies have survived the trauma of being born, but there is no business equivalent to judge how well an organization has survived a crisis. Ultimately, that assessment will be a perception and a matter of opinion. It will be based on how effectively the organization communicated with its key stakeholders initially and on an ongoing basis until the problem is fully resolved.

ICM's experience with clients in crisis over the past 16 years has shown very clearly that the key stakeholders vary depending on the nature of the organization and on the crisis itself. Those stakeholders will include one or more of the following:

• Adversarial groups
• Bankers
• Brokers, distributors, dealers
• Business groups
• Community leaders
• Competitors
• Customers/clients /patients/tenants
• Educators
• Employees
• Franchisees
• International executives
• Investors
• Law enforcement officials
• Licensees
• Neighbors
• News media organizations
• Plaintiffs attorneys
• Politicians
• Regulatory officials
• Retirees/Pension recipients
• Security analysts
• Senior executives
• Stockholders
• Suppliers
• Union officials
• Vendors

Public relations professionals, especially in the U.S. and Canada, tend to think of the crisis in terms of the negative news coverage that it may generate and they consider news organizations to be the primary stakeholder group. That is a mistake.

The stakeholder groups who are affected by the crisis need to be prioritized in terms of their importance to the future of the organization. Unless it is a disaster that may result in property damage and/or casualties, the news media should be a secondary consideration.

Questions that need to be asked in either a sudden or smoldering crisis situation are:

1. What stakeholder groups besides the media will be interested in or affected by this problem, and which are most important to the organization's ongoing business and future growth.
   
   
2. Who are the key stakeholders in each group the 20% who are responsible for generating 80% of what the business needs to keep going.

Your business crisis plan needs a strategy for trying to reach those key people with information on the crisis before they hear about it second hand from the media or someone else. In that way your organization will have the chance to explain its side of the story first. These key people, who count most in determining the future of the business, then are likely to give you the benefit of the doubt when they hear about the crisis later from some other source.

ICM firmly believes the smartest step you can take is to place your own management and employees at the top of the list of key stakeholders. They should be informed first since they are going to have to respond to countless other people when the word gets out about the crisis.

Coordinating Stakeholder Communications

As far as responding to inquiries from your various stakeholders about the crisis, ICM recommends a strategy that ensures client stakeholders will be given an approprite response promptly, without distracting management and employees who are working to resolve the situation.

The ICM strategy involves directing all inquiries from internal or external stakeholders to designated communications staff members. They can handle a vast majority of the questions, if they are on the Crisis Communication Team, and can take a great deal of pressure off the other Team members so they concentrate on resolving the crisis. The same will be true for Top Management, which can concentrate on making important decisions and in contacting key people and groups where their one-on-one communications will be most effective.

The key is to have a policy in the Crisis Plan of directing all internal and external inquiries from stakeholders to specific phone numbers/e-mail addresses or a designated internet site so the responses can be managed by people who are communications professionals.