When things go badly, strong HR can make the difference between a smoothly managed situation and an unmitigated omnishambles
A few years ago Niall Murphy, head of HR for a large housing association, was woken in the middle of the night by a phone call from
a colleague bearing the worst possible news. The business’s chief executive, an ostensibly hale and hearty 58-year-old full of drive and energy, had finished his day’s work, gone to the gym and collapsed and died of a massive heart attack.
“My initial reaction was shock. I think I said something like ‘Oh my God, how will we cope?’” says Murphy. Though grief for a popular leader consumed the organisation in the days that followed, business also had to carry on as normal and plans had to be made for the future. And all of a sudden, Murphy realised nobody was quite sure what to do.
The housing association had transferred relatively recently from the local council, a delicate political transition that the charismatic chief executive had handled with the same finesse he brought to the ongoing management of critical stakeholder relationships. “In a sense he was the organisation,” says Murphy.
Although it had a risk map, detailing a raft of potential problems and consequences, this eventuality wasn’t covered. “Death is an everyday occurrence, but how prepared was HR to deal with it? Not at all,” admits Murphy. “We had to overcome our personal feelings and act like a management team, and we arranged a crisis meeting in a colleague’s kitchen for later that morning.”
The team acted quickly to inform employees and other stakeholders about the death, help them come to terms with the loss and reassure them everything was under control. They demonstrated “business as usual” with the appointment two days later of one of the management team as interim chief executive. She held the reins until a permanent successor was found, since when the organisation – “which could easily have crumbled,” says Murphy – has gone from strength to strength.
“We certainly revisited the crisis plan, but what that episode taught me was that however good the plans you have in place, you have to accept the possibility of the impossible happening and be prepared to deal with it,” he says.
Ever since Captain Edward Smith sank his employer, White Star Line, as well as the Titanic and 1,500 passengers, by overlooking a massive iceberg (he had previously declared “God himself could not sink this ship”), crises have been a constant organisational hazard.
They come in many shapes and sizes: from the Hutton Inquiry, which imperilled the BBC, to the Deepwater Horizon oil spill that made BP’s name (almost literally) mud. There are product recalls and defects (Toyota, horsemeat), takeovers (Cadbury/Kraft), tax (Amazon and Starbucks) and a crystal-meth-abusing chairman (Co-op) as well as the more prosaic funding disasters that can afflict almost any company. Not to mention the head-in-hands PR gaffes, such as jeweller Gerald Ratner’s infamous pronouncements on his products in a 1991 speech that wiped £500 million from his eponymous company’s value overnight (“People say, ‘How can you sell this for such a low price?’ I say, ‘Because it’s total crap’”) or the memo Cable & Wireless chairman John Pluthero sent his staff in 2006: “Congratulations, we work for an underperforming business in a crappy industry and it’s going to be hell for the next 12 months.”
Because employees’ capability, commitment and resilience determine an organisation’s chances of surviving a crisis, HR should play a central role in crisis management. In practice, however, HR’s contribution is often tactical rather than strategic: it is typically wheeled in for support only after the worst has passed.
“HR is far less engaged in crisis management than it should be,” says Lynne Donaldson, a former HR and communications director and veteran of multiple crises. As an independent consultant, she is now trying to quantify the role HR plays in crisis planning and response, with a view to helping it ramp up its capability and “get itself invited to the table”.
The part that senior HR professional Jabeen Tahir played in helping a charity to survive a difficult period last year is testimony to the value of strategic HR input. The organisation’s chief executive had been suspended after what turned out to be unfounded allegations from some of his top team, and funding was at risk of being withdrawn. Tahir brought clarity to the picture, removed the executives responsible and oversaw a major culture change, including the appointment of new directors.
Brought in as interim HR director for a year, Tahir says that being an “equal partner” at board meetings and being seen as an “HR leader and expert” was critical. “Had I just gone in and done bits of the work, I couldn’t have delivered what I did,” she says.
But according to Donaldson, not only are too few HR teams capable of performing this strategic role in crisis management, without proper preparation they can struggle even at the basic crisis response stage. “Organisations turn to HR in a crisis to tell them where everyone is and how to contact them. But in practice, the systems they rely on are not as robust as they should be,” she says.
Liam Fitzpatrick, partner at Agenda Strategies, a change and internal communications consultancy, agrees: “The one thing that HR has to be on top of in a crisis is data. Any sense of reality disappears very quickly and the person who can sit down with the facts and figures is like an island of calm in the midst of a storm.”
Preparedness is all, but because you can’t predict everything, you have to ensure that people in the crisis response team are up to the job – and their colleagues are capable of carrying on without them. “Having a strong crisis and business back-up team is key to an organisation’s resilience to minor and major shocks,” says Donaldson.
Amanda Pierce, CEO of crisis PR specialist Burson-Marsteller UK, believes HR has a key role to play in crisis training – whether crisis scenario planning that brings together a team in a simulated crisis situation, or communications training for business leaders. But she warns HR may also have to convince the business such training is necessary.
Donaldson adds that getting different departments in the business to sing from the same hymn sheet when it comes to planning the response to a crisis can be a challenge. “HR needs to be on the front foot if there is to be a co-ordinated response, and getting the support of the CEO is essential. But they seem too willing to be a support service,” she says.
Crises may appear to come out of the blue, but in reality the signs are often there – and HR, with its ear to the ground, ought to be able to anticipate them. Take Enron: it ended up one of the worst basket cases in corporate history, but two years before its 2001 implosion, staff were portraying the company as fundamentally crooked during a lighthearted skit at the Christmas party. No one took the hint.
At the point crisis strikes, HR’s primary roles are to inform and reassure the workforce, and to activate a plan to resolve the situation. “Above all, you need employees to be focused on the job in hand, and feel proud to be working for you,,” says Fitzpatrick.
Senior executives should be visible and accessible to staff, and the communications agenda should focus on the good news as well as the bad. “During a crisis, the external stakeholders – shareholders, customers and so on – gain disproportionate importance in the eyes of senior leaders, who tend to disappear into a round of endless meetings, becoming invisible to staff,” says Fitzpatrick. “But it is the people at the top that employees most want to see, so HR has to do battle with the PR and investor relations teams if necessary to get the senior leaders out and about, looking confident and talking to people.”
And he warns: “HR can get wrapped up in sending out redundancy notices and information about site closures and so on, and neglect all the people who want to support the business and who need to feel reassured they work for a good organisation that has a future. They want to hear news that allows them to do that – and to tell people down the pub. Employees are your most potent advocates and a far more powerful driver of your reputation than what gets reported in the media.”
While the immediate pressure of a crisis may subside quite quickly, the aftermath can have a very long tail. “Solving the problem that caused the crisis takes time, so you have to maintain energy and momentum, explain the road map and not allow people to declare victory prematurely,” says Fitzpatrick. “This is the moment when a good employee engagement strategy really pays off – you don’t want performance to fall through the floor.”
But that engagement strategy needs to have been in place for a long time – trying to “turn it on” in a crisis will only make employees cynical.
The same applies to union relationships. Helen Klepper discovered in 2010 that the FE college where she was director of HR was £5 million in the red, making it unlikely she could pay the 750 employees that month. She believes the strong relationships she had forged with the unions over previous years were critical in helping weather the crisis. Not only did staff agree a 2.5 per cent pay cut for six months, but 120 volunteered for redundancy, although the college could afford to pay only statutory redundancy.
Because HR is, or should be, on the front line of crisis management, sustaining the morale and motivation of the HR team throughout and after the immediate crisis is a crucial – and sometimes forgotten – aspect of the HR director’s role.
But all this takes its toll. “Putting in the hours to try to turn things around, maintaining an open-door policy, keeping my team’s spirits up, then re-motivating and reassuring the staff who were left after the round of job losses during our year of crisis was very hard work,” says Klepper.
However, she admits, she got “a real buzz” from the experience. “Despite some of the negative consequences of what you have to do, you get an adrenalin surge because you’re helping the business to survive. When you achieve what you set out to, there’s a huge sense of satisfaction.”
Crises these days are as likely to be issue-led as event-based. Product recalls, plant closures and new CEOs still happen, of course, but crises increasingly arise from media and public scrutiny of things like corporate tax, environmental practice and employment rights. As Pierce says: “The days when a crisis was an exceptional event for a company are long gone.”
Today’s measure of success is not whether a company suffers a crisis, but how quickly its business and reputation recover after one. Are you ready for the worst?
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The HR crisis checklist
1 Know what could go wrong: rate your biggest risks and start building contingency plans for them.
2 Form a crisis committee before disaster strikes, ready to swing into operation when required. Include representatives from comms, HR and senior leadership.
3 Have your data ready. Where are your people, how much do they cost, what are the implications of moving, removing or redeploying them if it comes to it?
4 Keep communicating with staff – even if it’s to say there’s no news.
5 When it’s all over, capture key learnings for the next crisis.