How lack of information stymied effective crisis management
by Tony Jaques PhD, Director of Issue Outcomes Pty Ltd, for people who work in issue and crisis management, author of Crisis Counsel: Navigating Legal and Communication Conflict.
One of the important roles of a crisis leader is to recognise that a crisis actually exists. In fact, Kurt Stocker at Northeast University, Chicago, argues that the first step for organisational leaders is getting information about a potential crisis – what could go wrong and may already be going wrong.
So why do top executives so often fail to see a crisis coming; or fail to ask the right questions; or fail to acquaint themselves with the facts?
Two recent crises throw light on some of the key forces at play:
- Execs failing to keep abreast of what is happening within their organisation
- Silo thinking which inhibits sharing of information, and
- Reluctance to report bad news upwards.
Take the case of Rio Tinto and the decision to blow up 46,000-year-old Aboriginal rock shelters in the Juukan Gorge to expand an iron ore mine. Analysis for the ABC showed a siloed structure made the company vulnerable to poor decision-making by any one of its product divisions which could have disastrous human and environmental consequences for the organisation as a whole. The authors said the Indigenous Relations function “failed dismally to alert top management because it had lost its influence and been swallowed by a corporate relations function with a much wider remit.”
Indeed, evidence to the official inquiry into the debacle revealed that the London-based Director of Public Affairs, who had responsibility for stakeholder engagement, was not even aware of the issue until after the local aboriginal landowners had already been told it was too dangerous to remove the explosive charges. That was just days before the caves were destroyed. Soon afterwards, she lost her job, along with the CEO and the head of the iron ore division.
While the company apologised for a terrible mistake, it’s too easy to point fingers. The real question is how developments got so far without the relevant leaders recognising an impending crisis.
A similar lack of attention seems to have occurred at Crown Resorts, where governance issues now threaten the future of the gambling giant. In the wake of shocking newspaper reports and two nationally broadcast television programs in August 2019, a Commission of Inquiry was established to investigate allegations the company engaged in money laundering; breached gambling laws; and partnered with junket operators linked to drug traffickers, money launderers, human traffickers, and organised crime groups.
Yet as late as October 2020 Crown Chair Helen Coonan confessed she had not even watched the TV stories which helped trigger the greatest existential crisis in the history of the company.
She conceded Crown had “facilitated” money laundering, but blamed it on “historical shortcomings” and argued it may have been “ineptitude or lack of attention” rather than deliberately turning a blind eye.
At the same time, the company’s independent Directors relied heavily on the claim that they were unaware of the problems within Crown because they were “deprived of information from management.” Business writer Elizabeth Knight said some Directors admitted they weren’t even aware of the numerous, widely reported, media exposés about the casino. She concluded: “It is a defence that only goes so far.”
The truth is that lack of information, and lack of attention, is no real defence at all. Call it scanning the environment, or gathering facts, or risk assessment, the challenge is how to ensure information is properly managed to help avoid crisis failure.
A Parting Thought
Every crisis is also a crisis of information.
– Joseph Scanlon
Learn more about Reputation Management in Tony Jaques’ new book, Crisis Counsel: Navigating Legal and Communication Conflict.