In a lively workshop at The Economists’ CFO Summit last week, Stephen Carver an MBA lecturer at Cranfield School of Management, shared his advice for finance professionals charged with defending their company’s reputation in a crisis.

 

Those at the top are often the ones the media looks to when a crisis happens, but they’re also the most detached from the root of the problem in most cases – as Toyota’s CEO proved in his unconvincing defence of the company after complaints about safety defects with its brakes and accelerators. “Logical scenario planning needs to be accompanied by emotional scenario planning”, advised Carver, who stressed that CFOs need to think carefully about their audience’s (i.e. their key stakeholders’) perception of events before delivering their message.

 

In combat situations, army professionals are trained to use the STOPA rule:

 

When facing a grilling, Carver advised CFOs to adopt this approach and consider where the perceived grievance had come from before launching their defence. A bad defence can often be worse than no defence at all, he said.

 

A good response is characterised by how effectively it addresses the ‘three Rs’:

 

One of the key problems with Toyota CEO Akio Toyoda’s handling of his company’s crisis was that he didn’t show sufficient humility. “It’s so important to say it like you mean it”, noted Carver, who also pointed out that showing you regret what has happened is not the same as admitting liability. This skill doesn’t occur naturally to everyone and has to be worked at. For some it can be developed, but for those who simply cannot get the hang of it, it pays to identify someone in your team who can and ensure that they’re the ones given the proper training and put in front of the cameras at the crucial time.

 

As well as repairing any perceived damage to your brand, a public response to a crisis is an important step towards rebuilding trust with key stakeholders. Identify who you are talking to and make sure you convey your message in a way they understand. For example, it’s no use providing technical details of why a particular brake pedal is ineffective – what the motorist wants to know is whether their car is safe to drive their children to school in and if it’s not, how can they get it fixed?

 

When the time comes to deliver your message, you only have 90 words (about 30 seconds of speaking time) to get it across. While you might have carefully prepared a long statement, you’re not in control of which bits get used and catch people’s attention. The best politicians and speakers are experts at providing good soundbites – but even they have fallen victim to this rule.

 

When his extra-marital indiscretions were revealed to the press, Bill Clinton gave a rather long speech defending his position but unfortunately the only part people remembered was the now infamous line – “I did not have sexual relations with that woman”! Work out what you’re soundbite is going to be in advance and make sure it properly reflects your company’s message.

 

The most important part of managing reputation risk is to act – and to be seen to act – with integrity. While in some cases it might be tempting to seek revenge or get even with those who wilfully seek to tarnish your brand, this will only add fuel to the fire, says Carver. They key to mounting an effective response is to ensure you are fully prepared with the proper systems in place and key staff who are adequately trained to handle the situation.