The power of communication and compliance in crisis management

The business case for crisis management

Reputation risk is a top strategic business concern. Brands spend years and millions of dollars to build a strong reputation and earn stakeholder trust, understanding both have the power to directly impact market value and revenue growth. Trust is built over time but can be eroded in moments. In the age of social media, companies, brands, and public figures are just one viral TikTok or X post away from a full-fledged public relations crisis.

A recent study from Capterra found that less than half of U.S. businesses have a formal crisis communication plan in place[1] despite 96% of organizations (as reported by PwC) having experienced a disruption in the past two years that impacted operations.[2] Businesses—especially their compliance and ethics officers—must understand the importance of preparing for potential threats and aligning on how the organization will respond and manage communication.

Companies are judged by how they act in difficult times. In the case of an effective crisis response, organizations have an opportunity to deepen trust, identify new ideas, and emerge stronger than before. Winston Churchill is credited with saying, “Never let a good crisis go to waste.” Every crisis provides an opportunity for those ready to respond in a way that puts people first and is aligned with the organization’s core values.

Phases of crisis management

There are four key phases organizations should plan for and consider to effectively and successfully move through a crisis:

• Ready phase: Prepare the organization with a crisis management and communication plan and dedicated cross-functional team. Identify likely issues and crisis scenarios and prepare a plan designed to ready the organization and its leaders to respond in a way that maintains trust, reputation, and business continuity.

• Respond phase: Activate the plan when a crisis strikes. Focus on timely, authentic, and proactive communication with all stakeholders, as well as ongoing active listening. Use head and heart to deliver messages aligned with the organization’s core values.

• Recover phase: Continue communication even as the immediacy of the crisis passes and stability returns. Dedicate time to understanding what may have changed and whether adjustments are needed to successfully move forward.

• Restore phase: Prioritize reflecting on the crisis to assess what’s been learned from the experience. Determine how to carry those insights forward to facilitate sustained growth and success.

It is important for organizations to have clear frameworks for how they will approach and move through each of these phases, including the communication strategy.

The role of compliance and ethics

Ethics, compliance, and legal leaders are especially well-suited to advocate for and support crisis preparedness and response based on their visibility of organizational risk and understanding of how to manage high-stakes, emotionally charged situations. They also oversee sources that can identify potential problems or emerging crises early on—like reporting hotlines and compliance audit reports. In partnership with strategic communication, this expertise is a powerful resource to protect the brand and stakeholder trust both inside and outside the organization.

Ethics and compliance should be part of a dedicated team responsible for crisis planning and response. A multidisciplinary crisis management team will be best positioned to assess the situation and react decisively under pressure. Responsibilities, roles, and levels of authority should be clearly defined among team members to implement action plans appropriately and efficiently—especially amid a crisis when the ability to move quickly is critical.

To be prepared, companies first need to understand the various types of crises they may need to confront. Compliance officers, in conjunction with other key corporate stakeholders, should assess legal, regulatory, reputational, operational, and other risks their company might face to determine where a crisis could arise. While there may be common risk areas across industries, each company’s risk profile will be unique.

Create a procedure for assessing the severity of an incident through careful evaluation of factors such as the risk of reputational damage, public relations issues, the possibility of compliance breaches, and any associated legal liability. Determine the criteria that makes sense for your organization. This can also be a helpful foundation from which to create an escalation process within your organization. A clear, easy-to-follow escalation plan is a valuable tool to assess the appropriate level of response and ensure that decisions are objective and appropriate to the threat level—especially when emotions are running high.

Compliance officers need to have a plan to deal with various crises, but they should also stay flexible enough to ensure that, in the event of an emergency, the company can respond to the reality on the ground. Careful planning and internal cooperation are the keys to dynamic, responsive communications that avoid potential pitfalls.

One of the most vital crisis preparedness roles of an ethics or compliance leader is to build and support a values-based, ethical culture in the organization. Building a culture of compliance through programs that educate, train, and equip employees to put ethics first is one of the best ways to reduce risk, build trust, and minimize violations and potential risks. Partnering with a communications expert to engage team members in these programs and reinforce the culture can also be very beneficial to the organization. Culture, ethics, and values are crucial to guiding behavior change that protects the organization. It also creates and builds up a bank of trust and credibility, which is invaluable once a crisis occurs.

Communicating in a crisis

Strategic communication is foundational to crisis management. One of the biggest mistakes businesses make is staying silent or going into hiding. Silence after a crisis is deafening and will be quickly filled with misinformation and accusations.

Organizations that respond rapidly with transparent and truthful information are more likely to navigate a crisis well and strengthen trust with customers, employees, and other stakeholder groups. Proactive communication has the power to reduce uncertainty, engage stakeholders, and move an organization forward with purpose and clarity. It also can successfully sustain trust and loyalty.

Businesses will rarely have as much information as they’d like when responding to a crisis. This becomes easier and clearer when there is a comprehensive communication plan in place that includes:

• A dedicated response team with clear roles and responsibilities;

• A clear understanding of internal and external stakeholders, including preferred communication channels as well as anticipated questions and concerns;

• Designated trained spokespeople and identified external resources (e.g., legal, public relations);

• Prepared template materials that can easily be customized for the specific situation and response; and

• A process to actively listen to and meet stakeholders where they’re at as the situation evolves.

The amount of information in a crisis and the speed at which it can change may be overwhelming and cause people to feel uncertain, anxious, or fearful. Delivering straightforward information consistently from credible sources ensures everyone understands the situation, is aligned with the organization, and trusts what is shared.

Leaders should be open and authentic when communicating. If a mistake has been made, acknowledge it and explain how it will be corrected, including changes being made to ensure it doesn’t happen again. People appreciate authentic, connected communication, and in times of uncertainty and crisis, they seek it out. Active listening and two-way dialogue can de-escalate conflict, leading to better communication. It is also imperative to ensure the actions of leaders and the organization are consistent with what’s been communicated.

Response plans and communication should be grounded in the company’s purpose, mission, and values. Before a crisis strikes, be clear about what the organization stands for and its shared cultural values, including its code of ethics. This provides invaluable guidance when making decisions about when to respond, what to say, and which actions should be taken. It also ensures the company and its leaders are meeting employee, customer, and marketplace expectations.

How an organization and its leaders respond in a crisis directly impacts its ability to earn and keep trust. Earning trust is a daily opportunity—from big moments to small interactions—inside and outside of the organization. Understanding your stakeholders is one of the most effective ways to earn trust. Critical factors to earning and maintaining trust in crisis (and every day) include:

• Demonstrating authentic empathy,

• Meeting people where they’re at,

• Connecting to common goals and ideals, and

• Following through with consistent and reliable actions—keeping your promises.

Steps ethics and compliance leaders can take today

Ethics and compliance leaders have an essential role in effective crisis prevention, response, and recovery. Following are some immediate steps that can be taken to integrate these areas of expertise into the organization’s broader efforts.

• Confirm that the company has robust controls, policies, and procedures to anticipate potential issues and support crisis prevention.

• Ensure code of ethics and compliance practices are consistently communicated and supported by ongoing education and training.

• Establish clear processes for reporting ethical violations, establish a speak-up culture, and ensure proper follow-through without fear of retaliation.

• Build relationships with communication leaders; establish regular updates and connection points.

• Review (or build) a clear, integrated crisis plan in partnership with communications and other leaders.

• Stay current on laws and regulations that most directly impact your organization and conduct ongoing risk assessments.

• Foster a culture of compliance throughout the company—from senior management to entry-level employees.

No company is immune to a crisis, but having the right strategies, structure, team, and foundation in place goes a long way to creating readiness. The businesses and leaders that plan and prepare are those best positioned to respond quickly, minimize damage, and effectively move forward when a crisis impacts the organization.

Takeaways

• Every organization is vulnerable to experiencing a crisis; it’s not a matter of if but when.

• How an organization and its leaders respond to and communicate in a crisis can have a long-lasting business impact.

• Ethics and compliance leaders are especially well-suited to advocate for and support crisis preparedness and response.

• One of the most important crisis preparedness roles of an ethics or compliance leader is to build and support a values-based, ethical culture in the organization.

• Ethics and compliance partnered with strategic communication are powerful crisis resources that protect the brand and stakeholder trust both inside and outside the organization.

*Ayme Zemke is the Chief Client Officer and Certified Crisis Leader at Beehive Strategic Communication in Saint Paul, Minnesota, USA.

1 Zach Capers, “More Than Half of U.S. Businesses Should Be Worried About the Next Crisis—Here's Why,” Capterra, February 23, 2023, https://www.capterra.com/resources/crisis-communications-plan/.

2 PwC, “PwC’s Global Centre for Crisis and Resilience,” accessed July 25, 2024, https://www.pwc.com/gx/en/issues/crisis-solutions.html.