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10 leadership lessons for crisis management

Reputation risk management sometimes defies natural instincts

UNconventional Wisdom is a periodic guest blog where the conventional wisdom is held up for fresh inspection, often with divergent recommendations. If you have some "UNconventional Wisdom" to share, email scocheo@sbpub.com. UNconventional Wisdom is a periodic guest blog where the conventional wisdom is held up for fresh inspection, often with divergent recommendations. If you have some "UNconventional Wisdom" to share, email scocheo@sbpub.com.

The financial industry has seen its fair share of crises in the last decades. And clearly, leaders have not always responded correctly. But as leaders not only in the financial sector, but in almost every sector, have come under increasing attack from their angry publics, perhaps it is time to take a fresh look at the leader’s conundrum in crisis.

What conventional wisdom says …

Conventional wisdom states that a leader, in a crisis, should see the picture from their public’s viewpoint (always a good place to start), and then address every concern with positive action to redress the wrongs. But, that may be a naïve suggestion that hardly captures the complexity of real situations.

Conventional wisdom also tells us that in crisis leaders should either apologize, if the allegations against their organizations have merit, and put in immediate fixes; or, they should fight back, if the allegations are not true—blocking and tackling every misstatement.

Further, because perception often trumps reality, conventional wisdom also says that sometimes it is the wisest course to cease fighting, accept a faulty perception, and then address it as if it were the truth—capitulating to public sentiment and using it as a set point from which to devise a revived reputation.

So, it has seemed that leaders, when their organizations are in crisis, have four options to respond:

1. Apologize—When you are wrong and know it.

2. Fight—When you are wrongly accused.

3. Capitulate—When you are right, but there is no percentage in fighting public perceptions.

4. Stay silent—and just let it pass.

During the recent financial crises, we have seen financial leaders try all four of these options, with varying success.

So, when I try to think deeply about it—and the financial services industry’s constant call to rebuild consumer confidence, and yes, trust—I start to understand why our efforts have had only lukewarm success, at best.

Life and business just aren’t that simple, easy, or clean-cut, are they?

Outdoing Solomon himself

Sometimes, the public gets it half right.

Sometimes they get it right, but the fixes they demand are wrong, and would only make the situation worse.

Sometimes they may have it totally right, but there is no way that we can accommodate their demands and still discharge the duties of our office.

Critics can be small-minded, unrealistic, and myopic, as well as being right on point.

Leaders must address all sides of an issue—all key audiences—and still have a vision, a value proposition, a moral center, and marching orders from their board.

Now that is a conundrum. Leaders today are not just called upon to act as Solomon, they must be Solomon on steroids.

Bits and bytes alone won’t stop nipping

So, then the issue is, how do we respond to public demand and ire in highly complex situations?

I would submit that we really need a hybrid response—a combination of human and electronic. Mostly our “customer experience” efforts, as well as our marketing and communications efforts, are becoming “big data” driven—the “moneyball” equivalent of crisis response. They can be fairly formulaic, including electronic access, smart-phone access, changed staffing models, and improved customer care lines.

While necessary, these measures are insufficient, because they leave out both credit decisions and the human angle—and those are still the roots of most people’s anger.

Credit decisions we can do little about. But clearly more can be done on the human level.

What is needed is a truly innovative approach to crisis management that acknowledges the anger of the public, addresses it in ways both personal and electronic, yet does not—literally—give away the bank.

So, following, for your consideration, are 10 ways to respond to an angry public, that can be adapted into a more satisfactory, hybrid response for financial services leaders:

1. To defuse the situation, start with where they are, not where you are.

Whenever we are under attack, our natural tendency as human beings, as boards, as organizations, and as leaders is to go into a defensive posture and insist upon beginning with our version of reality. Yet for leaders, often the best stance is to dispel defensiveness, and seek to understand the points of views of critics.

We do not have to agree with them, of course. But, starting where they are not only gives us insight, and perhaps some compassion, but it lets us be more effective in putting our points of view forward in ways our audiences will relate to.

2. That means listening more than talking, at least initially.

Some people call this “empathetic listening.” Whatever you might call it, it is the best place to start, instead of immediately ramming your point of view down your audience’s throats. When involved in a crisis, or serious negotiation, it is not the time to adopt an “advertising” or “marketing” mentality.

The conversation is not one-way anymore, you-to-them; it is two-way

And you may get better results if you start by listening.

3. Attention is the new gold.

More and more, attention is a scarce resource.

People crave to be truly seen and heard, especially if they believe they have been hurt or wronged.

Sometimes the very act of hearing what someone has to say, whether you agree or not, or can do anything about it or not, is effective. When grievances are not given any attention whatsoever, the public will demand it. They can grow shriller and shriller, louder and louder, and more and more impossible to deal with.

Simply showing respect to your critics might begin to ease the situation.

Or it might not.

But it will rarely hurt.

Take a tip from psychology: Rephrase back to your critics what you have heard them say—to show that you have really been paying attention. You do not have to agree; you just must show that you have understood enough to paraphrase their reality back to them.

4. Find a point of common ground and build upon it.

Creating some substructure of agreement is always a good base for effective negotiation. If you can find any common ground, invoke it, return to it, amplify on it.

5. Make your point in a human, believable, understandable way.

Instead of reflexively going into your “I’m the CEO, you’re not, and this is the way it is going to be” or “institutional-speak” modes, sometimes explaining your point of view, and why you feel that way, helps.

Tell real, relatable stories that illustrate your points. And if helpful, explain your motives and the history of why you have done what you did. This may be crystal clear to you. But don’t assume folks will know, remember, give you the benefit of the doubt, or be able to perceive your intent correctly,

6. Institute changes and respond to criticism quickly.

Not only does this responsiveness constitute an act of good faith, it can save significant pain going forward.

When the banks were denied fees from traditional sources after the financial crisis, instead of understanding the positions of many of their customers who were strapped, institutions began levying every other fee they could. This death by a thousand cuts way of doing business didn’t sit very well, and customers started to vote with their feet—decamping to credit unions, non-bank banks, or even their mattresses.

Now banks are spending a great deal of  money concentrating on the “customer experience” in order to retain and win new clients. Had they thought of their customers’ experiences before they acted, or the moment they heard significant protests, and rolled back the most onerous fees before they had to, most likely they would not need to make reparations today.

7. Don’t match others’ anger with your own.

In the face of unrelenting angry demands or protests that are unaffected by reason, truth or attention, do the exact opposite, yourself. The angrier they get, the calmer you get.

Yes, extremely hard to do. But this almost Zen attitude allows you to retain control, gives you space to strategize, and of course, can also prove disarming to your critics.

8. Develop a very thick corporate skin.

It goes without saying that in order to be a professional in the world today (or even survive as a human being) you must develop a thicker skin. The same holds true for organizations.

The internet and social media are a free-for-all. No holds are barred. Anyone can say anything in real time, no matter how sophomoric, hurtful, or untrue. The true wisdom of corporations, organizations, or individuals is to know when to be quiet and bear it or ignore it, when to fight back—and when to change.

9. Do insist upon respectful communication.

You can always vote with your feet, and leave a negotiation or conversation with your critics, if they can not communicate in a respectful manner.

No matter how thick your skin is, some respect must be demanded. If you are giving your public the opportunities of attention and listening, then they must give you the courtesy of civility.

When is enough enough? I always suggest bearing lack of civility for a bit longer than one feels one can. If it continues, remove yourself for a time out.

10. Hold your ground when you need to.

Sometimes time does make it better. People lose interest, move on to their next grievance, or need to take a break.

At the least, the magnifying lens of media attention shifts to the next story.

Take a very clear-eyed look at your situation:

1. If you need to change, do so.

2. If the high ground really is yours, claim it, and hold it. But be prepared for a possibly protracted and unfair fight, replete with unintended consequences.

3. And regardless, marshal all your resources so that you can, yourselves, conduct your fight in an honorable, but indefatigable way.

Davia Temin

Davia Temin heads Temin and Company, corporate crisis consultants. She has long experience in marketing, media and reputation strategy, and crisis management. She serves as the spokesperson for major organizations during crisis, coaches numerous global CEOs, and advises worldwide corporations on the strategic direction of their women's councils.

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