“Crisis management puts huge strain on CEOs”

Posted on March 31, 2011

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Yesterday Reuters published an article about the strain the most senior executives might be put under as a result of a crisis.  Though one may wonder whether it might, possibly, be based on some kind of press release from Caroline Sapriel‘s organisation, it does highlight one of the issues I’m aiming to address from a different angle.

It’s short so, rather than summarise it, I’ve re-posted it below.  You can get to the original on the Reuters site by clicking here or on the graphic.

With thanks to Amy Lee from Stephenson Resilience, for bringing it to my attention.

(Reuters – Peter Apps, Political Risk Correspondent – London – Wed Mar 30, 2001 08:39 EDT) – Crisis management expert Caroline Sapriel has plenty of experience of the colossal pressure on corporate chiefs such as Tokyo Electric’s Masataka Shimizu, hospitalised as his firm battles nuclear catastrophe.

Firms such as airlines, oil majors and utilities may sometimes run scenario-based exercises, hold discussions and hire outside consultants such as her to brace for disaster. But when it strikes, she says corporate structures and personnel are often by their very nature still brutally unprepared.

As the stock price nosedives and media bays for blood, managers themselves are often simply in shock as they face the reality of potential deaths and difficult decisions. Part of her role is supporting them through those strains, she says.

“Executives aren’t military commanders,” Sapriel told Reuters from the Brussels headquarters of her crisis management consultancy CS&A. “They’re not trained for crisis management. The whole style of management these days is often do things by consensus. That simply doesn’t work in a crisis. It’s much more about command and control. The strains are enormous.”

Preparation is key, she says, but many companies are simply not willing to be honest in advance about what might go wrong.

Tokyo Electric Power Co — known as TEPCO– said on Wednesday that chairman Tsunehisa Katsumata would take over operations from president and CEO Shimizu, barely seen since the quake and tsunami that crippled its plant. It said Shimizu had been taken to hospital suffering from high blood pressure.

Crisis managers say TEPCO is facing one of the most challenging forms of corporate disaster — potentially open- ended and endangering health and human life.

As oil giant BP (BP.L) found in last year’s Gulf of Mexico oil spill, that can be a very uncomfortable place to be.

Governments, policymakers, regulators and other officials may also be feeling the heat — and taking in out on the firm. A “good crisis” might sometimes be the making of a politician, but in the corporate world managers know there is little upside to being the face of an industrial disaster.

“The first thing you often find is that… not a single senior member of a company is willing to talk directly to the media for fear of being the one to take the fall for the crisis,” sad U.S.-based crisis consultant Eric Dezenhall.

“In some companies, the key to becoming CEO is to avoid being blamed for any particular debacle and people know that.”

Disaster Cliches

With BP in the Gulf of Mexico, Sapriel said too much pressure was put on CEO Tony Hayward who also became the media point man and something of a hate figure in the U.S. Ultimately, he resigned after a string of gaffes that included being photographed going sailing at the height of the crisis.

“You do need the man at the top to make some statements to show he’s in charge and he cares — he can’t disappear altogether — but if they are out front every day they are going to start to make mistakes,” she said.

At the same time as having to handle relations with the media, and populations and politicians, firms themselves may still be struggling to get a handle on what has happened.

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