How to plan for the board of directors’ role in a crisis

When a crisis hits a publicly held or private company, the Board of Directors has a unique role in helping its company manage and survive the crisis. Today, directors are expected to take on the role of representing not only shareholders, but the broader array of stakeholders and the public interest. And as best practice in corporate governance evolves, there are rules of engagement that company directors must know as the crisis unfolds.

Be it cybercrime, environmental disaster, sexual impropriety, CEO succession, or product failure and recall — as crisis becomes the new normal, everyone within the company, from General Counsel to technical supervisor, can believe he or she is a crisis manager. Indeed, some can claim expertise just because they have read about crises in the news….or watched the TV show Scandal.

Yet few executives, or board members, really know how to effectively prepare and plan for crisis at the board or operational levels, much less have the expertise and experience to:

  • Do and say the exact right thing, at the exact right moment, to handle it when it hits.
  • Successfully resolve the underlying issues.
  • Recover from the real and reputational damage that follow on.

But shareholders and stakeholders, not to mention the SEC and other governmental agencies, are placing greater expectations on boards to assess risk, protect the company’s reputation and act proactively, responsively and responsibly, in the face of a crisis.

So, following are 11 Crisis Rules for Boards of Directors, distilled from years of experience as a crisis manager working at the board and executive leadership levels, starting as head of marketing at GE Capital and a number of banks and extending to over 15 years running my own crisis management firm, that GE actually helped to fund. For more information, see this document: Temin and Company’s Reputation Agenda for Directors — A 20-Point Plan for Boards to Address Reputation Risk.

  1. First: THE BUCK STOPS with the Board. It is imperative that directors deny the very human instinct to go into denial when they first hear of an incipient crisis, and skip straight to due diligence, acceptance, responsibility, and positive action.
  2. Become the guardian of your company’s reputation.
  3. Help your company see clearly; don’t let their first response be naïve or a lie. Insist upon proactive wisdom, appropriate transparency, and an attitude of solution-finding.
  4. Proactivity is needed before, during, and after a crisis:
  • Monitor risks at least 2x a year, through the audit committee, as well as by the entire board.
  • Insist the company have a crisis plan and review it yearly.
  • Know who will lead and who will be a member of the crisis team.
  • Know who will speak for the company in what situation.
  • Understand and agree upon the role of your board in a crisis.
  • Be a part of the feedback loop. Make sure to conduct what the military calls an “after action review” and make sure to capture all the learnings for the future.
  1. Increase the board’s input and impact...”noses in, thumbs out” turns into “all in.“
  2. Know immediacy is key, especially with social media, so make sure the company acts quickly and appropriately, don’t let them retreat into silence.
  3. Make sure your board is high-functioning and impactful before a crisis occurs… All the warts will come out.
  4. Provide a moral center for the company to do the right thing in a crisis…not only what is expedient. Limit liability but not humanity.
  5. Work to assure the company becomes a visible and real part of the solution — no matter what it takes.
  6. Practice board crisis management through role play games…We call ours “Crisis Games.™”
  7. Make sure the company does not make the same mistake ever again. 

Davia Temin is the founder and CEO of reputation and crisis management consultancy Temin and Company (www.teminandcompany.com). She writes a column for Forbes.com entitled “Reputation Matters” tweets (@DaviaTemin) regularly, and publishes articles in The Huffington Post and American BankerIn addition to her work as a reputation and crisis strategist, she sits on numerous boards, including Swarthmore College, ProPublica, and Harvard Kennedy School’s Women’s Leadership Board. She chairs the Board of India-based investigative journalism non-profit, Video Volunteers, and served for nine years as first vice chair of the Board of Girl Scouts of the USA.