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Managing the crisis Featured

6:07am EDT July 19, 2002

One moment on the front page of your daily newspaper can alter a reputation that took years to build.

Whether your business is the cause of a financial problem, safety issue or legal crisis, or suffering the effects of a crisis, facing the media can be a challenge.

In February, industry experts gathered at a luncheon conference sponsored by the Northern Ohio Turnaround Management Association to discuss steps business owners can take when their company is thrust into the spotlight.Be proactive

Donna Nowak, a certified turnaround professional and president of Conquest, says a troubled company does not function as an island and details cannot be withheld. Constituents from the financial arm, legal community and media all need information, so be proactive, think ahead and prepare to communicate to avoid surprises.

"You need to act swiftly," she says. "And, most important, communicate clearly and honestly."

Kathleen Obert says it is human nature to hunker down.

"Management typically has a natural defensive posture where they want to not talk about things that are less than great," she says.

Obert should know. As president and CEO of Edward Howard & Co., she's dealt with the issue on many occasions. She says it's imperative that everyone understand what's going on.

"This stuff is complicated and scary," she says, adding that not everyone knows what the ramifications of a bankruptcy Chapter 11 filing are. "If the media doesn't understand it, they're not going to get it right. That's going to cause you to spend more energy once again explaining what the facts are."

Ask for help

A crisis can monopolize an owner's or manager's time while the wheels of business continue to turn. With a plan in place and outside help, time-consuming issues can be handled without abandoning day-to-day operations.

"A crisis takes management's eye off the ball of the core business and diverts lots of resources and energy away," says Obert.

Make sure you have the right people in your corner by building strong relationships with key supporters. Obert recommends trying to build credibility long before a crisis occurs.

"It starts before the company gets in trouble," she says. "An organization that can work with its constituents to build important relationships that are solid before the crisis hits will be in a far better position to turn the company around going forward."

Understand the law

Lawrence Oscar, an attorney with Hahn Loeser Parks, says a company's lawyers may enter the situation after significant revenue losses have already occurred or when bankruptcy is imminent.

Attorneys are often requested to be spokespeople, but before assigning them the task, Oscar recommends legal advisers delve into the situation and probe because "every situation that I've been involved with, the story changes. Even if they're complete, things can change tomorrow."

Obert agrees that nothing should be held back.

"You need to know where all the skeletons are so that you can speak candidly under the gun," she says.

That means asking hard questions, such as why is quality an issue this year when it wasn't last year?

Although it is important to answer questions honestly, Oscar says that with help, managers can understand the legal landscape and learn where to draw the line.

"We don't want to offer things that are not necessary," he says.

A legal adviser can also recommend when a confidentiality agreement is necessary.

"Sometimes, there is a need to communicate confidential information," he says. "Whether it's to your bank lender or investors, sometimes your lender is also a lender to a competitor."

Control the message

Communication can be used to help turn a problem around. Obert suggests working with people who know how to communicate to help convey information in a way the owner can feel good about.

Just as important, different constituent groups need different pieces of information and a different approach.

The process can be as simple as town hall meetings in the company cafeteria to as complicated as conference calls across the globe. Within that framework, Nowak says, "What we're doing is talking about what's the public opinion of the customers, the vendors, the lenders, the creditors ... and how am I going to influence, direct and control that?"

Obert adds, "Communications need to minimize the impact of the crisis on the organization, restoring as much normalcy as you can and doing what you can to have a soft landing in the situation." How to reach: Donna Nowak, (216) 321-9181 or DNowakCTP@cs.com; Kathleen Obert, (216) 781-2400 or kobert@edwardhoward.com; Lawrence E. Oscar, (216) 621-0150 or www.hahnlaw.com; Northern Ohio Turnaround Management Association, (216) 696-3225 or TMA@mjmservices.org

Deborah Garofalo (dgarofalo@sbnnet.com) is associate editor of SBN Magazine.