Coping with disasters: it's all in the planning

By Selwyn Parker

"When a crisis hits," explains an expert on the subject, "it can be quite savage. Either the company recovers or, over time, it's gone."

The expert is Aucklander Vicki Nuttall, a former executive with Mercury Energy who, having studied these commercial traumas at the London School of Economics this year, can vouch for the truth of Dr Kent Stephens' theories on the importance of suppressing the causes of failure.

Nuttall's analysis of 21 corporate crises around the world, including the Exxon Valdez oil spill, convinced her that in every crisis lie the seeds of commercial ruin if they aren't properly managed.

Of the companies she studied, nine later went out of business or were taken over directly because they mishandled the situation.

Companies should not think they are immune from crises. "There were three times as many [corporate] crises in this decade as there were 20 years ago."

Nuttall, who established Mercury's much-praised compensation package after the lights went out in Auckland's CBD, makes several points about how to handle potential corporate disasters:

* Act quickly. "When a crisis hits, you can't do everything right but you must do the best you can. In a crisis there's never enough people or enough time."

Coca-Cola bungled the contaminated drink crisis in Europe this year by first, denying it, and second, failing to act fast enough. Eventually, the Belgian and Luxembourg governments took the matter our of the beverage company's hands by forcing the withdrawal of all cans.

* Get a team together, especially in finance, operations and PR.

"You need a group of crisis-hardened people." Union Carbide did not have such a group in Bhopal, India, when its factory released toxic gas in 1984, killing 3000 people. The management fled without warning employees or the locals. The compensation package was also bungled.

* Communicate, and especially with customers. "Urgency is the criterion in dealing with customers. But your public relations must match the facts."

When P&O's ferry turned turtle in the English Channel in 1987, drowning 192 passengers and crew, it was six hours before the company released details.

The good news is that crises are preventable, says Nuttall, echoing Dr Stephens. She suggests that companies should analyse their key vulnerablities, draw up a crisis plan just in case and institutionalise the results.

* Selwyn Parker is available at wordz@xtra.co.nz