Managing a Business Crisis During a Global Crisis: Top Takeaways
By M. Luke Davis, Furia Rubel Communications Intern
Many unforeseen crises ensued after COVID-19 silently swept through our states, placing a massive strain on people, businesses, and the economy. With the COVID-19 pandemic, we’re facing not just a monumental crisis but one that is fraught with many crises within it, which can lead to chaos.
The state of the economy is now on par with the Great Depression era. Retirement savings and corporate liquidity have suffered, tens of millions of jobs have been lost, and millions of people are waiting in long lines at food banks just to get food to feed their families. Health care workers are overwhelmed, and our health care facilities were blindsided and ill prepared. Lawsuits abound. Small businesses are shuttered, children are being educated at home, and we have seen a historic spike in cases of depression and mental illness.
While we navigate these uncharted waters, companies are certain to face challenges and crises that impede their survival. So, this is an opportune time to prepare for the unexpected and implement proactive crisis strategies for the future. Below are examples of a few crises that may affect you and important takeaways.
COVID-19 Related Class Action Lawsuits
Attorneys from Thompson Hine predicted that the coronavirus pandemic could spark a rise in challenges that plaintiffs and businesses will face, and there may be a heavy focus on various disclosure violations. Companies operating in essential fields that are most affected by COVID-19, including health care, travel and retail, are susceptible to class action lawsuits, while plaintiffs might have a difficult time proving cases.
On March 12, a lawsuit filed against Inovio Pharmaceuticals, Inc. and its CEO alleges that Inovio made erroneous statements about its development of a COVID-19 vaccine.
Two complaints were also filed against Norwegian Cruise Line Holdings, Inc. and two of its executives, accusing Norwegian of presenting invalid or misleading claims about its financial state and coronavirus safety procedures.
In times of a crisis, it’s important to disclose your businesses’ information accurately. At the same time, proceed with caution. The Securities and Exchange Commission extended filing deadlines and has provided best practices for proper disclosure. Stay on top of these best practices to ensure that your company disseminates vital communications appropriately.
In addition, check your facts and provide reliable information to your audience. It also can’t hurt to play devil’s advocate and consider all possible forms of backlash to the messages that you send. Determine if, when, how, and who you should respond to in each scenario that may present itself in a crisis. Start by first asking whether a response is appropriate or necessary, keeping in mind that sometimes the best response is no response at all.
A Six Flags season pass holder claims that Six Flags Theme Parks Inc. and Magic Mountain LLC violated state business laws for continuing to charge his credit card while denying him access to the park in Southern California. He also accused Six Flags of “breaching its contract, negligent misrepresentation, and unjust enrichment.” Six Flags decided to temporarily close Magic Mountain and Discovery Kingdom on March 13 due to COVID-19. According to plaintiff Rezai-Hariri, pass holders agree to pay the monthly fees, that add up to $240 to $505 a year, because they expect Magic Mountain will be open seven days a week as advertised.
“Defendants have made the baffling decision to keep charging all of its customers monthly membership fees while prohibiting access to Six Flags Magic Mountain as the novel coronavirus, COVID-19, rages throughout the world and the United States economy has gone into a deep recession,” he stated in the complaint.
Without indemnification, members assume some level of risk for acts of nature when they purchase memberships. This suit demonstrates how crucial it is to lay out all details clearly in the policies related to your business or firm’s services. If you find something missing from your contract, update it and address everything you can think of that would prevent future hardships, especially during a crisis, and provide updates to your stakeholders. Transparency is key, so share how an active crisis could impact products or services your consumers demand.
Use your communications to restate contract information that is easy to miss. It could save you a future suit against false allegations. In Six Flag’s case, it could explain to pass holders how their memberships will be impacted by coronavirus. If Six Flags’ contracts stated that pass holders are required to pay regardless of park access, it should restate this during a time of crisis. If not, updating the contract should be its first move.
Four law firms filed a class action lawsuit against Southwest Airlines for refusing to reimburse customers for cancelled flights due to COVID-19, until customers asked for a manager or filed a complaint with the government. This highlights the U.S. Department of Transportation’s requirement that airlines completely refund travelers whose flights were cancelled because of coronavirus. A similar lawsuit was filed against United Airlines in early April.
Have a crisis response in place for every crisis. Be honest with your target segment. It’s very likely with the coronavirus pandemic that Southwest doesn’t have the tangible money laying around to provide to every one of its passengers who expect to be recompensated. It’s okay to admit that your organization is having a difficult time.
Acknowledge that you are aware that your consumers may be unhappy, but ask for their patience and promise to make it up to them later.
If you want to maintain brand loyalty, you need to apologize for misconceptions. If the accusations are false, then apologize for the misconceptions of how the refund policy worked during crisis. If you care about your audience, they will care back.
Facebook and Ad Cloaking
Last month, Facebook announced a lawsuit against a user going by the name LeadCloak. The user is allegedly offering ad-cloaking software, which sneaks fake news, scams, cryptocurrency diet pills, and other malicious content past Facebook and Instagram’s ad review process. “When ads are cloaked, a company’s ad review system may see a website showing an innocuous product such as a sweater, but a user will see a different website, promoting deceptive products and services which, in many cases, are not allowed,” said Facebook in a statement.
Due to stay-at-home orders, people are turning to the digital landscape like never before. Along with this, many online privacy dilemmas have surfaced, like the case with the video conferencing platform Zoom. In a 24/7 online world, it’s important to keep your business information safe and secure. Make sure to regularly update your passwords and install security software and firewalls, especially if you’re working on a non-Apple device. Share your knowledge of cyber security with your audience, so they can protect themselves as well. This will help to establish your firm or company as a thought leader, and it will demonstrate your caring toward your customers. Learn more about protecting your privacy and data during virtual meetings in this blog post.
One of the more tragic crises that popped up from COVID-19 involved Walmart. A 51-year-old Walmart employee, Wando Evans, died from the virus after Chicago store managers supposedly ignored his symptoms and kept it secret from Evans’ colleagues. Another coworker, 48-year-old Phillip Thomas, died four days after Evans.
Walmart said in a statement that the company was “heartbroken” and would respond to the suit in court. “While neither associate had been at the store in more than a week, we took action to reinforce our cleaning and sanitizing measures, which include a deep-cleaning of key areas,” Walmart relayed in an email.
During a crisis, it might be hard to think about others, as your focus may shift to thinking about your own well-being and how you will keep your business afloat. However, forgetting to keep coworkers in mind could lead to resentment and potential lawsuits from them and their families. The bottom line is to respect the well-being of your employees and show your support during an active crisis. Remember that they are probably worried about whether they’ll keep their job or be able to feed themselves and their families. Sympathize with them in your communications, and offer possible accommodations, such as letting an elderly employee work from home to keep them safe from contracting COVID-19. If your employees are happy, then you’ll be happy. Don’t ignore your colleagues when something is wrong.
Fortunately, many individuals and companies like Etsy, a global marketplace where creative people can sell products they’ve made, have stepped up to do what they can to mitigate crises within the bigger crisis, by providing a solution to the PPE crisis of running out of face masks during the COVID-19 pandemic.
When news broke about the critical shortage of PPE, Etsy CEO Josh Silverman urged Etsy’s sellers to consider making face masks to help frontline healthcare workers. The goal was to support small businesses and simultaneously encourage them to take up initiatives to urgently support those who needed help the most. According to Etsy, 2 million of its sellers are open for business during the lockdown, but many still struggle to make ends meet, so Etsy has invested $5 million and offered a one-month grace period to sellers who need extended deadlines to pay their bills.
Aside from engaging in your organization’s internal initiatives, it is a good time to think beyond your organization and to consider ways you can support your local community. It goes a long way toward enhancing your company’s image and goodwill, and increased engagement with your community can promote stronger brand advocacy and loyal customers. Consider supporting a fundraiser or coordinating with local businesses to support those in your area.
Apple is another company that shifted gears to help those in need during the PPE crunch. Apple CEO Tim Cook made the decision to create 1 million face masks each week for healthcare workers. “Apple is dedicated to supporting the worldwide response to COVID-19. We’ve now sourced over 20M masks through our supply chain,” said Cook, in a tweet on April 5. “Our design, engineering, operations and packing teams are also working with suppliers to design, produce and ship face shields for medical workers.”
During a crisis, it is paramount to focus your messages and your goodwill on how your company is supporting your audience and the communities that you serve.
Caring for Elderly
The highest percent of people who died from COVID-19 in New York State were among our most vulnerable population—elderly people who lived in long-term care facilities. Other states also have experienced this trend, where residents and staff were not adequately protected with safety measures such as PPE protective wear like masks and gloves, washing hands, and limiting visitors. COVID-positive people also were sent from hospitals to long-term care facilities, and those infected were not always separated from healthy residents.
For those with elderly loved ones who live in long-term care facilities, ensuring their safety may require that we intervene and insist that safety protocols are enacted. The Cottages of New Lenox, Illinois is an example of a facility that began holding weekly conference call meetings with relatives and guardians of its residents. As a result, many suggestions were adopted to ensure stringent infection control, and some are listed below.
- Residents who test positive for COVID-19 should be temporarily housed apart from healthy residents.
- All residents and staff should be diligent with washing hands, using hand sanitizer, and wearing PPE, including masks and gloves.
- Mail and packages should be delivered to a central location to be disinfected with cleaner before entering the facility.
- Temperatures of staff should be taken before entry to the facility, and staff with elevated temperatures should not enter.
If a resident becomes ill with suspected COVID-19, prompt treatment yields the best results for recovery. All rooms should be deep cleaned and disinfected, and social distancing of six feet should continue whenever possible. Extra protective measures should be initiated for residents who have dementia, Alzheimer’s, or who are in memory care units. Facilities and residents can install or buy portable HEPA systems that filter air through UV lights.
For now, relatives and friends should not enter these residences, but in the meantime, you can safely say hello to your loved one through a window at the facility, by phone, through Facetime or by video conferencing.
No doubt these turbulent times call on us to be proactive and agile, and one takeaway that I think we can all agree on is that change is inevitable. Author Kent Beck said, “The technology changes. The team changes. The team members change. The problem isn’t change, per se, because change is going to happen; the problem, rather, is the inability to cope with change when it comes.” To be able to cope with and manage crises and the changes that will ensue, it’s imperative to have a strategy in place. As Dr. Phil McGraw said, “Don’t wait until you’re in a crisis to come up with a crisis plan.”
While we have a difficult road ahead, preparing for a crisis within a crisis can go a long way. The class action lawsuits against Southwest Airlines, Six Flags, and Walmart teach us the importance of being transparent in communications, empathizing with target audiences, and respecting the well-being of employees, consumers and patients. Apple and Etsy demonstrated the benefits of serving your community during a crisis, and Facebook’s ad cloaking concerns remind us to safeguard our privacy and data. As stated in an article by Ragan, “An ounce of crisis planning is worth more than a pound of apologies.” Apply these examples to help your own business plan ahead and always be prepared for the unexpected.
It is a tough time for Americans because it seems like everything we know has been put on hold. Graduations, weddings, proms, travel, and sports events have been sidelined. We can’t even get a haircut or have our teeth cleaned. Notwithstanding, crises within the crisis have revealed that we are strong, and in tough times we pull together and find solutions.
With positivity, resolve, and a proactive approach, we will prevail.