The Expanding Portfolio of the CFO – Where Does Crisis Communication Fit In?

• Crisis
• July 2, 2014
• by Merrie Spaeth

“Ugly scenarios are coming.” Those were the words of the Dallas CFO Executive Summit keynote speaker, Dale Buckner, CEO of Global Guardian. The former Special Forces veteran was talking about global power and political struggles as he paced the stage, an event billed as “by CFOs, for CFOs.” It was clear that much, if not all of the audience, realized that “ugly scenarios” are part of the new normal and they, despite their financial training and background, need to be prepared to deal with them.

The Summit may have been “by CFOs” but it was nurtured by the Evanta organization which lived up to its reputation as a world-class event planning group. A top drawer group of CFOs attended – with their mobile devices mostly turned off. A similarly impressive group of C-Suite finance leaders plus other subject matter experts spoke and participated. The sponsors and hosts were a who’s who of professional services providers. Most impressive, the small group discussions, which had titles like “Expanding to Latin America—Upping the Value Proposition,” provided unparalleled opportunities for peer-to-peer discussion and sharing of ideas. (The sessions are completely private so that’s as much as I can tell you.)

The final session, which I had the privilege of moderating, took on a very different topic. Suggested by Jim Skinner, who is not only Neiman Marcus’ CFO but also holds the titles of COO and EVP, it tackled “Managing Crisis: When Communication Matters.” The session featured a back-and-forth discussion between Skinner and Jennifer Coleman, SVP of marketing and public relations for Baylor Scott & White Health. Skinner is a CPA who has been at Neiman’s for 13 years and should really be considered part of the sales team since he has bought and sold the company more than once over the years. Coleman, who has spent 34 years with Baylor Health Care System, has seen the organization grow from a single hospital to a health care empire featuring 43 hospitals and hundreds of freestanding surgical centers and clinics.

The panelists drew on extensive personal experiences dealing with crises and adverse situations that can threaten a company’s reputation.

When I posed the question to the audience, “Whose company has experienced what you would define as a crisis?” every hand went up. We began by discussing why this panel was part of the Summit. After all, wasn’t managing crises the traditional province of the general counsel and communications department? Skinner was emphatic. Almost everything is seen by and has an impact on the CFO’s traditional audiences: investors, analysts, regulators. Beyond the impact on the financial health of a company, leadership needs to function as a team and avoid siloes and turf consciousness. Coleman seconded the view, noting that Baylor has well-established procedures for pulling together the team that makes decisions and implements strategies.

Both emphasized the importance of thinking through potential situations and putting in place procedures to deal with them. This is particularly challenging in the age of social media. Both discussed the tension between wanting and needing to use social media for employee and customer engagement and marketing and how empowerment can lead to an ugly scenario.

Neiman’s, famous for its customer service and forging multi-generational bonds with its customers, empowers its sales force to keep in touch with individual customers via email and other channels. This is a competitive advantage. Skinner told the story of meeting a sales associate in her 70s who held up her iPhone and told him, “This is my friend.” Electronic person-to-person communication provides a way to alert a customer to new items, sales or special events – but also creates routes for rumors and bad news to spread.

Both speakers agreed that it’s worth the risk to have policies that encourage the use of social media but to be alert to associated potential problems. Baylor initially prohibited the use of social media, and Coleman finally convinced top management several years ago that it needed to be allowed, even a priority, but with a clear explanation of what was and wasn’t allowed. The triggering event was the discovery of personnel doing what can only be described as inappropriate activities. Understanding that these things happen and dealing with them before they become public or cause problems is a priority.

Should the CEO be the spokesperson? This is one of the most frequently asked questions in discussions about crisis communication. Ever since the Exxon Valdez incident brought the question to the forefront of crisis planning, there has been disagreement. Neiman’s and Baylor were firm; barring a world-shattering situation garnering international attention, their CEOs are the face of the enterprise; they are expected to be leaders and articulators of the mission in a wide range of venues. They are, however, not the crisis spokesperson.

Since Neiman’s had a highly-publicized security breach, Skinner had some advice: When something happens, there’s always a continuum between minimally managing the situation and being sensitive to costs, and going in “whole hog.” And when you commit, you can’t get bogged down in minutia, the only thing that matters is handling the situation  the right way. You need to gather your internal and external experts and devote your full attention to it.

Additional guidance and advice from both panelists includes:

• Develop various options for handling crises. You may start out simply monitoring a situation and declining to discuss rumors but then find you need to quickly become more proactive.
• Remember that “no comment” is interpreted as a confirmation of the question or charge. Substitute “It’s not appropriate to discuss” with an explanation, such as, “it’s under investigation,” or “it’s a personnel matter and our company respects the privacy of all employees.” There’s almost always an explanation of why it’s not appropriate to discuss a topic.
• Get external coaching. Knowing a lot about a topic doesn’t mean a senior executive has the performance skills to sell a message. Remember that your internal audiences will pick up and repeat your messages and imitate your delivery. External audiences will pick up and repeat your words.
• Rehearse. Having all the right information in your head doesn’t mean it will come out of your mouth in a coherent manner. I reminded attendees that I always hear the same excuses: I’m too busy and I don’t need to rehearse because I know the subject material. My former boss, President Ronald Reagan always rehearsed, and he had the ultimate C-suite position.
• CFOs speak to many audiences, and the lines between traditionally separate audiences have blurred.  A message to one audience will be heard by others, who may hear it very differently.
• Be ready for the “Edward Snowden” problem. One disgruntled employee or customer can magnify their voice significantly.
• Develop trust between the traditional departments before you need to work together.
• Develop a set of pre-approved messages and don’t just concentrate on media.
• Remember employees are a company’s ambassadors.

As a CFO, mastering these communication skills will be one more valuable addition to your already robust portfolio. The panel was in agreement, it could be the difference between salvaging or damaging your company’s hard-earned reputation. I offered a final piece of advice from former President Teddy Roosevelt, “Do what you can, where you are, with what you’ve got.”