Crisis prevention has taken on greater urgency for management and boards as corporate crises, frequently self-inflicted, continue to make headlines. The deep and long-lasting reputational impact of self-inflicted crises--product quality, worker safety, sexual harassment, unethical sales practices, legal/regulatory compliance--has put a spotlight on crisis prevention, particularly the role of culture in crisis prevention.
How do corporate leaders assess the robustness of their crisis prevention and readiness efforts? The starting point is to make sure the fundamentals are in place, visible and working: tone at the top, an ethics and compliance program, whistle-blower hotline, employee training, and a robust risk management process. Then focus on the culture and incentives surrounding those mechanisms.
The overarching message from those board members and executives we interviewed for our lead director initiative white paper, "Crisis Prevention and Readiness," was to "make it safe for people to do the right thing."
Beyond setting the tone and walking the talk, the CEO and senior management should create a culture that makes it safe for people to do the right thing. A company's leadership, particularly the CEO, needs to be visible and approachable. "The goal is to create an open and comfortable atmosphere that encourages people to come forward and speak up--not just vertically but laterally--360 degrees, really," says one director. "You have to make it okay for people to ask questions, disagree and bring up difficult subjects. They need to feel empowered to speak up when they see problems, even if the problem isn't fully formed yet."
In making it safe for people to do the right thing, the directors and business leaders we interviewed stresses the following:
Be clear about the behaviors for which the company has zero tolerance. Companies typically have zero-tolerance policies for certain behaviors, such as violence, fraud, racial discrimination and sexual harassment, but there cannot be a zero-tolerance policy for everything. It is essential that companies get this right. How should a board and management team go about developing a zero-tolerance policy? What makes a zero-tolerance policy effective? The #MeToo movement provides some important lessons for boards as to how to establish absolute clarity regarding its zero-tolerance policy for harassment and abuse.
Create a culture of accountability. People pay attention to who gets hired...