6 Crisis Management Strategies for Business Owners

Large or small, even the best-managed businesses may be stuck by an unexpected public relations crisis. Recalls of dangerous or contaminated products, civil product liability lawsuits, and other unforeseen disasters can all hurt sales, the bottom line, and/or reflect poorly on a company's image.

When a public relations crisis strikes, a CEO's initial reaction may be to stonewall the press and refuse to comment. Public relations experts who have successfully handled numerous situations with crisis management strategies say this is the wrong way to address the problem. They urge the opposite—an immediate and full public disclosure.

Here are six crisis management techniques to help a company successfully defuse and resolve them favorably.

Key Takeaways

  • Companies can take steps after a pr crisis to mitigate adverse impacts by admitting any mistakes and holding a press conference.
  • Social media may drive negative pr for a company.
  • Having a crisis management plan in place and even a team may be a crucial element for larger companies.
  • When a crisis occurs, company officials should reach out to in-house counsel or outside lawyers for advice.
  • Telling the truth is a critical aspect of handling pr after a crisis.

1. Meet the Crisis Head-On

Although every crisis will have unique aspects, there are general principles that apply to most of them. Whatever the crisis, the media and the public want to know what happened. Your customers will want to know why it happened and how it can be fixed, including any possible compensation for damages or inconveniences they might have suffered.

The guiding principle for handling such crises is telling the truth. State publicly only what is known, just the facts. Do not make statements that assume, guess, or speculate on any aspect of the crisis. Make sure that legal counsel examines all statements before being released.

Concealing facts regarding the crisis will, in most cases, backfire because the media can uncover them, report the information widely, and damage the company further than it was already damaged.

2. Address the Media

In most instances where a public relations crisis affects a company, the media will contact either the firm's CEO, the company spokesperson, or the public relations department (if there is one) or some member of senior management. Reporters will ask for specific explanations and statements they can quote in their reporting.

Designate a crisis management team or individual and direct all requests for information to an appropriate member of the group or the spokesperson.

Do not allow anyone else in the company to speak to the media. Internal information about the crisis should only be given to the crisis management team and/or spokesperson to ensure that the company speaks with a single, consistent voice. If there are technical aspects to be disclosed, an expert in the specific field should be designated to interact with the media.

The CEO might also offer the media a real-time or recorded interview in which all questions are answered. A live broadcast on television or an appearance on a social media channel taking questions from customers is another effective means of handling the crisis. It may also be necessary to hire a public relations firm or expert consultant in crisis management techniques. Even if press coverage is extensive, it might also be advisable to buy advertising in broadcast, internet, and social media to help address the crisis.

3. Offer a Public Statement

A public statement should also include how people might be affected by the problem. This would consist of informing customers who might have bought a recalled, flawed, or contaminated product. In these cases, the company should provide a refund or equal-priced replacement for the product. A contaminated product should be disposed of (in some cases), and customers who have purchased the product should be informed of its risks.

When addressing the public and/or the media, present a calm, compassionate face. Denying responsibility or accountability for the situation creates more customer and public hostility. Keep in mind, this approach is different than admitting liability, a legal issue determined in a court: but again, clear public statements with legal counsel.

Handing a crisis should begin with an honest and vigorous public relations initiative that includes damage control and an opportunity to rebuild the public perception of your company.

A prepared press release, either created in-house or by an outside public relations or media relations firm, can also address the crisis at greater length and more detail than a public statement. The press release might also contain a question and answer exchange, anticipating what the public would want to know about the crisis. One suggestion is to use a Q&A format to provide general information in short paragraphs of just a sentence or two and is easy to read and understand.

4. Understand Any Potential Legal Issues

Legal issues should be discussed with counsel. Attorneys may urge an all-inclusive "no comment" to the media until the legal aspects of the crisis are fully understood and addressed. There may also be insurance issues, and attorneys should examine applicable policies.

However, the downside of the "no comment" approach is often increased media investigation and a negative public image. If and when the crisis results in the filing of civil lawsuits, or even criminal prosecutions, the refusal to comment by the company being sued will have a negative impact on the jury.

5. Support Your Customers

The affected company should expect customers to be angry and disappointed. These are natural reactions, and if the company acts responsibly, these emotions should eventually fade away and be replaced with a renewed loyalty to the brand.

Customers may appear at stores, for example, demanding refunds for recalled or faulty goods or for affected services. The company should initiate an immediate full refund or replacement policy to restore goodwill among customers. An additional bonus to affected customers in the form of a gift card or discount coupons will also help rebuild customer loyalty.

Drafting a new, more comprehensive guarantee of products and/or services may inspire consumer confidence and even spur more vigorous sales in the wake of the crisis.

6. Create a PR-Friendly Advertising Campaign

Once the crisis seems to be diminishing, a company should consider a brief advertising campaign in digital or traditional media to disseminate further and reinforce your message. The PR advertising message should be posted on all available digital content channels as well.

Points to emphasize in the advertising should include:

  • The company's policy of full refunds or replacements of the affected product
  • The steps taken to prevent a recurrence of the problem
  • New guarantees
  • New incentives (bonus gift cards, discounts, etc.) to recapture lost business
  • An apology for any inconvenience caused by the crisis

The Bottom Line

A quick, honest, complete disclosure response when a crisis strikes a company is the best way of controlling damage, maintaining the trust of your customer base, and minimizing loss of sales, which in most cases is inevitable.

Eventually, however, if the principles of crisis management are implemented, sales should be recovered, along with credibility, consumer trust, and a restored public image.

Take the Next Step to Invest
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.