OMNICOM GP : Survey: Few Companies Are Prepared to Manage a Crisis
04/12/2011| 09:10am US/Eastern
The biggest mistake companies make during a corporate or operational
crisis is a lack of communication and transparency with stakeholders and
employees, causing a negative impact on valuations, according to a
survey jointly released today by the Canadian Investor Relations
Institute (CIRI) and Fleishman-Hillard Inc.
The survey polled financial analysts and investor relations officers
(IROs) at companies across Canada and the United States on operational
and corporate crisis preparedness. It found that while many companies
are mindful of the potential damage crises can cause to their sales,
reputation and share value, few have an effective crisis management plan
in place to deal with negative scenarios -- and if they do it is likely
out of date.
Further, the survey found that half of responding IROs from the
financial services and healthcare industries claim they don't follow a
crisis communications plan at all. The survey looked at both operational
crises, which are issues impacting a company's day-to-day business, and
corporate crises, issues involving a firm's executive team or finances.
"Given the recent widely known sector crises -- the 2008 financial
meltdown, healthcare product recalls, extreme environmental damages,
automotive sector crisis and other headline-grabbing frauds and scandals
-- companies need to be armed with a plan," said Tom Enright, CIRI
president and CEO. "No sector or company is immune to a crisis; having a
crisis communications plan in place is simply prudent risk management.
"The survey reveals that a poorly managed crisis clearly has a negative
impact on a company's share valuation, so it is imperative for IROs to
be prepared," Enright continued. "A crisis communications plan is one of
the most important tools a company can have in its arsenal."
Yet for those who have a crisis plan in place, only 29 percent of
companies update it once a year, according to the survey results. As a
rule, it is best practice to update a crisis plan at least once a year
to ensure the content is evolving and maintaining relevance in today's
Not only is there confusion around the frequency of updating a crisis
communications plan, companies also struggle with its focus:
85 percent of responding analysts say a corporate crisis -- fraud
resulting in accounting restatement -- has the greatest negative impact
on a company's value.
But over 50 percent of responding IROs say their company builds a plan
that prepares them only for an operational crisis.
"Although IROs clearly understand the impact that trust, transparency
and proper disclosure can have on company valuation during a crisis,
it's apparent that most companies are unprepared to deal with the
fast-moving affects of a corporate or operational catastrophe," says Tom
Laughran, senior vice president, partner and global financial
communications co-chair with Fleishman-Hillard. "Timely and honest
communications are essential for maintaining the trust of investors
during volatile periods. In order to effectively communicate during an
emergency, companies must continually examine and update their crisis
plan to ensure all stakeholders have been addressed and that an
efficient and actionable chain of command is in place."
When focusing on digital communications, the survey found that while
many analysts and IROs recognize the potential impact that social media
outlets -- Twitter, Facebook and YouTube -- can have on their companies,
few have a crisis plan in place that incorporates social media protocols.
According to the survey, over 50 percent of responding analysts look to
the corporate blog for information during a crisis, but only 17 percent
of responding IROs say their companies use this tool as a channel for
crisis communications. Given that less than half of responding IROs
monitor social media platforms during a crisis, IROs clearly need to
incorporate these tools in their plans to maintain control of the
corporate message during a crisis and minimize wide-spread negativity.
An IRO's role during a crisis is very important. As the conduit between
analysts and the company, it's imperative that IROs play a lead role in
developing the communications plan. According to the survey:
85 percent of responding analysts say IROs are a main point of contact
for a corporate crisis specifically.
55 percent of IRO respondents don't know if the crisis communications
plan is updated after a crisis.
50 percent of IRO respondents don't know if their company conducts
Only 19 percent of responding IROs contribute to the corporate blog,
which was deemed as an important source of information by responding
"Given the importance of the IRO's role during a crisis, they need to
play a much larger role in developing the crisis communications plan,
executing crisis drills and regularly updating the document," said
Enright. "Their involvement in the process should be from beginning to
About the Survey
The 2011 Fleishman-Hillard Inc. and Canadian Investor Relations
Institute joint survey on crisis communications preparedness was an
online survey conducted among 34 financial analysts and 78 investor
relations officers in the U.S. and Canada. Interviewing for this survey
was completed during the period of Sept. 27 - Nov. 17, 2010.
About Canadian Investor Relations Institute (CIRI)
CIRI is a professional, not-for-profit association of executives
responsible for communication between public corporations, investors and
the financial community. CIRI contributes to the transparency and
integrity of the Canadian capital market by advancing the practice of
investor relations, the professional competency of its members and the
stature of the profession. With 600 members, CIRI is the world's second
largest society of investor relations professionals. For further
information, please visit CIRI.org.
Fleishman-Hillard Inc., one of the world's leading strategic
communications firms, has built its reputation on creating integrated
solutions that deliver what its clients value most: meaningful, positive
and measurable impact on the performance of their organizations. The
firm is widely recognized for excellent client service and a strong
company culture founded on teamwork, integrity and personal commitment.
Based in St. Louis, the firm operates throughout North America, Europe,
Asia Pacific, Middle East, Africa and Latin America through its 80 owned
offices. For more information, visit the Fleishman-Hillard website at www.fleishmanhillard.com.
Fleishman-Hillard is a part of Omnicom Group Inc. (NYSE: OMC) (www.omnicomgroup.com).
Omnicom is a leading global advertising, marketing and corporate
communications company. Omnicom's branded networks and numerous
specialty firms provide advertising, strategic media planning and
buying, interactive, direct and promotional marketing, public relations
and other specialty communications services to more than 5,000 clients
in more than 100 countries.
Alison Ford, 416-645-3296
© Business Wire 2011