May '11 PR Rankings Issue - Odwyerpr.com
May '11 PR Rankings Issue - Odwyerpr.com
May '11 PR Rankings Issue - Odwyerpr.com
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REPORT<br />
Study finds few <strong>com</strong>panies prepared for crisis<br />
Just a few years out of the financial crisis and with product recalls still reverberating in<br />
healthcare, those two sectors would seem ripe for crisis <strong>com</strong>munications planning. But a<br />
study by Fleishman-Hillard and the Canadian Investor Relations Institute found just the opposite.<br />
By Greg Hazley<br />
While many <strong>com</strong>panies are<br />
mindful of potential crises,<br />
few have effective crisis<br />
<strong>com</strong>munications plans for such contingencies,<br />
especially in healthcare and<br />
financial services, according to the survey<br />
of U.S. and Canadian analysts and<br />
investor relations officers.<br />
The survey also linked crisis situations<br />
to negative valuations for <strong>com</strong>panies<br />
and found the biggest mistake <strong>com</strong>panies<br />
make during a crisis is a lack a<br />
<strong>com</strong>munication with stakeholders and<br />
employees.<br />
“The survey reveals that a poorly<br />
managed crisis clearly has a negative<br />
impact on a <strong>com</strong>pany’s share valuation,<br />
so it is imperative for IROs to be prepared,”<br />
according to CIRI President and<br />
CEO Tom Enright, who said IR pros<br />
need to be more involved in crisis plan-<br />
18<br />
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ning.<br />
The apparent lack of planning is also<br />
surprising as the study found that 85%<br />
of analysts said a corporate crisis has the<br />
greatest negative impact on a <strong>com</strong>pany’s<br />
• Public / Legislative Affairs<br />
• Community / Industry Relations<br />
• Social Media / Online Marketing<br />
Don Silver/Julie Talenfeld<br />
Source: CIRI/Fleishman-Hillard<br />
value.<br />
The gap between what analysts<br />
expect and what IROs are prepared for<br />
was no more evident than in the survey’s<br />
social media findings. Few IROs<br />
and analysts said crisis plans incorporate<br />
social media like Twitter or<br />
Facebook, the survey found.<br />
Notably, 50 percent of analysts said<br />
they look to corporate blogs for information<br />
in a crisis, but only 17% of IROs<br />
said their <strong>com</strong>panies use that channel.<br />
Less than half of IROs said they monitor<br />
social media during a crisis.<br />
Half of the respondents from financial<br />
services and healthcare sectors said<br />
they do not follow a crisis <strong>com</strong>munications<br />
plan at all, a surprising revelation<br />
given those sectors’ doldrums in recent<br />
years.<br />
And more than half with crisis plans<br />
said such guidelines only apply to operation<br />
crises, not a corporate scandal like<br />
an account fraud or executive scandal.<br />
Asked how different crises impact<br />
<strong>com</strong>pany’s valuations, 85% cited fraud<br />
resulting in an accounting restatement,<br />
while 74% cited an accounting restatement,<br />
59% noted an operational crisis,<br />
and 44% said an executive scandal or<br />
environmental crisis would have an<br />
impact.<br />
Of the <strong>com</strong>panies that have a crisis<br />
plan in place, only 29% update it annually<br />
and 26% said it gets a look every<br />
one to two years, according to the survey.