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How Adidas Finally Responded To Their Kanye West Crisis

Commentary From Crisis Management Expert Edward Segal, Bestselling Author of the Award-Winning Book “Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies” (Nicholas Brealey)

Companies seeking to profit from relationships with celebrities can find themselves in a crisis when celebrities do or say controversial things that can tarnish corporate brands, images and reputations.

Because the court of public opinion can render its verdict quickly, corporate executives need to react just as fast to help prevent or mitigate damage to their brands.

The latest example is Adidas, which has sold rapper Kanye West’s line of shoes and has had a marketing partnership with him for almost a decade. But the singer, who now calls himself Ye, continues to make international headlines with his antisemitic comments and views.

Ye has not apologized or recanted, which today led Adidas to terminate its partnership with the singer.

“Adidas does not tolerate antisemitism and any other sort of hate speech,” the company said in a statement. “Ye’s recent comments and actions have been unacceptable, hateful and dangerous, and they violate the company’s values of diversity and inclusion, mutual respect and fairness.”

Other companies, including CAA, the talent agency that has represented Ye, has also cut its ties with the artist.

Slow To Respond

“The German footwear giant said at the start of this month that its partnership was under review — but since then has not issued any updates and continues to release new Yeezy merchandise, even as the rapper doubles down on antisemitic tropes and conspiracy theories,” NPR reported.

“The only surprise here is that it took Adidas way too long to respond,” John Goodman of John Goodman PR observed via email.

“This was such an outright anti-Semitic rant that it deserved an immediate response from the company. Sometimes it’s wise to wait a while before you respond. But this was so blatant and so offensive that Adidas needed to respond much sooner.”

“In crisis management, success is defined as not only doing the right thing, but doing it at the right time. In this case, Adidas did the right thing by terminating their relationship with Ye, and their statement hit the right notes, but they took too long to do it,” Nick Kalm, founder and CEO of Reputation Partners, a national strategic communications and public relations firm, said via email.

“Ye’s outrageous statements and actions began weeks ago, with the firestorm beginning immediately thereafter. It was a bit surprising that a consumer-facing company like Adidas was so slow to respond to the crisis, but perhaps it was due to the significant financial charge the company incurred as a result of the separation.

“In any case, any company with celebrity endorsers must have a crisis plan and scenario-based decision-making completed in advance,” Kalm observed.

‘Every Situation Is Different’

“Every situation is different, so there’s no one-size-fits-all answer. However, a good rule of thumb is to see what happens,” Stacy Elmore, cofounder of The Luxury Pergola, a company that works with social media influencers, said via email.

“Sometimes the controversy will blow over and be forgotten within a week or two, in which case you can resume normal operations as usual. But other times, the controversy will continue to be a topic of conversation (or even grow), and in that case, you’ll need to decide whether continuing to work with that celebrity is worth the potential backlash.”

“Keep in mind that the world doesn’t revolve around your brand—bad news for celebrities often means bad news for brands too. And finally, remember that the news cycle moves fast—if you do decide to part ways with a celebrity, don’t try to publicly embarrass them. It’s always a bad idea to burn bridges,” she counseled.

Other Variables

Adidas’ Kanye West crisis demonstrates “some of the inherent risks that brand collaborations with celebrities can entail and how brands might react. The nature of the controversy and the terms of the contract with the celebrity are often considerations that will guide brands” in how they respond, Ainsworth Bailey, an associate professor of marketing at the University of Toledo, said via email.

“Oftentimes, the controversy is of such a nature that public outcry will lead brands to dissociate themselves from the celebrity and terminate relationships with the person.

“However, termination is not always the response, as brands sometimes take into account whether it is a controversy that centers on some supposed moral failing, such as cheating on one’s spouse (Nike stood by Tiger Woods in this case) [or] kneeling in protest (Nike also stood by Colin Kaepernick in this case)…” Bailey recalled.

Setting The Ground Rules

“When assessing a brand, or company’s, ties to any endorsements including other brands, celebrities, etc., the most important work is done before the agreement is ever made,” Cassaundra Kalba, a publicist at Otter PR , said via email.

“Too often, brands are looking for high-profile people in their industry or in the media at the moment and don’t take the time to truly assess how mutually beneficial this partnership is going to be.”

“The C-suite at companies…such as Adidas, need to not only make sure their target markets align with the proposed endorsee, but also their values, morals, mission, etc. By doing this ahead of time, you can mitigate a lot of risk and potential issues within the partnership that may arise down the line,” she recommended.

“At the end of the day, put your own brand’s reputation before any other partnerships,” Kalba advised.

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Edward Segal is a crisis management expert, consultant and the bestselling author of the award-winning Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies (Nicholas Brealey). Click here to Order the book.

Segal is a Leadership Strategy Senior Contributor for Forbes.com where he covers crisis-related news, topics and issues. Click here to read his recent articles.

9 Leadership Lessons From Liz Truss’ Brief Tenure As Prime Minister Of The U.K.

Commentary From Crisis Management Expert Edward Segal, Bestselling Author of the Award-Winning Book “Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies” (Nicholas Brealey)

Despite Liz Truss’ record-setting brief tenure as prime minister of the U.K.—or because of it—there are several leadership lessons that corporate executives can learn from the British politican who resigned recently.

Don’t Rush To Make Changes

Take Time to Consult With Others

“Executives who are new to their role would be wise to avoid drastic changes within the first few weeks of leadership,” Stacy Rosenberg, an associate teaching professor at Carnegie Mellon University’s Heinz College, said via email.

“It takes time to consult with advisors and build a coalition that can implement a plan. Moving too quickly without the input of experts or stakeholders demonstrates a lack of restraint and leads to unnecessary risk-taking.

“Establishing financial stability is a critical initial step when taking charge, particularly in a weak economy. Financial markets get spooked by sudden reversals. Leaders need a steady course, not a turnaround. Backtracking on decisions causes confusion and confusion creates panic in the markets,” Rosenberg observed.

Be Patient

“Similar to the fate of a prime minister, initiating corporate changes slowly, with patience—[which may] not always available or realistic—may permit innovation and transformation with minimal damage to the corporation and to oneself,” Karen Beckwith, a political science professor at Case Western University, said via email.

“Like a prime minister, losing the confidence of those who can remove one from power, usually requiring a majority vote of a board of directors, can lead to removal,” Beckwith warned.

Balance Matters

“You must balance the need for change with the human need for stability,” Jonathan Kirchner, an executive coach, business psychologist, and founder and CEO of AIIR Consulting,” said via email.

“Too great a change made too quickly, and your followers lose track of your core platform. They may even become so overwhelmed by the magnitude of change or the poor timing they immediately reject it. And yet, if a leader changes too cautiously or too slow, your followers may deem you irrelevant,” he predicted.

Your Words Can Come Back To Haunt You

Be very careful about what you say and how and when you say it.

Truss proclaimed that “I’m a fighter, not a quitter.”

She quit the next day.

Don’t Promise More Than You Can Deliver

In announcing her resignation, Truss said, “I recognize that given the situation, I cannot deliver the mandate on which I was elected by the Conservative Party.”

Have A Plan To Succeed

John Maxwell said “A leader knows the way, shows the way, goes the way,” Chris Westfall, author of Leadership Language, recalled via email.

“The clarity of vision was ultimately her demise—she lacked a plan that could pass the laugh test in Parliament. (The laugh test is where a leader shares her ideas, and,if no one laughs, you pass.) Liz knew she lacked the support for her initiatives, not only from her peers—but also from the British people,” Westfall noted.

The Importance Of Alliances

“One of the first things any strong leader would prioritize is forming alliances with other executive members to assist in calming the rest of the board and shareholders,” Ravi Balgobin Maharaj, a political analyst and consultant said in a statement.

But this was “something that Liz Truss seemed either unwilling or incapable of doing during her short stint as prime minister,” he commented.

Listen To Criticism

“The thing about leaders is that they are always being watched and scrutinized. Leaders have to accept the fact that the idea of being a leader is to be held accountable for your actions,” Stacey Kane, business development lead at e-commerce business platform Easy Merchant, said via email.

“However, from the moment Truss entered the office, she shrugged off her doubters, denying herself a sounding board that [could] help her make better judgments. As people rise up in an organization, there are always greater responsibilities.

“She placed too much weight on the free-market ideology, which everybody else around her disapproves of. She failed to listen and confront the brutal facts and advice coming from Tom Scholar, who is the top civil servant at the Treasury,” Kane observed.

‘Leadership Is Not About You As A Leader’

“Leadership is not about you as a leader. It shouldn’t be about an experiment of a certain ideology. It’s about everyone else around you. It’s about the people who will be affected by your decision,” Kane commented.

“If Truss [had] listened to criticisms and what other people had to say about her plans, she would have done so much better. As a business leader, you should take this as a serious lesson.

“Listen to what your people have to say because their perspective is more valuable than you think. Consult them and use their voices to filter out ideas because they are vital to solving crises and your overall long-term success,” Kane advised.

Remember What’s Important

“Any short tenure [such as Truss’] reminds corporate executives that leadership is as much about uniting one’s immediate team behind an idea or set of beliefs as it is about making tough decisions,” Rutger von Post, a partner with global management consulting firm Oliver Wyman, said via email.

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Edward Segal, CAE Crisis Management and Spokesperson Training Services Author of the forthcoming book on crisis management — Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies (Nicholas Brealey/Hachette Distribution) Learn more about the book at PublicRelations.com 415-218-8600 (mobile)

10 Crisis Management Lessons Business Leaders Can Learn From Response To Hurricane Fiona

Commentary From Crisis Management Expert Edward Segal, Bestselling Author of the Award-Winning Book “Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies” (Nicholas Brealey)

Corporate executives could learn a thing or two about leadership and crisis management from how the federal government and local authorities prepared for and responded to Hurricane Fiona.

The hurricane delivered a knock-out punch to a U.S. territory that was trying to recover from Hurricane Maria five years ago. This will make a comeback from Hurricane Fiona even more challenging—and underscores the importance of the lessons others can learn from the situation.

Don’t Wait To Prepare

As soon as you know that a crisis is brewing, don’t wait to do something—anything—about it.

“FEMA has been tracking the potential impacts of this severe weather event well-ahead of the storm’s landfall,” Region 2 Administrator David Warrington said in a press release.

A day before Hurricane Fiona struck the island, FEMA announced that federal emergency aid was made available to Puerto Rico to help assist with their response to the storm.

Be Proactive

Once you see that trouble is on the horizon, do what you can to help mitigate the impact of the crisis.

Power

That’s what the Puerto Rico Electric Power Authority did when it shut down electricity on the island in an effort to help lessen damage to the power grid, Clifford Oliver, a former assistant administrator of FEMA, said via email. He is a principal with Nanticoke Global Strategies and served as an advisor during the early stages of LUMA’s taking over of the the island’s grid.

“Best practices during hurricanes, with respect to managing electrical grids, is to take proactive actions to protect the grid (that consists of electrical generation, transmission, and distribution) from an uncontrolled cascading failure,” Oliver observed.

“Such [weather] events often lead to damage to sensitive components of the grid that were not directly damaged by the hurricane,” he noted. This additional damage results in further delay in restoring power [to] the grid once the storm threat passes and the electrical transmission and distribution portions of the grid are restored.

“Since LUMA has only had control of the electrical transmission and distribution portions of the grid for about two and a half years, they have only made limited progress in modernizing and improving the resilience of the electrical transmission and distribution portions of the grid,” Oliver commented.

Equipment, Facilities, And Supplies

FEMA said it had prepositioned supplies on the island including:

  • Four strategically located warehouses throughout the island
  • More than seven million liters of water
  • More than four million ready-to-eat meals
  • More than 215 generators
  • More 100,000 tarps
  • More than 28,000 plastic covers and more than 10,300 cots and other emergency supplies

Put Someone In Charge

Any response to a crisis—especially one as large as the impact of Hurricane Fiona—requires that someone is in charge to provide guidance, direction and make critical decisions in a timely manner.

“Robert Little III has been named as the Federal Coordinating Officer for federal recovery operations in the affected area. Additional designations may be made at a later date,” FEMA said when President Joe Biden approved an emergency declaration for the island.

Give People The Authority And Power They Need

FEMA said that the declaration authorized them “to identify, mobilize and provide at its discretion, equipment and resources necessary to alleviate the impacts of the emergency. Emergency protective measures, including direct federal assistance, will be provided at 75% federal funding.”

Tell People What You Are Going To Do

In a press release, FEMA Region 2 Administrator Warrington said, “It is our mission to help people before, during and after disasters, and we remain committed to supporting the Government of Puerto Rico for as long as we are needed.”

Monitor The Situation

Pay very close attention to how the crisis is affecting people.

“I have been continuously monitoring the developments of Hurricane Fiona and its impact on the people of Puerto Rico,” SBA Administrator Isabella Casillas Guzman said in a statement.

Act Quickly

Respond as soon as possible to the impact of the crisis.

“Following President Biden’s swift action to issue an Emergency Disaster Declaration for Puerto Rico, the SBA quickly mobilized and positioned disaster assistance staff and resources on the ground to help communities and businesses impacted,” Guzman said in a press release.

Visit The Site Of the Crisis

Depending on the nature and location of a crisis, it may be appropriate for officials to go to the site of the emergency.

FEMA said yesterday that Administrator Deanne Criswell plans to do just that. She will “travel to Puerto Rico to assess the devastation caused by Hurricane Fiona and determine the additional resources needed to support the island’s recovery,” the agency said in a press release.

Provide All The Help That’s Needed

Ensuring that those who are on the front lines of the situation have what they need to respond effectively, efficiently and strategically should always be a top priority.

“Our partnership with the Government of Puerto Rico has never been stronger, and we remain committed to helping them respond to and recover from Hurricane Fiona,” FEMA Administrator Deanne Criswell said in a press release. “We’re sending hundreds of additional staff in the next few days to place staff in each of the impacted communities to supplement our already vast footprint.”

FEMA said in a press release that it had “deployed one national and four regional Incident Management Teams and two Urban Search and Rescue teams to augment the hundreds of FEMA personnel on the ground. The additional staff will help bolster the Government of Puerto Rico’s response efforts.”

“One of the ways FEMA is providing additional resources is by increasing the number of field operations resources, including staff,” it said in a press release.

Learn From Your Mistakes

Lessons From Hurricane Maria

“By most accounts, improved preparatory measures were taken in Puerto Rico after Hurricane Maria, relying upon lessons learned during that catastrophe,” said Rebecca “Becky” Rouse, an associate professor of practice and associate director of emergency and security studies at Tulane University’s School of Professional Advancement, in a statement.

More Warehouses

Before Fiona struck the island, “FEMA reportedly maintained multiple (versus a single) warehouses for supplies and exponentially greater stocks of food, water and power generators and deployed hundreds of specially trained FEMA responders,” she noted.

“Such preparations should certainly improve responders,’ and residents’ capacity to ‘ bounce back’ after need assessments are complete post-Fiona, yet early damage reports indicate many of the same failures in power supply, transportation assets, supply chain reliability and resource distribution experienced after Maria is occurring during the recovery from Fiona,” Rouse observed.

Pursue Resilience

“Perhaps the most significant lesson from Hurricanes Maria and Fiona—much like that extracted from most disasters in the U.S.—is that resilience can be pursued and achieved at the smallest or most complex levels. The success and survival of each part improve the strength and adaptability of the whole,” she concluded.

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Edward Segal is a crisis management expert, consultant and the bestselling author of the award-winning Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies (Nicholas Brealey). Click here to Order the book.

Segal is a Leadership Strategy Senior Contributor for Forbes.com where he covers crisis-related news, topics and issues. Click here to read his recent articles.

Corporate Succession Lessons From The Death Of Queen Elizabeth II

Commentary From Crisis Management Expert Edward Segal, Bestselling Author of the Award-Winning Book “Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies” (Nicholas Brealey)

The death of Queen Elizabeth II and the immediate succession of her son Charles provide timely lessons from the British monarchy about leadership transition for companies, organizations and corporate leaders.

The Queen’s death at age 96 is another reminder for business executives to have succession plans in place and ensure those plans are updated on a regular basis as needed.

Leadership transitions—whether they are planned or unexpected—can create a crisis for any organization if they are not handled strategically, effectively, and efficiently.

‘A Watershed Moment’

“The death of Queen Elizabeth II, which Buckingham Palace announced on Thursday, is a watershed moment for Britain, at once incomparable and incalculable,” the New York Times reported.

“It marks both the loss of a revered monarch—the only one most Britons have ever known—and the end of a figure who served as a living link to the glories of World War II Britain, presided over its fitful adjustment to a post-colonial, post-imperial era and saw it through its bitter divorce from the European Union,” the paper observed.

Succession Lessons

Plan For The Inevitable

“King Charles has been planning his entire life to take the throne. He has planned and replanned again and again,” retired U.S. Navy Captain Barbara Bell said via email. Bell is a leadership professor at Vanderbilt University and author of Flight Lessons: Navigating Through Life’s Turbulence and Learning to Fly High.

“There is a lesson in that. A succession plan must be a living, breathing entity. We must observe, prepare, and refresh our plans for the next leader to take over. And as CEO, we must be a willing and active participants in our own succession planning. Where is the company now, where is it going or should be going and what type of leader is needed for the future?

“In the Navy, it was always that way for me. While in command, I led and planned for the next commander to take over after me,” Bell recalled.

The monarchy’s succession plan “is codified in efficiency and dictated by centuries of history and traditions,” David Braun, founder and CEO of Capstone Strategic, a mergers and acquisitions strategic consulting firm, said in a statement.

“While companies need not have a minute-by-minute plan, they can learn the power of having ‘the next in line’ ready to go, followed by precision in their announcements and actions. Detailed plans that can be implemented quickly make a big difference in how companies are perceived and how they keep their business moving forward,” Braun advised.

Provide For Smooth Leadership Transitions

“Charles had already been taking on some of the Queen’s engagements this year as her health had become enough of a concern for her to cancel some of her commitments, including the State Opening of Parliament,” CNN reported.

“Both Charles and Prince William had been prioritizing the Queen’s diary over theirs. Both of them had been activated as Counsellors of State, where the Queen delegates her sovereign power for specific purposes, and they were obligated to be even more available for those duties,” according to the cable news outlet.

“This is the greatest lesson for business —be ready and develop a strong bench so that you can act quickly and safeguard a smooth transition,” Amy Clark, chief human resources officer of the Better Business Bureau National Programs and founder of the Growth Minded Leadership group, said in a statement.

She pointed to two examples in the corporate world.

“As part of a long-planned leadership transition, WD-40 groomed Steve Brass to succeed Garry Ridge, who retired as their chief executive officer this week. This is a terrific example of a well-controlled, communicated, and deliberate plan to take the WD-40 into the future.

“Compare this with the emergency replacement plan that JP Morgan Chase had in place and effectively activated in response to Jamie Dimon recovering from a health scare in 2020.

“Two senior JP Morgan executives were prepared and ready to effectively manage the company with confidence until Dimon was ready to return as CEO,”‘ Clark noted.

Carefully Groom Your Future Leaders

Position potential successors as true leaders, not figureheads

Charles “was never positioned as a person who was a leader,” Catherine Rymsha, visiting management lecturer at the University of Massachusetts Lowell, said via email.

“The monarchy could have strategically managed his leadership brand preparing for this moment over time, yet failed to position him well in terms of strength or confidence. While he may have the skills and support needed to lead, even the headlines and hearsay over the years saying that the crown may skip him and go to Prince William showed there may be something lacking in his preparedness,” she remarked.

“While this may not be case due to related succession laws set forth by the monarchy, it does show how Prince William is seen as a leader more so than his now reigning father,” Rymsha concluded.

The monarchy no doubt had its plan for how this day would proceed for years. The plan was written, the successor was in place, and now “management” is ready to execute it.

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Edward Segal is a crisis management expert, consultant and the bestselling author of the award-winning Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies (Nicholas Brealey). Click here to Order the book.

Segal is a Leadership Strategy Senior Contributor for Forbes.com where he covers crisis-related news, topics and issues. Click here to read his recent articles.

Return Of Polio Virus Is An Urgent Reminder On How To Prevent A Crisis

Commentary From Crisis Management Expert Edward Segal, Bestselling Author of the Award- Winning Book “Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies” (Nicholas Brealey)

Some crises strike suddenly and without warning, while others can be seen as soon as they appear over the horizon.

Polio’s recent return to the U.S. and U.K. is the rare crisis that falls into both categories, as evidenced by these headlines on Forbes in the past four months:

Polio Spread Detected In London Sewage For First Time In Decades (June 23)

First U.S. Polio Case In Nearly A Decade Reported In New York (July 21)

Poliovirus Identified In New York City Sewage, Health Officials Say (August 12)

‘Very Tip Of The Iceberg’

“A polio case identified in New York last month is ‘just the very, very tip of the iceberg’ and an indication there ‘must be several hundred cases in the community circulating,’ [according to] a senior official with the U.S. Centers for Disease Control and Prevention,” CNN reported in August.

Polio is also an example of a crisis that can be prevented—or at the very least minimized—thanks to the availability of the polio vaccine. Unfortunately, vaccination rates in some places fall short of ensuring the permanent eradication of the disease.

“Polio is a very serious virus that can have lifelong devastating effects. There are still a handful of people living in an iron lung today because of polio they caught decades ago,” Dr. Laura Purdy observed via email.

Crisis Prevention And Mitigation

For corporate executives, the unfolding situation in New York and London are urgent reminders to take all appropriate steps now to help manage, prevent or mitigate a crisis at their companies or organizations. The best practices include:

  • Identifying and addressing potential crisis triggers
  • Creating or updating crisis management plans
  • Periodically testing the plans against different crisis scenarios to ensure they will work when needed
  • Appointing crisis management teams before there is a crisis
  • Ensuring they have all the resources they will need to effectively respond to any crisis

Government officials appear to be responding to the return of the polio virus as best they can.

“Public health authorities are handling the situation appropriately. There is full transparency regarding the unfolding events,” Dr. Nesochi Okeke-Igbokwe, a public health expert who is CEO of Dr. Nesochi LLC, said via email.

Advocating For Vaccinations

“As epidemiological investigation continues, the general public has been informed about the best means to stay protected from polio (i.e., vaccinations). Public health officials and the medical community will continue to advocate for vaccinations and advise that all individuals remain up to date with their polio vaccine series,” she noted.

CDC Now Considering Options

The CDC “is considering a variety of options to protect people from polio, including offering children in the area an extra shot of the vaccine, as UK health authorities are doing now in London, or recommending extra doses to certain groups of adults,” Dr. José Romero, director of the CDC’s National Center for Immunization and Respiratory Diseases told CNN.

“We’re looking into all aspects of how to deal with this. At this point, we don’t have a definitive answer,” he said.

1955 Vaccine Dramatically Reduced Infections

“Polio was at one time among the most dangerous diseases in the U.S. and caused more than 15,000 cases of paralysis annually, according to the Centers for Disease Control,” Forbes reported.

“A vaccine was introduced in 1955 and slashed infections dramatically. Because of widespread vaccination, there is no longer year-round transmission of the virus that causes the disease, according to the CDC. No known polio cases have originated in the U.S. since 1979, but infected travelers have brought the virus into the country since then, most recently in 2013,” according to Forbes.

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Edward Segal is a crisis management expert, consultant and the bestselling author of the award-winning Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies (Nicholas Brealey). Click here to Order the book.

Segal is a Leadership Strategy Senior Contributor for Forbes.com where he covers crisis-related news, topics and issues. Click here to read his recent articles.

Reality Check: Frequent And Future Crises For Companies And Organizations

Commentary From Crisis Management Expert Edward Segal, Bestselling Author of the Award- Winning Book “Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies” (Nicholas Brealey)

If business leaders need any more reasons why their companies should prepare for a crisis, then a new dire warning about the economic impact of climate change and a report about the frequency of crises could move them to act now.

“The head of the European Space Agency (ESA) has warned economic damage from heatwaves and drought could dwarf Europe’s energy crisis as he called for urgent action to tackle climate change,” Reuters reported.

“Director General Josef Aschbacher told Reuters successive heatwaves along with wildfires, shrinking rivers and rising land temperatures as measured from space left no doubt about the toll on agriculture and other industries from climate change.”

“Today, we are very concerned about the energy crisis, and rightly so. But this crisis is very small compared to the impact of climate change, which is of a much bigger magnitude and really has to be tackled extremely fast,” he said.

Crisis News And Trends

Then there are the findings of a new report from the Institute for Crisis Management that was released earlier this month.

The 2021 ICM Annual Crisis Report is a compilation of news, trends and highlights industries that were most prone to the crises last year. According to the report, the catastrophes category again took the top spot at 36.6% of all news items tracked, followed by whistleblowers, consumerism/activism and executive dismissals.

“My advice for business leaders remains steadfast: invest in crisis planning and training,” Deborah L. Hileman, president and CEO of the Institute for Crisis Management, said via email.

“The cost of preparedness is a drop in the bucket compared to the price of a crisis that strikes absent a strategy. Evaluate risks and vulnerabilities objectively, without bias. Make sure the plan addresses the risks that are deemed highly probable or highly impactful on the business,” she advised.

The list and nature of crises that can threaten a business seem to increase by the day. They include the following, according to a survey of CEOs and crisis management experts and observers.

Weaponization Of Energy And Food

“Among the most serious crises facing businesses is Russia’s weaponization of energy and food, resulting in the damaging global impact of petroleum as a precursor for plastics, fertilizer, and a multitude of industrial and consumer products,” said Michael Susong, senior vice president of global intelligence at Crisis24 and a former CIA officer, via email.

Supply Chains

“We’re about to see many businesses hobbled by the developing supply chain snapback,” predicted Corey Donovan, president of Alta Technologies, via email.

“Companies have been filling shelves with side chain materials in order to address recent backlogs, but their traditional product allocations are going to flood their docks as manufacturing comes back online and shipping channels loosen up.

“Brands who have over-indexed on their procurement will face the most pain, as they take losses on liquidated inventories alongside write-downs on unsold product,” he said.

Cyberattacks

“The most serious crises facing businesses in 2022 and beyond is cyber security and how most companies are totally unprepared for a cyber attack,” said Alex Harrington, co-founder and CEO of SecureCo said in a statement.

“After a long period of complacency and perfunctory cyber defense, it has now become abundantly clear that most businesses are susceptible to cyberattacks and the hacking of proprietary information.

“Most businesses are completely outmatched, and high-profile hacks like Solar Winds and Colonial Pipeline have clarified that the stakes are very high. In fact, in the case of SolarWinds no alarm bells went off, as this was clearly about espionage with no intent to disrupt, taking 14+ months to discover,” Harrington observed.

Inflation

“Inflation causes all prices to rise, and that includes commercial space rent,” Baruch Labunski, CEO of Rank Secure, noted in a statement.

“Inflation on gas, products, utilities [and commercial rent space] has risen more than 200% since January of 2021. That must be figured into pricing, and businesses are finding it challenging to keep customers interested with higher pricing. After all, they are also suffering from high prices [on] everyday items,” he said.

Taxation

“Taxation is one of the biggest concerns for businesses,’’ Labunski pointed out.

“Congress just passed a bill that raises taxes significantly and includes the additional 87,000…IRS agents to be added to government coffers. Many businesses can’t afford such increases or defend themselves against audits. Audits, along with [the] seizure of computers and documents, could easily close many small and mid-size businesses,’’ he said.

Pandemic And Rising Business Costs

“A turbulent economy, the long-term effects of the pandemic, and rising costs for businesses are all serious financial crisis situations facing businesses in 2022. Tackling one of these factors alone would keep CFOs and financial professionals awake at night,” observed Daniel Docherty, director of strategy at Advanced Financials.

“Yet when they all play out at once, it becomes more crucial than ever to protect your business’s financial health. In times like these, it’s easy for the mind to stop/start without really putting down any concrete solutions for belt-tightening, reassessing ship-steadying, and fresh thinking that the current climate requires,” he noted.

“Peering into the uncertain future, businesses need to think beyond traditional bottom-line metrics and put purpose and trust at the forefront of their strategies. The time is now for them to take the initiative to transform the finance function into a strategic and value-driven powerhouse both now and in the future,” Docherty recommended.

Allegations Of Misconduct

Employers must recognize that they are in an increasingly binary position as it relates to allegations of misconduct—especially those around allegations of discrimination based on race, ethnicity, sexuality, and gender,” Kia Roberts, principal and founder of Triangle Investigations, said via email.

Impact Of Discrimination Tactics

“The discrimination tactics that attach to these prejudices within an organization can literally be devastating for the organization—as related to productivity, employee turnover, and overall employee satisfaction,” according to Roberts.

“Employers must realize that larger aggressions and microaggressions are still occurring while employees work remotely or in a hybrid working arrangement. Managers can still display discriminatory behavior while employees work remotely, and for an organization to not recognize this and create mechanisms for combating against this opens the organization to tremendous liability, both legally and reputationally,” she warned.

“It is very wrong-headed for employers to think that the risk of this exposure has diminished because of so many employees working remotely. Cultural competence, sensitivity, and emotional intelligence [are] still very much required as it relates to the employee experience,” Roberts counseled.

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Edward Segal is a crisis management expert, consultant and the bestselling author of the award-winning Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies (Nicholas Brealey). Order the book at https://www.amazon.com/gp/product/B0827JK83Q/ref=dbs_a_def_rwt_bibl_vppi_i0

Segal is a Leadership Strategy Senior Contributor for Forbes.com where he covers crisis-related news, topics and issues. Read his recent articles at https://www.forbes.com/sites/edwardsegal/?sh=3c1da3e568c5.

Why Experts Disagree On Whether Businesses Should Pay Ransomware Demands

Commentary From Crisis Management Expert Edward Segal, Bestselling Author of the Award- Winning Book “Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies” (Nicholas Brealey)

A new report that the number of ransomware attacks has dropped this year does not mean companies and organizations should lower their guard against these threats. While some experts don’t think companies should ever pay ransomware demands, others say it is not such a clear-cut issue. Whether they pay or not, these cyberattacks can create crisis situations for business leaders.

‘An Enormous Mistake’

“It’s an enormous mistake to think that paying ransomware demands will solve anything. The initial payment is only for the start of things,” Etay Maor, adjunct professor at Boston College in cybersecurity and senor director of security strategy at Cato Networks said via email.

Business leaders “should deprive criminals of any possible economic incentives that would allow them to run future attacks,” David Lindner, chief information security officer at Contrast Security, counseled via email.

“Moreover, there is no honor among thieves—paying a ransom does not guarantee that data will be returned safely and only increases the likelihood of repeat attacks on an organization. The bad actors now know that your system is insecure and that you will pay a ransom,” he advised.

When Ransom Payments Are Necessary Or Advisable

Despite the risks associated with paying ransomware demands, there are some who do not automatically rule it out.

“There may be scenarios where payment is necessary or advisable. Organizations—usually critical infrastructure—providing essential services may not have time to restore operations or services, and the impacts may necessitate payment,” according to Matthew Baker, a partner at Baker Botts in San Francisco. He focuses on data privacy, cybersecurity, crisis management, and incident response for various industries.

“In addition, threat actors may have accessed and stolen business-critical IP or other sensitive proprietary information, the release of which may be extremely damaging. That may… necessitate payment to prevent disclosure,” he said via email.

“Finally, savvy threat intelligence negotiators may arrange for an exchange of vulnerability information in addition to the decryption keys for payment. This can help organizations better understand the contours of an attack to prevent future recurrences. Though a more narrow scenario, this may likewise weigh in favor of payment,” Baker observed.

‘There Is No Simple Answer’

“There is no simple answer to whether an organization should pay the ransomware demand,” attorney William J. Roberts co-chair of Day Pitney LLP’s Cybersecurity and Data Protection Practice Group said via email. “An organization must carefully consider various factors with its advisors before making a decision.”

Roberts said those factors include the following:

Availability Of Backups

“Organizations that have fully or nearly-complete backup copies of the data affected by the ransomware generally don’t need to pay a ransomware demand.”

Operations

“A ransomware incident’s harm may extend beyond data and may also affect organization operations.”

Verification Of Data Access

“Unless there is clear evidence that your data has been exfiltrated, an organization should consider if the threat actor even has a copy of your data. If they say that they do, ask and verify first.”

Risk from Release

“Even if you have backups of your data, but you confirm that the threat actor in fact has obtained a copy of it, consider the implications of the threat actor releasing the data if a demand is not paid.”

The Reputation Of The Threat Actor

“Much of the above rests upon the belief that a threat actor will in fact release your systems, destroy your data, or not release your data. And all of this requires you to have a certain level of trust that the threat actor won’t just take your money and run or won’t ask for even more additional payments.”

Insurance Coverage

“Do you have cyber liability insurance and if so, what does it pay for? Responding to a ransomware incident can be expensive and worth seeing if your coverage will reimburse you for the path you take.”

Law Enforcement Request

“The FBI does not recommend paying a ransomware demand. This is because it doesn’t guarantee you will get your systems back online or your data back and it incentivizes threat actors to continue to target companies. And your organization may even become known as an easy mark,” Roberts concluded.

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Edward Segal is a crisis management expert, consultant and the bestselling author of the award-winning Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies (Nicholas Brealey). Order the book at https://www.amazon.com/gp/product/B0827JK83Q/ref=dbs_a_def_rwt_bibl_vppi_i0

Segal is a Leadership Strategy Senior Contributor for Forbes.com where he covers crisis-related news, topics and issues. Read his recent articles at https://www.forbes.com/sites/edwardsegal/?sh=3c1da3e568c5.

What Business Leaders Should Know About Their Deskless Workers

Commentary From Crisis Management Expert Edward Segal, Bestselling Author of the Award- Winning Book “Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies” (Nicholas Brealey)

Business leaders who think they know what’s important to employees who continue to resist corporate policies that they return to their offices should think again.

The results of the 2022 State of the Deskless Work Report by workforce scheduling platform Skedulo provide essential insights into the preferences and priorities of deskless employees. Deskless was defined as working at least 80% of the time as a mobile employee, and desk-based was defined as working at least 80% of the time at a desk.

The survey found that:

  • Over half (51%) of deskless workers would leave their current jobs to gain access to more autonomy and flexibility.
  • Nearly half (47%) of deskless respondents would rather work for an organization that provides flexible scheduling and/or increased autonomy over one able to pay them 10% more.
  • Deskless employees with access to the technology they need are twice as likely to be very satisfied with their job; over 50% said they are more likely to stay at their job for the next five years.

The Skedulo survey was conducted between April 29 and May 5, 2022 via Survey Monkey. The research project surveyed 500 deskless and 500 desk-based full-time U.S.- based workers.

“If your employees are telling you they need more modern and innovative technologies to do their job better, you better find and implement those technologies,” Matt Fairhurst, CEO of Skedulo said via email.

“If they’re telling you they want more autonomy in their position, find a way to help them achieve that. If businesses don’t follow this advice, they run the risk of not only losing employees, but also taking a hit in revenue,” he warned.

“My advice would be to listen to your deskless workers and employees in general. It’s no longer an employer’s market, the ball is now in the employees’ court. Because deskless workers make up about 80% of the global workforce, they are the livelihood and heart of businesses, and without them, everything will come to a standstill. Ultimately, the way we all work has changed and we need to evolve with it,” Fairhurst concluded.

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Edward Segal is a crisis management expert, consultant and the bestselling author of the award-winning Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies (Nicholas Brealey). Order the book at https://www.amazon.com/gp/product/B0827JK83Q/ref=dbs_a_def_rwt_bibl_vppi_i0

Segal is a Leadership Strategy Senior Contributor for Forbes.com where he covers crisis-related news, topics and issues. Read his recent articles at https://www.forbes.com/sites/edwardsegal/?sh=3c1da3e568c5.

How And Why Companies Should Prepare Now For The Departure Of Their CEOs

Commentary From Crisis Management Expert Edward Segal, Bestselling Author of the Award- Winning Book “Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies” (Nicholas Brealey)

Howard Schultz’s announcement this month that he will end his third run as Starbucks’ CEO early next year was a reminder for boards of directors about the importance of having and updating corporate leadership succession and transition plans.

Like Starbucks, some boards will know when and why they will have to launch a search for a new CEO. Schultz said the timeline of his planned departure “provides the company the ideal runway for a seamless transition and continuity of leadership through the 2022 holiday season,” The Seattle Times reported.

Other boards can be taken by surprise when the death, resignation, retirement or termination of CEOs creates a crisis. Directors who delay in preparing for the next vacancy at the top of the organizational chart run the risk of extending the crisis or making matters worse.

A lot can be at stake when, how—and how well—the succession and transition of CEOs are handled, including the morale, recruitment and retention of employees and the impact on the corporate bottom line. Succession, HBO’s popular series about a fictional multinational conglomerate, provides insights and lessons about the importance of preparing and implementing succession plans.

Covid’s Impact

“The uncertainty caused by the early days of the Covid pandemic led many CEOs to stay in place and for companies to put their leadership succession plans on hold, according to James M. Citrin, the leader of Spencer Stuart’s North American CEO practice, told G100 Network.

Between mid-March and April of 2020, “as pandemic-induced lockdowns began, we saw almost everything related to CEO succession plans, both from the CEO and board perspectives, come to a halt,” he noted. Now, as the pandemic continues to fade and more businesses return to normal, “The pent-up demand and overdue leadership changes could slingshot to record CEO turnover in 2022-2023,” Citrin said.

CEO Departures Are Ramping Up

“A high rate of Americans are quitting their jobs each month, and CEOs are no exception. Meanwhile, inflation concerns may have some boards looking to new leadership to weather the coming storm,” Andrew Challenger, senior vice president of Challenger, Gray & Christmas, a global outplacement and executive coaching firm, said in a press release.

The departure of CEOs appears to be ramping up. First-quarter CEO exits from U.S. public companies rose 29% from the same quarter in 2021, with 395. It is the highest quarterly total since Q1 2020, when 441 CEO exits were recorded, according to a report by the company.

Priorities

One of the most important early decisions boards must make about hiring a new CEO is whether to hire from inside or outside the organization. Starbucks, for example, is only considering external candidates to replace Schultz, according to the Wall Street Journal.

As I wrote in January, when choosing new CEOs, boards of directors often decide to go with what they may consider to be the safer route by promoting in-house candidates who are near the top of the organizational chart versus other so-called ‘leapfrog’ internal candidates. But the results of a study by Spencer Stuart challenge that approach.

The company noted that “Over the last 20 years, four roles—chief operating officers, divisional CEOs, chief financial officers and ‘leapfrog’ leaders promoted from below the second layer of management—represented the last-mile experience of 85% of freshly minted CEOs.

“Among them, leapfrog CEOs were most likely to outperform their peers. Former CFOs were the least likely to be among the top performers. And divisional CEOs presented the safest bet to avoid underperformance.”

Although the average tenure of a CEO is 6.9 years, according to M&A Executive Search, boards should not wait to make succession and transition planning an important part of the organization’s crisis management plans. The plans should be reviewed and updated as needed on a regular basis.

There are several steps boards of directors should take now to ensure they are fully prepared when they must find a new CEO.

Prepare And Update Succession Plans

Establish or update policies and procedures for finding the company’s next CEO. This includes deciding whether to hire a consultant or recruiting firm to handle the search and whether to appoint a committee or board member to oversee or handle the process.

“Succession planning is one of the main responsibilities of a board of directors,” according to Chester Spatt, a professor of finance at Carnegie Mellon University’s Tepper School of Business said in an email interview.

“A board should always have succession in mind—absent a full-blown search, it is natural to be evaluating the senior executives (partially through the CEO, but partially independently) and also have in mind whom on the Board could serve, at least as an interim leader,” he observed.

Factors To Consider

“The exact succession plan might be influenced by the circumstances—if the succession is in response to an internal problem that might preclude some or all of the internal candidates. The circumstances also might influence the type of leader needed and whether an interim or permanent CEO is most appropriate. If the need for succession is related to the CEO’s situation, that has different implications than if succession is motivated by a business problem,” Spatt advised.

If there are no succession plans in place when a company announces the departure of the CEO, let people know when those protocols will be implemented. That’s what happened this month when Amazon announced in a regulatory filing that Dave Clark, CEO of Amazon’s worldwide consumer business, will resign on July 1.

The company did not name a replacement for Clark. In a blog post announcing his exit, Amazon CEO Andy Jassy said the online retailer is in the process of firming up a succession plan for Clark and will announce an update “over the next few weeks.”

Practice Responding To Vacancy Scenarios

Boards should work with staff or consultants to conduct tabletop exercises to practice responses to different scenarios that could create the need to look for a new CEO. The scenarios should include death, illness, leave of absence, resignation, retirement and termination of the top corporate officer.

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Edward Segal is a crisis management expert, consultant and the bestselling author of the award-winning Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies (Nicholas Brealey). Order the book at https://www.amazon.com/gp/product/B0827JK83Q/ref=dbs_a_def_rwt_bibl_vppi_i0

Segal is a Leadership Strategy Senior Contributor for Forbes.com where he covers crisis-related news, topics and issues. Read his recent articles at https://www.forbes.com/sites/edwardsegal/?sh=3c1da3e568c5.

How Firing People On Zoom Can Create Another Crisis

Commentary From Crisis Management Expert Edward Segal, Bestselling Author of the Award- Winning Book “Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies” (Nicholas Brealey)

It is not unusual for companies to reduce their workforce in response to crises: Industry upheavals. Revenue shortfalls. Global pandemics. But if employers decide to fire people en masse on Zoom—or use other impersonal approaches—they can create a second crisis that makes a bad situation much, much worse.

Take what happened at Carvana, the online used car dealer which last month laid off 2,500 people, many of them over Zoom.

“An email to employees from CEO Ernie Garcia reportedly blamed slower-than-expected growth. Carvana, which has struggled to maintain its early-pandemic success, reported a net loss of $260 million in the first quarter and its stock price is down more than 84% since the start of the year,” Protocol reported.

In an email to CBS MoneyWatch, Carvana said it had “as many conversations as we could in person, and where in-person was not possible, we spoke to our team members over Zoom.” The spokesperson added, “Not all of the conversations were through Zoom.”

Reaction on social media was swift and critical, with people expressing their anger on how they were let go and how the online session was conducted. This response on Twitter was typical: “Part of [Caarvana’s] principles is ‘we are all in this together’ and I don’t believe that at all. Carvana, next time you need to lay people off do it in a more organized way than what happened today because honestly, that was ridiculous.”

“They were doing mass layoffs in these Zoom calls, “Leigh Frantz, 26, of North Liberty, Iowa, told CBS MoneyWatch. She said that a woman read from a prewritten script to inform them that they had lost their jobs. Workers weren’t allowed to ask questions on the Zoom call. “It was so disrespectful.”

The mortgage company Better has used Zoom three times since December to lay off workers. In a statement to Fast Company, it cited “ongoing instability in the mortgage environment” as the reason.

The remote firings have been seen as a cold, impersonal and detached way to lay off people.

Challenges And Issues

Using Zoom and similar services can create a second crisis for organizations.

Because of how the workers were notified and what is said on the video calls, they can place businesses on the defensive and damage the credibility, image and reputation of CEOs and the organizations.

The videos “… can be recorded and kept by the former employee,” said Baruch Labunski, a reputation management expert and CEO of Rank Secure. “The former employee could then use it on social media, editing it to make the company or manager look bad. It could also be used in legal proceedings if the employee decided to sue the company,” he added.

Leaked copies of any video calls about the layoffs can add fuel to the fire and help lengthen the crisis or make it worse.

“Leaked video from a second meeting that Better.com held minutes after the now-infamous Zoom call in December when it terminated 900 employees, provides stunning new insight into the level of mismanagement that went into perhaps the most bungled corporate downsizing in recent memory,” Fast Company reported.

A third crisis could be created by the videos because of the impact they can have on company morale and the ability to retain or recruit employees.

An Added Layer Of Complexity

Firing people online could also create legal-related crises.

Employment attorney Omar Ochoa said “… firing over video conferencing, like Zoom, adds a layer of complexity because the company has to be aware of the laws in the employee’s specific location rather than just worrying about employment laws in the jurisdiction of the company’s headquarters.

“There may be specific laws regarding when termination can occur and whether any type of notice or process is required. Firing employees en masse over Zoom may seem more expedient to companies (even if it seems cold and impersonal to the public), but it can lead to lawsuits if the law is not followed,” he warned.

Advice For Business Leaders

Beware

  • Employees could immediately post copies of the video on social media platforms.
  • Do not say anything on the call that you would not want to be reported by news organizations.

Be Clear

  • Take steps to ensure that the reasons for the layoffs are clearly understood by all those who are affected by the reduction of your workforce or who may learn about it later.
  • This includes posting an official statement from the company on its website, and social media platforms and emails, distributing a press release and posting a video from a corporate spokesperson on YouTube.

Be Prepared

  • Be ready to immediately respond to any blowback about the video or why employees were fired.
  • Prepare in advance key messages about the firings to use when responding to calls from the media, messages from remaining employees and criticism on social media.
  • Conduct media training sessions before the video calls to ensure you are ready to respond to questions from reporters.

Be Available

  • Make yourself available to answer questions people and news organizations may have about the layoffs, and respond quickly to their inquiries.
  • Immediately respond to any allegations or charges about the reasons for the layoffs.

Advice

  • Seek advice or counsel from your internal or external PR and legal teams about potential issues related to firing people via video that may be unique to your company, organization or industry.
  • The more you know about potential problems that can cause or exacerbate a layoff-related crisis for your company, the more prepared you can be to help mitigate or deal with it if it happens.

Edward Segal is a crisis management expert, consultant and the bestselling author of the award-winning Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies (Nicholas Brealey). Order the book at https://www.amazon.com/gp/product/B0827JK83Q/ref=dbs_a_def_rwt_bibl_vppi_i0

Segal is a Leadership Strategy Senior Contributor for Forbes.com where he covers crisis-related news, topics and issues. Read his recent articles at https://www.forbes.com/sites/edwardsegal/?sh=3c1da3e568c5.