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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.

Why Companies May Not Speak Out About The Future Of Roe V. Wade

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)

Whether pressured by customers and public opinion or because they thought it was the right thing to do, many companies ramped up their corporate activism by taking a public stand against Russia’s invasion of Ukraine, the murder of George Floyd and climate change.

So why have some of them stayed quiet about the leaked draft Supreme Court opinion that indicated a majority of justices were considering overturning Roe v. Wade?

Avoiding A Backlash

Fortune said recently that it contacted 30 of the most powerful companies in America, but few had anything to say about the court’s 1973 opinion guaranteeing a woman’s right to choose to have an abortion.

Abortion rights enjoy overwhelming public support. FiveThirtyEight reported that “The majority of Americans don’t want to overturn Roe. How polls ask about support varies, but the vast majority of respondents—somewhere between 85 and 90% according to most polls—think abortion should be legal in at least some circumstances.”

According to the Wall Street Journal, “Executives are navigating difficult terrain when it comes to deciding whether to speak out on social issues. At many companies, CEOs are under pressure from employees to take stands on political and social issues.

“At the same time, the stakes of doing so are higher after Florida Gov. Ron DeSantis signed into law a bill that would terminate a special tax district that has allowed Walt Disney Co. to self-govern the land on which its Orlando-area theme parks sit.”

Location, Location, Location

Several businesses have found a way to support employees who choose to have an abortion while avoiding a larger discussion about the draft opinion on Roe v. Wade.

Ronald Zambrano, the employment litigation chair at West Coast Trial Lawyers, said in an email “Some companies such as Citigroup and Levi Strauss have pledged to pay for travel expenses for their employees in states where abortion is restricted to obtain out-of-state abortions.”

The Risks Of Litigation

“It doesn’t take a lot of mental gymnastics to see how companies could face liability for helping employees leave their home state for an abortion,” Zambrano said.

He said that anti-abortion states would have a good chance of winning a judgment against companies that helped employees get out-of-state abortions. Businesses, on the other hand, would maintain that abortions were legal where they were performed, or that a state’s anti-abortion laws were too vague to be enforced.

“Federal juries are usually more educated and less ideologically extreme than state court juries,” Zambrano added. “But anti-abortion states would still stand a good chance of prevailing.”

Past Is Prologue

Carla Bevins is an assistant teaching professor of business communication at Carnegie Mellon University’s Tepper School of Business. She said that “Several companies who were quick to respond after the leaked Supreme Court opinion have been part of the reproductive health debate for some time.

“When Texas passed the SB8 law, more than 50 companies—including Patagonia, Lyft, and Ben & Jerry’s — endorsed an open letter indicating restrictions on reproductive care would be ‘bad for business’ and would jeopardize the state’s economy,” she said.

“Many of these companies already have communication plans in place, so they can respond quickly to issues like these.”

Advice For Business Leaders

A Role To Play

Nadia Khamis is the director of corporate engagement at Planned Parenthood. She said in an email that “Many companies have already committed to diversity, equity and inclusion targets. Yet in refusing to address abortion bans, these companies are willing to risk nearly 50 years of reproductive rights, gains in gender equity and workforce diversity. All businesses have a role to play if they believe their people are their number one asset.”

Sending A Message

Bevins at Carnegie Mellon University said that “while some business leaders might be hesitant to bring the spotlight to their company by speaking out about this controversial issue, not saying anything still communicates a potentially powerful message to both employees and external stakeholders. In business, it’s essential to control the narrative your company is sending out.

“If you don’t take control of the information that’s being communicated from your company, then there’s a good chance someone else will fill that information gap and shine the spotlight on your company when you might not be ready,” she said.

Expectations

“Business leaders today need to remember their companies are part of a political and cultural debate, and they are expected to weigh in on this issue and others more often than they were previously,” Bevins said.

“The ways in which company leaders respond will influence and continue to set examples for other businesses, regardless of industry. While company leaders might not want to respond, their employees, stakeholders, and even other companies see it as more and more necessary,” she added.

Navigating The Issue

Bevins counseled that “even if your company isn’t ready to share a full statement on company policy and action, you can still be upfront and let your employees and stakeholders know where your company currently stands. When you have more information, be sure to share it quickly.

“This is a time when clear, transparent communication, consistent with your company’s core values, will help you and your company navigate this controversial issue,” 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). 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 Can Learn From Will Smith’s Apology For Slapping Chris Rock

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)

Actor Will Smith apologized to Chris Rock a day after he slapped the comedian in response to a joke about Smith’s wife at the Academy Awards ceremony in Hollywood, California.

As angry as Smith was with Rock, he could have handled the situation better.

Brandy Aven is an associate professor of organizational theory at Carnegie Mellon University’s Tepper School of Business. She said Smith’s anger was understandable, and he was fully entitled to it. “However, it is the expression of it that was not appropriate, and I believe he would agree.

“He escalated to violence when there were several other alternative responses that might have been more impactful. For instance, if he had emerged on the stage and demanded an apology that would have been far more appropriate to help Chris Rock and the audience understand how hurtful comments about appearance can be, especially if it is a known medical issue,” she explained.

Key Lessons

When faced with the need to apologize, company executives can learn the following lessons from Smith’s apology that he posted on Instagram.

Don’t Wait

  • Although Smith apologized to the Academy and his fellow nominees when he accepted the Best Actor award last night, he made no mention of Rock.

Be Direct

  • He called his own behavior “unacceptable and inexcusable.”

Make It Personal When Appropriate

  • Smith said that, “I would like to publicly apologize to you, Chris.”

Explain What Prompted Your Actions

  • In his statement today, Smith admitted that ,”…a joke about Jada’s medical condition was too much to bear, and I reacted emotionally.”

Be Clear

  • Make it clear why you were wrong. Smith wrote that “I was out of line, and I was wrong.”

Express Embarrassment/Remorse/Regret

  • He pointed out, “I am embarrassed and my actions were not indicative of the man I want to be.”
  • Smith wrote that “I deeply regret that my behavior has stained what has been an otherwise gorgeous journey for all of us.”

Put Things In Proper Perspective

  • The actor said that “There is no place for violence in a world of love and kindness.”
  • He admitted that “I am a work in progress.”

Don’t Leave Anyone Out

  • He ended his apology by saying, “I would also like to apologize to the Academy, the producers of the show, all the attendees and everyone watching around the world. I would like to apologize to the Williams Family and my King Richard Family.”

Too Late To Matter?

Smith’s delayed apology might not be enough to save him from the consequences of his actions. Although Rock declined to press charges against the actor, he has six months to change his mind. He also has the option of suing Smith.

A day after the incident, Academy issued this statement: “The academy condemns the actions of Mr. Smith at last night’s show. We have officially started a formal review around the incident and will explore further action and consequences in accordance with our bylaws, standards of conduct and California law.”

Criticisms

While some on social media said they could understand why Smith got angry at Rock, few condoned his violent response.

On Twitter, Rob Reiner said that “Will Smith owes Chris Rock a huge apology. There is no excuse for what he did. He’s lucky Chris is not filing assault charges. The excuses he made tonight were [BS].”

“Let me tell you something, it’s a very bad practice to walk up on stage and physically assault a comedian,” Kathy Griffin wrote on Twitter. “Now we all have to worry about who wants to be the next Will Smith in comedy clubs and theaters,” according to ABC News.

People reported “Noting that she thought Will’s outburst was a result of “a lot of stuff built up,” including a joke that Rock, 57, made at Jada’s expense at the 2016 Oscars. Whoopi Goldberg added, “I think he overreacted.’”

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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 The IRS Is Seeking To Manage Expectations This Tax Season

Commentary From Crisis Management Expert Edward Segal, 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 ability to successfully manage expectations can help deflect criticism that can lead to a crisis for organizations. It can also put an ongoing crisis into perspective and create understanding or sympathy for what the organization— and their leaders—are going through.

IRS Commissioner Charles P. Rettig may have had this crisis management best practice in mind when he posted an op-ed on Yahoo Money recently In an apparent effort to help put the issues the agency is facing this year in perspective, he noted that the IRS is confronting enormous challenges related to the pandemic and years of underfunding by Congress.

The tax collecting agency already has at least some public support for its activities. Last September, The Hill reported that, “About two-thirds of registered voters favor boosting the IRS’s budget to increase tax enforcement on high-income taxpayers, which President Biden has proposed as a way to help pay for Democrats’ multitrillion-dollar social spending plan, according to a recent University of Maryland poll.”

Challenges

Rettig wrote in his article that, “We want to do more, but we face major challenges. Over the past decade, the IRS budget has been cut by nearly 20%.

“The agency today has as few employees as it did in the 1970s, despite a 60% increase in the United States population during that time and an unprecedented increase in responsibilities. While more than 90% of the over 160 million individual returns are filed electronically, the remaining people who file on paper lead to millions of time-intensive, manually processed paper returns.”

Progress

An important part of managing expectations is explaining what you are doing to address the crisis.

Rettig said in the op-ed that, “The IRS is operating without stable, multi-year funding in place, which creates additional impediments to our efforts to deal with our current situation.

“However, we have taken extraordinary measures to work through unprocessed returns and correspondence, including mandatory overtime by IRS employees, creating and redirecting surge teams to address the inventories, temporarily suspending certain automated compliance notices and, where possible, modernizing operating systems to accelerate the manual processing of inventories.

He observed that, “For the current tax season, the IRS workforce has already delivered more than four million refunds worth nearly $10 billion just through Feb. 4. And yet millions are waiting for their returns to be processed, and many won’t be able to reach us when they call with questions this filing season. This is frustrating for taxpayers and for us.”

Asking For Help

Rettig ended the article with a plea for help.

“The reality at the IRS is that we know we need to do better, we’re committed to doing better, and we are trending in a positive direction. Our employees are doing everything they can.

“But we need help. As many IRS leaders have stated for most of the past decade, without long-term, predictable funding, the IRS will continue to be hamstrung, failing to provide the experience that taxpayers deserve,” he concluded.

Advice For Business Leaders

It remains to be seen what impact Rettig’s effort to manage expectations will have. But one thing is certain: if you don’t try, you are guaranteed to fail.

Was his op-ed part of a campaign to generate understanding and sympathy for the challenges the IRS continues to face? Stay tuned.

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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.

Biden’s Remarks About Ukraine Shows That All Words Matter In A Crisis

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

Criticism of President Joe Biden’s recent comments about Russia’s anticipated invasion of the Ukraine underscored an important reality for business leaders about responding to any crisis: all words matter.

The BBC reported that President Biden said at his last press conference that Vladimir Putin would pay a “serious and dear price for invading Ukraine, but also indicated that it might depend on how Russia went about it.”

“What you’re going to see is that Russia will be held accountable if it invades and it depends on what it does,” he said. “It’s one thing if it’s a minor incursion, and then we end up having to fight about what to do and not do etc.”

According to the BBC, “His comments prompted questions over how the U.S. might respond to Russian aggression and officials have been rushing to clarify Washington’s position.

Ukraine’s President Responds

Ukraine’s president pushed back on President Joe Biden’s suggestion “that a ‘minor incursion’ by Russia into Ukraine might not merit a strong international response,” USA Today reported.

“We want to remind the great powers that there are no minor incursions and small nations,” Ukrainian President Volodymyr Zelenskyy wrote in a tweet Thursday morning. “Just as there are no minor casualties and little grief from the loss of loved ones. I say this as the President of a great power.”

Biden Backtracks

Biden had to backtrack, saying that any Russian forces that crossed into Ukraine would constitute an invasion.

“If any assembled Russian units move across the Ukrainian border, that is an invasion. Let there be no doubt if Putin makes this choice, Russia will pay a heavy price,” Biden told reporters before a meeting with his infrastructure task force.

“The Ukrainian foreign minister said this morning he’s confident of our support and resolve, and he has a right to be,” the president added.

Damage Control

Reuters reported that, “Biden’s remarks on Wednesday sent his administration and allies quickly into damage control mode, with a stress on unity.

“No matter which path Russia chooses, it will find the United States, Germany, and our allies, united,” said Secretary of State Antony Blinken, speaking at a press conference with German Foreign Minister Annalena Baerbock during a visit to Berlin to meet ministers from Britain, France and Germany.

“We urgently demand that Russia takes steps towards de-escalation. Any further aggressive behavior or aggression would result in serious consequences,” Baerbock told the news conference.

Advice For Business Leaders

Philadelphia’s Violence Crisis

Immediately apologize for anything you said that causes a crisis to get worse or is criticized by those who are impacted by the crisis.

Last month, Philadelphia’s District Attorney Larry Krasner apologized for comments he made that the city does not have a violence crisis, surrounded by community supporters who accepted his admission of wrongdoing.

According to WHYY-TV, ” Krasner made a new statement during his weekly violence update, this time from the Love Zion Baptist Church in North Philadelphia — not far from the scene of several carjackings in recent weeks, including one that resulted in the murder of the car owner.”

“My words unintentionally hurt people,” Krasner said. “It was never what I wanted to do … I know that those words were the wrong ones. I chose them. They came out of my mouth … I failed in not acknowledging the pain and suffering that disproportionately affects people of color and poor people, so for that, I am truly sorry.”

The TV station reported that, “…in an exchange with reporters, Krasner acknowledged that the city does have a gun violence crisis, while insisting on pointing out that police statistics show overall violent crime is down in Philadelphia.

“We don’t have a crisis of lawlessness. We don’t have a crisis of crime. We don’t have a crisis of violence,” he said.

“The comments drew criticism from some community leaders, as well as former Philadelphia Mayor Michael Nutter, as [being] insensitive to the dangers and heartbreak faced especially by many Black and Latino residents as more than 500 people were murdered so far this year. The vast majority of homicide victims have been young Black men.”

Gulf Oil Spill

In 2010, Tony Hayward, who was then the CEO of BP, had to apologize after making remarks about the company’s oil spill in the Gulf of Mexico. “I’m sorry. We’re sorry for the massive disruption it’s caused their lives. There’s no one who wants this over more than I do. I’d like my life back.”

In a post on Facebook, Hayward said that, “I made a hurtful and thoughtless comment on Sunday when I said that ‘I wanted my life back.’ When I read that recently, I was appalled. I apologize, especially to the families of the 11 men who lost their lives in this tragic accident.

“Those words don’t represent how I feel about this tragedy, and certainly don’t represent the hearts of the people of BP—many of whom live and work in the Gulf—who are doing everything they can to make things right. My first priority is doing all we can to restore the lives of the people of the Gulf region and their families—to restore their lives, not mine.”

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Edward Segal is a crisis management expert, consultant and 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.

Public Trust Increases In Most Businesses And Industries: New Report

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

Here’s some good and encouraging news for corporate leaders: More people appear to trust businesses and industries than they do the government and news organizations, while trust in most industries and businesses has increased. That’s according to the Edelman 2022 Trust Barometer that was released this month.

Other business-related findings of the Edelman Trust Barometer include:

  • Trust in almost all industries rose slightly over 2021, led by technology, automotive, education, transportation, financial services, professional services, and healthcare sectors.
  • Trust in social media companies declined.
  • Trust in companies that are headquartered in the U.S. and France rose.
  • Trust in companies headquartered in Canada, China, German, India, Japan, South Korea and UK decreased.
  • Family-owned businesses are trusted more by the public than privately held, publicly traded or state-owned ones.

The New York Times noted that, “One curiosity is that while about half of people [surveyed] purport to trust C.E.O.s in general, two-thirds of people said they trusted the C.E.O. of their employer. That suggests that people are unfairly impugning the reputations of many executives, or that they have a bias toward the person who signs their paycheck.”

Trust Is The Ultimate Currency

Edelman said that, “We have studied trust for more than 20 years and believe that it is the ultimate currency in the relationship that all institutions—companies and brands, governments, NGOs and media—build with their stakeholders. Trust defines an organization’s license to operate, lead and succeed. Trust is the foundation that allows an organization to take responsible risk, and, if it makes mistakes, to rebound from them.

“For a business, especially, lasting trust is the strongest insurance against competitive disruption, the antidote to consumer indifference, and the best path to continued growth. Without trust, credibility is lost and reputation can be threatened.”

The Importance Of Trust In A Crisis

Trust is important, of course, in the day-to-day operations and activities of companies and organizations. In times of crisis, the public’s trust in how a business in dealing with the situation and what they are saying and doing about it can directly impact the company’s image, reputation and credibility.

Take Johnson & Johnson, for example.

In 2018, there was a report by Reuters that the company had known for decades that the raw material in talcum powder could be contaminated with asbestos but tried to cover it up.

“The report triggered a 10% drop in the company’s stock price. J&J called that report “false and inflammatory,” according to NPR.”

A Global Perspective

Kirsty Graham is Edelman’s global leader of sectors and global chair of health. She observed that, “We enter the new year in the long shadow of an enduring pandemic, with Omicron yet another gut check to a world still holding its breath. This enduring uncertainty is clear in the 2022 Edelman Trust Barometer, which finds we are caught in a vicious cycle of distrust.

“Many are in self-protection mode. No doubt this is sparked by the pandemic for some. For others, perhaps it is reaching the boiling point of long-held feelings of being unheard and unrepresented by societal decision makers. Edelman’s data found only one-third of the world believes most people can be trusted, fear of fake news is at an all-time high (76%), and globally more than half (51%) of respondents in the countries studied do not believe their families will be better off five years from now.

“Rebuilding trust is essential to move beyond short-term survival mode to a healthy, functioning and stable society. To do this, we must focus on meeting core needs: we are experiencing a time when many are questioning if the roof over their head will withstand fires and floods, if their loved ones will be able to join their next celebration, if they know who they can rely on for trustworthy information.”

About The Trust Barometer

The 2022 Edelman Trust Barometer is the company’s 22nd annual trust and credibility survey. The survey consisted of 30-minute online interviews conducted between November 1 and November 24, 2021 and included responses from more than 36,000 respondents in 28 countries.

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Edward Segal is a crisis management expert, consultant and 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.

8 Dangerous Assumptions That Will Make Any Crisis Worse

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

Making assumptions about anything can be dangerous. That’s especially true when it comes to making assumptions about preventing or managing a crisis at companies and organizations.

To help get the new year off to a good start, review the following major assumptions about crisis management and crisis communications that can prolong or make a crisis worse. If you or your staff are guilty of believing any of these statements, take steps as soon as possible to ensure that you or they do not fall into these traps.

Assumptions And Reality Checks

No Crisis Today, No Crisis Tomorrow

“Because our company did not have a crisis today, it will not have one tomorrow.”

Reality Check: A crisis can happen anywhere, anytime, to any company and for any reason. The more unprepared you are to deal with a crisis, the worse it will be when, not if, it happens.

Example: Colonial Pipeline had never been hacked or forced to shut down its 5,000 miles of pipelines. That is, of course, until last May.

No Plan Needed

“We do not need a crisis management plan.”

Reality Check: Every organization, no matter how large or small or what industry or profession, needs a plan. Otherwise, they will waste valuable time when a crisis does strike trying to decide what to do, how to do it, when it do it, who will do it, where it do it and why to do it. And be sure to have different plans for different kinds of crisis situations.

Example: The organizers of Travis Scott’s concert in Houston last November had a crisis management plan. But it made no provisions for crowd surges — which created the deadly crisis.

No Updated Plans Required

“Our organization does not have to update its crisis management plans.”

Reality Check: Crisis plans should be reviewed at least on an annual basis and updated to ensure they reflect new possible crisis situations, changes in the industry and changes in the company’s activities, operations and staff.

Example: Business executives around the world had to scramble last March after a cargo ship blocked the Suez Canal for several days and created a supply chain crisis for their companies. None of the organizations had updated their crisis contingency plans to account for such a disruption to how and where they receive their goods, products and supplies.

Do It Yourself

“I can manage a crisis all by myself.”

Reality Check: Managing a crisis should not be left to amateurs. Unless you have received training and have managed a crisis before, do not assume you can manage one all by yourself. And even if you have crisis management experience, you will likely be too busy running your company or organization to devote the time needed to manage a corporate emergency, disaster or scandal.

Example: Ozy Media found that out the hard way this past October when it was hit by a crisis that forced it to shut down. When Marc Lasry, co-owner of the NBA’s Milwaukee Bucks, announced he would resign as chairman of Ozy Media because of a crisis at the media company, he said, “I believe that going forward Ozy requires experience in areas like crisis management and investigations, where I do not have particular expertise.”

No Rush

“We can take our time in responding to a crisis.”

Reality Check: Every second you delay in responding to a crisis can make the crisis worse or help prolong it. The sooner you deal with the crisis, the sooner you can put it behind you.

Example: Peloton waited for weeks before recalling one of its products that had caused several injuries and the death of a child.

No Practicing

“We do not need to practice responding to different crisis scenarios.”

Reality Check: Every crisis is different, and different types of crises can present their own challenges and difficulties. The more your crisis response teams practice responding to different scenarios, they better they will be prepared to respond to any situation.

Example: Andreas Grant is the founder of Networks Hardware. At least twice a year they practice their response to cyber attacks. He said, “This is superior to an in-person exercise because it places us in very real situations. Instead of just telling us to read the protocol on how to deal with a cyberattack, they make us experience a simulated attack. With this experience, it becomes much clearer on what to do if we get attacked for real.”

“The biggest lesson I have learned from doing these are that experience is everything when it comes to acting fast in a crisis,” he said. “Even if you theoretically know what to do you need the experience, otherwise your [response] will be slow and uncoordinated. This is especially true for groups of people who need to work together.”

Staying Quiet

“When we have a crisis, we can wait until we tell anyone about it.”

Reality Check: The failure to immediately disclose your crisis to stakeholders can lead to allegations that you are trying to cover something up, are afraid to tell the truth about the matter or are concerned about the consequences when people learn about the situation.

Example: Consumer credit reporting company Equifax waited for several weeks before announcing their computers had been hacked and cyberthieves had obtained confidential information for 143 million Americans.

No Outside Help

“Our company has all the resources, skills and expertise we will ever need to deal with any kind of crisis.”

Reality Check: No company can possibly have all the staff and other resources they would need to respond to every conceivable crisis situation. But they can identify the areas in which they could need help in a crisis and take steps immediately to make sure those resources will be available as soon as they are needed.

Example: U.S. Capitol Police needed immediate reinforcements to respond to the insurrection at the Capitol on January 6, 2021. Because of issues related to the chain of command, it took them several hours to receive the help they urgently requested.

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