Lessons in Crisis Communication

Most everyone is shell shocked at the way Bear Stearns’s stock fared in the last few days and with how quickly (if not cruelly) the decision to buy it at $2 a stock was reached. The blogosphere as one would imagine has been lit up with emphatic posts. A few are questioning the competence of the senior executives at the firm, a few are questioning the merits of the decision to buy it out right and a few are lamenting their misfortunes or loss of savings.

Comments here suggest that it would not be a stretch to try the CEO and the Board of Directors for gross negligence or willful misconduct. Angry allegations are being hurled back and forth regarding failure to disclose the gravity of the situation.

That brings us to the something called communication. In such situations, rumors cannot be contained, especially with all the wonderful technology we have at our disposal. How do you quash rumors even when they are the most bizarre? How do you communicate confidence to your employees? How do you communicate in a sincere and honest manner as opposed to a preference for keeping everything hushed till a rumor is no longer a rumor and turns into a veritable fact? How do you navigate such choppy waters? A lesson might be drawn from WSJ’s account of how Lehman handled this at their firm.

1. Open and honest communication along with acceptance of facts
2. All Hands on Deck (even if it was a weekend)
3. Communication even if someone is in-flight
4. Asking for help before your life depends on it or it is too late
5. Communication with all employees regardless of their title
6. Coordination with other agencies
7. Act in a manner that inspires confidence

That there are angry investors just reaffirms that there is something to be said about investor activism. It pays to be vigilant. At least, that way when fortune swings such as these happen, one can sleep easy knowing one did the right thing.