Abhijit Mukhopadhyay, general counsel (Europe) at the Hinduja Group spoke at the In-house Division annual conference in June on the role of in-house legal in crisis management. Here, he shares his advice on the topic.
Can any organisation avoid a crisis? Probably not. They happen all the time. Sometimes, the crisis may be temporary, or last for a prolonged period. It will depend upon the situation. Whatever it may be, it will be impossible to avoid it. Management of the crisis is something that an organisation should learn to deal with, and do well, however big or small.
Crisis and its nature
It is difficult to define how and when a crisis will emerge: as with anything in life, it may crop up anywhere, at any time, with or without warning.
Take the example of a dawn raid. In one of the organisations that I worked with, a sudden raid by the regulatory agencies started early in the morning and went on for the whole day. No one was allowed to move from the office or make calls. Papers, documents and files were taken away.
In another case, I had to fly to another country within a few hours of my organisation being raided by law enforcement authorities. Senior people were arrested and put behind bars. It was a nightmare, and the whole objective at the beginning was to get those people released on bail. This is an example of extreme crisis management.
It may so happen that there is deadlock in discussions with joint venture partners. To draw on my own experience again, on one occasion all hell broke loose in a meeting with a joint venture partner and they simply left the meeting in a hurry, unceremoniously and with a lot of bitterness, which led to the collapse of a multi-billion dollar project. I would put this as a critical, but moderate crisis.
Another time, there was deadlock in discussions in a joint venture project which came unexpectedly and had to be tackled within the shortest possible time on the principle of give and take. I would call this low-level crisis management.
Dos and don’ts
We should remember that crises may happen any time and without notice. What is crucial is how to manage them. First, stay calm and try to understand what has gone wrong. There is no point in automatically seeking to place blame. Try to work out how the crisis may have originated and why it has become a crisis. It will be much harder to reach a solution until you have done so.
If an organisation has a critical crises policy, it should serve as a protocol and people should know how to handle a crisis situation. In the absence of a policy, especially in a large organisation, any attempt to defuse the situation will be dysfunctional. So, it is better to have a codified policy dealing with critical, less critical and minor crises, and people should be trained on how to deal with them. Identifying every situation will not be possible. But if people are trained in how to respond in a crisis, that in itself will go some way in easing the crisis. The policy should indicate whether to escalate the crisis to a particular level, or try to resolve it locally while keeping senior management informed.
An organisation cannot run on a crisis management footing all the time. It has to develop its own systems, procedures and protocols so that putting a crisis management plan into action becomes the exception rather than the rule. People should be trained to handle crises calmly and without panicking, though sometimes that may be difficult.
Once the crisis is over, analyse the issues in depth to understand the root cause(s) and, more importantly, how to stop it happening again. As I have said, the threat of crises cannot be completely eliminated, but the trick is how to manage them efficiently and effectively, with minimum cost. This includes the cost of fixing the fall-out from bad publicity. Depending on the situation, it may be good to be open and transparent with the media.