January Fellows Conference

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ERC Fellows kicked off 2011 with a day a half of discussions on preparing their organizations to deal with a crisis and ensuring that decisionmakers’ take account of ethical considerations as they manage their way through turmoil. In collaboration with communications experts, attorneys, and corporate ethics and compliance officers steeped in crisis experience at the highest levels, the Fellows examined the stages of crisis, considered their organizations’ state of preparation, and pondered the ethical issues that might arise.

 

The session was opened by Jeff Eller, Vice Chairman of the Texas-based public affairs firm Public Strategies, who described the differing types of crises that typically strike large organizations and described the way events may unfold. Beginning with “denial,” Eller identified the stages of crisis and emphasized the benefits of transparency, the need to identify a single decisionmaker who can act with a minimum of emotion, and counseled acting because “a good decision today is better than a perfect decision tomorrow.” He said ethics officers can play a vital role in preparing companies for possible crises by assessing the internal culture and thinking through how the organization would and should react to a public challenge.

 

Eller’s presentation set the stage for a role-playing exercise under the direction of Burson-Marsteller Managing Director Karen Doyne, who asked Fellows to assume roles as communications directors, CEOs, General Counsels, and ethics officers and imagine how each might react to unfolding events. The exercises revealed a range of ethical questions that can arise during a crisis, including when and how information should be disclosed and sorting out potentially conflicting obligations to shareholders, employees, business partners, possible victims of misconduct, the general public, and other stakeholders. Doyne said that a statement of organizational values should be a central part of any crisis plan and observed: “A crisis is a test of character and whether you live up to your values.”

 

The Fellows also heard from corporate officers as well as outside legal counsel who helped guide Merck, Pfizer, and Firestone through significant public crises.   They generally urged self-disclosure of problems and said companies in crisis need to move beyond defending themselves to identifying real issues and fixing them.   Pfizer Senior Vice President, Associate General Cousnel and Chief Compliance Officer Doug Lankler said it can help to “assume we did it and fix it, because something went wrong.” The group generally agreed that ethics and compliance officers can help organizations prepare for crisis by troubleshooting their company and identifying potential issues, including barriers to internal communication.   The group said poor internal communications keeps companies from addressing problems before they turn into crises.

 

The meeting wrapped up by looking at crisis recovery through the eyes of senior executives who worked at repairing the damage from crises at BP, Worldcom, and USFoodservice. Barbara Kuryk, Vice President of Compliance and Ethics at BP, said the Gulf oil spill caused a fundamental reassessment of the company’s view of ethics, which has since moved to the center of the company’s business planning.

 

The panelists called crisis recovery a multi-year process that may require cultural change to restore company pride.   The panelists counseled ethics officers to consider any and all risks as part of crisis preparation – “even the seemingly unfathomable.”