Managing a crisis globally: Andersen fifteen years on

It is fifteen years since Enron folded in, at the time, the largest corporate bankruptcy, and June 2017 is the anniversary of the collapse of Enron's auditor Andersen

Anne Groves is a communications and career development consultant. She was EMEIA Head of PR at Andersen at the time of the crisis:

A $9 billion global professional services firm, with 85,000 people in 84 countries, the US firm was convicted on criminal charges of obstructing justice (later revoked), the global network ceased to exist, thousands of US and UK staff were redundant, and the Andersen name effectively disappeared.

Living through it was an experience of unprecedented intensity.  15 years on, it still lives vividly in the memory.  This was the first example of a professional services firm facing a reputation crisis on a global scale.  If a brand which is based on trust is 'globalised', exposure to risk is hugely increased. 

One of the most stressful aspects of the situation was the fact that people within the firm in the UK, daily seeing coverage of 'beleagured', 'troubled', latterly 'doomed' Andersen, could not recognise in these reports the firm they worked for, and were anxious to reassure their clients, colleagues, and themselves. 

Communicating with Andersen people In an age with no social media to speak of, communication methods now seem positively historic!  Voicemail was habitually one of the main channels for communication, supplemented by face-to-face briefings for all staff, intranet and email bulletins for updates, and a daily media summary, to interpret stories as essential preparation for daily conversations with clients.  It was also vital to try to manage people's expectation about the kind of information they can expect to receive in a time of great uncertainty.  The critical point: keep communicating, even when there wasn’t much detail to give.

Communicating with clients The firm strove to keep clients informed and address many of the misconceptions which were gaining currency in the constant comment on the situation.  UK clients were supportive, and we tried to give reassurance and information, helping to anticipate shareholder questions at forthcoming AGMs: much of the action took place during the proxy season.

At the time controversially, we went high-profile with media interviews, specifically BBC TV 'Ten O'clock News' and 'Newsnight' and Radio 4's 'Today' programme.  This was in fact a hugely effective way of communicating to all our audiences - clients, alumni and our own people.  All these groups wanted to hear our point of view put publicly, and it was an occasion on which mass media broadcast was an excellent method of reaching a highly targeted audience. 

Crisis media service The crisis media service was set up in the UK in mid-January and was sustained for approximately the next fifteen weeks.  The first priority was to try to accommodate a 24 hour global media schedule, with a system of daily conference calls and voicemails between the US and UK, and advice and briefings passed on globally so each country could handle their own media.

Each call was logged and prioritised, each person in the PR team had a list of journalists they were responsible for.  With hundreds of calls coming in to land lines and mobiles, we struggled to cope at the height of the crisis - it was simply overwhelming.  One of the most satisfying parts of the crisis, however, was the PR team's overnight arrangement of a press conference, attended by around 50 journalists, including eight TV crews, 4 of them from the BBC!

What did we learn from the crisis? 

It can happen to you - no matter how strong your brand.

A crisis can be anticipated and prevented - but don't be complacent about your firm's risk management systems. No amount of crisis planning will help if a substantial risk has not been identified and managed as part of normal business procedure.

Ask the hard questions: does your firm have a compliance culture?  Would the policies stand up to outside scrutiny?  Is there a potential gap between how you view your organisation and the expectations of the outside world?

Acknowledge which battle exactly you are fighting.  Is this a local or a global crisis? Is it a real or perceived problem? One-off or systemic?  Is remedial action or reform needed?

Set up a 'command and control' structure, to establish the facts and to counter misinformation. Rumour gets ahead of reality very fast, and there is a real danger of losing control.  Of course, coverage can have an impact on the legal situation during a crisis, and it was notable that there were almost no ‘unofficial’ media briefings or leaks going on during this time.

A crisis can be turned around if there is real evidence of change – and a truly joined-up communications structure.  Keep your nerve: keep communicating, and be bold and firm in your arguments.

Once the crisis starts, it can continue to get worse - and you need to prepare yourself for the worst possible outcome at each stage. 

The communications team will take the crisis hard: they expect to be able to mitigate the reputational damage and there will be unrealistic expectations internally of what is achievable.

The crisis will finish: other stories will supplant it in the media.

Acknowledge when it's a rout - and switch to damage limitation.  Andersen fought for its life and reputation from December 2001 to March 2002; from March it faced the death sentence.

What survives when a corporate reputation is destroyed?

It is possible to rescue personal integrity: the integrity of Andersen management and people in the UK remained untainted.  The communications team emerged with credit and stronger for the experience.

It is a scarring experience and, finally, the only thing to do is to give it your all while you can make a difference, then to learn from the experience and, finally, move on.

Anne Groves is a communications and career development consultant. She was EMEIA Head of PR at Andersen at the time of the crisis.

 

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About the author

Richard Bailey

Richard Bailey is editor of PR Place. He teaches and assesses undergraduate, postgraduate and professional students.


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