How you and your board handle a high-pressure situation – from initial crisis meetings with management to dealing with the media – can make or break the organisation’s reputation, not to mention your own.
David Marshall AM FAICD, chairman of high-profile not-for-profit Snowy Hydro SouthCare Rescue Helicopter Trust and a trainer and media consultant for business leaders, shares his tips for responding to a crisis and minimising the damage.
Not-for-profit (NFP) organisations can face many risks: inappropriate behaviour by field workers, financial mismanagement and poor distribution of donations are recurring sources of crises and reputational damage. The fallout, as always, can extend to directors who find themselves personally liable if it is proved they breached their duties, or at the least suffer significant personal reputational damage that hurts their governance career.
According to David Marshall AM FAICD, “as a board member, reputation is everything.”
If your personal reputation is damaged because of a crisis, it can have very serious consequences for you personally and for your career.
“There are many directors of NFP boards who are very well meaning, but perhaps haven’t had that much experience at board level, or certainly at a company level, and can tend to forget that their responsibilities are equal to that of a for-profit company,” he says.
Marshall adds that sometimes NFP boards don’t see where damage could be incurred to their reputation because they make decisions without the filter of public opinion.
“Making a decision without thinking about the consequences of public perception can be very dangerous,” he says. “Particularly with media scrutiny, boards should always be aware of what the headline could possibly be. They should consider: will our decision create any public angst? Will it pass the ‘pub test’?”
Make your move
If a crisis situation develops, speed is critical, and directors need to take a proactive approach. “One of the first things I suggest is a very quick crisis meeting with the management team – perhaps with the board – to examine exactly what the issue is,” says Marshall.
“Clarifying the issue, and its implications, can sometimes be quite challenging. I have been in situations where it has taken an hour to actually clarify what the board is talking about, to make everybody aware of the problem and to confirm what it is that we’re addressing.”
Marshall also recommends that a director or organisation consider putting out a holding statement. “If you don’t make a comment, others will fill the void.”
“One of the challenges is that often people will seek legal advice, which is very advisable. But often legal counsel will advise to not make any comment. My strong recommendation to boards is to really consider whether that’s the right approach. There is a lot you can say without jeopardising any investigation, and often silence in a crisis can be incredibly damaging,” he says.
“As soon as you possibly can, make amends or at least advise people, what processes you are going through to fix the situation. Ultimately there should be an apology or some sort of admission given – and you must do that with consideration of the wording you use – but always be honest, be open, be forthright.”
A matter of probity
If a matter comes before the board where you believe there may be a credibility or probity issue, Marshall provides the following tips:
- Make yourself heard – If you are of the view that you dissent from a decision, you need to make sure that is minuted.
- Always read the board minutes – Many directors do not thoroughly read the draft minutes before a meeting to make sure they are accurate. Of course, when an inquiry erupts, these minutes are very valuable.
- Consider resignation – It’s a very big call, but if you feel that the board has made a decision and you’re very uncomfortable with it, then you really need to consider whether you should resign. Remember, if your personal reputation is damaged because of a crisis, it can have very serious consequences for you personally and for your career.