By Harrell Kerkhoff, Maintenance Sales News Editor
Crises, emergencies and disasters happen. It’s a fact of life. When they do happen, companies that best survive are the ones with a well prepared plan in place. The old line, “It will not happen here,” simply will not do, according to Paul Rutledge, vice president of risk and loss control, for Masters Gallery Foods Inc.
Rutledge presented, “An Ounce Of Prevention, A Pound Of Cure — Emergency Planning & Recovery,” during a recent educational institute webinar.
“Even though it’s not always fun to do, it’s important to plan for the unthinkable. There are a lot of things a company leader should think about when it comes to crisis management,” he added.
Included in that list are: fire and weather damage, lawsuits, workplace accidents, active shooter incidents, product recalls, threats made to employees, issues with OSHA, EPA and FDA, infectious disease control — the list keeps growing and growing.
“We must have a plan in place for handling different crises. I have dealt with almost every one of those listed in my 30 years of experience. Hopefully, you can’t say the same, but I hope you spend time preparing for all of them,” Rutledge said. “The unthinkable does happen.”
BEFORE THE CRISIS
Having made proper preparations, before a crisis or risk event actually occurs at a business, is often the difference between survival or disaster, according to Rutledge.
Early planing involves:
• Enterprise Risk Management (ERM);
• Emergency, Crisis Management and Disaster Planning; and,
• Business Continuity Planning.
“The very act of going through those steps often provides the best thinking. ERM helps identify the biggest risks to a business; Emergency, Crisis Management and Disaster Planning all involve plans one should make before a crisis; and, Business Continuity Planning revolves around what to do after a crisis actually occurs,” Rutledge said. “Taking such steps may not stop things from happening, but they can prevent a big economic pitfall as a result of a crisis or emergency.
“ERM is a very interesting tool. It started in the financial sector, and was picked up by different businesses and industries as a way to properly identify, and manage, risk.”
ERM can help company leaders focus on identifying risks that can derail a business, preventing it from accomplishing strategic goals, including making a profit and finding new customers. ERM also helps companies identify risk tolerance.
“Every company has some type of risk tolerance. For example, if a company has $1 billion in revenue, generally its risk tolerance is around $12 to $20 million. That is a lot of money, but losing that amount of revenue would not put the company out of business. When you know what your economic risk tolerance is (as a company), better decisions can be made when it comes to handling risk,” Rutledge said.
While going through the ERM process, it’s good to rank each type of risk according to its: likelihood, severity and velocity. Ranking mitigation is also important and involves: type, cost and velocity.
“When it comes to understanding velocity, it’s good to look at two extreme examples. A fire represents high velocity, as its impact is felt immediately. On the other hand, if your company is hit with a class action lawsuit, that could take years to impact your organization. It has low velocity,” Rutledge said.
He added that ERM involves true prevention followed by mitigation.
“If you can’t prevent a crisis from taking place, then it’s about mitigation. That is how you lower your risks as an organization, by putting in the right mitigations at the right spots,” Rutledge said.
It’s not uncommon for companies to identify 50 to 150-plus risks present within the organization. A lot of those risks can be identified through company interviews, such as with owners, other top level management and production staff. The idea of such interviews is to gain different perspectives pertaining to various risks involved at a specific company. Often the next step is to prioritize the top five to 25 risks, and then develop corresponding mitigation plans.
“It’s Ok to start with a few risks at a time. A lot depends on resources. Planning takes money and time. It’s important to prioritize and reprioritize,” Rutledge said. “Always keep the process moving. It’s easy to put things on the back burner and cancel meetings, but you have to keep the process moving.” DURING AND AFTER
When a crisis does occur, having an Emergency Action Plan in place in critical, especially as it relates to keeping employees safe and structures sound. The next step is Crisis Management, followed by Business Continuity and Disaster Recovery.
Rutledge explained that an Emergency Action Plan is designed to be put into place during the first four to six hours of a crisis. The plan can involve 911 officials, local emergency planning committees and HAZMAT preparations.
“The main goal of an Emergency Action Plan is to properly respond to a situation as it develops. It should involve how to get people to safety, making sure resources are available and arriving, and starting some type of company preservation,” Rutledge said.
Other steps include:
• Implementation of internal calls within a company, designed to put specific officials on notice of the situation at hand;
• Implementation of a mass communication system, designed to contact all employees; and,
• Sizing up the emergency.
After people and buildings are safe, Crisis Management takes over, and usually lasts up to 72 hours. It often involves: operations, public relations, supply chain, planning, scheduling, sales, marketing and working with contractors, engineers and human resources.
“I was involved with a company where a fire had taken place. Our crisis management included getting contractors to the site to evaluate the building, as well as working with our insurance carrier,” Rutledge said. “Crisis management is based on getting resources directed to specific areas. It also involves setting up a work and communications structure. It’s important to have a plan in place before a crisis strikes, one that spells out who is responsible for what.
“Crisis management must include communications, public relations and internal messaging. It’s important to work on controlling and mitigating the emergency, as well as labor planning. Start looking beyond the emergency, to the impact that crisis has on your business. At this point, it’s not too early to start a Business Continuity plan.”
The latter involves planning how customers will soon be supplied with product again, allowing the revenue stream to continue.
Another important step in planning for a crisis involves Disaster Recovery, which includes knowing who to call for each area of support needed. Examples that Rutledge provided include:
• Pulling Product — “If you have to pull product from a customer’s facility, due to a recall, how exactly is that going to take place? What about product at the consumer level? Who is going to dispose of that product?” he asked. “Those are all questions that should be addressed long before a recall is necessary.”
• Clean Up & Debris Removal — If a company’s building burns down or is destroyed in a storm, who is going to clean the mess?
• Post-traumatic Stress Counseling — For employees who see a crisis unfold, especially if there is an injury, post-traumatic stress is a real possibility. There is also the stress that comes if a business shuts down for a period of time. Employees may start to worry about future paychecks. Such issues should be part of a Disaster Recovery plan.
• Insurance and Insurance Support — Rutledge expressed the importance of making sure insurance brokers will be ready if an event, such as a fire or storm, occurs. He added that insurance carriers are very good at helping their customers try to prevent disasters, through their various resources involving loss prevention.
• Food and Drink — It sounds simple, but detailed Disaster Recovery plans also include who is responsible for basic items, such as food and drink, during the disaster recovery process.
He added that when it comes to Disaster Recovery, it’s all about, “Who are you going to call?” It’s also vital that those companies that are “coming to the rescue,” are contacted beforehand, so that they will be ready when there is a need.
“It’s important to determine who are the best sources to contact. Make sure all companies your business is relying on will be available 24/7. If they are not, look for somebody else,” Rutledge said. “I don’t know why, but a lot of emergencies occur on a Friday afternoon (when people have left for the weekend), rather than 9 a.m. on a Monday.”
He noted that planning for a crisis takes leadership, commitment and drive. The work, however, can have an enormous and long-lasting impact on a business, brand, customers and employees.
EVALUATE YOUR BUSINESS TODAY
Before a disaster strikes is the perfect time for officials to evaluate their company’s preparedness. Crossing all “Ts” and doting all “Is” is much easier before a major event occurs.
Rutledge recommended the following when discussing proper evaluation:
• Rely on past experiences of company leaders — “There are many businesses that have members in upper management who have dealt with crises before, whether it’s with their current company or elsewhere,” Rutledge said. “It’s important to ask and learn from them. They can identify current risk levels within a company.”
• Look at circumstances from the worst possible point of view — “We all like to focus on the good stuff, but it’s also important to identify bad things that can happen,” he said.
• Embrace a plan of action — It’s nice to know that if something does goes wrong, there is a plan in place and people know how to implement that plan.
• Actually teach the plan to those who will be involved — “Don’t draft a beautiful document and just set it on a shelf or place it inside a folder in a computer. Instead, employees need to be constantly educated and updated on crisis plans,” Rutledge said. “Plans should be taught at a frequency that provides good retention. They should also be specific to what needs to be done. Don’t make them too complicated.”
• Drill the plans — “Pick a crisis that could happen at your business and conduct a drill exercise,” he said. “Drilling is an important component, as it keeps things alive, people thinking, and most importantly, it teaches your people what to do if an emergency occurs.”
• Modify accordingly — Things change. Although Rutledge said checklists are fine to use when preparing for disasters, no two disasters are the same.
“You don’t want to get into the mindset that everything about an emergency or disaster can be covered in a single document. Plans will always need to be modified. That is where drilling and teaching come into play,” Rutledge said. “When new information presents itself, or your company experiences something it hasn’t experienced before, it’s important to revisit your plans and modify them accordingly. For example, people were not talking about ransomware 10 to 20 years ago. Today, it’s a real threat. Pull out your plans, and modify where necessary, to cover something new.
“The goal is the avoid going through a crisis on the fly. You want to have a plan that is detailed enough to get your company on the right track as the crisis develops. And remember, no matter what the crisis is, and no matter what plan or document you have in place, there is going to be new developments that have not been covered. Therefore, it’s important to be flexible with what is going on.”
He added it’s important to conduct a postmortem for every crisis that takes place. Ask such questions as: What went well? What did we learn? What things did we not see coming? How can we respond differently in the future?
It’s also important to decide ahead of time how major decisions will be made if, and when, a crisis takes place. It’s important to ask in the planning process: What decisions are going to be made by the owner, by the president, by the board, by the managers, etc?
“Often, what happens is, companies not properly prepared will have management start debating decisions. People are not always going to see eye-to-eye, and that is OK. It’s normal, but is also why decision-making protocol must be decided ahead of time,” Rutledge said. “Fire departments, police forces, SWAT teams and the military have all identified ‘decision making’ as a potential barrier to crisis management.
“In response, those groups have created structures and chains of command related to how decisions will be made. The same should apply to business.”
CONTROLLING THE SITUATION
A crisis can test business culture like nothing else, according to Rutledge. And although the timing of a crisis is not controllable, its impact can often be controlled. That can be achieved through proper planning and mitigation. For example, fire suppression equipment can help a facility avoid a serious fire, and quality inspections can lead to fewer product recalls. It’s also possible to lessen, or avoid, negative public relations that can result from a crisis.
“I remember one circumstance where there was a serious injury at a company. After the 911 call was placed, a newspaper reporter came to the scene before the ambulance. That is an example of how things can quickly get out of control,” Rutledge said. “Today, there is Facebook, Snapchat and other social media that people use to rapidly share information. For those businesses that can afford one, a good public relations company can help.
“Many of the crisis management programs I have created focus on public relations. That includes prepared statements, such as those sent to customers. It allows employees and customers to know what has happened, and if the supply of product will be delayed.”
He added that mass communication technology now available is another good way to notify employees and other people regarding a recent event.
“Crisis management is all about how fast your business can properly recover. The order in which a company works on recovery is equally as important. People, such as employees, have to be the top priority. Otherwise, it appears a company is putting profit in front of people, which nobody likes,” Rutledge said. “The next thing that comes into play is the planet. People want to know if an emergency is hurting the environment. After that, it’s about property.
“If you can take care of those three ‘Ps’ — people, planet and property — the fourth ‘P,’ which stands for ‘profit,’ will take care of itself. When working through a crisis, emergency or disaster, start with heart and make sure you are doing things for the right reasons. If you act with integrity and honesty, you will be fine.”
For more information,
contact Rutledge at 1-920-912-4466.