Almost a year after the event, I still get a lot of questions about the BP disaster in the Gulf of Mexico. One of the most recent questions was whether this disaster was a “wake-up call” for chief executive officers as far as crisis preparation and management at their companies.
There were two disasters that confronted BP. One was the explosion that killed a number of people and which spilled countless tons of oil into the Gulf of Mexico. One was the continual communications blundering. These disasters do serve as a warning to chief executive officers that anything can happen anywhere in the world at any time.
But I would argue that the Gulf of Mexico crisis is an anomaly. Few companies ever will face a crisis of that magnitude. So yes, chief executive officers as well as communications professionals around the world watched closely as these two disasters unfolded. But more from an intellectual perspective because few of them will believe such a crisis can happen to them.
There were other events last year to which chief executive officers did pay more attention. One of these was the rash of strikes by Chinese factory workers who demanded more pay.
News coverage focused on strikes at large companies, among them some of the best-known global brands. But this is a challenge that could confront any global company, and every chief executive officer whose company has operations in China is well aware of such a threat. And these days, that includes not just Fortune 100 companies but small and midsize companies too.
Here is what this means for you.
If you have operations in China, it is because of the opportunity to be close to customers there and elsewhere in Asia. That suggests the greatest growth prospects for your company are in Asia.
Any crisis such as a labor strike in another country is not just a local issue, it is a threat to your continued success. But dealing with a crisis in another country, is not always the same as dealing with one here. That is particularly true in a country such as China.
Global media may make it seem that business success and consumer affluence are common in China but these are still new developments for most people. So is working for a global company. And unless you foster the company culture, Chinese will have no particular loyalty to you.
If there is a problem, Chinese employees will talk. For that matter they may also walk if they do not believe you care about them, their community or their country.
But they will talk on social networks and blogs because this is how people learn about what is happening. What they say about you will help dictate how quickly the problem is resolved, and whether the problem becomes a public issue. If that happens, all bets are off.
Because if employees are critical of you, Chinese media soon will hear of the problem. They are increasingly nationalistic and will criticize you for caring about money and not about people.
Sound far-fetched? Not to companies that faced labor strikes last year.
And that is a challenge that any company conducting business in China – or other countries – can face. Because that can happen to any company, that is the real wake-up call for all CEOs.
What to do?
Crisis preparation in China begins with employee communications, including the use of social networks to reach your employees, to build employee loyalty that can help you with reputation management if you do have any issue or crisis. It can also help with talent retention, still a problem for many companies particularly at a time when Chinese employees are beginning to move from successful global companies to successful domestic companies.
Crisis preparation simultaneously includes far greater emphasis on frequent planning and training sessions, right down to every single plant manager and shift leader in your facilities. Because people at this level have never been through a crisis – they may be young and have known only success – they may well fail you when you need them most.
This happened to one global company. There was a fire at one of its manufacturing plants, which was covered by the Chinese media. When the plant manager left for the day, he was ambushed the media. He ran back inside because he did not know what to do. The resulting video coverage made it difficult for the company to prove that it was on top of the situation and that it had the interests of the local community at heart. That is important to success in China.