by D&E Staff

October 28, 2015

In some ways, the situation United is facing – it’s newly appointed CEO had a heart attack shortly into the job after the previous CEO left abruptly following a scandal – is unique. However, this should be a wakeup call for all companies that the unexpected can happen. And, your company’s leadership – and by extension, its succession planning – are key topics that matter to your investors, employees, customers and other stakeholders.

In my opinion, the company fumbled nearly all aspects of its response from both a communications and corporate governance perspective – in that they did not control their message, but rather allowed it to be controlled by others. While these situations can be highly emotional, United’s slow response left an unfortunate vacuum of information in the court of public opinion, with lots of room for speculation and doubt.

Most notably, there was no immediate interim leader named, leaving investors, analysts and employees wondering who was in charge. In the meantime, speculation mounted in the media and on social media, placing greater pressure on the company to respond. When United did finally issue public statements, they were vague and somewhat confusing, suggesting the Board of Directors wasn’t fully up to speed, which doesn’t inspire confidence in the company’s management team or its Board.

The “complete” statement was finally issued the following Monday evening – days after the news broke – and it wasn’t much better. It didn’t say much other than to identify the interim CEO, who is not well-known to the investment community, according to news reports.

This situation offers a lot of “lessons learned” and reminders about the importance of proactive corporate governance and crisis planning:

  • Always have a succession plan.Yes, the new CEO had been in his role for just a few weeks. But one of the first Board actions when naming a new CEO should be to figure out who’s in charge if he or she can’t be, and in the event of the unexpected.
  • Avoid getting caught off-guard.With the right succession plans in place, companies should quickly be able to identify interim leadership. Additionally, companies should routinely – with the Board of Directors – brainstorm various crisis scenarios and develop communications accordingly. The sudden illness or death of a CEO should be at the top of the scenario list so that companies are ready with communications and disclosure tools.
  • Communicate quickly and as transparently as possible.As with any crisis, ensure you are responding as  soon as practical  and as transparently as possible, even if only to say we are saddened by the news, working quickly to name an interim and will announce soon. No one really expected United to have all the answers – given the legitimate privacy concerns of the CEO and his family for one thing – but by waiting to respond, it appeared the company wasn’t as forthcoming as it could have been.

Bottom line: With the proper corporate governance, succession planning and crisis preparation in place, a company and its Board of Directors can be ready to act quickly and decisively to assure investors, employees and customers that things are under control if the unexpected does happen.