A Healthy Business

The crisis at Lloyds Banking Group last week, when it was suddenly announced that new chief executive Antonio Horta-Osorio was to take a leave of absence at the insistence of his doctors because of a stress-related illness, once again highlights the PR benefits of having a well-thought out and well-communicated crisis plan in place.

Unfortunately in this case it wasn’t immediately clear that Lloyds did. Which is why the share price took a hit of almost 4% on the announcement and its credit rating is at risk.

Shareholders and stakeholders were understandably unimpressed at the loss of brand and financial equity that came from the instant and significant reputational damage of being perceived as not being prepared for this crisis.

So how should it have been managed? Firstly, you have to have a plan for every reasonably-conceivable scenario involving key personnel.

More importantly from the PR perspective, you must show and communicate clearly to all stakeholders beforehand that you have a credible key-person crisis succession plan in place as a matter of course – that it’s the norm in your organisation.

As part of that communication you have to ensure the nominated successor is both well known and understood to be able to take up the reins and implement the existing strategy at a moment’s notice – the need for the Lloyds board to approve the group's finance director, Tim Tookey, as interim chief executive didn’t help. Worse was that he’s already known to be leaving the company in February – immediately creating the extra questions of ‘Who’ll succeed him?’ and ‘Will the next person know enough about Lloyds to keep things on an even keel?’

You also have to think long and hard while planning about how to talk about the leader’s ill-health. Most notably in recent years, Apple faced this challenge with Steve Jobs’ well-publicised struggle against cancer. Every announcement was poured over in minute detail by those who comment on the firm.

Part of the problem there was that he was such an iconic leader so closely associated with the brand and its history of innovation that finding a credible successor was difficult. But by making it clear that Jobs had been mentoring COO Tim Cook for years they minimised the inevitable shareholder and stakeholder jitters.

If you already have a C-level crisis plan in place, you may also want to look at a recruitment process which properly assesses the individual’s ability to cope with the stress that comes with a high-profile leadership position.

Star Trek has this as part of the leadership tests at Starfleet Academy. Each candidate has to go through a simulated command of a rescue known as The Kobayashi Maru Scenario. What they don’t know is it’s a no-win situation designed to test their character and leadership qualities in a true worst case. Whatever they do, they and their crew will die. How will they react? (The only person to manage to save himself and his crew was James T. Kirk, but only because he cheated by reprogramming the simulator in advance. Starfleet awarded him a commendation for initiative!)

In the real world, workplace simulations such as those used at assessment centres by large organisations should be extended above the lower levels to more senior jobs because the PR and financial ramifications of senior staff and leaders going off sick with stress are far more widespread, as we’ve seen this week.

Recruiters should also look at thorough assessment of candidates’ leadership style using the Tannenbaum-Schmidt continuum to ensure they are able to delegate enough and effectively to avoid the kind of crisis Lloyds endured this week unnecessarily.

With PR crisis planning you can avoid a crisis turning into a damaging drama.