The human side of crisis

Why your people hold the key to crisis outcomes

A crisis can touch many aspects of an organisation — from its financial, legal, and competitive standing to its technology, processes, and reputation. What too often gets overlooked is the human factor.

After all, while companies are said to “face” crises, the reality is that it’s people who actually deal with them, and people who hold the key to outcomes. And, as crisis specialists, we know that how you treat your human stakeholders, both internal and external, will likely make all the difference in whether a company is irreparably harmed or emerges transformed for the better.

Here’s the key to changing the paradigm on crisis management: Instead of viewing people as your weakest link in a crisis, see them — and the culture you foster — as your single greatest potential strength. There may be no greater strategic imperative — because, when it comes to crisis, it’s not a matter of if, it’s a matter of when.

How to lay the groundwork for that is the subject of this deeper dive into the data from PwC’s just-released Global Crisis Survey.

Deeper insights on crisis, from PwC

We've just released the most comprehensive global report on corporate crisis ever assembled — with more than 2,000 global respondents describing, in real-world detail, their experiences of 4,500 crises.

This is the first in a series of deeper insights into crisis — focused on how companies can understand the actual dynamics of crisis, reverse-engineer the positive experiences of their peers, and emerge from crisis transformed for the better.

Crisis will wreak havoc on traditional decision-making 

Crisis: The physiological/psychological impact

Research has shown that the pressures of a crisis can trigger physical reactions capable of distorting perceptions, decisions and outcomes, including:

  • stimulation of the amygdala, which activates the "flight or fight" response
  • reduction of available working memory
  • a (self-reinforcing) lack of sleep

These conditions can then impair executive function in numerous ways, including:

  • a tendency to mistake assumptions for facts
  • the inability or reluctance to make any decision "until all the facts are in" (a luxury rarely available in a crisis)
  • "tunnel vision" (seeing only the fire that needs to be put out, or focusing only on what has just happened)
  • confirmation bias (the tendency to filter out information, or stakeholder perspectives, that do not confirm to preconceived notions)
  • overconfidence bias (assuming we know more than we actually do, or can handle more than we actually can)

Fast-paced, complex, and unpredictable as it unfolds, a crisis will put humans to the test in ways that are hard to anticipate, and even harder to handle. That’s because the extreme stress of crisis impacts us simultaneously on the mental, emotional, physiological, and cognitive levels (see sidebar). It distorts not only human perception, but also our decision-making abilities — precisely when we need them to be at their sharpest.

In a crisis situation, natural human instincts can be counterproductive, at best. For example, a person’s first tendency, when under siege, is often to defend or protect themselves or their team — but that can lead to an inauthentic or inappropriate response. When disaster hits, an all-hands-on-deck, everyone-to-the-rescue reaction is understandable — but such good intentions will most likely lead to a chaotic response. 

For business leaders — accustomed to the luxury of clear facts and options prior to making business decisions — being forced to make fast, enormously impactful choices based on limited, incomplete, or possibly even erroneous, information is extremely stressful. The more so when you consider they know they will be held accountable for those decisions — with 20-20 hindsight. 

And yet in a crisis, crucial decisions must be made, often at the most inconvenient or inflexible time. It could be deciding whether to include a material disclosure with a required financial statement. When and how to reveal a breach. Whether the CEO should make a public statement. Even when and what to release in a press release. All of these actions will be scrutinised, and none of them can be undone.

The hidden risks of group dynamics in times of crisis

Most crisis management teams are multidisciplinary (comprising at a bare minimum the CEO, Operations, Legal, and Communications) — but that doesn’t mean they will be cohesive. Each functional group will be far more familiar with its own perspectives, motivations, and goals (and devoted to the interests of its own stakeholders) than it will be with those of its counterparts, which can lead to confusion and even conflicts. In the midst of an unfolding crisis, for example, it’s hardly uncommon for Legal and PR to have diametrically opposed positions on whether, when, and how to disclose an issue to the public.

Team dynamics (positive or negative) tend to be amplified by crisis. In our client engagements, we have frequently seen situations where an organisation allows only one or two stakeholders to dominate and guide the response — only to discover later the damage done as a result of ignoring others. Or where a crisis response team dissolves into factionalism just when decisive, coordinated action is most needed. Or where an echo-chamber, “groupthink” mentality takes over and a broader perspective is lost.

Your stakeholders are human beings — and they hold your reputation in their hands

Trust is built, regained, and maintained in human-to-human interactions. That’s true with your internal crisis management dynamics. It’s every bit as true with your other stakeholders as well — including your employees, your customers, your shareholders, and the press. Keep in mind that your reputation is largely based on their perception of your credibility in delivering on expectations.

Animated graph showing the importance of a fact based response to a crisis

Source: PwC Global Crisis Survey 2019

Stakeholder management: The 5 guiding principles

  1. Compile a list of all your relevant stakeholders, internal and external
  2. Assess each one's specific needs and nuances
  3. Identify the team best positioned to play the leading role in communications — and the resources needed — for each stakeholder
  4. Design the mechanisms needed to both "push" information to, and "pull" (and respond to) inquiries from, each stakeholder
  5. Balance consistency and customisation: While all your communications should adhere to the same basic script, ensure that each is tailored to the needs and concerns of the individual stakeholder

In the heat of a crisis, it’s easy to forget that your stakeholders are not abstract forces, but human beings — with their own nuanced feelings, fears, preferences, and biases — just like those on your crisis response team. Neglecting to interact carefully with each of these stakeholder groups, on the “home turf” of their own perspectives and needs, can lead to a loss of trust. In our experience, it can even lead to a secondary reputational or legal crisis.

So ask yourself: In a crisis, what facts will what stakeholders most care about, or need to know? Who should communicate those facts, and how, and when? The solution is to balance, prepare, and test your fact-finding and stakeholder communications strategy for any potential crisis well in advance. 

When an issue arises, be open, transparent, and clear. Know what you know, know what you don’t know — and always communicate with each stakeholder group through the prism of that stakeholder’s worldview.

Why values and teamwork are critical in a crisis 

When facts are uncertain, and the pressure to make time-sensitive decisions is enormous, it is wise to default to values-based decisions. Even if the decision later turns out to be not optimal, hewing to your values can help inoculate you from harm. It can even transform the reputation of the organisation and its leadership in an extremely positive way once the dust has settled.

The reality, unfortunately, is that when an actual crisis hits, “corporate crisis response” and “corporate values” often appear to go in separate directions. Most of us can think of household-name organisations whose early response to a devastating crisis was incompatible with their public-facing values statements — and who suffered losses to their reputational capital as a result.

Crisis is a time when it can be hardest to stay true to your values. Some companies address this challenge directly, and turn it into a positive: they post their values statement in their conference rooms, and use it to evaluate every business decision they make. We have witnessed firsthand how this practice has played a decisive role in successful crisis outcomes. And our Global Crisis Survey confirms that two of the most important factors of an effective crisis response are teamwork and people sticking to the company’s values: of those companies who self-identified as “in a better place” post-crisis, huge majorities confirm that they acted with integrity and as a team. 

Here’s another reason why values-based decisions matter. When a company is perceived by its own people as being inauthentic in its response, the trust lost from employees can have long-term consequences. On the other hand, making values-based decisions can help bring the organisation and its teams together, and come through the crisis stronger and more unified than before.

Animated graph showing the results of working as a team during a crisis

Source: PwC Global Crisis Survey 2019

Human side of crisis word cloud

“Soft skills” and immersive learning

Effective crisis management requires a combination of hard structure and “soft” skills — the ability to handle the stress and chaos of crisis, to make decisions under pressure, to communicate the right messages in the right way to the right stakeholders. A strong command-and-control infrastructure and well-rehearsed crisis response plan are critical to creating a sense of management, rhythm, and pace in the response. But in the end, outcomes usually hinge upon human qualities.

No amount of study or plans on paper can adequately prepare you for the experience of a true crisis. That’s why it is so critical to practice decision making in immersive environments, with those team members you would normally interact with. These exercises must be realistic and have high psychological fidelity (recreating the actual pressures organisations would feel in a real live crisis). 

This kind of exposure can bring the familiarity and observational ability you need to make the right choices under the press of an actual crisis. It can also invigorate both teams and individuals, yielding some hard-earned confidence and comfort.

What successful companies recognise about crisis management — and how you can be prepared

As part of PwC’s Global Crisis Survey, we asked crisis leaders to describe the emotions they felt while combating their worst crisis. The result is this “word cloud,” which illustrates the variety and intensity of emotions felt by our respondents, with the size of the word corresponding to how many times it was used. 

Despite the understandable prevalence of negative experiences, rays of sunshine are also visible cutting through the dark clouds. In fact, the fifth most-cited emotion was “determined,” and not far below, words like “resilient,” “focused,” “prepared,” and “hopeful” were cited by significant numbers of people who had lived through a major crisis.

What does this tell us? That emotions are extremely powerful — and that the experience of crisis will alter the chemical balance of human behavior (including in your network of stakeholders) in ways that are impossible to predict. Successful companies know that no amount of systems, data, or software will help you manage a crisis effectively if your people don’t step up to the plate.

 

With that in mind, here are five essential questions you need to ask to test your human crisis readiness

  1. Are your everyday business decisions aligned with your values? 
  2. How confident are you that, in the heat of a crisis, those decisions will appear authentic to those values?
  3. Are your crisis communications in tune with the needs of all of your stakeholders (including your employees)?
  4. Are the dynamics of your crisis response team well balanced? 
  5. Have you put your crisis response plan to the test in a credible, truly immersive exercise?

 

The crisis management spectrum — Prepare, Respond, Emerge Stronger — also applies to people. A well-managed crisis can build teamwork and reinforce your values, while building the kind of muscle memory and confidence that makes for a stronger organisation, top to bottom. Given the intensely disruptive, universal experience of crisis, that can also spell competitive advantage and long-term resiliency for the organisation.

Contact us

Kristin Rivera

Global Forensics Leader, Partner, PwC United States

Tel: +1 (415) 302-3428 

Dave Stainback

Principal, US Territory Crisis Leader, PwC United States

Melanie Butler

Partner, PwC UK, PwC's Global Crisis Centre

Tel: +44 (0)20 7804 5158

Dr. Claudia van den Heuvel

Senior Manager, PwC United Kingdom

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Our Global Crisis Survey confirms that two of the most important factors of an effective crisis response are teamwork and people sticking to the company’s values. Talk to a forensics partner to discuss your crisis preparedness.

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Contact us

Kristin Rivera

Global Forensics Leader, Partner, PwC United States

Tel: +1 (415) 302-3428 

Dave Stainback

Principal, US Territory Crisis Leader, PwC United States

Melanie Butler

Partner, PwC UK, PwC's Global Crisis Centre

Tel: +44 (0)20 7804 5158

Dr. Claudia van den Heuvel

Senior Manager, PwC United Kingdom

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