The Law of the Few: World Class Corporate Crisis and Communications Teams

Many companies navigate the routine complexity of business with adequate or acceptable managem

Team Sport

ent, however it is the truly stellar company/s that excel not only on a routine basis but especially in times of crisis. It is select skills, experience and traits that are able to applied during times of critical decision-making that separate them from the herd.  Specific skills and attributes are not something that can be learnt in the minutes and seconds required in order to apply to a critical decision making process but are acquired and developed over many years and supported by advanced processes and tools.

To understand the best-in-class for corporate crisis management and decision-making we need to consider a number of things. Given that the timeliness of response is often predicated on how little time is wasted on logistical or bureaucratic processes before getting to a point of action, therefore companies with existing policy and procedure that is both rehearsed and updated, put themselves in the top 10 to 20% immediately. This element is certainly not a significant contributor to their success our outcome. Second, the quality of information on which decision-makers and leaders are basing their actions upon. This information alone does not comes from traditional sources such as television and paper it increasingly is inclusive of social media. The voices of many, albeit nonofficial, can have a significant impact on the outcome of the overall damage/survivability of an incident faced by a company.

The best-in-class companies not only acknowledge social media but have means of tapping into influencing and monitoring all social media channels as required, not just in times of crisis but on a routine basis. Lastly and most significantly it’s the character of the individuals that fill the functions within a crisis or communications plan. It’s this area will look in more depth to determine the requirements attributes and success factors as crisis management is seldom the catalyst for success or failure but that of crisis leadership.

In Malcolm Gladwell’s groundbreaking book The Tipping Point he mentions three significant class of character that are an important influence on social trends and epidemics. These three main character traits are also vital if not pivotal in the success of corporate communications and crisis response. Companies that lack or fail to identify and leverage from these key character and personality traits fall far behind the best of class and most innovative companies. These character traits and abilities are not governed by job title position or function they are skills possessed within a person and therefore should be leveraged in accordance with the skills to the desired outcome rather than relying on a predefined job title or function within the company. These three character traits are 1. Connectors. 2.  Mavens and  3.  Persuaders. In very rare instances one or more of these skill sets may be founded in a single person but any one person shouldn’t be relied upon in adding depth to any team, which is always sound practice.

What makes someone a connector? The first–and most obvious–criteria is that connectors know a lot of people. They are kinds of people who know everyone

No great team has all the solutions nor knows all of the information, however is vitally important that the team have access to an individual or group of individuals that can connect to all the known and possible resources in a short-as-possible time period. Connectors as such are fantastic networkers with not only huge personal networks but also plug into other complementary networkers or fellow connectors that maybe industry, technical, media or stakeholder orientated. They can aide immensely in benchmarking or calibrating the sentiment of particular decisions/actions or even the most appropriate channel to make sure that their message is heard clear and concisely with the required outcome.

Every company should have at least one connector in a crisis or communications team or one that can be called upon quickly and effectively. It should be painfully evident this is not the type of skill or network that is built up overnight and therefore can’t be expected to be turned on by the flick of a switch; it may take years if not decades to develop and refine.

Second of the three kinds of people who control the work of mouth epidemics are a Maven. The word Maven comes from Yiddish, and it means one who accumulates knowledge

Mavens are active if not and borderline fanatics in their collection of information relative to a specific discipline or social scenario. Once again it’s essential that corporate decision-makers and crisis management teams include such knowledge collectors. Some companies may have them within their own organic structure or call upon them as part of their service providers or trusted advisors, in some instances even board members. Mavens may manifest in many shapes, forms, gender and age but they are very quickly identifiable by their sheer depth of knowledge and cross-referencing ability to join problems with solutions. A single conversation with an effective Maven may save corporate decision-makers hours if not weeks of procrastination and circular discussions.

Mavens are teachers, Connectors are conduits but neither may be Persuaders and the reality is that some people are actually going to have to be persuaded to do something, this is the role of the persuader. A Persuader is not a snake-oil salesman, although many very effective salesmen and communicators are Persuaders. Persuaders are able to influence through their tone of voice, their physical appearance, their social observations, their empathy towards listeners or just in the way and manner they use all of the skills to communicate their particular message. Many famous politicians, while drawing criticism for their lack of knowledge and other skills, have been exceptional persuaders. Not advocating the requirement for “empty vessels” but persuaders have a rare and unique talent to be able to communicate and influence people to do something, that something being consistent with your objectives. It is a very dangerous process to use any of the identified skills and characteristics in the roles in which they’re not suited, in particular the use of a persuader in a lesser role or not that of an influencer.

Many can now probably identify these key character traits and how successful they have been in routine and critical environments. However, it should be of major concern if you can not identify these traits within your own corporate crisis and communications team. Additionally if you have a total absence of any-and-all of the skill sets within your corporate crisis and communications team. You may survive the day to day routine rigors of business but survivability rate when exposed to critical incidences without these key elements is very poor.  Even worse are those that assume that job titles within the company or even gender have imparted these skills upon each and every one of their senior executives is a gross oversight. The question remains can you identify these assets or can you contact them on your worst day? Your survival may very well depend on it one day.

¹ The tipping point by Malcolm Gladwell chapter 1–The three rules of epidemics, page 38

² The tipping point by Malcolm Gladwell chapter 1–The three rules of epidemics, page 60

Ashes in our mouths-How a volcano shed light on the true state of affairs in corporate travel risk management

Friend or foe?

Volcanos that erupt and disrupt the world’s travel plans don’t happen every day but travel disruptions and threats to travelers do. It often takes a dynamic or amplified event to display just how much planning and oversight goes into day-to-day risk management, in order to reveal just how ineffective the process may be overall.

Travel buyers have admitted that the volcano eruption in Iceland has taken a substantial bite out of their 2010 travel budget, if a new survey is to be believed.

Polling its international members, the Association of Corporate Travel Executives (ACTE) found that some 71% of global travel buyers said the disruption in Europe has resulted in a “substantial” economic hit on their travel spend for the year. Of this 71%, 36% percent described the unanticipated expenses as “severe”. An additional 21% indicated the hit was slight, while 8% reported being unaffected.

“It is important to note that the financial factors of this crisis have a special significance in the light of the fragile global economic recovery for business in general and business travel in particular,” said ACTE president Richard Crum. “If even just 1% of the industry’s financial contribution to the global economy were affected, that would equate to roughly 4 billion euros.”

Crum added that travel managers have been preparing for contagion, pandemic, conflict, war, and earthquakes for years. For many travelers, that level of preparedness was reflected in their corporate response to the eruptions in Iceland. Forty-seven percent of companies responding to the ACTE survey had a plan in place to accommodate stranded travelers. Twenty-nine percent did not have a specific program for this crisis, but moved forward with implementing one cobbled from other crisis programs. Twenty-five percent believe this crisis is so extraordinary and rare, that no preparation could have dealt with these developments and have no immediate intentions to change their policies.

The unanticipated expense of the crisis has already taken a big bite out of existing travel budgets for 2010, but survey respondents believe the crisis would not force the company to travel less in 2010 (76%). Twenty-two percent were unsure as the crisis is ongoing and 2% said yes.

Stories continue to emerge of how travelers and companies have been forced to sleep in airport terminals, pay thousands of dollars for taxi rides across countries or cancel major business activities, all the while suffering substantial productivity losses of some of their company’s most valuable human resource group. It is not acceptable that company travelers be subjected to the same limited response or emergency interventions as your everyday tourists, in the event of such wide spread disruptions. If you have been significantly affected, you have failed and your system just doesn’t work.

Poor surveillance of developing events, superficial plans and even less effective decision making methodologies reduce workable response options; if any exist after such systemic failure. Failure to identify and plan for whole-of-journey risk management leads to situations where your traveler/s is stranded in transit without a valid visa forcing them to sleep en mass in terminals with limited solutions. Similar oversights lead to false hopes that the situation will correct itself and “anytime soon” everything will be okay. After all this, if you believe that the overall situation will return to normal and you and your travelers will be on their way immediately after the airspace ban has been lifted, again; you’re in for a nasty shock.

Numerous managers and travelers now understand the various roles required to achieve productive, efficient and safe travel management. Your insurance company is more than capable, and perhaps willing, to process your claim for losses and expenditure incurred but you are still stuck at the airport without a workable solution and suffering a major loss in productivity for those that are typically within the top 20% of your human capital earning (compensation and business contribution) demographic. Your cheque will arrive in the mail and tangible loss/expenditure compensated. It still doesn’t get you from A to B or even via D. Your local office or contacts don’t possess the network or experience to manage your requirements, especially when the rest of the world is scrambling for the same resources. Those without wild stories of adventure to relate after this event are not inclusive of a well thought out plan and capacity to act. Those with a more boring story to tell but maintained productivity and contained costs, all the while preserving the safety of their people, have in their team brokers, insurance, travel management companies and assistance. Which is the smarter business option?

Total failure resulting in numerous stranded people are the result of high walled departments without collaboration. Lack of unification and leadership/ownership in the practice of travel risk management has lead to wide spread helplessness and stranding. If you have key executives traveling for leisure also affected that will prevent them returning to work as scheduled, you have yourself to blame and your appreciation has proven to be too shallow.

This is not over. Hotels are likely to default on bookings for pending travel as they still haven’t been able to clear the backlog of stranded travelers. Ground transport will be stretched and prices will rise even further. Government departments will debate the options but essentially there is nothing you can do to influence their inconsistent influence. Airlines will be pressured into economic decisions long before safety data is consolidated or examined under normal parameters. The thousands of inbound and outbound travellers will take much longer than a few days to clear, not forgetting those adding to the mele than need/want to travel this week. Overtime payments, supplies of food and water to airports, cash reserves and transnational collaboration will all act upon the solutions and choices. It is one thing to read about this in the media but do you really have a handle on what is happening and how it affects you? Failure to do so will compound past mistakes too.

There was adequate warning that this event would have far reaching implications. The impact could be calculated. There was opportunity to implement plans or develop an effective solution to support the objective and effective, rehearsed management teams would have had sufficient time to assess the impact and act accordingly. The final impact was not fate but determined by everything you have done to date. You have been weighed, you have been measured; have you been found wanting?

Business class is cheaper than economy: whole-of-journey travel risk management

Just what have you cut?

The majority of travel departments/managers are only empowered, authorized or capable of looking at travel management from a cost perspective exclusively. However, to truly ensure that the process of travel is efficient, profitable and safe; a much wider focus is required-predominantly in the areas of cost, productivity and safety.  When such a wider and more comprehensive perspective is engaged, most organizations will discover that business class flights are in reality much cheaper than economy class for the majority of their executives and traveling talent.

Consider a short-haul flight of under four hours. For an executive this will typically translate to an eight-hour working day. If traveling in economy class they will typically need to be at the airport nearly 2 hours before departure. Even with privileged frequent-flier status they will need to be checked in much earlier than their business class counterparts. Without such privileges, the time required maybe even longer as check-in queues and airline efficiency lengthen and decline respectively. The immigration processing will potentially be lengthened also as many airlines now have preferential immigration processing of business travelers. The traveller in economy will now be left to fend for themselves in the public seating/WiFi/meals environment of economy class travel. Boarding time will be  lengthened and carry-on luggage will be reduced which again will have added to the overall pre-departure time.  Regardless of the physical size of the traveller, their work laptop, the airline or the seating space; very few people get anything close to productive work conducted whilst in economy.  Not to mention, when corners have been cut,  everyone within proximity of a business laptop user can often see the entire content and context of business presentations, e-mails, discussions and intellectual property. The arrival stage will also entail longer immigration processing times, time lost awaiting baggage and jostling within the bulk of the flights travelers. If after all this, on a short-haul flight you expect the traveller to bring their A game or deliver pivotal business results, you should prepare yourself for disappointment now.

Conversely, a journey that has been considered in a whole of risk  manner will play out significantly different. First, the traveller will have the time and flight best suited to the work productivity objectives and reduced commute, check-in and processing times. Utilization of the business lounge will ensure productivity and access to information and systems prior before departure. Overall fatigue and affect on the individual will also be reduced. Whilst not entirely risk free, the threat to personal belongings, company information  or other valuables will also be reduced.  Productivity (best calculated by adding the per hour cost to the company for the executive and the per hour revenue potential of the trip or executive) will also be enhanced by a compact yet usable mobile workspace. Even if the individual is not conducting work on a computer platform, the demands to the individual  are also diminished.  It is also almost ensured that the executive will hit the ground running and clear the aircraft, immigrations and baggage claim much faster, leaving only the commute from the airport to the place of business. This streamlining and efficiency is also replicable for multiple travelers or trips.

When analyzing all of these factors (even in a developed country) the hundreds or even thousands of dollars between economy class and business class travel is often much cheaper than the thousands or tens of thousands of dollars  of business productivity, time and dollars at risk. However, the functional heads responsible for cost, productivity and safety are all typically measured and evaluated on cost containment rather than profitability or maximized earnings of their senior executives. All of these elements are significantly amplified in developed or developing countries. When the entire journey is constructed along whole-of-journey travel risk management lines thousands or even millions of dollars in opportune business can be preserved while appropriate expenditure managed. Reduction or elimination of disruption and wastage can be easily achieved. When it comes to whole-of-journey travel risk management most companies are penny wise and pound foolish. There is nothing more comical and economically tragic than a senior executive or CEO traveling on a budget airline. While sitting in cheap seats being nonproductive and paying five dollars for peanuts or drinks they are losing thousands of dollars or even millions in productivity or earnings for the sake of a few bucks. In the wake of the financial crisis, some very savvy financial institutions openly conveyed that they dare not reduce the privilege, risk or status of their major wealth generation executives for fear of losing them to more competitive or sophisticated banks or financial institutions. Why should this be any different in the face of many other threats to talent and revenue?

The empirical data and evidence of enhanced productivity and efficient travel risk management exists at present in every company. The only limitation is that few are rewarded or supported in harvesting, processing and analysis of such data. If companies and their respective leadership took the time to stop and analyze such processes or even historical culture within the organization, they would find that simple and efficient adaptation of such processes like the use of business class travel versus economy class travel could potentially unlock thousands of hours of productivity and greater business competitiveness. This is certainly the case in developed markets and significantly more acute in developing markets where there is an accumulation of much greater threat, costs, threat disruptions and safety issues.

The question then  is not “Is business class is cheaper than economy?” but more a case of  “Can you accurately prove that it’s not?”

Product contamination-Did I hear someone say “Tiger Woods”

Crisis leadership or crisis management?

“We estimate that in the days beginning with Tiger Woods’ recent car accident and ending with

his announced “indefinite leave” from golf, shareholders of companies that Mr. Woods endorses

lost $5-12 billion in wealth.”

http://www.econ.ucdavis.edu/faculty/knittel/papers/Tiger_latest.pdf

The perpetual requirement for any company, especially those with a strong commercial brand association or derived income from public opinion, is the identification and management of stakeholders. The priority of communication can be readily identified with a simple x and y chart that apportions values for the level of interest and influence any group or individual may hold with your brand/company. For example, a stakeholder (media, investor, regulator, consumer, etc) with a very high level of interest in your brand, product, processes or return on their interest and is likely to know most things that occur relative to your success of failures. If that same entity has a high level of influence in your operations or the communications specific to your company, they will invariably be one of your highest needs when developing holding statements, pre-emptive advisories or response to publicly circulated content. Communicate with this group, quickly, sincerely and frequently and as a matter of priority. For those with less interest and influence, they will still get your message but at a time more appropriate to their weightage. Do not however underestimate the cumulative or cohort potential of this group should they surge to become a much more credible element should an issue of high emotional (mothers on issues affecting their children, unions), financial (investors or sponsors) or consumption (consumer groups; inclusive of the media) value rapidly circulate among one or all of your associated stakeholder elements.

Information time to market is (in contemporary terms) all but instantaneous, even if you are not! It is therefore imperative that a degree of preparation be conducted for all companies, big or small. It is a folly for any company to operate with this knowledge and not have a process or service to continuously monitor the myriad of available networks that introduce or perpetuate content that could adversely affect your value proposition. This is only part of the preparation required, as any time spent on planning or preparations established before demand presents, will pay dividends well beyond their establishment value. For this you need a number of holding statements, media release, stakeholder communications and the like. This is further supported with a detailed, rehearsed and timely escalation protocol that allows you to identify, analyse, adapt and respond to applicable situations that invariably require customization as you can’t always predict the nature and theme of every issue in advance. You could of course ignore this totally and rely on your response only capacity but as they say “prevention is always better than the cure”, cheaper too!

Where Tiger, and many individuals and companies before him went wrong; despite the sizable investment and earnings capacity associated with his personable brand (especially since it appears to have been substantiated on a pious and family friendly ethos) was apparently to invest only in a response, albeit weak, without preparation and substance. You get what you pay for essentially. I personally could not care less about what he or any other athlete, actor; media personality does outside of their chosen expertise/profession. However, there are plenty that do and it sells.

The net result of the information storm that has ensued has the “Tiger” brand has been impacted. Pre-event equity will protect the brand to a degree but much like natural disasters whereby the government or companies are not “blamed” for the event, they will be evaluated on their subsequent response to the issue. Just ask the Prime Minister of Taiwan who lost his job as result. The impact in this case be measured in dollars and cents, both now and any future earnings.

A number of studies have been conducted on the investment loss attributed to crisis leadership failures and the results are consistent. Your investment pre-incident will pay dividends for daily and extreme disruption events, whereby a failure to plan all but guarantees a plan to fail. If only Tiger and his paid executives bothered to read the instructions first, we may have seen a much different outcome than is currently a slow moving train wreck.

Qui bono (Who benefits?)- Is your corporate resilience more about personalities than real threats?

The sky is falling!

The vast majority of companies, regardless of what they themselves believe, are significantly influenced in their resilience planning by the personalities that represent the process. Whether it is a sole champion or a department that is charged with the enterprise resilience strategy and execution of planning, it is most likely that their personal passions, skills, experience or even comprehension will dominate the overall corporate preparedness and response to actual threats. This phenomena is further compounded by the degree of humility or hubris of these executors and their ability to assimilate, even in the wake of such shortfalls, to rapidly and effectively respond to such oversights. Regrettably, it is often all too late to change at the 11th hour and many of the failing are dismissed/justified by environment, market forces, mother nature or just bad luck. Not the root cause. Sizeable amounts of money is lost, unrealized or expended on unnecessary opportune cost daily or annually as a result.

The scope and demands of modern and dynamic corporates, especially multinational or geographically dispersed entities, is by no means an easy task. A vast amount of knowledge and planning may be required and then resources/strategies applied to areas that warrant countermeasures/treatment solutions that then must be simplified or distilled for consumption and action by numerous stakeholders or line managers. Limited scope, ego, protectionism, arrogance, incompetence, budget constraints and many other issues act in unison to prevent a less than optimum result for all involved. The most resilient companies and the most efficient departments acknowledge all these issues and build such human failings and influences into the methodology to achieve superior results. Paradoxically, these companies are often the most competitive companies also thanks to this vision and forethought.

If this were not challenging enough, the character, charisma, communications skills or business acumen of the lead/executive representative of such functions could signal the final success or failure of all the accumulated work conducted that comes to then convincing the CEO/COO/CFO that a particular threat is credible or a specific investment is necessitated on the strength of the threat and the potential impact if left unchecked. Should they be found wanting, the threat remains unchecked. The squeaky wheel gets the oil!

Financial management has moved past this similar challenge (for the most part) by means of audits, internal checks, disclosure, review or external validation of findings. Risk management, of a non-financial nature, has a long way to go before such approaches become mainstream.

Resilience is based on a comprehensive understanding of all the assets/investments/capital at risk. Qualifying and quantifying the threats and the residual risk present; once current and proposed mitigation/treatment/corrective measures are implemented. A subsequent project plan based on budgets, tolerances, practicalities, strategies and threats is then initiated. None of this is possible or conducted until executive or leadership elements are consulted, convinced and contribute to the outcome, not retrospectively. The sheer diversity and complications of modern and fast paced business operations mandates that this process be a team sport and a collaborative approach.

If you have never met your risk manager, or contributed to the demand or have no budget for such measures, you are part of the problem and less a part of the solution and remain symptomatic of this chronic disease.

Like all addictions or dependency behavior, the first step in breaking the cycle begins with asking yourself some fairly honest and confronting questions. If you can’t affect change then you need help, not time, but actionable collaboration. If not, are you merely a wolf in sheep’s clothing, only to be discovered when most needed?

Chicken or the pig, what came first?-The growing menace from Swine flu and other health crisis

The evolving threat from any health crisis should be a major concern to all those charged with ensuring their company’s resilience. When Swine Flu first surfaced, the public interest was akin to the gold medal tally board during the Olympics, if my country isn’t represented in the top five, who really cares? Sadly, with planners and medical advocates focusing on an inconsistent and flawed measurement tools such as the WHO’s running tally, most will not recognize the threat until it is literally upon them and rife within their communities. Much like the stock exchange, if the S&P 500 is surging, it is no guarantee that you are inclusive of the rally, alternately if it is plunging you could very well be unaffected. Why should the WHO’s numbers be any different?

When it is widely acknowledged that most governments, certainly within developing countries, are not the most dynamic of organizations and the list of failings by numerous administrations remains long and varied; why have so many placed such absolute trust in their ability to manage this particular crisis? Are so few people aware of the already over extended healthcare system in even the most developed of countries? When people are already waiting lengthy periods for non-life threatening surgeries and general practitioners are dwindling in number do they really believe that thousands of people even mildly ill simultaneously will be serviced in a timely manner? Not to mention the issues over any drug or vaccination that is rushed to market exclusive of any standardized clinical trials. I agree that the current trial periods may be too long but look at the countries that are mandating or implementing widespread vaccination programs of the first round of vaccinations. Concerning? Volunteers?

Even the most progressive multinationals have turned a blind eye to the inequalities of everything outside their home country when addressing planning and prevention for a major health crisis like swine flu. Their “home ground” view seems to be the same assumptions and standards for addressing the issue abroad. Since when has India had the same labor laws as the US? Since when has Indonesia enjoyed the same level of broadband connectivity to enable for employees to telecommute? And who in their right mind would assume that employees in China will stay at home and monitor their own health to ensure they do not contaminate the rest of the office/factory? Contractors and consultants in the UK recently declared that they were unlikely to stay away from the office if sick as they are on an hourly/daily rate which would be reduced should they not turn up for work. So much for that assumption! How many people do you think fill in the health declaration forms accurately when entering a country with such screening? Even Hong Kong’s current attempts are nothing more than superficial and mere inconvenience rather than anything of substance or consistency.

Malaysia has acknowledged their citizens are oblivious to Swine Flu and its affects. India is in a growing state of fear over the sudden realization they could be affected too, and they are helpless to do very much at all. Many employees in companies within India simply walk off the job to care for family if they think or confirm an ailment. How much of the world’s back office is situated in India? What do you think the impact will be from thousands who don’t turn up for work or significant diminished service capacities within India? South Korea, Taiwan and China all have major problems. They thought it was a European and Americas problem. Their population is ill informed, suspicious of the government, dependent on them to do something, have very underdeveloped risk management strategies and little to no budgets for such countermeasures, not to mention the care of extended family responsibilities well beyond that of the European and American cultures. Forget what the conflicting medical opinion is, do you really believe this will not be a problem?

Swine Flu (I don’t refer to water as H20 either) is not a human health issue. It is not limited to public health and safety. Like never before, company resilience to this issue will be determined by their actions and implementation, not industry standards or piecemeal government efforts. More concerning is that while these companies will be well prepared, their vendors, suppliers, consumers, affiliates, distributors, advocates and just about everyone else will not enjoy the benefits of their planning and be at the mercy of dynamically shifting environmental influences. You don’t need an economist to confirm the impacts of the economic downturn, equally any similar announcements by the medical fraternity will come well after the obvious, and at present, inevitable impact. On the scale of victim to survivor, where do you fall?

Asleep at the wheel-Outdated assumptions and current threats

Is my assessment still relevant?

Despite countless events and incentives to change, a startling number of companies are still behind the business curve with regards to their risk management. In much the same way a train travels on a set track that has been planned, surveyed, laid and maintained for predictable routes between key locations it doesn’t permit for deviation or adaptability. Given a large enough obstacle it can even be derailed, damaging the train, goods, passengers and requiring major repairs before service is returned. Shareholder value may be affected and the reputation of the company called into question. While the business demands swift and timely movement between locations, the business decision making process is likely to be much slower than the business operation.

Enterprise resilience is a relatively new term and still foreign to most. Outdated risk management structures are functional silos of threat identification, budgets, management and risk mitigation with higher than average potential for duplication, wastage and blind spots not covered by the functional departments or managers. The people overseeing the strategy or implementing the objectives may also be inexperienced or lack authority to encompass all the necessary business aspects.

To further frustrate the process is the human trait that ensures the longer one is exposured to a situation, activity or location results in complacency or diminished ability to identify emerging risks. We have seen this in action most recently with companies operating in Thailand. Despite repeated and almost obvious changes in the situation across the country, but more so in the capital Bangkok, thousands of people and hundreds of companies were taken totally unawares when protesters blocked streets, business environment altered, airports closed and open violence on the streets. The situation was largely predictable and measured preparedness and planning would have negated any major disruption or continuity issues. Thanks to the legacy emotion of Thailand being a “great place” companies almost refuse to accept the new status and many have dismissed the past events as “isolated” and still remain vulnerable to what is the new order until resolution is evident. A similar situation is emerging in Malaysia at present. With a large foreign investment, multinational headquarters, expatriate placements and active international travel, the affects of the changing state in Malaysia will have similar impact on companies and personnel. The signs are there; rule of law, emergency services, crime, religious fragmentation, social unrest, health crisis and financial division are not easily remedied and constitute a here-and-now threat that must be mitigated accordingly.

Enterprise resilience begins at the top. If your board, C-suite or executive leadership is not engaged, the process is doomed from the outset. If the identification and preparation for threats are not inclusive of the enterprise and a representative counsel, the results will be similarly weak. Modern management and competitive advantage lays with those that are hard-wired to the assets and issues in parallel. To know what constitutes value, and the priority to the business along with emerging and dynamic incident surveillance rounded out with a replicatable and efficient decision making process will ensure survival of the fittest. This is an even more poignant issue for those with there manufacturing, management, back office processing or supply lines in developing economies where even the most basic of enterprise resilience strategies are specks on the horizon and not perceived to be an economic imperative. The vehicle is in motion, its speed increasing and the business may be depending on you as the designated driver. The question is, are you asleep at the wheel?

Penny wise, pound foolish-human capital risk management

Do you know the actual value?

In spite of the considerable investment and development around the preservation of assets and the mitigation of risks across conventional corporate assets such as facilities, information, equipment and products, the same methodology and motivation remains far less advanced in regards to human capital.

Before any organization even explores risk management strategies for their human capital it is fundamentally important that they first determine the value at risk. Not only is it a case of valuing the contributions of the individual or groups of personnel but differentiating the value in which they contribute to the company, whether it be through the provision of specific skills and services or the commercial value they present the company. These distinctions also need to be made between job functions or management/executive levels. No two individuals are contributing to the company in the same manner, much less two diverse business functions.  How many companies even know this definitive financial value of their people?

Following the basics of valuation, and any other unique considerations that the company may have (mobile work force, fixed laborers, knowledge capital, research and development) a unit cost can then be applied for prioritizing strategies or expenditure. For example, an individual that reflects a unit cost/investment per hour of $1 will be less likely to addressed as a priority when compared to an individually that presents a unit cost/investment per hour of $100. However, if there are significant numbers of the basic unit cost of $1 at risk, that group as a whole may be a greater priority than that of a single or limited $100 per unit cost individual.

Threats and residual risks associated with human capital are many and varied. Over time a detailed and thorough analysis can be conducted to determine the probability, velocity of onset and other governing factors that will provide a single or annual loss expectancy to the company. A single loss expectancy, such as death, may cost the company significantly more than just the forecast value identified in the first stages. Conversely, an annual loss expectancy, especially in light of the fact many companies are unable to even quantify this loss, may equate to millions of dollars in lost productivity, administrative burden or opportune costs.

To truly understand or appreciate the current or potential losses to a company through their human capital it is imperative to model the disruptions and time loss (inclusive of management and departmental support) to a cellular and group level. If someone falls ill, how long are they unproductive? What does it cost the company? Should the become a victim of crime or their business activity disrupted due to a natural disaster, what is the cost to the company? When applied to our entire human capital asset base, what is our single and annual loss expectancy?

“You can’t improve what you can’t measure” If you are making a truly informed decision on where your assets are distributed, you can then make informed decisions around strategies to preserve their value. You also enjoy the benefits of comparative investment/management. Most companies are surprised to discover that despite their commitment to their people, they actually devalue their contribution by not acknowledging them as an asset and preserving it accordingly. Are you one of those companies?

Companies that have undertaken to approach the management of their human capital consistent with other corporate assets have found the process highly rewarding and very confronting. Conversely, those adverse to such strategies or behind the curve continue to loose more money than the cost of such preparation and mitigation. They too find over time that penny wise turned out to be pound foolish.