Crisis Management: What Walgreens, 7-Eleven, and Other Crisis-Prepared Retailers Have in Common

Crisis Management Plan, Crisis Leadership

Donald Trump’s acceptance speech at the Republican National Convention in Cleveland painted a grim picture of the nation’s safety. The candidate recited a laundry list of recent global crises and pounded a message of danger—it’s everywhere and growing. A week later, in Philadelphia, Democrats endeavored to laugh-off that characterization and paint a much sunnier portrait of the state of the nation, insisting, for example, that—upticks in violence notwithstanding—crime remains at historic lows.

Regardless of which characterization more closely tracks reality, there is no denying that turmoil does exist. Crises regularly occur. And while it’s possible that Trump’s characterization was an exaggeration—he has, on occasion, been known to—he was perhaps spot on in capturing a feeling that the nation and the world today is a powder keg.

That feeling is one reason why, in both convention cities, Walgreens didn’t just hope for the best. They put their crisis preparedness plan into action—taking steps to protect their stores, people, and profits in the event that the heated political climate sparked unrest. Well in advance of the balloon drops, Walgreens LP field managers had completed crisis prep forms to help guide risk assessment and mitigation. Information collected included details on asset proximity, store construction such as number and placement of windows, store hours, neighborhood characteristics, previous store crime, and a host of other checklist items. The company readied to keep store shelves stocked, deal with closures if necessary, execute contingencies in the event armored cars were unable to make cash pick-ups and extended its preparations far beyond the immediate vicinity of the convention center.

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“A lot of people might think ‘we have no stores in the area, so it’s not a problem,’ but not everyone stays at the $400 Hyatt right next door to the event.

Dave Colen
Dave Colen

Every hotel room in the suburbs was sold,” said Dave Colen, director of corporate investigations and standards at Walgreens and a key member of a multi-functional team within the company’s Asset Protections Solutions division that constantly monitors risk and mediation strategies. “We didn’t solely rely on the fact that we had no stores in close proximity to the event. You have to account for the fact that sometimes the event comes to you.”

Several retailers say today’s civil unrest and social protests are raising the bar for crisis preparedness programs. Additive to traditional sources of agitation, LP teams now find themselves tracking every police-involved shooting and anniversary, analyzing the potential for it to spark protest and put store assets at risk.

“The events that occurred in Dallas on July 7, with the ambushing and killing of police officers, has challenged the way we think about a crisis,” said Byron Smith, corporate asset protection manager for 7-Eleven in its Corporate Security, International, Acquisitions and Supply Chain division. “Preparing for those events that we have never experienced forces us to continually review our plans. We have become really good at preparing and recovering from storm events, buts it’s those events like social unrest, protest, and the like mean that we must frequently review our approach.”

Colen also cited unrest as a key challenge facing retailers’ crisis management teams, one that is forcing them to be more ready, more often. “The reality is that every trial of Baltimore police officers, every police shooting, has become a potential flashpoint.”

Byron Smith
Byron Smith

Crisis teams have grown more accustomed to tracking weather events, but these, too, are commanding more attention than ever. Between floods, wildfires, tornadoes, and hurricanes, extreme weather events now trigger corporate crisis management plans more frequently than ever before. For example, the North Atlantic Ocean spawned more hurricanes and tropical storms in the first decade of this century than it had in the 1,000 years before it, according to Pennsylvania State University researchers.

The future also looks stormy. The US Climate Change Science Program predicts the intensity of storms and hurricanes will increase, featuring greater wind speeds, rainfall intensity, and storm surge levels. We can also expect a dramatic increase in the frequency of extreme heat events in the years ahead, according to government scientists. For retailers with a large footprint like Walgreens—70 percent of Americans live within five miles of a store location—it means either an extreme weather event somewhere is currently impacting a store or else one is right around the corner. “Any events that impact communities impact our stores,” said Colen.

What Does It Take to Be Ready?

While many crisis events are, by their nature, impossible to predict, the impact they have on retailers can be dramatically curtailed if the organization is crisis-prepared and managers are adequately prepared to effectively manage the resultant disruption.

To be a crisis-prepared retailer, Walgreens relies on, well, preparation. Colen is a big believer in the blue-sky principle, noting that the time to strategize for a hurricane is when the weather is clear, not after clouds have already formed. He credits regular blue-sky meetings, which bring together crisis team representatives from corporate communications, supply chain, safety, and other departments, as helping Walgreens align the different resilience disciplines, which was the number one obstacle to preparedness cited by crisis managers in the 2016 Crisis Management Insights Survey by Regester Larkin. “It’s when things are good that it’s time to sit down and talk about things.”

Feature 33Crisis team communication is also a critical part of 7-Eleven’s success. Smith says it helps the company avoid the second most frequently cited obstacle to crisis preparedness—a lack of clarity of roles and responsibilities, which was cited as problematic by 47 percent of crisis managers. The 7-Eleven team holds scheduled meetings quarterly, and whenever events occur they immediately convene via a conference call as they did after the recent shooting of police officers in Dallas.

To gain a complete picture of how a crisis event will be managed, organizations must identify the functional roles and responsibilities of external agencies, external organizations, and internal departments and individuals for each stage—preparation, mitigation, response, and recovery. Lines of authority must also be established and identified. Tabletop exercises are an excellent way to highlight the responsibilities of different crisis team members, and Smith says they play an important role in keeping 7-Eleven ready to manage a full range of crisis events.

To Smith a more significant challenge than confusion at corporate over roles has been pushing crisis preparedness principles down to the store associate level. “I think it’s always difficult when trying to deliver a message about crisis preparedness to have that message not only resonate, but also stick with the individual,” he said.

Typically, crisis planners are of two minds on the subject, explained Colen. One school of thought is to tell employees what they need to know when the emergency is imminent, so the information is fresh. “But I’m a fan of the second school of thought,” said Colen, “which is to socialize the information early and often.” He believes that frequent reminders of emergency information are more likely to sink in and also convey a message to workers that the company takes crisis events seriously and instill confidence that it has taken the necessary planning steps to keep them safe.

Strong Leadership and Informed Employees

Crisis response requires solid leadership, but it also requires personnel who are willing to be led. And that depends on whether a company has spent time before a major disaster providing crisis information, training, drilling, and establishing trust. Workers need to sense that the company is ready to handle the event and has their interests at heart, which is not something that a retailer can build once the storm is already on the radar.

A deep well of credibility and goodwill is something that is critical for retailers to tap into. “If you don’t talk about it until the crisis is happening, workers aren’t going to be comfortable that you can handle it,” and may fail to check in, call for instructions, or simply stay home, said Colen. “There is a greater likelihood that they will go to work if you’ve been talking about it all the time for weeks and not just the day before.” Reminders of emergency preparations don’t need to be long to convey concern, said Colen. Starting a month or so out from an identified event, Walgreens store managers typically will disseminate relevant information during normal five-minute operational meetings with store personnel.

Short but regular education sessions are a good way to provide information, answer questions, identify needs, and address concerns. These mini-training sessions on emergency topics can also be delivered as a short aside during other general employee training. In this way, stores can limit the amount of time that emergency planning takes individuals away from their business activities. In this type of session, managers can socialize contingency plan information such as:

  • Individual roles and responsibilities,
  • Information about threats, hazards, and protective actions,
  • Notification, warning, and communications procedures,
  • Emergency response procedures, and
  • Evacuation, shelter, and accountability procedures.

7-Eleven is committed to raising its staff’s level of awareness of emergency procedures. At its new campus headquarters located in Irving, Texas, workstations are outfitted with emergency information cards. And a quick reference guide, with information such as the location of emergency evacuation rally points, is as close as the back of their access/ID cards, hanging from their lanyards.

In order to assist franchisees, 7-Eleven is in the final stages of publishing an eight-by-eleven emergency reference flip chart for use by store employees, which will walk them through how to handle a bomb threat, a refrigeration failure, evacuation, and other emergencies. “This will give our franchisees and employees a go-to resource chart to address just about any risk or event and it fits nicely with our ‘My 7-Eleven’ safety education program,” said Smith.

Long ago, the company relied on the traditional emergency preparedness binder and then moved emergency procedures and instructions to the company Intranet, but recently decided that asking store associates to conduct online information searches was unnecessarily complicated. With the upcoming switch to a simple flip-chart reference, “It’s like we’ve come full circle,” said Smith.

Early PreparationFeature 32

As it did in the run-up to the Republican and Democratic national conventions, Walgreens begins taking preparatory actions as soon as a potential event is identified. The general assessment form it developed guides field managers to collect all relevant information and is customizable, giving the company flexibility in its readiness activities.

Colen suggested that retailers should have a comprehensive list of actions that it may be necessary to take in order to help a store location prepare for disaster, which is not something that can be pieced together at the last minute. For example, “You have to make sure all cameras are operational, or put repair orders in, and that they’re pointing at the right things.”

In the event of a planned protest, a crisis team needs to maintain contact with local police, assess whether any particular vulnerability may cause stores or neighboring businesses to be the target of protesters, and assess how practical it will be to operate normally during the protest, as well as accounting for direct physical threat and planning to maintain full communications with employees in areas targeted by protesters.

There are also far-flung issues to consider, Colen suggested. “What about twenty-four-hour stores that haven’t closed for years? Do they even know where the keys are? How to power down? Or set the alarm?” Coordination is just as vital, he said. For example, if a weather emergency is forcing a store to close but will also shut down public transportation, “You want to close the store several hours in advance; you don’t want your employees to be stuck.” And employee absences resulting from disruption in local transportation systems can have a far-reaching impact and need to be accounted for during emergency preparations.

Five-Step Model

The flexibility that Walgreens has built into its approach is a critical—but often forgotten—piece of the crisis preparedness puzzle, according to Regina Phelps, president of Emergency Management & Safety Solutions, a crisis management, exercise design, business continuity, and pandemic planning firm. There are five steps in the crisis management model—risk assessment, prevention/mitigation, preparedness, response, and recovery—and companies need to individually address each step for every threat they face, according to Phelps.

For example, retail locations that face a risk from earthquakes should take specific mitigation measures against that threat, such as implementing restrictive “overhead policies” and securing tall items, and specific preparedness activities, such as earthquake awareness training. Retailers must avoid generic emergency management planning that doesn’t acknowledge that different types of disasters warrant different prevention measures and response planning and create standard operating procedures for identified credible hazards.

“Too many companies have one emergency plan for every type of disaster and focus on some aspects of emergency management, such as evacuation, but ignore others, such as training,” said Phelps. Retailers that are truly crisis-ready take action at all steps along the crisis management continuum—for each threat they face.

Incorporating Lessons Learned

7-Eleven and Walgreens possess another marker of crisis-ready retailers. Their plans and policies are in constant motion, incorporating lessons learned after every event and reviewing and improving their plans regularly. A post-mortem is a critical part of crisis management—what worked, what didn’t, and what should change for next time. Corporate crisis teams need to establish a system through which it will share solutions throughout the organization.

Feature 31The crisis-related lessons you learn during one event in one location need to improve preparedness at all other appropriate locations. Which is why, after the recent political conventions, Walgreens went back to its field organizations to ask critical questions, said Colen. “We asked our teams: Did you feel prepared? What can we do better? How was the quality of the communication? Was the amount of information appropriate, or were you inundated?”

One planning expert at FEMA offered a related recommendation for becoming a crisis-prepared retailer: “Don’t let the crisis management plan get ahead of personnel.” In other words, retailers should assess the extent to which plans may just be empty words—or if they are actually integrating the plan into the entire enterprise. A few questions can help guide that assessment:

  • How well does senior management support the responsibilities outlined in the plan?
  • Have emergency planning concepts been fully incorporated into the facility’s accounting, personnel, and financial procedures?
  • How might processes for evaluating employee performance and defining job classifications better address emergency management responsibilities?
  • Are there untapped opportunities for distributing emergency preparedness information, such as through company newsletters, employee manuals, or employee mailings?
  • What kinds of safety posters or other visible reminders do you have?
  • Do personnel actually know what they should do in an emergency? Have you surveyed personnel to assess their knowledge?

Creating those lines of communications with employees and identifying responsibilities are critical, according to 7-Eleven’s Byron Smith. When the threat of a crisis event arises, 7-Eleven stores are obligated to call into a company crisis hotline, which they staff with a live operator 24/7.

Using Technology

Crisis-prepared retailers also make smart use of technology. While planning, preparation, and training are at the core of crisis preparedness, technology can make crisis teams more effective in each discipline, as well as enhance risk assessment. For example, Smith’s department constantly monitors active weather areas that might impact its franchisees, employees, corporate headquarters, and distribution partners.

“We have become really good at reacting to severe weather be it hurricane or winter storm season, floods, or fires. For the last couple of years, we have used a wonderful tool called Riskpulse that has given us a total view of all our locations and partners’ distribution facilities,” he explained. “The asset protection field teams have the same visibility for their areas, and it’s like having you very own weatherman in your back pocket.” Recently, Smith’s team shared the tool with its partners in Mexico. “It’s already becoming beneficial for them,” he said.

In addition to aiding risk assessment and helping prevention/mitigation, 7-Eleven leverages technology for insight during emergencies, relying on its IP camera system to get a live look at unfolding situations, for example. During Hurricane Sandy evacuations, the company’s IT team pinged T1 lines for a clue as to whether affected stores had power and refrigeration and to inform recovery planning.

Both 7-Eleven and Walgreens also rely on social media monitoring tools to give the corporate crisis team insight on what’s going on in the field and to enhance its understanding of developing situations. 7-Eleven uses a social software platform called Sprinklr that provides social media marketing and social advertising and can also help track keywords to get upstream alerts in unfolding crisis events. “It gives us a one-screen view of what’s going on,” said Smith.

In addition to monitoring social media to assess risk, retailers might examine harnessing social media to enhance emergency operations. It’s something some experts think is a missing piece, exacerbated by the fact that a company’s most senior executives are often the least knowledgeable about social media tools and its potential uses.

Individual departments may be examining how to use social media, but maximizing its effectiveness requires consultation between members of the disaster team, human resources, business continuity leaders, loss prevention executives, and corporate communication and public relations teams. Working together, crisis management representatives should jointly develop strategies for using social media in crisis management, potentially using social media platforms for generating alert messages, confirming personnel and other asset accountability, and keeping key stakeholders—including the general public—informed on crisis events.

Ongoing Program Reviews

Conducting frequent program reviews is another activity common among those retailers best prepared to handle a crisis. Both 7-Eleven and Walgreens review, assess, and improve their crisis preparedness plans annually or more often. Such reviews are indicative of a mindset that lies at the heart of true preparedness, according to Peter Power, chairman of the 2016 World Conference on Disaster Management and managing director of Visor Consultants. He says the most-prepared companies never complete emergency planning. They perceive emergency planning not as a project to complete but as a process that must continually be refined, reviewed, and improved.

The risk from different disasters fluctuates, new technology can offer better options for mitigation or prevention, and no company has a continuity program that doesn’t have room for improvement, he said. “Too many companies still perceive emergency planning as having a beginning and an end with an occasional update,” he warned. In addition to an annual or more frequent review, emergency planning requires ongoing, active management.

The interconnectedness of business operations makes it important for retailers to examine not only the risk to their own operations and facilities, but also the risk to key suppliers. Resilience is not solely dependent on how well you can handle a crisis, but also how well key suppliers and business partners can. Smith says 7-Eleven takes the role of suppliers seriously, reviewing its third-party program annually, assessing their plans to respond to disasters, and fostering communication between the company’s logistics department and its partners. There are many things companies can do to mitigate loss from disruptions, from improving the accuracy of demand forecasts to investing in logistics technology. A review of suppliers and partners—to assess their ability to meet the organization’s security requirements—is also a critical component in building resilience (see Figure 1).

Figure 1.
Figure 1.

The Role of Senior Management

Finally, the role of senior management is a critical—and often tricky—component of crisis readiness. As with security, it can be difficult to demonstrate a direct connection between preparedness activities and their value, especially when management spends money to prepare for a potential crisis that doesn’t materialize.

Managing the perception of risk can also be complicated, especially in a twenty-four-hour news cycle environment. “The media can be a friend and an enemy,” said Colen. “We find out about threats from the media, but executives are getting the same information, which means we can find ourselves playing catch-up, trying to provide some context about upcoming events.

It’s also true that an event’s recency can play tricks on risk perception. Because recent disaster events are easier to recall, those types of events seem more numerous or dangerous to casual observers. While an event’s occurrence might indicate an increase in its probability potential, it may not. In that case, there is greater risk from letting the fact that it just happened alter a rational risk approach.

LP leaders and other crisis managers must ensure that disaster planning does not place undue attention on a recent event to the detriment of planning for more probable events that are less fresh in the company’s consciousness.

How Will You Do?

A disaster event is likely to expose which type of retailer you are—one that seems ready or one that is. Although it can be tough to know exactly which you have until a crisis happens, a company’s approach to disaster planning is its best indicator. At retailers where readiness is ingrained in the culture, emergency planning is a process. At retailers where preparation looks better on paper than in practice, emergency plans are a project.

Although there is a lot that LP leaders and other crisis team members can do to enhance a retailer’s readiness, there is—unfortunately—a limit. Research by the Center for Catastrophe Preparedness & Response and the Public Entity Risk Institute reveals that any company’s degree of crisis readiness is not solely based on its crisis readiness activities. Crisis readiness is the sum of readiness activities plus organizational characteristics—the two cannot be separated. “Crisis readiness cannot be found easily in poorly performing organizations. It is not something that can be grafted onto an organization in disarray. Even as it contributes to high performance, crisis readiness is also a consequence of high performance,” concludes the research.

Hence, while specific preparedness activities like conducting exercises are critical, a retailer must also infuse readiness into its core, and make it as central to its mission as other areas of focus. To reach maximum readiness potential, a retailer’s crisis preparedness program would have the same priority as other mission-centered activities, such as marketing and branding, have an identifiable line in the budget and not subsumed in another budget, and the discipline’s leaders would be given the power to make and enforce decisions. At crisis-ready retailers, a crisis management team has not only the responsibility to improve organizational readiness, but also the authority and resources to make it happen.

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