Sure, the headline is meant to grab your attention. But what is more likely is that as a loss prevention leader, your litigation team will eventually send an email request following some tragedy that impacts your company store, distribution center (DC), or regional office. The topic of the email—what did we know, when did we know it, and what did we do about it?
Because these requests often arrive long after a critical event, it’s important to think carefully about the changing landscape of retail crisis management. While your team is focused on preventing inventory shrink and responding to other challenges impacting human and product assets, how ready are you for some of the challenges that have impacted other loss prevention executives in recent years? Remember that these other companies had accomplished executive leaders at the helm—just like you—who likely never thought “it” could happen to them.
The Chipotle Lesson
With a stellar brand, superb food, and a stock price that was so steadily climbing that many mutual funds embedded it in their top-twenty holdings, Chipotle was a Wall Street darling—until “it” happened. Their “it” was a slow bleed of food-borne illnesses across the country, especially occurring on college campuses, that propelled Chipotle’s crisis story to national prominence.
This great company was slow to respond. They delayed acknowledging what they knew, told a fractured account of the blame game when they did respond, and failed to issue a strong, early statement that should have said: “We will work tirelessly to get to the bottom of this and redouble every effort to offer the best, safest food of any restaurant in America.”
Their CEO was replaced in December, also too late. A company’s CEO often pays the price for a delayed or inadequate crisis response, even if its efforts in other aspects of governance are strong. If your brand is under siege, and you are perceived as passive—Target’s board of directors replaced its CEO months after the major credit card attacks, also far too late—expect heads to roll. The heads that roll typically do not include the director of loss prevention; that’s the good news. However, CEOs increasingly are looking to you to anticipate what could go wrong. Providing thoughtful, proactive crisis analysis can help distinguish you from “the guys who chase shoplifters” to true business strategists.
The Waffle House Index
Ever heard of the Waffle House Index? Here’s a summary in a nutshell.
When Hurricane Matthew devastated much of the Southeast last year, even FEMA acknowledged that they look to the regional leadership of Waffle House as one key indicator of how, when, and where they should apply resources. Here’s why.
The often-mocked restaurant chain pledges to keep every restaurant open nationwide 24 hours a day, seven days a week. When Waffle House closes restaurants in a certain territory, it has been historically accurate that the coming “snowstorm” became a blizzard or the projected “rain storm” became a devastating hurricane.
Waffle House has a war room, social media monitoring, wind-and-rain experts on retainer, and teams that move the menu to “red” when only prepared foods can be served, “yellow” if foods are provisional but fresh, and “green” if fresh ingredients remain available. I love The Miami Herald’s take on the Waffle House Index: “When Waffle House surrenders to a hurricane, you know it’s bad.”
Product Recalls
The negative effects of product recalls merit thoughtful discussion by your crisis management team. Product recalls hit a number of significant brands last year including Volkswagen and Wells Fargo. The consumer anger directed at these companies led to threats against both executives and even store and branch managers that no one expected.
In an age of around-the-clock media and heightened expectations that your company will be free of scandal, both companies not only allegedly engaged in illegal behavior, but also lied to the public about what they knew and when they knew it. They essentially played the wait game hoping that certainly some other story would trounce their problems. Not so.
Crisis leadership requires that you get your message out quickly. Essentially, the message must communicate, “We goofed, we will hold those responsible for fraud accountable, and we apologize for breaking your trust,” period. Every loss prevention executive can have a seat and voice at the table by reminding your colleagues in marketing, legal, and finance that a tainted brand may need years to recover.
Consider the People
Never underestimate the people aspect of crisis management. On three occasions last year, I was working with clients on the tragedy of an active shooter or workplace homicide when family members learned of the loss of a loved one through Twitter before police or a company ambassador could contact them. Expect it to happen to you. Better yet, ask your crisis team what can and should be done in this era where employees typically know more details than management and aren’t afraid to post on social media. Think through what is appropriate, legal, and ethical and develop a response plan before you need it.
Here are two recent examples that could happen at any company. One was a very public suicide attempt at Amazon headquarters. The second was a successful suicide of a 25-year-old employee at Apple headquarters. Both events led to blogging and Tweets before site management could properly respond.
The corporate and consumer landscape has changed. The corporate microphone is no longer owned by management. In the midst of disaster, the crisis team as well as all executives need to be thinking about a swift, compassionate, and appropriate message that can be issued promptly so that the management team does not look inept or insensitive.
Assess Your Emergency Operations Center
Finally, your loss prevention team likely has multiple amazing technologies to connect you to your stores, your logistics locations, and your corporate offices. These technologies allow you to monitor regional crime trends, benchmark peers, watch store and DC incident reports, and, hopefully, stay on top of crisis events. But when “it” happens, what is the quality of your emergency operations center (EOC)? Some companies have not updated their EOCs for years. Many sit unattended because the company has been lucky. The old cliché is more true than not—it’s not if, but when “it” will happen to you.
It would be wise to assume that your competitors are ahead of you. They likely have fusion centers, not EOCs. They are monitoring what Twitter is saying about your company and the crisis real-time. They know the crime trends in neighborhoods, not regions. They have fortified their fusion efforts to link crisis response to messaging with pre-populated statements and frequently asked questions. From a product recall to an industrial accident to a workplace violence incident, they have prepared beyond their peers. My hope is that you and your company move to that category of best practice sooner rather than later. Before “it” happens to you.
SIDEBAR
Following are excerpts from Dr. Barton’s 2008 book, Crisis Leadership Now: A Real-World Guide to Preparing for Threats, Disasters, and Scandal, 
that may provide some points of discussion for executives involved in managing crisis management teams.
Words and Phrases to Emphasize in Most Incidents
- We are working vigorously
- Deep concerns for community safety
- Abiding efforts on a daily basis to protect our community
- Robust efforts are underway with law enforcement
- We are cooperating with police in every regard to assist in their important work
- Our thoughts and prayers are with the victim(s) and their families
- Working to confirm as soon as possible
Words and Phrases to Avoid in Most Cases
- Dead
- Massacre
- Policies and procedures
- Impact on revenue
- Investigation (law enforcement and regulators investigate; loss prevention leaders drive the internal “review”)
- Name of a specific victim until law enforcement confirms
Can You Answer the Following Questions?
- Do we know the site leadership, who is in charge, and have pertinent contact data for all site leaders?
- Who will communicate with victims and witnesses? Are they trained in grief communications?
- Is there a peer company or competitor that has dealt with this type of disaster before? How quickly can we contact these peers to ask for insight and recommendations?
- Who will contact our insurer on loss and mitigation efforts?
- Who will contact OSHA or the pertinent safety regulator in our province/country to ensure we have properly notified all authorities?
- Who will communicate with employees regarding the incident, what we know, and do not know? We need to remind them not to speak with the media, speculate, or spread rumors during this sensitive time.
- Who is monitoring blogs and social media to determine if our message as a company is “breaking through” various barriers?
- If a site will need to be closed for any number of reasons, will we pay our employees and continue benefits? This is always one of the first questions to emerge after a fire, flood, industrial disaster, or prolonged crisis.
- How confident are we that we have all of the facts? Do we have a fusion center so that we can look at the site, at damage and needs, with a live feed? If not, how quickly can we establish an ongoing link?
- Does our employee assistance program provide grief counselors if needed as well as counseling for impacted employees who may need emergency cash or who have other urgent issues? Are we properly communicating this benefit to our impacted employees?
Loss Prevention Becomes Crisis Central
During and after a crisis, the loss prevention leadership team is often called to support other teams that may be overwhelmed in dealing with site leaders. In short, you may become critical to the communication needs of the entire company. Don’t assume your corporate communications team, which mostly deals with marketing, “good news,” earnings reports, and related issues, are ready to manage bad news and disasters on their own. Your expertise is valuable. Therefore, work with the entire crisis team to address the following issues:
- Monitor for print, online, broadcast, and social media coverage, flagging significant coverage and highlighting any errors requiring immediate response and correction in real-time.
- Compile cumulative monitoring reports with top-level summaries highlighting key themes and trends.
- Deliver reports to the senior team on a regular basis regarding the severity of the issue and the intensity of employee buzz, social media posts, and news media coverage.
Supplement monitoring reports with a daily or weekly recap analysis that shows traffic spikes and other trends
in coverage.
Other Articles on Crisis Management
To read other crisis management articles by Dr. Barton and other retail industry contributors, visit LossPreventionMedia.com and search on the phrase “crisis management” in quotation marks.