The effects of the 2008 financial crisis continue to reverberate throughout the credit union movement. How would your board grade itself on crisis management?
A recent study on crisis control by the Ethics Resource Center (ERC) says most issues an organization faces during times of crisis are really about corporate character and ethics, not operations. “Crisis is a test of character,” the study says. “People will want to know if you lived up to your values.”
- Establish a team that’s prepared to uphold organizational values under a great deal of pressure. The team should make decisions with the bigger picture in mind.
- Be sure corporate values are appropriate, up to date, and aligned with company culture. These values will guide your corporate response.
- Evaluate which stakeholders are most important, recognizing that some have competing interests. Your corporate response should primarily address the most important stakeholders.
- Ensure employees will work with you, not against you, if a crisis occurs. Keep in mind that the availability of social media means employees’ opinions are more public than before.
- Understand a strong bottom line doesn’t necessarily mean a complete recovery.
Important signs of recovery include employee trust in leadership, a strong ethical culture, consumer and vendor confidence in the organization, and respect from industry peers regarding the crisis response.
Additional steps your credit union should take to prepare for a crisis, according to the ERC study:
- Review corporate values;
- Conduct periodic ethics training;
- Conduct a comprehensive stakeholder review;
- Review crisis communication plans and outline ethics-related messages;
- Plan to be a thought leader if a crisis takes place. Learn from company mistakes and move forward; and
- Make additional resources available in case a crisis occurs.
Above all, take responsibility for the crisis, the study advises. Ethical behavior is crucial to crisis recovery. This primarily involves being open to the truth, taking responsibility, and committing to making things right.
Ignore values at your own peril
According to the Ethics Resource Center, if your credit union ignores its values in a crisis it can expect:
• Denial—downplaying the situation or denying involvement;
• Internal chaos—lack of coordination within the company;
• Transference—blaming someone else;
• Deception—covering up what was wrong;
• Boxes—different sectors developing hardened views of right and wrong;
• Fishing—calling in people from outside;
• Silos—sectors working in isolation, leading to self-preservation; and
• Paralysis—being incapable of action.
This article originally appeared in Credit Union Directors Newsletter.