Crisis Management During Hard Times

[Editor’s note: Today we bring you a special guest post by our multi-cultural colleague, Carlos Victor Costa, that takes a hard look at the Spanish royal family’s most recent crisis]

Crisis Management During Hard Times: Lessons from the King and the Elephants

Once upon a time there was a very happy Kingdom with a much beloved king. Everything was fine, people had money, dreams and their king was bold and young and fair. But time went by, and things changed: peopled ceased to have money, jobs grew scarce, people started to worry about their dreams and were not happy anymore. Meanwhile, the king grew old, but kept doing the type of things that Kings usually like to do, such as hunting and hanging out in the company of wealthy, beautiful people.

Unfortunately, while hunting elephants in Africa (exotic land of Simba, The King Lion) something unexpected happened: he missed his shot, and had an accident. He broke his hips, people’s dreams – and his image of bold, young and fair.

While all this seems to be a sad ending for an unusual fairy tale, it is, in fact, true. King Juan Carlos I from Spain suffered an accident while hunting elephants in Botswana that received huge international press coverage recently and left us some lessons about crisis management during the hard times we are living. The main one, I guess, it is something that I heard for the first time from Richard Edelman called “the dialectic between control and credibility.”

Institutions are having a hard time managing this dialectic. How do they keep secrets under wraps, while managing public image in a coherent way, aligning image to stakeholders´ expectations? The crisis era we live in demands more sensibility from companies in order to keep things smooth in the public arena, something that, apparently, was missed in this example.

We can learn from the royal case some interesting lessons that explain the forces behind this dialectic struggle between message control and credibility building:

1. Secrecy doesn’t exist anymore.
   One of the most shocking aspects about this crisis (personal and institutional for Spain and Spain´s royalty) was that, apparently, the king´s trip was not communicated (as law requires) to Spain´s head of Government (Spain is a parliamentary monarchy). However, once the accident happened, the trip got immediate attention in a world avid for news like this. Bad risk management.
2. Empathy should be real, otherwise it is just royal propaganda
   Spain has Europe´s highest unemployment rate, one in four Spaniards doesn´t have a job. The government is working on a radical turnaround plan that includes very unpopular measures such as tax increases and cuttings in health and education, among other public expenditures. As we know, in modern democracies, monarchy is seen as an OK thing that unifies a country on its cultural roots and common past, like in Britain. And, actually, to be fair, King Juan Carlos I has been seen as more than just a symbol, he has an impeccable track record in crucial moments of Spain´s recent history (like when he stood for democracy during a military coup d´etat). However, while nobody expects the royal family to fly economy class, taking a leisurely trip to hunt elephants is not exactly a good message to give in times like these. Bad reputation management.
3. Everything is connected
   Much like the British royal family 15 years ago, Spain´s first family has been suffering its astral hell in the last months. The king´s son-in-law is being investigated for fiscal fraud in a high-profile case, and, a couple of weeks ago, the king´s grandson shot himself in the foot (the kid´s just 13, and at that age he legally cannot carry a gun). I can only remember in the recent years BP´s CEO Tony Hayward having such a talent to do the wrong things at the right time (my post on this here). Couldn´t the king postpone the trip? Bad, bad, timing.
4. Other aspects: To make things worse, this imbroglio brought to light two additional aspects –

• The fact that Juan Carlos I was honorary president of the World Wildlife Fund didn´t help to improve things here. Through an activism online site called Actuable (Change.org Spanish clone) more than 80,000 people required WWF to end the King´s job as the institution´s honorary president. At the end of last week, WWF’s board in Spain voted unanimously to make this happen.
• Finally, guess who had been invited to the hunting? The organizer of the safari was a beautiful German princess and the gossip around this suggests a possible closer than expected relationship between her and the king, spicing things a little bit more. The German newspaper Bild displayed a photo of the two on an official trip.

How did all this end up?

In an unprecedented gesture, Juan Carlos I left the hospital and, with a quick statement, apologized to the people in a typical “Dropped the ball, I am sorry, will never happen again”. As the press said, Spaniards aren´t accustomed to accepting guilt easily, and such attitude might open an incredible precedent, leading people to see themselves from a different perspective; if even a king can make mistakes, ordinary people can, too, and to accept mistakes is the first step to change things for the better. That would be nice if it really happened, and it would be the good part of the lesson learned by the country from this sad fairy tale.

Or not?

Some analysts like the respected academic Manual Castells produced a fierce article asking the king to resign and others (like me) say that “sorry” has become a devaluated currency: everybody says sorry. Politicians (like Clinton) say sorry, CEOs (like BP´s) say sorry, high profile athletes (like Tiger Woods) say sorry. Is that genuine or just an easy way out taught by spin doctors? Can credibility be regained just by saying “I´m sorry”?

In general, I guess people welcome an apology as a first step, but things really have to change in order to regain trust, otherwise the reputation will be tarnished. However, their positive inner feelings regarding the person can play an important part on the outcome, and if nothing bad happens again, everything returns to normal, and the issue will be regarded as the bad story that everybody prefers not to talk about at family dinner.

Other people will simply just forget all the fuss, and see the story as another curiosity from rich public people and their extravagant life style. Let´s move on to the next scandal.

The elephants, on the other hand, they don´t forget.

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For more resources, see the Free Management Library topic: Crisis Management
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Carlos Victor Costa is a Brazilian professor and consultant living in Madrid. He writes the blog www.carlosvictorcosta.com

Jonathan & Erik Bernstein