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Business Management

by Janine Reid

Even with the best safety program, emergencies can happen. That's the bad news. The good news is that contractors are becoming more proactive in preparing for these events.

A survey of 149 general contractors, heavy/highway contractors and subcontractors was completed in March 1996 relative to the issue of crisis management planning. The results are compared to a similar survey conducted in March 1988.

How Many Contractors Have a Crisis Management Plan?

Of the 149 respondents, 41 percent reported that they have a crisis management plan. This is encouraging since eight years ago only 23 percent had a plan. Of the 41 percent with plans, 31 percent were developed as a result of a crisis. Unfortunately, this is all too common. However, the upside is that a plan is in place to proactively deal with the next situation.

We are sorry to report that the number of crises occurring in the industry today has not changed since 1988. Contractors surveyed reported that they experienced an average of five crises over the last three years...the same as eight years ago. Increased awareness, training, and the support of a strong safety program should reduce this high risk factor.

What Are the Top Ten Crises?

Participants were pre-sented with a list of 27 crises and were asked to indicate the ones they had experienced in the last three years. Following are the Top Ten lists for 1996 and 1988.

How Many have been Burned by the News Media?

Media coverage of contractor crises has increased over the last eight years. Fifty-eight percent of respondents received media attention as a result of their crisis and over one-half felt the coverage was unfair. In 1988, 43 percent received media attention and one-third felt as though they were treated unfairly.

The media can be extremely aggressive, especially in a crisis. If reporters believe there's a story to be told, they won't go away until they get it. Every corporate representative must be equipped with the skills necessary to portray his or her company in the best possible light while working under the worst possible circumstances. A contractor who is not prepared for a media encounter will probably get poor coverage, or worse yet, inaccurate, one-sided coverage. The penalty is severe, because there is no practical recourse to "set the record straight."

Who Manages a Crisis?

Of the contractors surveyed, 59 percent felt their ability to handle a crisis was "good to excellent" and 98 percent stated that company personnel would handle the situation.

How can 59 percent feel that they have a strong ability to handle a crisis when only 41 percent have a systematic protocol in place? And can company personnel effectively handle a crisis if they haven't been trained and don't have a plan to follow? Speaking from experience, crises are emotionally charged and people rarely act in a predictable manner, especially if it's a "big bang" crisis. It is critical that every corporate representative understand and feel comfortable with their responsibilities before disaster strikes.

In 1988, 74 percent of the respondents felt their ability to handle a crisis was better than average and 96 percent would handle it internally. However, only 23 percent of this group had a plan.

What is the Financial Impact of a Crisis?

A crisis has a definite impact on the overall financial picture, both in hard and soft costs. Forty-five percent of the respondents felt their bottom-line was adversely affected. A crisis makes heavy demands on the time of management as well as key personnel involved in trying to gain control of the situation. Without a plan, the crisis will control you rather than you controlling the crisis. Hard and soft dollars will roll away with recoupment being virtually impossible.

In 1988, 50 percent of the respondents stated that their bottom-line was adversely affected.

What is the Impact on Employee Productivity?

Nearly one-half of the respondents noticed a decrease in employee productivity as a result of a crisis. This number has grown since 1988 where only one-third of the respondents reported a productivity loss.

Depending on the type of crisis, it is not at all unusual for productivity to decline during and after an emergency. Effects can range from trauma experienced by witnessing an accident or fatality, to negative media attention, to lack of communication from management to employees.

Does a Crisis Affect a Contractor's Reputation?

Thirty percent felt their reputation was jeopardized or damaged as a result of experiencing a crisis. This is a significant decrease from the 1988 survey where over 75 percent reported their reputation was in jeopardy. The fact that 41 percent of the participants have a crisis management plan suggests that contractors are increasingly aware of the importance of being proactive and protecting their most valuable asset -- their reputation.

How Many Contractors Employ a Full Time Safety Manager?

Sixty-seven percent of the 149 respondents employ a full time safety manager. A comparison could not be made to the 1988 survey because the question was not asked.

There is no doubt that safety must become the number one priority for all contractors.

Conclusions

• The construction industry tends to be crisis prone, however, more contractors are prepared for the inevitable.

• Media attention has increased and will continue. Contractors who are prepared to respond proactively stand a better chance of being treated fairly by the news media.

• Crises clearly have a negative impact on the bottom-line. This includes hard costs and loss of productivity. It is recognized now, more than ever, that a contractor's reputation can be jeopardized by a poorly handled situation.

• Safety has come a long way over the last 10 years, but there is still a long way to go. Risks must be reduced and the attitude of zero accidents should become the norm.

Janine Reid, of the Janine Reid Group, Inc., Denver, Colorado, specializes in crisis management planning, media training and marketing for the construction industry.