Crisis Management: Should Your Board Be the Crisis Team : Crisis Leadership
The 2009 leadership decapitation of NC State University was unsettling for at least two reasons. First, the tree was diseased at the top. Second, it begged the question of how stakeholders can protect institutions when the chiefs are involved. First, an NCSU recap. Influence peddling gave then-first lady Mary Easley a high paying faculty job. Revelations and executive opacity felled the chancellor, provost, trustees chairman, and Ms. Easley. UNC system president Erskine Bowles dropped the guillotine saying the evidence “…made me literally sick.”
NCSU’s debacle also mirrored a disturbing corporate trend. One-third of CEO’s are being eliminated for not being forthcoming with their boards according to a 2008 Booz Allen survey. A 20% jump from five years earlier.
So, what do insiders and outsiders do to avoid being sandbagged by leaders? This is hard. Violation of trust is at the core. Speaking generically, it’s kind of like being had by a deft embezzler who creates a paper trail so convincing that you don’t know anything’s wrong until the money is gone. Some ideas:
Mandatory CEO-Board disclosure. Senior executives must inform boards and boards must demand it. Since ENRON and Sarbanes-Oxley the days of board rubber-stamping are supposed to be long gone. Clearly they are not. This is a two-way communication that CEO’s should initiate and in which boards must participate: all board members. Case in point: NC State’s Board of Trustees Chair was part of the Easley coziness and Bowles ejected him.
The board as crisis team. If there is a possibility that top executives are part of the problem then those executives should not be in charge of fixing it. Example: in 2008 the CEO of a financial organization I know wanted to reassure stakeholders after huge subprime losses. Unfortunately he had been in command when the disastrous real estate policies were in place. Ultimately the board decided the most persuasive way to signal change was to expel the CEO and CFO. In this case, the board managed the crisis.
Crisis consultants engage board members. This is a note to me and to others who do what I do. In a handful of situations I sadly came to realize that I was shuffling Titanic chairs because the very person who hired me to help, usually the chief executive, was the problem. I was hamstrung because I answered to that individual alone and did not have a relationship with a higher authority to develop alternatives that might involve eliminating or at least counterbalancing the chief executive. This is tricky business here, but outside consultants like me cannot resolve disputes when we are beholden to the troublemakers. The board can be a kind of court of last resort and liaison should be established at the beginning under certain circumstances.
PR insiders become “reporters”. How do you suppose the PR staff at NCSU feels? They were probably doing all they could to protect the university while the place was falling around their ears. Yet how could they have prevented it if the chancellor was involved? I suggest staff PR teams maintain loyalty without drinking the institutional Kool-Aid. Often former journalists themselves, they should act as internal reporters. Ask penetrating questions to try to avoid being hung out to dry. Difficult but not impossible!
Leadership failure at the top rolls like a wave across many and it is darned tough not to be swept away.