Bring It On
from November/December 2006
Has crisis management been an important issue in your boardroom? What is the biggest crisis you've faced as a director?
Gather round and listen to tales of floods and bankruptcies and the day you had "to replace practically an entire senior management team in light of the discovery of improper handling and reporting of transactions."
Yes, it’s an important issue. When things seem to be going well, you cannot sit back. Competitors are working 24 hours a day to take your market share. My biggest crisis was to take over as CEO when my company was on the brink of bankruptcy. We pulled through.
Louis P. Valente, 76
Executive Chairman, Palomar Medical Technologies Inc., Burlington, Massachusetts
Medical Information Technology Inc., MKS Instruments, SurgiLight Inc.
Yes. Realistically, you can’t expect a board member to be able to micromanage anything. To think a board member can come in and have the day-to-day insight to micromanage a crisis, that’s not realistic. But what board members can do is take a higher-level outside look and make sure crisis management, in a broad sense, is getting done in the most appropriate way.
Lizabeth A. Ardisana, 55
CEO, ASG Renaissance, Dearborn, Michigan
Citizens Banking Corp.
A readiness to respond to a crisis situation is very important for the board. On our board, for example, our major distribution center was flooded by a county water main breaking through the wall. What was important was the board’s willingness to assemble and to assist the employee and management teams. When a crisis occurs, you’re either ready or not ready to respond. That means getting the right resources together quickly, and that only happens through open communication. When you have all those resources working together efficiently, it’s due in great part to the culture of the company.
Benn R. Konsynski, 56
Professor of Decision and Information Analysis, Goizueta School of Business, Emory University, Atlanta
Tessco Technologies
The Isle of Capri headquarters is in Biloxi, Mississippi. Last year was the year from hell for us. Our flagship casino and two barges were destroyed. One boat landed on a garage; another boat lifted onto the land and stuck. We also had substantial storm damage to our Bahamas property. But we were ready. Our employees came first, and we kept them on the payroll even though we had no jobs for them. It was a corporate decision to honor people before profits. We also led legislation to allow land casinos where there is direct proximity to the Gulf of Mexico. We were the first to open a temporary land-based property, and we have plans to rebuild 40 feet above sea level. It just shows that if a business plans for crisis, it can handle it.
Randolph Baker, 59
Chair, Sycuan Institute on Tribal Gaming, San Diego State University, San Diego
Isle of Capri Casinos Inc.
There’s a direct correlation between preparedness and crisis. You can make luck happen. The more prepared you are, the greater the influence you have over the future and the less likely a crisis is to happen. The world turns at a fast pace. Like any good family, people pull together to work it out. One of our largest crises was the need to restate our earnings. We did it as transparently as we could, and all the while we were able to stay focused on strategic management. We never had to put one ball down to focus on the other ball—we always had both in the air.
Edward J. Fritsch, 47
President, CEO, and Director, Highwoods Properties Inc., Raleigh, North Carolina
Crisis management is very important, and you must do it in advance. I was in a situation on another board 10 years ago where we got in some serious financial trouble and had to retain a crisis manager, who helped us. We weren’t prepared at the outset, and as a result we were slow and didn’t react the way we should have. But we learned our lesson. Today crisis-management planning is part of the activities of all the boards I serve on.
Nolan Lehmann, 62
Retired President, Equus II Inc., Houston
Allied Waste Industries, Synagro Technologies
If the board and management are working together and communicating, there’s very minimal crisis management needed. It’s essential for directors to be kept well informed. I always demand advance information that may help us keep situations from developing into a full-blown crisis.
James L. Martineau, 66
Retired Executive Vice President, Apogee Enterprises, Minneapolis
Apogee Enterprises, Pinnacle Entertainment
The biggest crisis I faced as a director was the ultimate crisis—the need to replace practically an entire senior management team (CEO, COO, CFO, and others) in light of the discovery of improper handling and reporting of transactions. The entire board worked wonderfully hand in hand, conducting internal investigations, working with the SEC, recruiting a new management team, and working with the new team to ultimately return the company to stability. Every member of the board undertook a different set of responsibilities and worked together to address the crisis.
Joe F. Hanauer, 69
Principal, Combined Investments LP, Laguna Beach, California
MAF Bancorp, Move Inc.
