How good crisis management can protect shareholder value

Measuring the impact of PR is the bane of Marketing Directors the world over. On a personal level, I’d argue that measuring the marketing effect of PR is the problem, rather than measuring the impact of PR as a management function.

To support this heresy, I point to a study conducted a number of years ago by the researchers Rory Knight and Deborah Pretty. Their study, The Impact of Catastrophes on Shareholder Value, highlights two groups of factors that help companies to retain (or grow) shareholder value in the days, weeks and months following a crisis.

Direct factors largely consist of financial safety-nets, like the company’s insurance policy and cash reserves.

Indirect factors are largely attributed to the perception of competence displayed by the company’s management during and immediately after the crisis. And here’s where communication (crisis PR if you like) plays a massive role.

If you really think about it for a second, communication is the only way information ever gets out of the room and into the world – whether that’s into the brains of the company’s workforce, the pages of its annual report, or the copy of The Huffington Post. It’s all public relations because it’s all about relating the company to…the public.

As we often say on this blog, we can’t judge the performance of the people in the room by what we read in the media, simply because we don’t have the same information as the people in the room. However, when it comes to instilling confidence in an audience, that usually requires sharing some of that information, in a way that’s easily accessible to that audience.

That’s largely the point of the crisis management function. We help convey that information more effectively during times of distress. And because we can see what happens when that’s not done well, researchers like Knight & Pretty are able to demonstrate the impact of a job well done.

I’d strongly recommend downloading the full paper – it’s only 20-odd pages and makes a compelling argument for your communication investment.

Share and Enjoy:
  • Facebook
  • del.icio.us
  • Twitter
  • StumbleUpon
  • Reddit
  • Digg
  • RSS
  • LinkedIn
  • Google Bookmarks
  • Technorati
4 Comments
04

Feb
2010

Jason Whitmen

Just wanted to say HI. I found your blog a few days ago on Technorati and have been reading it over the past few days.

04

Feb
2010

Ben Waugh

I discovered your homepage by coincidence.
Very interesting posts and well written.
I will put your site on my blogroll.
:-)

08

Feb
2010

uberVU - social comments

Social comments and analytics for this post…

This post was mentioned on Twitter by pmbaird: #PR How good crisis management can protect shareholder value: Measuring the impact of PR is the bane of Marketing … http://bit.ly/de36bo...

21

Mar
2010

Collective Conversation » Media Insights and Crisis Expertise » Blog Archive » Nestle, Greenpeace, social media, crisis management, facebook, YouTube, Twitter. PR measurement. Interested?

[...] While that’s not wonderful for the company’s shareholders, it’s useful as an in situ case study. As mentioned previously on this blog, good crisis management can have a remarkably positive impact on shareholder value. [...]

Add a comment