Who should investigate a crisis?
Crises are unfortunately a daily occurrence in our lives. Media reports of plane crashes, product recalls, water contamination and data breaches are only a few examples of crises reported in the news.
How do companies learn from crises? A good starting point is an investigation following the crisis. Both the botulism crisis at Fonterra and the water contamination crisis at Havelock North are examples of crises that were followed by investigations.
An important issue that an organisation faces after experiencing a crisis is deciding who to appoint to investigate the crisis. Two important factors that need to be considered are the independence and competence of the investigative team.
The first factor, the perceived independence of the investigative team, is key in convincing stakeholders that the findings are credible.
If experts appointed to investigate a crisis are not independent from the organisation that experienced the crisis, stakeholders will be sceptical of the findings. The lack of independence casts doubt on the findings because people will question whether the investigative team is trying to avoid blame since they could have potentially played a role in the crisis.
A good example of a perceived lack of independence is the investigation into Wellington's problematic new bus system. Wayne Hastie, the former general manager of public transport at Greater Wellington Regional Council, was chosen to lead a review into the design of the troubled network. The media questioned his selection because of the key role he played in the planning and rollout of the revamped network.
This situation could have been avoided if an assessment regarding the independence of the investigative team had been conducted before Hastie's selection to lead the review.
It would have been better to appoint an individual who was not involved in the development of Wellington's new bus system to lead the review.
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Another important consideration is the competence of people appointed to investigate the crisis. For example, in the case of a hacker attack, we would expect people who have expertise with computer systems to be included on the investigative team.
If people on the team do not have the appropriate expertise, there is a high likelihood they will not uncover the true cause of the crisis.
The government inquiry into the botulism crisis at Fonterra in 2014 is a good example of choosing people with the appropriate level of expertise to investigate a crisis.
Not only was a member of the three-person investigative team a distinguished food scientist with years of experience, but the investigative team also consulted with the chief scientist of Australia's NSW Food Authority, who served as a scientific adviser during the inquiry.
To provide additional assurance of the quality of the investigation, the chief executive of the Food Safety Authority of Ireland served as an independent peer reviewer.
Clearly, the investigative team examining the crisis at Fonterra had sufficient expertise to examine issues around food safety. This enhanced the credibility of the recommendations included in the report.
Ensuring that the investigative team includes people who are both independent and competent to examine the type of crisis that an organisation has encountered is of great importance. This maximises the likelihood that recommendations from an investigation will help prevent a similar crisis from occurring again in the future.
However, it is worth noting that this is not sufficient. Implementation of the recommendations issued by the investigative team at the organisation that experienced the crisis is also important.
A good example of not learning from a previous crisis is the Havelock North water contamination crisis.
The government inquiry into that crisis in 2016 found that a similar crisis involving water contamination occurred in 1998. This raises the question of whether learning from events in 1998 could have prevented or reduced the severity of the water contamination crisis in 2016.
In order to facilitate implementation of the recommendations, a mechanism needs to be in place at the organisation to ensure that learning from the crisis takes place. For example, a progress report prepared by the organisation that describes in detail the actions taken to address the recommendations from the investigation would be useful.
The process could involve the preparation of a progress report every six months, reviewed by senior management. In addition, an external independent review of the company's actions provides an additional level of assurance that the recommendations are being implemented.
The board of directors at the organisation should hire the external party that conducts this review. If the original investigative team is available, they would be a good choice to conduct the external review of the implementation of the recommendations.
If conducted properly, an investigation into a crisis can help prevent a future crisis.
However, if the wrong people are chosen for the investigative team, the credibility of the recommendations may be questioned by key stakeholders. In order to avoid this situation, a company should make sure that the members of an investigative team are both competent and independent.
In addition, a mechanism should be in place to ensure that the recommendations from the investigation are implemented by the organisation. A report gathering dust on the shelf will not help a company prevent a future crisis from occurring.
Daniel Laufer, PhD, MBA is an associate professor of marketing at Victoria University of Wellington, and an expert in crisis management. He has previously provided commentary on best practice in crisis management for the Wall Street Journal in the US.