By Ronald “Rocky” A. Robins, Jr.
Abercrombie & Fitch Co. (A&F), a leading global specialty retailer, has faced arguably well more than its fair share of crises over the past five years. The retail chain has dealt with store fires, natural disasters (including Superstorm Sandy and the Japanese tsunami and nuclear reactor meltdown), social media snafus, cyber-attack threats, negative publicity and shareholder activism, among others.
The company has weathered these crises, in part, by having a crisis management team and protocol pre-assembled. Having this process in place is critical for retailers because of the unusually large number of different touch points that retailers have. For example, A&F is a public company that typically has tens of thousands of sales associates working for it – most part-time – throughout the course of a year; has over 1,000 stores spread throughout the United States and the rest of the world; and relies almost exclusively on third party suppliers, many of whom are located in developing countries with varying degrees of regulatory oversight.
Setting up a Crisis Response Team
A&F didn’t always have a formal crisis management team. The idea for a formal process came about through the company’s enterprise risk management and annual risk management review. This review identified the need to have a mechanism in place to identify potential crises and to establish a crisis management team that would be prepared to respond to a crisis anywhere in the world on a 24/7 basis.
During my tenure, the A&F crisis team was co-chaired by the CFO (now COO) and General Counsel. The head of Human Resources served as an additional co-chair depending on the issue. When a crisis was identified, either through real-time monitoring of social media, press and TV, message boards, etc. or via an internal notification, the co-chairs evaluated the issue and determined who from the extended crisis management team should be involved. A&F’s extended crisis management team included operational heads within the company and outside legal, PR, financial, insurance, asset protection and other resources throughout the world.
When setting up a crisis response team, companies should keep the following practice pointers in mind:
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Have both internal and external current contact information for an extended crisis management team readily available at all times.
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Run periodic scenario planning exercises to keep the team sharp and to continually refine the process, especially if a company is fortunate enough not to have many real life situations.
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If the CEO is not part of the front-line crisis management team, maintain a protocol for when and how to bring the CEO into the loop.
Responding when a Crisis Occurs
Social media can quickly elevate something minor into a full-on crisis. As a company, a management team and a crisis response team, you have to be prepared to respond, and respond quickly. Through a combination of internal and external resources, A&F’s internal PR team monitored social media events and, in appropriate circumstances, depending on the volume and tone of what was being said – and by whom, would elevate a given event to the crisis management team.
For example, a few years ago, A&F was opening a store in South Korea and, as part of that opening, some of the company’s American “lifeguards” were brought in to greet customers and pose for photos with them. Several of these photos were posted to social media and in some of the photos, the lifeguards appeared to be making fun of and mocking the customers in a racist manner. This issue quickly spread across social media and became a regional crisis in need of immediate attention before becoming a global issue. The A&F crisis management team assembled in the early morning hours (mindful of the 13-hour time difference between the two countries) and analyzed the complex situation. Internal HR, PR and legal counsel were consulted, as were external PR experts. A decision was made after a fulsome discussion that balanced concerns for the careers of the two young men involved in the incident, who may have been acting improperly but not necessarily with malicious intent, and the company’s desire to do the right thing, which included not offending a significant customer base. A consensus having formed around the correct course of action, a few hours later, as the young men stepped off their return flight from Asia, they were informed that they were being dismissed, and the company issued an online apology, in a manner intended to be culturally appropriate within the region, that ultimately quelled the crisis before it spread globally.
Marshalling Appropriate Resources to Respond
There are times when an internal team can adequately respond and quell a crisis, but there are also times when bringing in outsiders quickly is the key. Shooting a mosquito with an elephant gun is counterproductive, but our experience was that a company shouldn’t be shy about bringing in outside assistance, whether that was the insurer, outside counsel, PR experts (with local knowledge), financial advisors or other relevant experts. As our team gained experience, we tended to become more likely to involve outside experts rather than less. Perhaps in a corollary to the “Powell Doctrine,” our team found that having more resources at our disposal, rather than fewer, made it more likely that an incipient crisis could be quelled or avoided before becoming full blown.
Keep the Board Appropriately Informed
Just as not every purported crisis is a crisis, not everything that comes to a crisis management committee is necessarily something to escalate to the Board. On the other hand, it is also important not to allow the Board to be caught off guard and learn about a company issue in an article or blog post. Monitoring social media and the press internally helps the crisis response team discern when there could be negative publicity and give the Board a timely heads up (rather than the other way around). The team should also provide an explanation with relevant background information, since often what appears in print or online can be incorrect.
Keep Calm
This may be the most important aspect of crisis management. Keeping an even keel and not panicking is important both internally and externally. Even if the crisis team leader is personally substantively worried about the crisis or potential crisis situation, it is critical not to let the broader team know that. Rather, the leader should fall back on the process above that has been pre-established: gather information, assemble the appropriate team, fashion a response, and a plan, and then execute against it. Then monitor the execution and/or revise until the crisis has been resolved.
About the author: Ronald “Rocky” A. Robins, Jr. with Vorys, Sater, Seymour and Pease LLP. He previously served as the senior vice president, general counsel, chief compliance officer and secretary for Abercrombie & Fitch Co. Robins also co-chaired the company’s crisis management committee. He can be reached at rarobins@vorys.com.
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