Blindsided is the authoritative guide to crisis management. This "how to" handbook gives essential advice that every manager needs to know when a crisis hits. Written by CMI Founder/CEO Bruce Blythe, it's a fascinating, easy-to-read guide that draws on Blythe's 20+ years of experience as a pioneer in crisis management.

  CMI e-Newsletter
      March 2003


Negligent Failure to Plan:
The Next Liability Frontier?
By Bruce Blythe, CEO of Crisis Management International and
Terri Butler Stivarius, Managing Shareholder, Littler Mendelson, LLC

It’s a normal Tuesday, when suddenly a huge blast rocks your workplace. You are jolted out of your seat. After an eerie silence you hear screams and commotion. People around you start running. Unthinkably, your facility has been the target of a bombing.

Responding as best you can to the panic, you direct employees outside to what seems a safe corner of the parking lot, near the dumpster. Ten minutes later, a second explosion goes off – in the dumpster, resulting in several more casualties.

Your immediate concern will be taking care of the injured, putting out the fires, securing the site, receiving frightened family members. But in the aftermath of this tragedy, two important questions will emerge. They will be directed toward the management and Board of Directors. Employees, the media and the public will inevitably get around to asking:

1. Did you take reasonable precautions to prevent the incident from occurring, which could take a terrible toll on your workforce?

2. Were you prepared to respond with proper protective and palliative actions for your people following the incident?

The answers that you give could have enormous consequences for your company, its bottom line and its future, because of an emerging concept of liability: negligent failure to plan.

What are Your Responsibilities?
An employer can be considered negligent if you do not take the reasonable steps to eliminate or diminish known or reasonably foreseeable risks. And following September 11, the range of known hazards is widely perceived to have broadened. But whether the crisis comes following an incident of terrorism or from some other kind of tragedy, you would be wise to anticipate heightened scrutiny of your preparedness and response planning.

Though there is as yet no reported law on the subject per se, negligent failure to plan is likely to be tested as a new legal concept. Think of it as a common law of simple negligence applied under a newly critical lens. The notion that employers have a legal duty to exercise reasonable care in providing a safe workplace is not new. Indeed, this is legislated by both our federal government and many state governments in the form of occupational health and safety laws. For instance, under the federal Occupational Safety and Health Act (OSHA), every covered employer has a general duty to provide a safe workplace, and the U.S. Department of Labor issues regulations and guidelines that essentially define the “standard of care”. This Act addresses hazardous materials and potentially unsafe workplace practices and conditions. Prevention and response plans to address workplace violence are also the subject of such guidelines.

That crisis prevention and response plans should similarly fall within the realm of this “standard of care” will come as no surprise to any employer who is paying attention to domestic and world events. Such a plan, at the least, should minimize the potential for unnecessary harm to employees, both during the eruption of a crisis and in its aftermath. The expectations of judges and juries who may study this question in the future would likely range from what should now be standard emergency response plans at any workplace (involving evacuation plans, emergency medical and law enforcement, etc.) to providing competent support to employees who may have been impacted mentally or emotionally during a crisis.

In this regard, although there is no legal duty to provide post-crisis support services to employees, most employers should shoulder this burden willingly out of the desire to “do the right thing,” to meet employee and public expectations of being good corporate citizens.

Luck is Not an Adequate Strategy
Employees and the public expect that corporate governance and executives are adequately addressing crisis prevention and post-incident response. Crisis preparedness requires a management system that has an effective champion, sufficient managerial support and talent, adequate budgeting, quantifiable objectives, periodic testing and a monitoring system to assure it is working.

The alternative is to face people, financial and reputational consequences that can create significant, possibly permanent harm to the organization. This is the fodder of future “negligent failure to plan” claims. As in any corporate endeavor, inadequate planning results in dreadful results.

The Cost of Grief
By Grace Burley, Editor

Trying to determine how much grief costs U.S. businesses seems like an ambitious if not impossible task. However, the Grief Recovery Institute, a non-profit educational foundation, recently conducted an extensive study in which they measured how grief financially affects American businesses.

Their study which was highlighted in The Wall Street Journal showed that grief costs companies more than $75 billion annually.

As part of the study, the institute interviewed more than 25,000 grieving individuals. Nearly all of those interviewed, said that their job performance had been affected.

So, how did the Grief Recovery Institute calculate their numbers? They used more than 12 recognized studies to compute the cost of a lost working hour, then applied that to an estimated number of hours. For instance, to calculate the effect of loved ones’ deaths, the index assumes that a death produces just one primary mourner, who in the next two years loses a total of 30 days productivity. This comes to an annual cost of $37.6 billion for U.S. companies.

The Society for Human Resource Professionals as well as groups representing hospice families, funeral directors and others all say that they have no statistics to confirm or dispute the Grief Recovery Institute’s findings.

The study, although helpful, is subjective and far from exact. The way in which people grieve and how they react to tragedy differs greatly. However, this is the first study that has even attempted to put financial estimates on grief.

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