The global economic downturn has highlighted the need for effective crisis planning, according to senior Gulf-based executives surveyed in a new study by Hill & Knowlton and Real Opinions.

More than three-quarters (77 per cent) of the executives who had undertaken some form of crisis planning said having a plan in place helped their company manage the downturn.

However, only one in six (16 per cent) said they had a plan fully in place to deal with the economic crisis, while little more than a quarter (26 per cent) strongly agreed that their organisation is well prepared to deal with a crisis if it occurs.

The online survey of 254 GCC-based business leaders was conducted by Real Opinions for Hill & Knowlton’s Middle East Corporate Reputation Watch earlier this year, at the height of the economic crisis.

Brian Shrowder, director of crisis and training, Hill & Knowlton Middle East, said: “The impact of the global downturn on the Gulf region was greater than generally predicted. When it hit, many companies in the GCC were caught unawares. Managers who had undertaken proper risk assessment and crisis planning fared better than those who were forced into making critical decisions on the run.”

Communication is vital
An overwhelming majority (85 per cent) of respondents agreed that communication is either extremely important or very important during a crisis. Sixty-one per cent strongly agreed that in the absence of information people are more inclined to think the worst.

Yet only 36 per cent of executives believed their organisation had enough resources fully in place to manage communication of difficult messages during a crisis. Less than a fifth (18 per cent) thought their company had put out the right level of information to the media about the crisis.

Dave Robinson, Hill & Knowlton CEO, Middle East, Turkey & Africa, said: “In challenging times it is more important than ever to communicate clearly and effectively with employees, customers, investors and partners. Failure to do so can lead to rumour and speculation, resulting in a loss of confidence.

“The effects of the global recession appear to have eroded public trust in business. A separate study conducted in February this year for Mepra, the Middle East Public Relations Association, found corporations were regarded as not credible or reassuring by 53 per cent of residents in the UAE.

“Companies in the Gulf region need to address this challenge to their reputation and be ready to communicate openly about the impact of market conditions and their management’s strategy.”

Forewarned is forearmed
The findings also underscore the importance of thorough research in a rapidly changing market. More than half of the senior executives surveyed (54 per cent) did not feel they had enough information about the global financial crisis and its impact on their business.

While 89 per cent felt that it is important to have research data on how a company’s stakeholders would react to news of a crisis, only half (52 per cent) said their organisations have this kind of research data.

Dan Healy, CEO of Real Opinions, said: “Managing a crisis without up-to-date business intelligence is like boxing while blindfolded. It becomes harder to make the right decisions under pressure and to communicate those decisions in a way which maintains trust and confidence.

“As the survey respondents concluded, stakeholder sentiment is vital to an organisation’s success in a crisis. Without the tools to track market perceptions there is little wonder that some GCC companies were not as proactive as they could have been in responding to the economic crisis.”

The Middle East Corporate Reputation Watch 2009 report will be published in full in the coming weeks and will be distributed to clients by Hill & Knowlton and Real Opinions, said a statement. – TradeArabia<