By: Nastaran Roushan
Overview
Businesses and organizations face a new reality where consumers and stakeholders demand accountability for environmental, social, and corporate governance (ESG) issues. This demand has been internalized by employees who increasingly refuse to work for companies engaged in practices they deem illegal, objectionable, or unethical.
For small and medium-sized businesses (SMBs), the challenge is amplified. While large corporations have dedicated crisis teams, SMBs often lack the resources to manage an immediate public crisis. Unfortunately for employers, the social media and digital era means any employee protest can gain immediate, widespread publicity and solidarity, leading to crises that are difficult to manage.
However, the speed of digital communication cuts both ways. SMB owners must resist the urge to back away and must address these highly charged ESG issues directly.
In this article, we provide a multi-prong crisis management strategy for SMB employers addressing ESG concerns raised and/or magnified by employees.
Communicate Your Crisis PR Strategy
Clear, responsive, and effective communication is vital in any ESG crisis management response. For SMBs, rapid, consistent messaging is key to controlling the narrative.
The following are tips and factors to consider:
- Directly acknowledge employees’ concerns. Do not ignore them or use vague language. Your employees need to feel heard.
- Know your audience. Your internal message to employees will differ from your external message to clients and the public. Crucially, your employees know your operations best and will quickly expose “white lies” or muddled facts.
- Ensure consistent messaging. All leaders, executives, and communications staff must agree on the substance of any communication before it is released. Inconsistent messaging is difficult to undo and fuels speculation of a corporate cover-up.
- Create a clear plan of action (even if preliminary). Words without a plan are useless. Show your employees that their concerns are valuable enough to result in concrete action. Updates can follow as the plan evolves.
- Clearly state your intent. If your organization decides against a particular action, clearly communicate this and the reason why. While a “no-intent” approach should generally be discouraged, transparency is paramount.
- Draft knowing your message will go public. Assume all communications can be forwarded, copied, and recorded by employees.
- Legal Review is a Must. Ensure an attorney approves any pre-written communications. This step is critical to prevent self-incrimination if the alleged conduct could lead to legal or regulatory action.
Case Study in Poor Communication: Microsoft’s involvement in the Israel-Gaza conflict illustrates the danger of inconsistent messaging. After an initial refusal to comment on allegations of Azure cloud services being used by the Israeli Defence Forces (IDF), and then a first investigation that cleared them, a second investigation prompted by further reporting found the platform was being used for surveillance. This reactive, inconsistent messaging led to a loss of trust among employees and the public, an outcome any SMB must avoid.
Investigate
Many organizations, especially SMBs, may not be fully aware of the facts behind allegations raised by employees. If this is the case, investigate the facts and allegations thoroughly and as soon as possible.
- Hire the right experts. This may require engaging external professionals like forensic auditors, human rights lawyers, or specialized consultants who can bring an unbiased perspective.
- Prioritize Transparency. Investigation results should be made public to the extent possible (with legal counsel). While some sensitive segments may need to be withheld, transparency builds trust with your employees and the public, a vital asset for any small business brand.
Discipline
Employee discipline is a sensitive area when employees raise ESG concerns, carrying significant legal and public relations risks. SMBs must consider:
- Is discipline warranted and beneficial? Has the employee directly violated a policy or the law? Was the employee a fiduciary who breached their duty, or a non-fiduciary who breached a duty of loyalty?
- Apply policies consistently. If disciplinary action is based on a policy violation, ensure the policy is applied in an unbiased manner. Review past cases to ensure consistent application.
- Avoid Illegal Reprisal. Disciplinary action must not constitute a reprisal under human rights or occupational health and safety legislation. This is a nuanced area; for example, while political expression itself isn’t always a protected ground, political expression based on a protected ground (like religion or nationality) may be.
- Check Whistleblower Laws and the Criminal Code. Ensure action doesn’t violate any whistleblower policies or legislation, including Section 425.1(1) of the Criminal Code of Canada, which criminalizes retaliation against an employee for reporting a crime or assisting in a criminal investigation.
When done correctly, these considerations do not tie the employer’s hands. For example, in Mulligan v. Ontario Civilian Police Commission, Sergeant Mulligan was disciplined for criticizing his employer (the OPP) in a public forum. The court upheld the finding of misconduct because he had not taken “all reasonable steps to have the matter addressed internally” before airing his grievances publicly. This highlights the importance of strong internal reporting procedures for SMBs.
Reform, Remediate, and Rehabilitation
If the ESG concerns are substantiated by the investigation, your small or medium business must commit to reform, remediation, and rehabilitation.
This step serves two primary functions for an SMB:
- Employee Retention: Reformation shows existing employees that the employer values their opinions and is serious about a better future.
- Public Trust: Remediation convinces clients, stakeholders, and the public that the organization is serious about its ESG commitments and is committed to doing better.
