What happens when you get a U.S. Food and Drug Administration (FDA) warning letter, product recall, or plant audit? Typically, it’s a disruptive “all hands on deck” event, even if you have a crisis management plan. Functional leaders drop everything to handle the problem. When they “do whatever it takes” and the crisis passes, there is a collective sigh of relief.
This approach may end the crisis, but it is reactionary, inefficient, and potentially damaging. Dealing with the problem takes time away from operations and growing the business. Urgent needs and hasty decisions stretch budgets. Customers and stakeholders lose confidence, and stressed employees look elsewhere for jobs.
If you prepare for and manage compliance crises with disciplined leadership and formal processes, you can minimize disruption and damage. In fact, your processes, communication, and adaptability can get stronger from the experience.
The best start for handling any crisis is preparation.
Apply risk management. Regularly monitor the market, competition, regulatory landscape, and business metrics. The more you know, the better you can identify potential risks and develop proactive mitigation plans—and prevent crises.
Plan a structured response. Identify the crisis response leader and other requirements such as cross-functional support, communications, and funding. The plan should consider the impact to finances, operations, customers, and employees, as well as the work of those who are pulled from their day job to focus on the crisis. Develop structured response plans for any potential crises and update them regularly.
Despite your best efforts, a crisis may occur. Don’t panic. Assess the situation and apply the appropriate structured response plan.
Assign the leader. Engage the leader identified in the structured response plan and clear their plate so they can focus on the crisis. If you don’t have a response plan, assign a leader who can instill confidence and drive execution. Ideally, they will have experience managing in a crisis and keeping work moving at an accelerated pace.
Form the team. The cross-functional team must have clearly defined roles. Depending on the crisis, the team might include members from engineering, quality, customer service, or other functions. In an emergency, all their time should go toward developing the solution. Determine how to resource their regular responsibilities.
Agree on the root cause. Write down the problem to be solved and get agreement from all key stakeholders. Work to reach the root cause rather than symptoms. For example, a product defect is a symptom; it may be due to machinery miscalibration, worn out tooling, or another reason, each of which may have a deeper root cause.
Create a crisis response plan. Use the structured response plan to develop a roadmap that delineates what needs to be accomplished, when, and by whom. Involve all stakeholders and consider impacts to the company’s operations and culture. Tackle the most urgent problems first. This is the key to triage. Even if you know the root cause, there might be more immediate issues to solve first to stabilize the situation. Importantly, prepare to make decisions quickly and adjust the plan as necessary when new information becomes available.
Develop a crisis communication plan. Immediately, and at a regular cadence, communicate plans to any potentially affected stakeholders, both internal and external. Convey the proper sense of urgency and empathy, and be transparent to maintain trust. Effective communication is bidirectional. Encourage questions and feedback, and respond promptly.
Execute with discipline. Be disciplined in applying the plan, regularly assessing progress, and monitoring financial, operational, and cultural impacts. Stay focused on addressing the root cause. However, as you tackle large problems, consider new risks, and as you uncover additional information, adjust the plan as necessary.
Communicate, communicate, communicate. At a regular cadence, share status updates, upcoming responsibilities, risks, and successes to all stakeholders to ensure understanding and alignment. Communicate changes and how they affect the organization. It is critical to engage those impacted by the changes, as their adoption is necessary to sustaining performance.
Continue to triage. You may discover problems not directly related to the crisis. Fix the things that are necessary to fix, but add the others to an action item log to address later. Continue to execute and iterate plans until you have addressed the root cause.
Ensure the root cause was resolved. After you resolve the crisis, validate and document the actions and solutions. A critical look can ensure there is not an underlying issue that could cause another crisis. Update structured response plans with lessons learned.
Communicate again. Everyone who is impacted, even indirectly, should understand what happened, how it was addressed, and how to ensure it doesn’t happen again. Continue to drive the change management plan to make sure new procedures stick.
Resolve tabled issues. Address remaining problems on your action item log.
Reassign resources. The team can return to their day jobs or to other projects.
With the right planning and preparation, a compliance crisis can be dealt with quickly. Being adequately prepared ensures you communicate and maintain the trust of internal and external stakeholders. The costs of fixing the problem are minimized, and business can get back. At the end of the day, resolving a crisis teaches you how to be more agile and how to be even more efficient the next time around.
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