Businesses must stay prepared for crises

The decline was less than what many had feared and indicated investors weren’t too worried about the company’s future in the hands of Chief Operating Officer Tim Cook, who will take over in Jobs’ absence.

Companies have long been forced to adapt to the absence of a key employee.

Large corporations like Apple have a board of directors in place to determine who will oversee the company’s daily operations, but small- to medium-sized businesses are not often as prepared for an emergency.

After Hurricane Katrina, the Las Vegas Chamber of Commerce partnered with the Institute for Business and Home Safety to produce a disaster-preparedness guide called “Open for Business.” The publication is available for free on the chamber’s website.

“One of the things we’ve done over the years is encourage businesses to do contingency planning,” said chamber spokeswoman Cara Roberts. “A lot of people think about contingency planning in terms of a disaster, like a fire or a flood, but really, losing your top or your key executive either to something like death or an unexpected medical leave is also a contingency the company needs to plan for.”

The chamber used its own contingency plan when its new president, Matt Crosson, died last month. Roberts said the first step in deciding who will run the business should be done before disaster arises.

“The vulnerability in doing it when the crisis occurs means you won’t have thought it through as completely as if you’d given yourself time in the planning process,” she said.

University of Nevada, Las Vegas business strategy and ethics professor Joseph Gilbert said a potential replacement should be trained to take over the reins of a company and offered incentives, like stock options, to remain with the company.

Small businesses are often unable to craft a contingency plan.

“What often happens, especially in a family business, is the parent thinks the children will take over. When the parent becomes disabled or dies, the business goes away,” Gilbert said. “It’s really scary at a small- or medium-sized company when you get a call and they say, ‘The boss is in intensive care.’ ”

For an executive who is planning a temporary leave of absence, Southern Nevada SCORE business counselor Raj he said, the key is staying connected.

“Interact remotely, even if it’s just a little bit to stay on top,” he said. “Communicate the message to other business owners or stockholders that there are long-term strategies put in place and there are the right people assigned to execute them.”

Apple has been criticized for not disclosing the reason for Jobs’ leave. Gilbert said companies should try to release as much information as possible without violating privacy.

“People guess. They assume the worst,” Gilbert said. “There’s a moral obligation to (tell) shareholders when something this big happens.”

Las Vegas is no stranger to executive secrecy. Park Place Entertainment Corp. was in the midst of acquiring Caesars World Inc. from Starwood Hotels & Resorts Inc. when CEO Arthur Goldberg fell ill in 1999. Few details about his illness were released, leading to speculation in the gaming industry. Goldberg died of complications from bone marrow failure in 2000.

Contact reporter Caitlin McGarry at
cmcgarry@lvbusinesspress.com or
702-387-5273.