Concept of Crisis Management Revisited

Friends, Thank you very much for taking out time from your busy schedule to read my blog(s). Sharing knowledge with you has become my passion now. I feel encouraged after reading your feedback in the comments column. Today I’m happy to present my 95^th Blog “Concept of Crisis Management Revisited”.

Friends, an Issue, if not properly handled and timely resolved, can turn into a Crisis and become an Emergency. Let’s first differentiate among an issue, a crisis, and an emergency.

Issue: An issue is a matter in dispute or a subject of controversy. An emerging issue is a matter that shows signs of developing into a dispute or controversy. Dispute generally involves different point of views between adversaries, about what should be or should not be done or how a matter of mutual concern should be handled.

Crisis: A crisis is a stage at which all future events affecting person or an organization are determined. It is a major turning point resulting in permanent drastic change. It is far more crucial than most issues or emergencies. Crises are of great importance but they are rare.

Emergency: An emergency is a sudden, usually unexpected, occurrence that requires prompt action. While demanding serious and prompt attention, emergencies do not indicate a major turning point in the person’s or organization existence. Issues become emergencies when they develop into challenges that require urgent decisive action. Friends, crises are major unpredictable events that threaten to harm the organizations, its stakeholders or general public. Although crisis is unpredictable but is not unexpected. Crisis can affect all segments of society i.e. businesses, educational institutions, families, non-profit organizations and the government and are caused by a wide range of reasons.

Although the definitions of crises can vary greatly, four elements are common to most definitions of crisis: (a) Threat to the organization, (b) Element of surprise, (c) Short decision (d) Process of transformation A crisis in an organization is ‘any emotionally charged situation that, once it becomes public, invites negative stakeholder reaction and thereby has the potential to threaten the financial well-being, reputation, or survival of the organization or some portion thereof’.

Types of Crisis 1. Natural Crisis 2. Product Failure 3. Technological Crisis 4. Confrontation Crisis 5. Crisis of Malevolence 6. Crisis of Organizational Misdeeds.

Natural Crisis:

Natural crisis, typically natural disasters considered as acts of God, are such environmental phenomena as earthquakes, volcanic eruptions, tornadoes and hurricanes, floods, landslides, tsunamis, storms, and droughts that threaten life, property, and the environment itself.

Product Failure: Failure of a product can be a major disaster for a Company, since the present and future of the company depends entirely on the acceptability and reputation of their products.

Technological Crisis:

Technological crisis are caused by human application of science and technology. Technological accidents inevitably occur when technology becomes complex and coupled and something goes wrong in the system as a whole such as Technological breakdowns e.g. software failures, industrial accidents, and oil spills.

Confrontation Crisis:

Confrontation crisis occur when discontented individuals or groups fight businesses, government, and various interest groups to win acceptance of their demands and expectations. The common type of confrontation crises is boycotts, and other types are picketing, sit-ins, ultimatums to those in authority, blockade or occupation of buildings, and resisting or disobeying police.

Crisis of Malevolence:

An organization faces a crisis of malevolence when opponents or miscreant individuals use criminal means or other extreme tactics for the purpose of expressing hostility or anger towards, or seeking gain from, a company, country, or economic system, perhaps with the aim of destabilizing or destroying it. Sample crises include product tampering, kidnapping, malicious rumors, terrorism, and espionage.

Crisis of Organizational Misdeeds:

Crisis occur when management takes actions it knows will harm or place stake-holders at risk for harm without adequate precautions.  Lerbinger specified three different types of crises of organizational misdeeds: 1. Crisis of Skewed Management Values, 2. Crisis of Deception, and 3. Crisis of Management Misconduct.

Crisis of Skewed Management are caused when managers favour short-term economic gain and neglect broader social values and stakeholders other than investors. This state of lopsided values is rooted in the classical business creed that focuses on the interests of stock-holders and tends to view the interests of its other stake-holders such as customers, employees, and the community.

Crisis of Deception occur when management conceals or misrepresents information about itself and its products in its dealing with consumers and others.

Crisis of Management Misconduct are caused not only by skewed values and deception but deliberate amorality and illegality e.g.: (a) Workplace Violence Crises occur when an employee or former employee commits violence against other employees on organizational grounds. (b) Rumors False information about an organization or its products creates crises hurting the organization’s reputation. Sample is linking the organization to radical groups or stories that their products are contaminated.

Crisis Management consists of (a) Methods used to respond to both the reality and perception of crisis. (b) Establishing metrics to define what scenarios constitute a crisis and should consequently trigger the necessary response mechanisms. (c) Communication that occurs within the response phase of emergency management scenarios.

Crisis management is occasionally referred to as incident management also. The credibility and reputation of organizations is heavily influenced by the perception of their responses during crisis situations. The organization and communication involved in responding to a crisis in a timely fashion makes for a challenge in businesses. There must be open and consistent communication throughout the hierarchy to contribute to a successful crisis communication process.

During the crisis management process, it is important to identify types of crisis, in that different crisis necessitate the use of different crisis management strategies. Potential crises are enormous, but crisis can be clustered. Successfully defusing a crisis requires an understanding of how to handle a crisis before they occur.

Following are the various phases of Crisis Management:

1. Anticipating the Crisis, Preventing Crisis or the diagnosis of the impending trouble or the danger signals.

2. Action during a Crisis / Resolving Crisis or choosing appropriate Turnaround Strategy.

3. Action Post Crisis / the Aftermath or Implementation of the change process and its monitoring. Crisis is also a facet of risk management.

The primary aims or benefits of crisis management would normally include:

(a) Ability to assess the situation from inside and outside the organization as all stakeholders might perceive it.

(b) Techniques to direct action(s) to contain the likely or perceived damage spread.

(c) A more effective way to rapidly trigger that part or parts of business continuity management.

(d) Better organizational resilience for all stakeholders.

(e) Compliance with regulatory and ethical requirements, e.g. corporate social responsibility.

(f) Much better management of serious incidents or any incident that could become serious.

(g) Improved staff awareness of their roles and expectations within the organization.

(h) Increased ability, confidence and morale within the organization.

(i) Enhanced risk management in so far that obvious risks will be identified, mitigated (where possible) and through crisis and business continuity management - as prepared for.

(j) Protected and often enhanced reputation a much reduced risk of post event litigation.

Role of PR in Crisis Situation

There are five PR steps that should be executed in order to properly manage a crisis. First, the corporate in crisis should be prompt, addressing the public immediately following the discovery of the crisis.

Second, the corporate in question should maintain honesty because the public is more willing to forgive an honest mistake than a calculated lie.

Third, it is important to be informative because the media as well as the public will create their own rumors if no information is given to them by the corporate in crisis. Rumors can cause significantly more damage to the corporate than the truth. 

Fourth, it is important to be concerned and show the public you care because people will be more forgiving if it is clear that the corporate cares about the victims of the crisis.

Fifth, maintain two-way relationships. This is important because the corporate can learn a lot about the status of public opinion by listening. The above five PR steps are necessary in order to manage any crisis situation.

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