Crisis Management

To manage a crisis one first must understand that crises:

Occur abruptly
Cannot always be anticipated or forecast
May not occur within an issue category

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 Crisis Management

Basic Causes of a Business Crisis

1. Acts of God

2. Mechanical problems

3. Human errors

4. Management decisions / indecisions

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 The Nature of Crises

Crisis Definitions

 A major, unpredictable event that has potentially negative

results and its aftermath may significantly damage an
organization and its employees, products, services,
financial condition, and reputation.

 A low-probability, high-impact event that threatens the

viability of the organization and is characterized by
ambiguity of cause, effect, and means of resolution, as
well as by a belief that decisions must be made swiftly.

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 Crisis Management

How a Crisis Should NOT be Handled

 Minimizing the Crisis

 Stonewalling

 Too little, too late

From Figure 6-7 4

 Types of Crises

Economic
Economic

Physical
Physical

Personnel
Personnel

Criminal
Criminal

Information
Information

Reputational
Reputational

Natural
Natural disasters
disasters
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 Model of Crisis Management Process
Identification
Identificationof
ofCrisis
Crisis

Analysis
Analysisof
ofCrisis
Crisis

Prioritization
Prioritizationof
ofCrisis
Crisis

Formulation
Formulationof
ofCrisis
CrisisResponses
Responses

Implementation
Implementationof
ofCrisis
CrisisResponses
Responses

Evaluation,
Evaluation,Monitoring,
Monitoring,and
andControl
Controlof
ofResults
Results
Figure 6-3 6
 Types of Crises

Outcomes of Major Crises

 Escalated in intensity
 Subjected to media and government scrutiny
 Interfered with normal business operations
 Damaged the companies bottom line
 Resulted in major power shifts

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 Crisis Management: Four Stages

Prodromal
ProdromalCrisis
CrisisStage
Stage Acute
AcuteCrisis
CrisisStage
Stage
Warning—precursor
Warning—precursor Point
Pointofofno
noreturn
return
Symptom
Symptom—precrisis
—precrisis Crisis
Crisishas
hasoccurred
occurred

Learning

Chronic
ChronicCrisis
CrisisStage
Stage
Crisis
CrisisResolution
ResolutionStage
Stage Lingering
Lingeringon—perhaps
on—perhaps
Patient
Patientisiswell/
well/ indefinitely;
indefinitely;period
periodofofself-
self-
whole
wholeagain
again doubt;
doubt;self-analysis
self-analysis

Figure 6-8 8
 Pattern of a Poorly-Managed Crisis

 Early indications that trouble is brewing occur.

 Warnings are ignored / played down.
 Warnings build to a climax.
 Pressure mounts.
 Executives are often overwhelmed or can’t cope.
 Quick-fix alternatives look appealing. Hasty moves create
trouble.
 Clamming-up versus opening-up options present themselves.
 Most firms choose the former.
 A siege mentality prevails.

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 Managing Business Crises

Fink’s Three-Stage Model

1. Identifying the crisis

2. Isolating the crisis
3. Managing the crisis

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 Managing Business Crises

BusinessWeek’s Five Steps in Managing Crises

1. Identify areas of vulnerability

2. Develop a plan for dealing with threats
3. Form crisis teams
4. Simulate crisis drills
5. Learn from experience

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 Managing Business Crises

10R’s for Handling Public Policy Crises

 Respond early
 Recruit a credible spokesperson
 Reply truthfully
 Respect the opposition’s concerns
 Revisit the issue with follow-up
 Retreat early if it’s a loser
 Redouble efforts early if it’s a critical company issue
 Reply with visible top management
 Refuse to press for what is not good public policy
 Repeat the prior statement regularly

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 Managing Business Crises

Augustine’s Six Stages of Crisis Management

1. Avoiding the crisis

2. Preparing to manage the crisis
3. Recognizing the crisis
4. Containing the crisis
5. Resolving the crisis
6. Profiting from the crisis

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 Crisis Communications

1. Identify crisis communication team

2. Identify key spokespersons
3. Train your spokespersons
4. Establish communications protocols
5. Identify and know the audience
6. Anticipate crises
7. Assess the crisis situation
8. Identify key messages to communicate
9. Decide on communication methods
10. Be prepared to ride out the storm

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 Components of Crisis Plans

 Media communications
 Employee communications
 Crisis management team
 Communications with elected officials
 CEO / senior executive involvement
 Documentation / written policy / handbook
 Website communications

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 Be First, Be Right, Be Credible

Get
Getmessage
messageout
outfirst
firstto
tocontrol
control
Be
Be First
First content
contentand
andaccuracy
accuracy

Be
Be Right
Right Say
Sayand
anddo
dothe
theright
rightthing
thing

Be
Beopen,
open,honest,
honest,and
andspeak
speakwith
with
Be
Be Credible
Credible one
oneconsistent
consistentvoice
voice

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 Benefits of Crisis Management

 Fewer disruptions to every life for consumers,

employees, and citizens

 Preparing for one type of crisis may be beneficial

when other types of crises strike

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 Key Terms
 Prodromal crisis stage
 Acute crisis stage
 Chronic crisis stage
 Crisis resolution stage
 Crisis teams
 Crisis communications
 Ten steps of crisis
communication
 Being first
 Being right
 Being credible

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