CRISIS MANAGEMENT

Key issues

Crisis Management
Crisis management is the process by which an organization
deals with a major unpredictable event that threatens to harm
the organization, its stakeholders, or the general public

Elements of a Crisis

Three elements are common to most definitions of crisis:

a threat to the organization,
the element of surprise
a short decision time
a need for change

Crisis management - 1
Crisis management consists of:
Methods used to respond to both the reality and perception of
crises
Establishing metrics to define what scenarios constitute a crisis
and should consequently trigger the necessary response
mechanisms.
Communication that occurs within the response phase of
emergency management scenarios

Crisis Management - 2

The credibility and reputation of organizations is heavily

influenced by the perception of their responses during crisis
situations

Crisis Management - 3

respond to a crisis in a timely fashion makes for a challenge in

businesses.
must be open and consistent communication throughout the
hierarchy to contribute to a successful crisis communication
process.

Types of Crises

Natural disasters
Malevolence
Technical breakdowns
Human breakdowns
Challenges
Mega-damage
Organizational misdeeds
Workplace violence
Rumors
Terrorist attacks/man-made disasters

Crisis Management
Crisis management model - Gonzalez-Herrero and Pratt
Successfully diffusing a crisis requires an understanding of how
to handle a crisis before it occurs
planning-prevention (crisis avoidance)
Crisis mitigation
post-crisis (crisis recovery)

Contingency Planning

Plan in advance
Rehearse via simulation
Stipulate who the spokesperson is
Speed and efficiency in response to crisis
Offer accurate information or it will backfire
Plan offers info and guidance to help decision makers deal with
long-term effects of decisions

Business continuity planning

crisis will undoubtedly cause a significant disruption to an

organization, a business continuity plan can help minimize the
disruption.
Identify the critical functions and processes.
Each critical function and or/process must have its own
contingency plan.

Role of apologies in crisis

management
Controversial - for fear of legal outcomes
Evidence says that a compensation and sympathy are
effective
True contrition includes sympathy for victims and offers of
compensation to offset losses or suffering

Crisis leadership
Building an environment of trust
Reforming the organizations mindset
Identifying obvious and obscure vulnerabilities of the
organization
Making wise and rapid decisions as well as taking courageous
action
Learning from crisis to effect change

Crisis management team

The role of the Crisis Management Team (CMT) within a business
is a straightforward management process.
It should:
Establish what has happened
Assess the impact
Resolve any conflicts of interest
Identify and prioritize actions required
Retain control

Responsibilities of Crisis management team

Prevention and to be normal again.

To minimize losses
To encase any opportunities
Survival
Successful outcomes
(and they all must be trained that how to cope with crisis
situations)

TOYOTA
Basic Rules Violated
For senior mgmt: crises must become their #1 priority
immediately.
Integrity of firm threatened - immediate hands-on control of
CEO/team
Sticking accelerators in 2008 - not treated as a serious matter

TOYOTA
Basic Rules violated
Find facts & solutions fast:
Toyota managers at first in denial
accepted a patch (remove floor mats), not solution
when crisis exploded -- engineering solution/stopped production
Even today no one outside of Toyota knows what the real
problems are open to speculation and rumors

TOYOTA
Basic rules violated
Communicate fully and accurately:
to all constituents to sustain trust
Error on side of protecting consumers & maintain trust with a
recall
What Toyota did:
hushed problem and hoped it go away