Reshaping Crisis Management: The Challenge for Organizational Design

Article excerpt

Abstract

A new approach to crisis management is emerging which progresses beyond a purely reactive response and creates fresh opportunities for improved organizational development. This paper outlines the traditional event approach to crisis management, which focuses on preparing for and responding to a major adverse occurrence, and discusses the new process approach, which reshapes crisis management within a broader continuum of management activity. Crisis prevention instead of just crisis response necessitates moving responsibility from the operational to the executive level. The paper builds on a nonlinear model to explore how crisis management activities can be clustered together and integrated to optimize organizational effectiveness.

Introduction

Virtually nothing can damage organizational reputation and financial performance more rapidly and more deeply than the impact of a major crisis. Yet many organizations continue to delegate responsibility for crisis management to operational middle managers, while reputation management increasingly secures a place at the executive table.

However, a significant trend in crisis management is now emerging which has the potential to reshape the discipline with substantial implications for the development of organizational structure and design. This trend is the advance of proactive crisis prevention as opposed to reactive crisis response, which brings with it more comprehensive parameters of what should be recognized as integral elements of crisis management within a broader continuum of management activities.

In order to properly understand the emerging shape of crisis management it is essential to appreciate the longer term evolution of the discipline. It is also important to recognize that in the present discussion the term crisis is used to refer primarily to organizational crises - where particular organizations or groups of organizations are specifically impacted. This discussion is not intended to focus on societal crises - including natural disasters such as earthquakes, hurricanes, forest fires or even climate change - where individual organizations may be affected but only as part of broader community or national impact.

The British scholar Denis Smith observed in 2005: "The definition of crisis has generated considerable debate within the academic literature and there is no real collective acceptance about the precise meaning of the term" (p. 319).

Yet there is a good deal of academic and practitioner support for the broad concept of a crisis fundamentally as a low probability and highly damaging occurrence. A frequently cited descriptive definition is that developed by Pearson and Clair (1998): "An organizational crisis is a 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" (p. 60).

The event approach

The traditional approach, which regards a crisis as an adverse event, has been present since organizational crisis management first appeared as a fully recognized independent discipline in the United States after the Tylenol poisoning on 1982 (Heath & Palenchar, 2009) and in Europe following the Chernobyl crisis of 1986 (Falkheimer & Heide, 2006).

This so-called event approach led to a very logical conceptualization of crisis management as a largely tactical activity focused on incident response - what to do when a crisis occurs and how to prepare for it in case it happens. Such functional activities are critically important for successful organizational crisis response and recovery and the event approach retains widespread support, for example: "A crisis is a sudden and unexpected event that threatens to disrupt an organization's operations and poses both a financial and reputations threat" (Coombs, 2007, p. 164) or "A crisis is an unplanned (but not necessarily unexpected) event that calls for real time high level strategic decisions in circumstances where making the wrong decisions, or not responding quickly or proactively enough, could seriously harm the organization" (Davies, 2005, p. …