Crisis Management

Crisis management is the method by which a company or organization responds and handles a major event that threatens to harm the company, its stakeholders and sometimes even the public at large. Crisis management has become an important component of managing a business. No business is immune to crises. A crisis can strike a business or organization in the shape of a terrorist attack, product recall or natural disaster. Crisis management is closely allied to public relations, since the company's image and pride is at stake.

Crisis management is an integral part of any organization. Failure to manage a crisis could result in a major disaster for stakeholders, losses for the organization and at worst the end of its existence. Public relations professionals are a critical part of crisis management, for their expertise in knowing how to put the right spin on a bad situation.

A crisis can be defined as a major threat to an operation that can result in harmful consequences if not correctly handled. In crisis management, a major threat is the damage a crisis can potentially cause the organization. A crisis can lead to three related threats: public safety, financial loss and loss of reputation. Some industrial accidents and defective products can cause injuries or even death. Crises can lead to financial losses by the disruption of operations, which can create a reduction of market share or lawsuits. A crisis can reflect badly on an organization and damage its reputation.

Crisis management is divided into three phases: pre-crisis, crisis response and post-crisis. The pre-crisis phase concerns prevention and preparation. The crisis response is when management must face and address the crisis. The phase after the crisis examines possibilities in order to be better prepared for any further crisis and to fulfill all promises made during the crisis phase including pertinent information about future developments.

Prevention and preparation involve looking to diminish all known risks that can lead to a crisis; this is part of an organization's risk management program. Prevention involves the creation of a risk management plan along with the selection and training of the crisis management team. Exercises must be done to test the crisis management team and crisis management plan. Organizations are more ready to cope with a crisis when these four steps are in place:

1. Update the crisis management plan at least once every year.

2. Designate a team specifically for crisis management.

3. Practice exercises to test the plan and team at least once a year.

4. Have pre-drafted crisis messages ready.

The crisis response is what management does and says after the crisis hits. Public relations plays a very critical role in the crisis response by helping develop the right message. The guidelines for the initial response are to be quick, be accurate and be consistent. "Be quick" seems rather simple; provide a response in the first hour after the crisis occurs. However, that places a lot of pressure on the team to have a message ready in a short period of time. "Be accurate" means that the team must provide the public with information that is accurate and without contradictions. When a crisis happens, people want to know exactly what occurred, and if the information is not accurate it gives people and the media an opportunity to attack the company. A quick and accurate response suggests that the organization has gained control of the situation.

Speaking with one voice does not necessarily mean that only one person speaks. It is physically impossible to expect one person to constantly speak for the organization. The crisis team must share information to ensure that all the information given is consistent. The focus during a crisis should be on the information and not on how to handle the media.

In the post- crisis phase, the company or organization is returning to normal. The crisis is no longer the focal point but it still requires attention. During the crisis, managers usually promise the public additional information; now is the time to deliver on that promise. During this phase, the organization must release updates on the recovery process and any corrective actions they are undertaking. The amount of follow-up information depends on what promises were made.

With a successful crisis management team, a company or organization can hope to get out of a crisis with the least amount of damage and get back on its feet in the shortest period of time.

Crisis Management: Selected full-text books and articles

Public Relations: Theory and Practice By Jane Johnston; Clara Zawawi Allen & Unwin, 2009 (3rd edition)
Librarian’s tip: Chap. 11 "Risk, Issus, Crisis and Recovery"
Crisis Communications Management 2.0: Organizational Principles to Manage Crisis in an Online World.1 By Gonzalez-Herrero, Alfonso; Smith, Suzanne Organization Development Journal, Vol. 28, No. 1, Spring 2010
Reshaping Crisis Management: The Challenge for Organizational Design By Jaques, Tony Organization Development Journal, Vol. 28, No. 1, Spring 2010
The Crisis Manager: Facing Risk and Responsibility By Otto Lerbinger Lawrence Erlbaum Associates, 1997
Business Continuity Management: A Crisis Management Approach By Dominic Elliott; Ethné Swartz; Brahim Herbane Routledge, 2002
The Paradoxical Nature of Crisis By Nathan, Maria Review of Business, Vol. 21, No. 3, Fall 2000
PEER-REVIEWED PERIODICAL
Peer-reviewed publications on Questia are publications containing articles which were subject to evaluation for accuracy and substance by professional peers of the article's author(s).
Timing Is Everything: The Optimal Time to Learn from Crises By Kovoor-Misra, Sarah; Nathan, Maria Review of Business, Vol. 21, No. 3, Fall 2000
PEER-REVIEWED PERIODICAL
Peer-reviewed publications on Questia are publications containing articles which were subject to evaluation for accuracy and substance by professional peers of the article's author(s).
Communication and Organizational Crisis By Matthew W. Seeger; Timothy L. Sellnow; Robert R. Ulmer Praeger, 2003
Librarian’s tip: Part III "Crisis Management Functions"
A New Archetype for Competitive Intelligence By John J. McGonagle Jr.; Carolyn M. Vella Quorum Books, 1996
Librarian’s tip: Chap. 8 "Crisis Management"
Designing Post-Crisis Messages: Lessons for Crisis Response Strategies By Coombs, W. Timothy Review of Business, Vol. 21, No. 3, Fall 2000
PEER-REVIEWED PERIODICAL
Peer-reviewed publications on Questia are publications containing articles which were subject to evaluation for accuracy and substance by professional peers of the article's author(s).
Crisis Communications: A Casebook Approach By Kathleen Fearn-Banks Lawrence Erlbaum Associates, 2002 (2nd edition)
Librarian’s tip: Chap. Five "Managing a Crisis"
Corporate Reputation and Competitiveness By Gary Davies; Rosa Chun; Rui Vinhas Da Silva; Stuart Roper Routledge, 2003
Librarian’s tip: Chap. 5 "Defending a Reputation"
Crisis Management in the Midst of Labor Strife: Preparing for the Worst By Crandall, William; Menefee, Michael L SAM Advanced Management Journal, Vol. 61, No. 1, Winter 1996
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