Crisis management strategy Crisis management strategy (CMS) is corporate development strategy designed primarily to prevent crisis for follow-up company advancement. Thus, CMS is synthesis of strategic management. It includes projection of the future based on ongoing monitoring of business internal and external environment, as well as selection and implementation of crisis prevention strategy and operating management. This is including current status control based on ongoing monitoring of the internal and external environment, as well as crisis-coping strategy selection and implementation.
Crisis management model Successfully managing a crisis requires an understanding of how to handle a crisis – beginning with before they occur. Alan Hilburg speaks about a crisis arc. The arc consists of crisis avoidance, crisis mitigation and crisis recovery. Gonzalez-Herrero and Pratt found the different phases of Crisis Management. There are 3 phases in any crisis management as shown below • The diagnosis of the impending trouble or the danger signals. • Choosing appropriate Turnaround Strategy. • Implementation of the change process and its monitoring
Crisis management planning No corporation looks forward to facing a situation that causes a significant disruption to their business, especially one that stimulates extensive media coverage. Public scrutiny can result in a negative financial, political, legal and government impact. Crisis management planning deals with providing the best response to a crisis. With the growing threat of cyber attacks, "traditional information technology incident response plans often fail to consider the cross-organizational activities that need to be performed to remain resilient when a major cyber crisis occurs, resulting in a delayed, chaotic, unstructured, and fragmented response. A cyber crisis management plan is designed to reduce these risks through careful pre-planning; therefore, developing a cyber crisis management plan requires organizations to take a holistic approach to cyber crisis planning. By proactively acting to build a cyber crisis management plan, a broader, carefully considered, integrated and validated plan can be developed to meet an organization's unique demands before the crisis strikes."
Contingency planning Preparing contingency plans in advance, as part of a crisis-management plan, is the first step to ensuring an organization is appropriately prepared for a crisis. Crisis-management teams can rehearse a
crisis plan by developing a simulated scenario to use as a drill. The plan should clearly stipulate that the only people to speak to publicly about the crisis are the designated persons, such as the company spokesperson or crisis team members. Ideally it should be one spokesperson who can be available on call at any time. Cooperation with media is crucial in crisis situation, assure that all questions are answered on time and information on what was done to resolve the situation is provided. The first hours after a crisis breaks are the most crucial, so working with speed and efficiency is important, and the plan should indicate how quickly each function should be performed. When preparing to offer a statement externally as well as internally, information should be accurate and transparent. Providing incorrect or manipulated information has a tendency to backfire and will greatly exacerbate the situation. The contingency plan should contain information and guidance that will help decision makers to consider not only the short-term consequences, but the long-term effects of every decision. This part of the planning should be conducted in the earliest stages, and is part of a business impact analysis phase that will signpost "How much does the organization stand to lose?" (Osborne, 2007). Practical Business Continuity Management. Business Management: Top tips for effective, real-world Business Continuity Management). Each critical function and or/process must have its own contingency plan in the event that one of the functions/processes ceases or fails, then the business/organization is more resilient, which in itself provides a mechanism to lessen the possibility of having to invoke recovery plans (Osborne, 2007). Testing these contingency plans by rehearsing the required actions in a simulation will allow those involved to become more acutely aware of the possibility of a crisis. As a result, and in the event of an actual crisis, the team members will act more quickly and effectively. Following a simulation exercise, a thorough and systematic debriefing must be conducted as a key component of any crisis simulation. The purpose of this is to create a link and draw lessons from the reality of the simulated representation and the reality of the real world. The whole process relating to business continuity planning should be periodically reviewed to identify any number of changes that may invalidate the current plan.
Structural-functional systems theory Providing information to an organization in a time of crisis is critical to effective crisis management. Structural-functional systems theory addresses the intricacies of information networks and levels of command making up organizational communication. The structural-functional theory identifies information flow in organizations as "networks" made up of members ". Information in organizations flow in patterns called networks.
Diffusion of innovation theory Another theory that can be applied to the sharing of information is diffusion of innovation theory. Developed by
Everett Rogers, the theory describes how innovation is disseminated and communicated through certain channels over a period of time. Diffusion of innovation in communication occurs when an individual communicates a new idea to one or several others. At its most elementary form, the process involves: (1) an innovation, (2) an individual or other unit of adoption that has knowledge of or experience with using the innovation, (3) another individual or other unit that does not yet have knowledge of the innovation, and (4) a communication channel connecting the two units. A communication channel is the means by which messages get from one individual to another.
Role of apologies in crisis management There has been debate about the role of apologies in crisis management, and some argue that apology opens an organization up for possible legal consequences. "However some evidence indicates that compensation and sympathy, two less expensive strategies, are as effective as an apology in shaping people's perceptions of the organization taking responsibility for the crisis because these strategies focus on the victims' needs. The sympathy response expresses concern for victims while compensation offers victims something to offset the suffering."
Crisis leadership James identifies five leadership competencies which facilitate organizational restructuring during and after a crisis. • Building an environment of trust • Reforming the organization's 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 leadership research concludes that leadership action in crisis reflects the competency of an organization, because the test of crisis demonstrates how well the institution's leadership structure serves the organization's goals and withstands crisis.
Unequal human capital theory James postulates that organizational crisis can result from discrimination lawsuits. James's theory of unequal
human capital and
social position derives from economic theories of human and social capital concluding that minority employees receive fewer organizational rewards than those with access to executive management. In a recent study of managers in a
Fortune 500 company, race was found to be a predictor of promotion opportunity or lack thereof. Thus, discrimination lawsuits can invite negative stakeholder reaction, damage the company's reputation, and threaten corporate survival.
Social media and crisis management Social media has accelerated the speed that information about a crisis can spread. The viral effect of social networks such as Twitter means that stakeholders can break news faster than traditional media – making managing a crisis harder. This can be mitigated by having the right training and policy in place as well as the right social media monitoring tools to detect signs of a crisis breaking. Social media also gives crisis management teams access to real-time information about how a crisis is impacting stakeholder sentiment and the issues that are of most concern to them. The advent of social media changed the field of crisis management dramatically, empowering stakeholders and making organisations more accountable for their actions. By creating a platform for
two-way symmetrical communication between an organisation and its stakeholders, social media facilitated a rise in organisational crises, allowing for stakeholders anywhere in the world – providing they have an internet connection – to communicate publicly with organisations. The publishing unfavourable behaviour on social media, combined with the immense speed that information can be shared online, created a need for social media strategy to be included within the crisis management planning process. Stakeholders expect organisations to respond quickly and effectively to crises that transpire online. Organisations should have a planned approach to releasing information to the media in the event of a crisis. A media reaction plan should include a company media representative as part of the Crisis Management Team (CMT). Since there is always a degree of unpredictability during a crisis, it is best that all CMT members understand how to deal with the media and be prepared to do so, should they be thrust into such a situation. In 2010,
Procter & Gamble Co called reports that its new Pampers with Dry Max caused rashes and other skin irritations "completely false" as it aimed to contain a public relations threat to its biggest diaper innovation in 25 years. A Facebook group called "Pampers bring back the OLD CRUISERS/SWADDLERS" rose to over 4,500 members. Pampers denied the allegation and stated that only two complaints had been received for every one million diapers sold. Pampers quickly reached out to people expressing their concerns via social media, Pampers even held a summit with four influential "mommy bloggers", to help dispel the rumour. Pampers acted quickly and decisively to an emerging crisis, before competitors and critics alike could fuel the fire further. ==Examples of crisis management==