Crisis Management - Research Paper Example

? Crisis Management Executive Summary The study targeted to accomplish a comprehensive understanding of organizational crisis management as well as the implication of the development of crisis management plans and communication strategies in order to tackle potential crisis. The study discusses the crisis that had engulfed Apple Inc. owing to the departure of Steve Jobs. The study conferred on the response initiatives and strategies employed by Apple Inc while managing the organizational crisis. The study also discusses the public relation and crisis communication strategy adopted by the management of Apple while responding to the crisis. The study focuses on the development of the crisis management policies of Apple Inc. The study conclusively provided recommendations to improve the crisis management and crisis communication strategies of Apple Inc. Table of Contents 1 3 Overview 4 Crisis Management 4 Identification of Potential Crisis and the Crisis Management Plan 5 Cases of Organizational Crisis Management 6 Company Background 7 Crisis Management in Apple 8 Identification and Response of Crisis 8 Public Relation & Crisis Management Plan 9 Recommendations and Conclusion 10 Works Cited 11 Overview The management of a crisis in an organization entails deterrence, planning, examination, assessment and maintenance to lessen the negative outcomes of the crisis. The procedure employed by an organization determines the consequences for those impacted by the crisis, counting customers and society, in addition to the employees and the organization as a whole (American Institute of Chemical Engineers, “Corporate Crisis Management”).  In this context, a crisis can be termed as any natural, inadvertent or deliberate incident that rigorously affects people, possessions, and/or the surroundings. The effects of a crisis might consist of losses, injuries, considerable obliteration or contamination, or endanger and make vulnerable the company’s repute or its products. Thus, the consequences of a crisis can challenge a company’s status or its sustained existence. The cost of crisis is generally found to be non-reliant on the size of the organization, quality of its management, the business or place (American Institute of Chemical Engineers, “Corporate Crisis Management”).  The study comprises of a comprehensive assessment of organizational crisis management, identification of potential crisis in an organization and the significance of the development of crisis management plans in order to tackle further crisis. This study focuses on the development of the crisis management policies of Apple Inc. The study accentuates on the crisis that had engulfed Apple Inc. due to the departure of Steve Jobs. The study discusses how fast Apple reacted to their latest crisis and how did the company intervene to lessen the damage. The study also discusses the public relation strategy implemented by Apple while responding to the crisis. The study finally offers recommendations for the crisis management and crisis communication policies of Apple Inc. Crisis Management Researchers have described an organizational crisis as a significant unexpected incidence (King, “Crisis Management & Team Effectiveness: A Closer Examination”) with a possible negative result (Schrivastava, “Crisis Theory/Practice: Towards a Sustainable Future”) that challenges the endurance of the business organization (Fearn-Banks, K., “Crisis Communication: A Casebook Approach”; Fink, S., “Crisis Management: Planning for the Inevitable”) by effecting the domestic or external configuration (Pearson & Clair, “Crisis Theory/Practice: Towards a Sustainable Future”, Loosemore & Teo, “Crisis Preparedness of Construction Companies”), or by impacting the legality of the business. Several authors have attenuated that a crisis is not a daily occurrence, but an unforeseen and unanticipated, low possibility incidence that requires or necessitates quick and effective decisions (Platz & Madsen, “Crisis Management in IT Projects”; Pearson & Claire, “Crisis Theory/Practice: Towards a Sustainable Future”; Fink, S., “Crisis Management: Planning for the Inevitable”). Technology and rapidly altering intimidations challenge the planning and the groundwork required to manage circumstances that may have an effect on a company’s future. There has to be an overall contingency plan to tackle organizational crisis, and the major constituent of such a plan should be diminishing hazards by appliance of process protection management equipments as well as security arrangements. However, the mere outlining of a response or contingency plan that makes the organization ready for naturally, fortuitously, or deliberately caused adversity or crisis circumstance is not enough. It is important for organizations to be prepared to make financial arrangements for and procure the essential resources to make the response plan effective. The company has to build a suitable organizational structure to efficiently handle the crisis and effectively alleviate the consequences. Furthermore, it is imperative that an organization makes sure that its employees practice the crisis management plan (American Institute of Chemical Engineers, “Corporate Crisis Management”).  Training as well as continuation of the contingency plan is decisive to make sure that all the concerned members of the organization be aware of who makes the judgment, how the resolutions are executed, and the tasks and functions of the members. The employees occupied in handling a crisis of their organization must be allocated their responsibilities and they should be able to act in response without delay and efficiently. Identification of Potential Crisis and the Crisis Management Plan The objective of crisis management is to gain a comprehensive understanding of the mechanics of the crises into, the management of the crisis in the diverse stages and the detection of possible generic crisis. Over the years, several frameworks have been developed for handing the organizational crisis. The five phase model (Mitroff, “Crisis Management: Cutting through the Confusion”) and the diagnostic model (Loosemore & Teo “Crisis Preparedness of Construction Companies”) are two renowned models for organizational crisis. The five phase model designed by Mitroff, categorizes the lifecycle of a crisis into five different stages. These stages are Signal detection stage, Prevention stage, Containment stage, Revival stage and finally the Learning stage. Each of these stages is important, and the efficient handling of the circumstances in every stage of the crisis enhances the likelihood of success in overcoming the crisis. The diagnostic model employs a more analytical or investigative approach in the handling of the organizational crisis. The model focuses on the identification of the cause as well as the stage of the crisis the company is in (Mitroff, “Crisis Management: Cutting through the Confusion”; Loosemore & Teo “Crisis Preparedness of Construction Companies”). Several scholars have suggested that there are no distinctive crises facing an organization and generally the potential crises of a company are similar to that of its peers in the same industry. Nevertheless, the scholars have also accentuated that there is no such thing as a ‘routine crisis’ and hence organizations are required to be always prepared for possible crisis that might engulf them (Augustine, “Managing the crisis you tried to prevent”; Dubrovski, “Peculiarities of managing a company in crisis”). Hence, it is essential that every company has its crisis management plan in position. A Crisis Management Process illustrates a sequence of interconnected practices and activities that would aid in the generation, testing, and preservation of a company-wide plan for utilization in the occurrence of a crisis that intimidates the feasibility and stability of the business. The crisis management policies of an organization should comprise of three main components. The foremost component of an organization’s crisis management policy is the planning process that includes of the anticipation, preparation and the administration of the crisis. The crisis management plan should comprise of team organization, responsibility allocation, notification, and the data and measures required to deal with a crisis. The second component of the crisis management policy is the effective execution of the process to control a crisis with the tools identified in the planning process. The final component of the crisis management strategy should be the appropriate training of the employees, particularly the crisis management team, in addition to the continuation of an effectual crisis management plan (American Institute of Chemical Engineers, “Corporate Crisis Management”).  For ensuring the effectiveness of its crisis management strategy, an organization should take into account three objectives. These objectives are ascertaining an effectual preliminary response, upholding the response all through the crisis, and attempting to reduce the internal as well as external aftershocks by means of the appropriate administration of the concerned elements. (ioMosaic Corporation, “Corporate Management of a Major Crisis”). Cases of Organizational Crisis Management A crisis can have an effect on a company’s feasibility, credibility and repute. It has been observed in many instances that communication can conserve and guard the priceless repute of an organization. This is because by signifying recognition of liability for the crisis and concentrating on the concerns of victims by means of effectual communication, organizations have been able to effectively manage their crisis. In many cases organizations have to encounter a major crisis during the transition of authority from one CEO to another, owing to the unexpected demise or of the stepping down of the former. For instance, in the year 2009, when the founder and CEO of Rogers Communications expired, the company faced the challenge of choosing his successor. The Board of Directors of Rogers Communications pursued a widespread internal as well as external search, and finally decided on Nadir Mohamed, who was the President as well as the COO of Rogers Communications segment. He was the undisputed choice of the entire board of Rogers Communications Inc. Subsequently, the company formally announced his appointment as the CEO, which was readily welcomed by the employees and the investment community as a whole (Rogers, “Rogers Communications Names Nadir Mohamed as Chief Executive Officer”). Microsoft also faced a similar crisis in 2000 when its CEO Bill Gates decided to step down as the CEO of the company and stay merely as Microsoft’s Chairman. Steve Ballmer, who had headed quite a few divisions of Microsoft, was announced as the CEO of the company (Bloomberg Businessweek, “Ballmer’s Microsoft”). In an analogous context, in January 2011, Eric Schmidt, the CEO of Google announced Larry Page as his successor. Previously, Eric Schmidt and the co-founders of Google, Larry Page and Sergy Brin made decisions collectively. Eric Schmidt had effectively communicated the news of his step down, citing that the elucidation of individual roles of the three founders would generate clearer accountability and dependability in the management of Google. The company announced that Larry Page would take over as the CEO, and Eric Schmidt would be the Executive Chairman, while Sergy Brin would assume a more dynamic function in Google’s strategic projects (Guardian, “Google Announces Surprise Shakeup As Larry Page Takes On CEO Role”). Company Background Apple is a consumer electronics manufacturing company which was established by Steve Jobs, Steve Wozniak and Ronald Wayne. The operation of Apple is expanded throughout the world. Apple is famous for its innovative products in computers and other electronic devices. The company manufactures several products, applications for educational, business and entertainment purposes. With the death of Steve Jobs, the company has lost an idealistic and innovative genius. In the life span of Steve Jobs, Apple has given the world several pioneering products and transformed the industry. Today the brand is known as ‘innovation center’ in the industry (Kane & Fowler, “Steven Paul Jobs, 1955-2011”). Crisis Management in Apple Every organization must develop a crisis management plan in order to deal with emergency conditions which can hamper the performance of company. The emergency situation in any organization can arise in several forms, such as, technical problems, financial problems, employee related problems, production problems or problems due to death of certain person who is significant for the company such as innovator, or CEO. The death of Steve Jobs is a big crisis for Apple, as he was a talented innovator who had contributed much for the survival of the company. Death of any big contributor or significant person is critical issue for a company, but it must not hamper the operations of company in the long-term. When a person has an enormous influence on the success of an organization such as Steve Jobs on Apple, there is need to develop a crisis management plan regarding who will guide the organization ahead, deal with the turmoil and fluctuations of business condition in future, maintaining the employees loyalty towards the organization and keep good customer relation among others. It is great challenge for Apple to decide who will be liable for driving improvement in the company after Steve Jobs. Alleviating those extreme situations needs a good crisis management strategy. Identification and Response of Crisis Apple does not intend to respond to the crisis quickly, rather it prefers to move slowly and manage the problems cautiously. The company does not make any urgent movement because it does not want to make any mistake in dealing with emergency situation so that it can solve problems correctly at the first turn. The response of Apple in any kind of uncertainties is slow. But at times there is need to take quick action to manage crisis for the welfare of stakeholders. According to investigators, Apple had delayed a whole week for dealing with the ‘location data collection’ problem in the operating system of their device. Besides Apple, Sony also follows the slow response strategy to deal with the crisis (Snell, “Apple's Unique Brand of Crisis Management”). In the case of Steve Jobs, Apple had shown less concern for crisis management plan. The company had frequently avoided any kind of media interrogations and only responded to the inquiries regarding Steve Jobs’ heath condition when required. These activities of Apple made the stakeholders anxious and it also impacted on the performance of the company. For example, when Steve Jobs had taken leave from Apple, it had generated anxiety in the mind of the financiers and customers because the company was confronting immense competition from the rivals such as Microsoft and Google. It also raised certain uncertainties whether he will return to the company or not and as a result, the shares of the company had dropped immediately by 7.6% in the year 2011. Due to the management system of Apple to preserve the health related information of Steve Jobs secret, it had faced several blames from the shareholders who opposed that the organization has a responsibility to be more transparent with critical information (Helft, “Jobs Takes Sick Leave at Apple Again, Stirring Questions”). Public Relation & Crisis Management Plan Progression of leadership is an ordinary part of the growth of any organization. As Apple had recently lost an important leader, this can certainly impact on the public relation. In order to manage the crisis of public relation graciously and effectively due to death of Steve Jobs, Apple should take several planned moves. It is likely that a company experience leadership sequence numerous times in the lifecycle. A crisis concerning the CEO can swiftly cause in long-term loss to the productivity and share price of an organization if it does not react promptly and efficiently. Death of CEO can lead to withdrawal of other directors or crucial personnel and a subsequent disorder in the organization. Researchers suggest that, loss of CEO is directly related to the performance of organization unless organization allocates new CEO quickly. Besides, the performance of organization is mostly reliant on the ground rules during crisis (Foley & Lardner LLP, “Succession Planning and Crisis Management”). Execution of plan In order to deal with the crisis, Apple needs to develop an effective plan quickly to locate the leadership position of Steve Jobs. Organization’s employees need to be guaranteed that the board has planned and is well equipped to deal with the crisis. Naming the new CEO and provisional CEO can help to get the confidence of shareholders that the company has not become a ‘rudderless ship’. Apple needs to be very careful before selecting the new CEO and can progress with careful course of finding the right person to the position of Steve Jobs. Developing Team Apple needs to confirm that the CEO not only operates the business carefully but also develops a strong team which can become a possible replacement in the future. It is the objective of CEO to create a tough talented team (Foley & Lardner LLP, “Succession Planning and Crisis Management”). Developing List of Activities The other task for successful crisis management is to develop a list of activities that need to be accomplished and create plans to execute them. It is useful to consider certain vital criteria which are most significant for the organization as well as the stakeholders. Thinking through numerous situations can enable Apple to involve in valuable crisis prevention actions (Foley & Lardner LLP, “Succession Planning and Crisis Management”). Consider Crisis Due To Loss of Other Top Officials An effective crisis management plan always reflects on the loss of top officials besides CEO such as principal operating officers or financial officers among others which may lead to disorder in whole management team. Considering the lead director for the position of CEO is not always right, rather organization can decide on another board member who has good experience in managing difficult situations (Behan, “Emergency CEO Succession Planning”). Transparency Apple needs to express their plan as well as vision openly to the shareholders and needs to declare them that the company’s renowned inventiveness and course of business will not be hampered due to the death of Steve Jobs. The shareholders of Apple must be disclosed the vital information with respect financial condition of the company and other plans as they have devoted money on the company and have the right to identify about the rudder of Apple. In order to commence a crisis management plan Apple needs to let professional consultants to participate in the planning procedure. The services of public relation companies, policymaking professionals, and corporate advisors are more effectual and easier to implement if they participate in the practical planning procedure, and therefore have a deeper consideration of the culture of Apple (Foley & Lardner LLP, “Succession Planning and Crisis Management”). Recommendations and Conclusion There are certain public relations and crisis management ethics which must be followed by every organization, but Apple has not followed many of them. The major problem of Apple with respect to public relations is communication problem which can be seen in the antenna problem in iPhone4. Apple does not completely acknowledge any reports or problems to the public quickly which cause negative publicity about the brand. In case of any problem or issue there is need to provide a quick reaction or at least to recognize the problem. In order to maintain good public relations, Apple needs to assure customers and shareholders that they are fully investigating the issue in detail (BTH News, “Apple's Big Communications and PR Mistake”). In case of any crisis situation, Apple needs to communicate with the stakeholders by using most efficient channels. Apple can employ the 5Cs model of communication to maintain positive relations with the customers. The 5Cs model suggests that crisis management in any organization should satisfy five basic principles which are care, commitment, consistency, coherence and clarity (Howell & Miller, “Maple Leaf Foods: Crisis and Containment Case Study”). A successful crisis management calls for rapid response to the problem in a proactive manner. Every crisis cannot be avoided, but if an organization is equipped for it and maintain effective public relations then it can successfully rise up from the difficulties. Works Cited American Institute of Chemical Engineers, “Corporate Crisis Management”. November 19, 2011. Resources, 2005. Augustine, Norman. R. “Managing the crisis you tried to prevent”. (1995), Harvard Business Review. Behan, Beverly. “Emergency CEO Succession Planning”. November 19, 2011. Bloomberg L.P., 2008. BTH News, “Apple's Big Communications and PR Mistake”. November 19, 2011. Wireless Industry News, 2010. Bloomberg Businessweek, “Ballmer’s Microsoft”. November 21, 2011. Cover Story, 2002. Dubrovski, D. “Peculiarities Of Managing A Company In Crisis”. (2004), Total Quality Management, Vol. 15, 1199-1207. Ewing, Bob. “Maple Leaf Foods CEO Business Newsmaker of the Year”. November 19, 2011. Digital Journal. 2009. Fearn-Banks, Kathleen. Crisis Communication: A Casebook Approach. Taylor & Francis, 2010. Fink, Steven. Crisis Management: Planning for the Inevitable. IUniverse, 2000. Foley & Lardner LLP. “Succession Planning and Crisis Management”. November 19, 2011. National Directors Institute, 2008. Read More