Importance of Crisis Management Plan in Organizations - Research Paper Example

? Importance of Crisis Management Plan in Organizations Importance of Crisis Management Plan in Organizations Introduction It is important for all organizations to have some forms of crisis management to avoid considerable damage to the organization when there is an event that needs fast and effective action. In fact, all businesses face the situation at one time or another, though the nature of crisis will vary from organization to organization. Some common examples are threat of bankruptcy, computer system failure, a big industrial accident, defect of a manufactured product and its recall, sudden fall in the sales and so on. In fact, the senior management of an organization is the most affected when there is a crisis. It is for the management to ensure that suitable people are arranged in a proper fashion to deal with major problems that could affect the organization. In addition, it is necessary to ensure that even the crisis management plan reflects the company’s core values. Also, there should be properly defined methods to communicate with various stakeholders including clients and shareholders during a crisis. Admittedly, organizations can considerably improve their readiness to face crises by testing the methodologies they have developed. First of all, a suitable crisis management plan can make an organization strong enough to withstand potential threats and secondly, awareness about possible threats makes the organization able to take early action, thus resulting in reduced damages. Also, the development of a suitable crisis management plan will give the organization an upper hand over other poorly-prepared competitors. Moreover, effective communication at the time of crisis will make the public realize how the core values and beliefs helped the organization overcome the challenges, thus giving it a better public image. Some other benefits are that the plan restores critical business processes and systems in less time, reduces the length of the interruption process, minimizes reputation damage, maintains customer relations, protects assets, saves lives and reduces the chances for further injuries. The Action Checklist of Crisis Management The first step in crisis management involves developing an overall crisis management plan that does not significantly vary from the organization’s core values and beliefs. Thereafter, it is necessary to develop a crisis management team structure and define the roles and responsibilities of each personnel. In addition, it is necessary to define the lines of authority as absence of this may result in communication anarchies. Also, it is vital to ensure that during a crisis, appropriate action is taken to communicate with stakeholders. Lastly, it is vital to connect the crisis management with business recovery program. The purpose of crisis management Effective management of a crisis involves prevention, planning, testing, evaluation and maintenance. However, when a crisis management plan is developed, it is necessary to ensure that the plan restores critical business processes and systems, reduces the length of the interruption process, minimizes reputation damage, maintains customer relations, protects assets, saves lives and reduces the chances for further injuries. The planning process Successful crisis management involves planning, testing, evaluation and maintenance. In fact, successful risk management is a mix of sound organizational practices and the use of basic safety-related technology. So, the first stage is enhancing security to avoid the possibility of unintentional events. In order to identify the possible crises, it is necessary for organizations to develop a vulnerability assessment process. This will help the organization identify the probable threats and the need to make necessary changes. When assessment is conducted, it is necessary to include warning signs because before certain crisis, there is the possibility of certain warning signs. For example, erratic employee behavior can be the indication of a possible protest. Also, there can be warning signs for natural disasters and product contamination too. Once the crisis possibilities are assessed and maximum security measures are taken, it is time to prepare a crisis management plan. It is necessary for such a plan to address situations like an incident that involves extreme danger to life, an incident that may affect the general public safety and resources, an incident that requires the service and expertise of state or private organizations, and an incident that will create a lot of media and public interest. According to Lerbinger (1997), there are various kinds of crisis. They include natural crises, technological crises, confrontation crises, crises of malevolence, crises of skewed management practices, crises of deception, and crises of management misconduct. According to Lerbinger, there are many important aspects of a contingency plan. It is pointed out by him that the purpose of a contingency plan is to recognize and address the uncertainties and risks as possible. So, it is utmost important that such a contingency plan should remove confusion during a crisis by clearly outlining the response actions, communication procedures, and responsibilities. In addition, the plan should provide guidance to the personnel who deal with the crisis. Another vital thing is that the plan should provide guidelines to the personnel who communicate with key stakeholders and the media. Lastly, it should also indicate what additional resources and skills are available in the organization (p. 20). Establishing crisis thresholds Once the possibilities of crisis are assessed, it is time to establish crisis thresholds. It is necessary that for every contingency, there should be an established threshold. A threshold means a set of concrete signals or indicators that means that a crisis is on hand unless emergency measures are taken to avert it. Lerbinger (1997, p. 20) points out the fact that in Bhopal, India, it was lack of a well defined crisis threshold that resulted in the delay in communication with the local residents leading to large number of deaths. In Bhopal, the Union Carbide Company failed to warn the local people of the possible danger as methyl isocyanate was leaking. So, evidently, identifying signs or signals which are often mild, is very crucial to manage crisis. For example, there may be a number of customer complaints about the quality of a particular product. However, most of the time, such signals go unnoticed as no one in the organization is officially responsible to look into such indicators. So, it is very necessary to have someone in the organization who is assigned to alert the crisis management team of the organization when there is a perceived or observed threat. The Crisis Management Team The next thing is to have a crisis management team in an organization. This crisis management team should be a top-level team with the chief executive officer, senior operating officers, public relations officer, and the general counsel. In addition, depending on the nature of the crisis, financial officer, security director, director of environmental affairs, director of engineering, or director of human resources can also be included. Many organizations have a separate crisis communication center. For example, the USAir has a ‘situation room’ which is equipped with 25 phones to call families and friends of air crash victims. It is necessary to make the entire organization aware about the roles and relations of the crisis management team and its various task forces. It is important that the ones who face the media are given proper training on answering the queries. In order to train crisis management people, crisis simulations can be used effectively. This will also help in identifying the drawbacks and flaws of the existing system. Another important point is to have prior permission from governments to take the contingency plan measures when necessary. It is followed by identifying and listing the people who should be informed first when there is a crisis. This may include the people who should be informed to protect life and property, and employees, suppliers and distributors who are not at the crisis site. When there is a crisis, the possible audience with whom the crisis management team may communicate include employees, customers, contractors, boards of directors, media, government and regulatory agencies, local law enforcement, emergency responders, investors, and insurance companies. The things and equipments which are necessary for such a crisis command center are enlisted by the Corporate Crisis Management of the Center for Chemical Process Safety (2005). It is pointed out that such a crisis command center should be on UPS/backup power system. In addition, some other typical equipments required in the center include phones, cell phones, satellite phones, teleconferencing equipments, separate computer with internet and intranet access, laptop connections, printers, video teleconferencing, fax machine, photocopies, TV with satellite connection, key office supplies including pens, paper, and flip charts, LED projector, status board, clock, sign board, and if possible conference table, assigned work stations, and hardcopy backups of information (Corporate Crisis Management, 2005). Crisis management and communication with media Lerbinger (1997, p. 31) warns that every crisis will present the organization a rough trial by the media because it is the responsibility of media, being the society’s watchdog. The media is so strong that it decides how public view the crisis management measures by the organization. So, it is vital to ensure that the media is handled carefully. This is so because the damage caused by media to the public image of an organization is in no way less than the damage caused by the actual crisis. So, poor communication during a crisis is to have two crises at the same time. To illustrate, Lerbinger reports of a 1993 survey in which 95% of the customers of a company opined that they were more offended by the company’s lying about a crisis than by the actual crisis (p. 31). Another important point is that a proper crisis management plan enables the various spokespersons of the organization to speak in unity. This is so because if various people of an organization give various reasons for a crisis, it will certainly damage the public image of the organization. Hayes and Wooten (2005) speak about the various competencies which would enable a company to show ability during crisis. The first one among them is the creation of an environment of trust. It is followed by reforming an organization’s mindset. For example, the urge to promote the stakeholders’ interest may force an organization to take risky decisions. However, in such situations, the long term and broad needs of the organization should be taken into account and should be given priority than short term risky gains. The third competency, according to Hayes and Wooten, is identifying the visible and invisible vulnerabilities of the organization. The scholars report that 50% of all crises in organizations are the result of managements’ wrong actions. The last two competencies are taking rapid decision, and taking courageous decisions. According to the famous communication and management consultant Lukaszewski (cited in Nelson, 2011), it is easy to manage crisis. The strategies he suggests include stopping the production of victims, communication with internal people and stakeholders, informing the public who are likely to be affected, and managing the media. According to him, it is important for organizations to be ready to face contingencies. This readiness involves eliminating risks, and planning for risks. In the opinion of Alter (2011), there are three steps to be taken when things go wrong, or when there is a crisis. They are to prepare well in advance, to avoid overlooking signs, factors, and indicators, and the last one is to avoid delay in response when something goes wrong. Klein (2011) points out that in the business world, if something can go wrong, it will certainly go wrong at one time or another. So, it is clear that business is not supposed to deal with uncertainties. They should be prepared to face all the possible threats and emergencies. Conclusion In total, it becomes evident that having a well developed crisis management plan is very important for every organization. First of all, it helps reduce the risk of facing a crisis. Secondly, when there is a crisis, it helps reduce the damage caused by the crisis on the organization and on its stakeholders and the general public. In addition, it helps ensure that the organization’s relation with its stakeholders remain less affected. Also, a good crisis management plan ensures that the queries of the media are managed well, so that the public image of the organization remains less affected. Thus, in the long term, a good crisis management plan can improve the profitability and public image of an organization in a significant manner. References Alter, S.. (2011, May). “3 Steps to take when things go wrong”. Journal of Property Management. 76(3), 12. Retrieved July 4, 2011, from ABI/INFORM Global. (Document ID: 2372049511). ‘Corporate Crisis Management’. (2005). Center for Chemical Process Safety of American Institute of Chemical Institute Engineers. New York. pp. 14-15. Retrieved from http://www.aiche.org/uploadedFiles/CCPS/Resources/KnowledgeBase/CCPS%20CM%20Booklet_Rev_Dec%2013(1).pdf Hayes, E & Wooten, L. P. (2005). “Leadership as (Un) usual: How to display competence in times of crisis”. Organizational Dynamics. Elsevier, Inc, 34, (2), pp. 141-152. Klein, E. (2011, May 24). It can go wrong? It will go wrong. The Washington Post, p. A.16. Retrieved July 4, 2011, from ProQuest Newsstand. (Document ID: 2355763811).  Lerbinger, O. (1997). The crisis manager: Facing risk and responsibility. Mahwah, NJ: Erlbaum. Nelson, T. (June 26, 2011). He’ll manage crises but prefers to avert them. StarTribune business. Retrieved from http://www.startribune.com/business/124514733.html Read More