Management and Communication Crisis in the World Trade Organization - Research Paper Example

Management and communication crisis in world trade organization Name Subject Instructor Institution Date Abstract Crisis management is the overall organization effort to prevent and stabilize further damage to business facilities after occurrence of an unplanned event. It takes place at all business levels, starting with the executive management. It includes; initial efforts that entails all departments, such as; regulatory affairs, communication/public relations, human resource, environmental safety and health, corporate security, business unit, and legal. Crisis communication is a component of crisis management and includes all the business communication before, in the course, and after an event. This includes targeted communication to the employees, community, customers, regulatory agencies, board, shareholders, and those affected by occurrence of the situation. This paper elucidates the management and communication crisis in world trade organization. It further highlights a trading room damaged in the11th September attack on World Trade Center. Table of Contents Table of Contents 3 1 Introduction 4 2 The trading room prior to September 11th incidence 6 3 Recovery as innovation 7 4 Sense making in crisis 8 5 Overcoming crisis 12 5.1 Identities in practice 14 6 Conclusion 15 1 Introduction Crisis communication is a paramount facet in any organization, as it is involved in each event that takes place. Trends in crisis communication aim at having multidisciplinary team for both internal and external communication, which work together to pass message as noted by Brown and Duguid (2001, p.194). Quick reaction with the right response is the most challenging part in crisis communication management due to the fact that, behaviors precede communication. On the other hand, examining crisis dimension that can be recognized clearly by the executive helps public relation counselor to provide strategic and true meaningful advice. In this paper, the trading room damaged on 11th September attack on world trade center has been examined. The findings revealed by the crisis on technological tools and social practices have been analyzed. Indubitably, by basing research on ethnographic field prior to 11th September incidence, the findings indicate that, heterarchichal as opposed to the hierarchical organization in the trading room contributed significantly to innovation on a continuous base (Burke and Cary, 2000). By drawing subsequent observation on the relocated trading room and by group discussion with other world trade centre financial executives, it has been shown that heterarchichal features had a greater upper hand in responding to the crisis. Tolerance of multiple registers, laterally distributed intelligence, and interaction, gives generative structure where replicative redundancy in contingence planning confronts it limits. Firstly, the trading room was a major part of the international investment bank. The room location was in the World Financial Center, which was directly adjacent to World Trade Center. The evening of 11th September was a day when the management team regrouped in the business emergency facility located in New Jersey and, made estimation that operation be resumed. After six days, equity market was re-opened on 17th of September and they began trading again. The organization fast recovery is worth of concern and, the arising question is on what the crisis revealed about technological tools and social practices of trading. The extent of implication of the organization based on responsiveness and innovation for broader recovery is another aspect that needs to be investigated. Consequently, the trading room was destroyed by collapse of twin towers. The room computers, connections, data, and facilities were also destroyed. Traders survived the incidence but were forced to relocate to a makeshift trading rooms located in New Jersey. During the time when the traders were exiled from the city, they were faced with uncertainty and anxiety never experienced before due to inescapable sense of vulnerability, dramatic fissure lines in the organization, and the difficulties of the trading securities. After one year, however, the trading technology was restored, Wall Street office was returned to where it was and the original trader previously relocated to New Jersey were maintained in the organization. This paper unfolds the organization processes that made the traders cope with the extreme uncertainty that faced the organization and ensure survival of the organization is a key indicator of its recovery as asserted by Everest and Roy (2008). Confronting extreme uncertainty was not a surprise for the international security traders. Before September 11th incidence, the simplicity of International Securities was demonstrable by the capability not to simply cope with but literally thrive on volatility. The trading room was properly organized to exploit the uncertainty in the market. Pillars of the world trade center were destroyed by the terrorist attack, posing fundamental threat to the organization continuity. The number of traders at International Securities who survived was one hundred and sixty. The question was on whether these traders were able to restore the business to security. 2 The trading room prior to September 11th incidence Financial Center complexes and the World Trade Center could almost be thought as being one: traders at international securities used the lobby of the trade center as entrance in their daily commuting. They had to walk through coffee and boutiques shop below the twin tower, passed through West Street across elevated corridor to reach the financial center. During the rainy seasons, traders usually stepped out of subway to the trading room without being rained on. Trading strategies of quantitative traders at the international securities is different in blends and styles. Arbitrageurs at the International Securities are a representation of a cry from traditional Wall Street traders of 1980s, described by Tom Wolfe as the master of the universe. Arbitrage is a creative strategy for trading that hinges on possibility of security interpretation in many ways producing profits by using previously disparate markets as stipulated by Pijl and Libby (2004, p. 324). Arbitrageurs associate markets to two merging companies stocks when merger make company value shortly comparable. They may also associate stock of two companies with the same index that move similarly; or bond and stock of the same company with its value associated to legal clause, which makes the stock and bond convertible. In every case, the point is to avoid conventional route in company valuation by intrinsic value. Arbitrage trade reach out and link the value to other previously unidentified security. Two securities used together have to be similar to hedge exposure, but should be different enough to make sure that other traders have yet to see them to avoid resemblance. Each trade is thus, never exact as the previous one. Hence, whereas momentum trading is extrinsic and trading value is essentialist, arbitrage is associational (Beunza and Stark 2004). 3 Recovery as innovation Recovering in culminates, spontaneity and the redundancy of a given self-organization as noted by Bagli (2002). The firms under the world trade organization had backed up their data on two off sites location at Atlantic and across the river. Apparently, any occurring crisis presents a challenge to the technology problems. The interface between the humans and the technology presents a social interface. This is because, the knowledge used in accessing the coded systems was indeed uncodified. The trading room was purposefully built for financial uncertainty management. The room was equipped to meet all challenges in recognizing opportunities and for making innovative association. Every desk was organized around different distinctive evaluation principle with corresponding cognitive metrics, frames, specialized instrumentation, and optic important for pattern recognition. Thus, trading room entailed diverse principle of valuation. Interaction across this heterogeneity generated innovation to manage crisis faced. Trading room managers promoted crucial business synergies by developing risk taking among traders and, by developing trust through human resource policies putting people first. The manager replaced subjective annual bonus, which is an infamous tradition in the Wall Street, with objective system bonus preventing traders from feeling undervalued, when there is decrease in profits for reason beyond economic cycle control. The manager made a subtle change in the arrangement of the seats so that; the traders do not always sit next to the same persons but would provide an environment of getting to know each other. Instead of staying in a closed office, the manager sat near the centre of the room in order to reduce status differences that would promote notion of open communication, which is the recommended strategic position (Marshall, 2006). Wall-less and table-less corner of the trading room surrounded by whiteboard was meant to serve as conference fast-turnover room where traders in different desk could be able to exchange their own perspective without exposing themselves to the risk of being trapped in corporate style and interminable meeting. Trading had organized diversity and distributed intelligence. Workplace culture resulting from highly localized proximity resource faced by the trader profitably exploited uncertainties and risk in the market. According to Gibb and Buchanan (2006, p.135), heterarchichal organizational form is proved resource that has ability of coping with difficult risk and uncertainties that were created by World Trade Centre Attack. 4 Sense making in crisis The attack on the trading room had an effect of fear and shock well captured by Stoldt and Stephen (2006). cosmological event notion. Destruction that happened on the twin tower caused an ontological crisis where basic law of matter seemed to be violated. It is expected that trees have the possibility of falling, chairs have possibility of tripping over, but it is against expectation that building such as world trade center would quickly vanish. Unlike financial crisis and technological change, cosmological events are not fully captured by uncertainty notion, even in the event extreme form. The pressing question is on career, safety, and the well-being characterizing, the environment on the wake of this attack, happening in the trading room in New Jersey as asserted by Knorr and Bruegger (2002, p.905-907). Characteristic of this questions were present in the form of repeated disaster images, mourning for the love ones and friends and worry from anthrax attack by CNN monitor news. Traders required some emotional isolation from these concerns. Social-psychological contours on the attack of 11th September crisis called for limit to the organization’s exposure various environmental uncertainty and ensuring that condition that, would help the organization recover were promoted to enable it to overcome various crisis (Hancock, 2008. In his discussion, Sorkin and Zukin (2002) retell the extraordinary of a military unit in a crisis that survived due to the removal of unwarranted resolve of a map not corresponding to the actual territory that they faced. This false map saved the organization by ensuring that paralysis in face of dissent was prevented. In the trading room, the predication of heterarchies was done on belief that, the organization superiors had minimal knowledge on better information as compared to other organization members. In heterarchies, there are different solutions typically that emerge from interactions inside the organization instead of from the superiors (Kingma, 2008). It is known that knowledge does not just flow from top to bottom in the lines of command, but move laterally across different social network. Viewing organization in this manner raises some important questions on people formerly charged with the mandate to running an organization. During the September 11th incidence, work of arbitrageurs was interrupted by sudden explosion adjacent to the building, world trade center. Traders saw the tower of the trade centre going into frame. From that point, some of them saw the approach of the second plane. This was frightful and the incidence brought terror in the trading room, people started escaping to Hudson River. Falling of the tower made many traders to run helter skelter but none of them was harmed. Many traders were not able to make sense of the event. The process rapidly changed to a social nature one. Trading room manager met with technical staff and senior traders on the night of this incidence to discuss the disastrous condition of the bank. Trade center had collapsed at the doors of the bank badly damaging the building. Due to this, the lively trading room was turned dark hole without even electricity and with no assurance of toxic chemical safety. To overcome this crisis, bank facilities were moved to a back-office located in pseudonymous Escape way, in New Jersey. The other resource that could have been counted on by the traders was the spare space located in building basement where corporate style minicomputers were stored for payroll data processing. The basement had no desk, no workstation, and no connectivity. All the same, the manager decided to do whatever possible to ensure that international security was ensured in the equity arbitrage. Same as the group of traders who decided to meet with the manager, other employees in this room also needed to overcome these ambiguities. Distinct from the technical staff and the trading room manager, employees did not have a chance of meeting face to face to decide on the fate of the trading room and its future. Their final resort was phoning each other. As said by Ray one of the employees in the trading room what he had to do after the incidence was just talk to people he was close to. Employees did not know what to do. Some of them did not even know that there was a place in the Escapaway. Employees who did not have their colleagues’ home phones numbers started to interact via internet. This interaction was facilitated by creation of a website for traders by the bank first days after the attack. Traders could post on the site that they had survived and could indicate that they were in contact with other colleagues who had also managed to get to their homes while unharmed. After the site was operational, employees began to use the site as a means of sense making. Many of them started sharing their puzzlement and continued asking questions to each other. The website posts gave employees a view of the confusion that existed. Instead of this medium structuring the way for making meaning to the tragedy to give reassurance, the website promoted fear and anxiety. An executive by the name of Greg was sensitive to the problem. The bank delay in answering employees and traders posts was devastating. Out of his personal initiative, he responded to this post saying, “We are working on trying to re-establish our systems and will contact you as soon as this is through.” This was to make sure that, the employees felt that someone was concerned about them. This is considered to one of the greatest business asset in human resource management (Gibb and Buchanan, 2006). Inherently, beyond international security confines, symbolic attack called for a significant symbolic response. New York stock exchange chairperson vowed on September 14 that he would re-open stock market on 17th of September in order to move the country towards normality. To underscore dramaturgical character of opening the market, the NASDAQ and the Exchange undertook full-scale test on computer, power system, and communication three days before reopening. Emphasizing the market message, the then president of the United States George Bush associated re-opening of the market to start of the country recovery. The then Vice-President urged investors not to fear and to buy and demonstrate that they had confidence in the country and confidence in the country economy. Selling at this moment was deemed unpatriotic. The impartial and neutral activity of capturing financial value through arbitrage became laden with value and ethics. International security management also understood the need of a symbolic response. They decided to re-open after the market did, they did so not only for their customers sake, but as an assurance to the employees. Even though the facilities that were available were limited, they decided to start the business again. By the time of the opening of the New York exchange on 17th September, international security traders were trading again. Accomplishment of this took some processes. After the attack, it was realized that everyone in the trading room escaped unharmed. 5 Overcoming crisis Two days after the re-opening of the market, the trading room was moved to a converted warehouse at Escapaway in New Jersey. The new room had a cavernous open space, furnished completely with desks, traders, outsized computer screens, computers, and multi-time zone clocks. This room had made shift feel on it: low ceiling, no windows, and the walls were painted in the industrial yellow. The room was more fitting for storage than for trading. Correspondingly, employees’ dress code had shifted from the known business casual to boots and jeans. This room was noisy, but traders felt that the room had a wonderful sound of life. American flags were predominant in the room. A huge American flag was hung at the centre of the room, and small flags were placed on nearly all the traders’ desk. This was done as a way of portraying patriotism. During these first days, traders were trying to fight their own grief and fear in situation where their colleagues were also full of fear and grieve. One trade center executive was quoted saying that this was not just a fire that destroyed two of the building floors, most of people lost people they knew and their friend. People were traumatized and there was a constant fear of war. They never knew what would happen during the next few days. Many even feared that they would not return home. This was a major crisis. This tragedy significantly affected the mood of different traders, creating an increase in anxiety level. Most of them even used drugs to enable their bodies to function properly. Those with cell phones and used to place them at arm’s reach were now keeping them in pockets so that in case of another evacuation the family lifeline could not be forgotten. The manager at the time understood the risk and the crisis that was posed on the traders’ uncertainties on the organization if their requirement were no attended. The manager kept reassuring the trader that everything was fine by visiting them on their desks but what he received was unanimous answer. One trader expressed his uncertainty to the manger saying that he intended to buy a house with the new trading room in mind but that moment he was not sure where he would be the following three weeks. By walking all over the room, the manager was gaining traders appreciation because he seemed to tackle different problems and issues that in one way or another was affecting their lives and the organization continuity. Before this incidence, the manager used to walk across the room for risk management. This was done to identify sources of uncertainty in the market unforeseen by organization mathematical risk model. After this incidence, he did so to get a grip on traders’ personal uncertainty. The manager assured all the workers for example he was involved in reassuring a middle-aged woman of the Asian origin who was his administrative assistant that the risk of small pox epidemic was low. Thus, reassurance was very significant in managing crisis in this situation as itemized by Hancock (2008, pp. 656-658). The manager also put the façade of reassurance towards the employees in form of assembly like speech. Junior traders thus, appeared calm and assured to the clients but they disclosed their fear to their senior counterparts. On the other hand senior traders reassured junior traders despite being somehow skeptical about the future. In turn, the manager reassured the whole population in the trading room and showed that there was no crack in public. What made the difference from other crisis management situations was the kind of touch and low-tech solution. 5.1 Identities in practice The incidence left many traders wondering if there was possibility of their firm continued existence. They wondered whether the trading room would be in operation again, what they were required to do, and even what was they meaning to the organization. The room basement comes in time to solve the underlying crisis. The trading room was creatively inscribed to restore order and meaning to traders. Though traders were in New Jersey basement storage room, a sign on the wall gave a prominently different bearing. The sign was taped to read “20th Floor, Equities.” Trading room corners had signs reading“19th Floor, for Risk Management” and “21st Floor, for Fixed Income.” The traders’ room was still located between 19th floor and 21st floor, but it was horizontally rather than initial vertical. Moreover, with the temporary quarter constraints desks were arranged reproducing the layout that was on the financial center trading room. The “20th Floor” reminded traders that, equities trading room were between fixed income and risk management, but it also led employees to their jobs as traders. The sign on the 20th Floor showed that the traders were supposed to act the same way they acted when in the financial center trading room. In the trading room, traders were told in effect to pick their tools and to start the process of orienting and sense making in the world by affirming their identities as traders through trading. 6 Conclusion In conclusion, crisis management and crisis communication efforts ensure the organizations take concern on the organization responsiveness on innovation and recovery. This has been vividly indicated in the trading rooms of Lower Manhattan during the September 11th attack on the world-trading center. The following question have been addressed: how do organizations cope with radical and sudden change in the word today? Long traditional literature argues that, environment uncertainties can be dealt best by reproducing them within the organization. In contrast sense making literature argues that, in a challenging situations the emphasis should mainly be on preserving and protecting the organization, the firm, the team, socio technical unit, the factory even if it is at the cost of misaligning the environment. The case of trading room, severely damaged because of September 11th terrorist attack, was a concern to this debate. The study has shown that in extreme crisis a strong leadership is called for. The main question arising out of this incidence is on whether heterarchies leader should take absolute control of event, or should he resist the underlying pressure and ensure that organization’s non-hierarchical character are preserved. This study shows that, in the event of extreme crises, different organization need to favor internal stability. As can be seen in the case of trading room, it began to use reduction of uncertainty methods by providing means of re-enacting identities, by first hailing the first identities as patriots and then traders. This case is much consistent with sense making literature. This study warns against difficulties of using simple recipe as it can be seen that, the trading room could not rely entirely on the environment to buffer the traders. As a trader, exposure is required; trader must take position for risk exposure. They must take position of being exposed to war news. It can be seen that by providing condition for traders and employees to realize their professional skills, the trading room in the Escapaway came to re-instill extra nuanced identities. In the context of crisis, leaders have a function of ensuring that employees’ interpretation of the environment is well managed in ways that uncertainty and conflict are downplayed. Leaders must never abandon their non-hierarchical style by telling the employees that they know more than they do, but they can organize employees together increasing chances of emergence of solution by interaction of the knowledge and skills of the organization members. Moreover, this study shows that, low-profile leadership can be very effective. The trading room traders managed their situation successfully and no trader was lost in the incidence. They were able to cope because the leadership provided reliable conditions by reducing uncertainty in some dimension while making sure that considerable freedom of action was allowed making possible for the traders to avoid frames pulling them part by their own. 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