Analysis of Crisis Management - Article Example

Analysis of Crisis Management Introduction Crisis management refers to the response that a company makes towards solving challenges and difficulties that may occur in the process of conducting its affairs (Weick 2003 p 79). It does not control or prevent a risk from occurring but instead, it involves responding to a problem that has already occurred. These problems or events can occur without the expectation of the organization’s management and thus requires quick and effective response in order to prevent extensive damage to the company and its assets (Reason 2002 p 37). It therefore demands for excellent damage assessment skills and techniques. Construction companies are an example of companies faced with high possibilities of developing crisis. This is due to the risky environment within which they operate that may result to injury of their employees due to accidents, lawsuits that may be as a result of injured persons claiming compensation and also the possibility of laborers getting involved in boycotts due to poor salaries etc. Crisis Management A crisis is an event that occurs as a result of disagreement between two or more people, or out of conflict of interest on a subject which may result to disruption of normal activities. In businesses, a crisis can have negative effects on the financial status if they are not well handled. A crisis can occur due to natural disaster, human error or technological failure (Friedman 2003 p 85). Crisis management is the process through which a company dedicates its efforts to ensuring that threats that occur without the anticipation of the management are solved professionally and effectively. Unlike the risk assessment process which concentrates on the prevention of risks from occurring, crises management is concerned with managing threats that have already occurred (Reason 2002 p 51). It therefore requires understanding and experience in the field which is important in saving time and resources required in containing the threat. It involves various strategies and set guidelines which are followed when responding to threats. These guidelines include well defined methods of solving threats that have already happened, well established definition of crisis into categories that would determine the response period and the communication between the various personnel involved in executing the response mechanisms Crises of Construction This refers to the challenges that face the construction industries. These industries are faced with many risks due to the working environment that pose danger to humans. Accidents either caused by human error or Technology mostly result to injuries on employees who in turn file law suits to claim for compensation (Reason 2002 p 30). It is therefore necessary for these companies to have a well defined strategy and response personnel who are well trained and experienced so as to prevent loss of income due to other factors that may arise from the crisis. Significance of Crisis Management Companies are faced by different kinds of threats from time to time. Construction companies are not an exception and therefore crisis management plans are necessary to ensure that threats are contained in the best way possible. Poor management of crisis can result to heavy losses for the company and can lead to total collapsing of the business. The company’s success depends on how well efforts are made to protect its sources of funds and ensuring that little or no funds are lost to crises that can be managed and controlled (Reason 2002 p 50). For example, an accident may occur whereby a laborer is injured and as a result a lawsuit is filed to claim for compensation. With a good crisis management plan, this can be controlled even before the lawsuit is filed. This can be done by ensuring that once the person is injured, he is approached with an offer of a compensation scheme that is favorable to the company. Negotiation can be done to convince him and make him lose the idea of filing a lawsuit (Lagadec 2004 p 46). In other cases it would be necessary to give in to the demands of the other party as a way of solving a conflict but only when there is not much at stake. The significance of this is to defend the company’s integrity which may be compromised if the case is taken to the courts where publicity would be created especially if it catches the attraction of the media (Lagadec 2004 p 80). This would also avoid unnecessary tag of wars which would only waste precious time and resources that would rather be used to perform more important tasks. In such a crisis, it is possible for opportunistic threats to occur if they are not handled properly (Lagadec 2004 p 26). It could lead to intervention from workers organizations who champion for worker’s rights. If this happens, the company would have a negative image that might lead to loss of opportunities especially if the company works under contracts given by the government. In that case, political interference may come in with the spirit of protecting the workers. The crisis may also attract risk evaluators who may come to assess the company’s compliance with the set standards. This could lead to closure or suspension of the operating license if it is found to be faulty. All this could be avoided if the company had a well defined crisis management to deal with cases of accidents and injuries that may occur to their employees. Crisis management is also a significant process in a company as it tests the credibility and ability of the different levels of management. This is because it requires coordination and interaction between the various levels in the hierarchy of management systems (Weick 2003 p 90). If there is no proper communication and respect between the key players in the decision making process, there would be no positive results hence proper measures would have to be put into place either to replace the personnel or to offer them on job training. How well a crisis is solved determines the integrity and efficiency of the response mechanisms in place and also saves the company’s image in the eyes of the public (Friedman 2003 p 18). It also serves as a resource for future referencing in case the company experiences the same crisis thus increasing preparedness and efficiency when handling such occurrences. Crisis management is also important for it can save many lives that could be lost due to lack of preparedness. This could happen as a result of accidents that may occur in the areas of work. Once an accident occurs, immediate first aid should be provided as a response to prevent death. This can only be achieved by a quick crisis management team that is well skilled and organized. They should be able to assess and determine the extent of the damage and immediately offer a solution. Advantages for Crises Management Crises management is advantageous in that it reduces the chance of deaths that may occur due to injuries that may be caused by accidents. This in turn would save the company’s money that would be lost as compensation (Lagadec 2004 p 16). It also ensures that the company does not risk losing its integrity as a result of poor crisis management plans that may bring conflicts between the management and the law. With proper management plans, money can be saved by ensuring that the crisis is controlled before it generates into a disaster. The crisis communication plan which is a part of the crises management process helps in preventing the risk from reoccurring and if it does, the lesson learnt from the past experience would provide a quicker response thus saving time and resources (Lagadec 2004 p 14). The process of crises management also involves business planning that identifies the major functions of the company that must be maintained so as to uphold its continuity. By doing this, the company gets to protect the functions by dedicating crisis prevention mechanisms which can be well rehearsed such that in case the risk occurs it would be faced with a quick and effective response. Crises management also helps to maintain business relationships with partners and suppliers of materials for the company (Lagadec 2004 p 60). This can be necessitated by a crisis for example embezzlement of funds or bankruptcy which may lead to the suppliers refusing to approve supplies to the company by credit. This could have far reaching negative effects on the operations of the company and may lead to total failure. A well strategized crisis management would convince the suppliers thus saving the company from falling. Disadvantages of Crises Management Crises management sometimes requires constant evaluation of the possibility of crisis occurring. This process is expensive as it may involve a simulation of the real crises whereby all the response groups would be required to respond (Lagadec 2004 p 78). Also in the course of crises management, the company may compromise its integrity by using wrong methods of solving crises. This may be as a result of the urge to uphold the company’s name and saving it from public scrutiny leading to activities that would be tantamount to corruption. If this happens, it risks losing a lot if the activities are uncovered. One way of managing conflicts is by bearing with the demands of the party causing the conflict. This may be evident in most companies which experience boycott and strikes staged by laborers who may be demanding for salary raise (Friedman 2003 p 26). Where as this would not necessarily improve their productivity, the company may opt to bear with them and raise their salaries as per their demands. This would result to increased expenditure that may have not been anticipated. Conflict resolution may also create enmity between the parties if the wrong decisions are made (Friedman 2003 p 90). This may result to unnecessary planned attacks from the party that felt that justice was denied. These attacks could be directed at physical or integrity damage. The losing party may use the media to damage the image of the company by issuing false statements. Conclusion Crisis management refers to the response that a company makes towards solving challenges and difficulties that may occur in the process of conducting its affairs. It is always necessary for companies to have well defined mechanisms that would apply when responding to crisis. Construction is a field that exposes the laborers to risks that may result to crisis. Therefore, they should ensure that a good working relationship exist between the employers and the laborers so that in case there is a crisis, the relationship would serve as a break through to convincing them against creating more crisis for the company. References 1. Friedman M. 2003. Everyday Crisis Management: How to Think Like an Emergency Physician, Archer-Ellison. 2. Lagadec P. 2004. Preventing Chaos in a Crisis: Strategies for Prevention, Control and Damage Limitation, McGraw-Hill Companies. 3. Reason J. 2002. Managing the Risks of Organizational Accidents, Ashgate Publishing. 4. Weick K. 2003. Managing the Unexpected: Assuring High Performance in an Age of Complexity, Jossey-Bass. Read More