Crisis Management - Assignment Example

CRISIS MANAGEMENT By The and where it is located The Crisis Management Introduction Project management is characteristic of a certain allure of people who may shun routine and adopt workplace styles and practices such as work-a-day lifestyles. Project managers associate production of unique outputs with many uncertainties (Hallgren and Wilson 2008). Hence, each day can bring in a completely new set of experiences. Nicholas (2001) defines that as much as a positive approach to project management indicates that an individual can design them well in advance, plenty of room still exists for the occurrence of events that can interfere with the plan. At times, the events can have minimal impact prompting the managers to tolerate them. On the contrary, stakeholders in a project often bid them on a fixed-cost basis and fixed-time. For this reason, the unanticipated events have the potential of rapidly rising to the crisis level if they lie within a project’s path that defines the timeframe for implementing the projecting (Hallgren and Wilson 2008). Roux-Dufort (2007) suggests that crises show signs of being inevitable in projects. For this reason, project managers in organizations that participate in projects often must understand different approaches that address crises effectively. Failure to address the incidents or situations characteristic of such crises might reduce or at times raise uncertainties regarding the success of the project. These crises are the focus of this discussion. Specifically, the purpose of this discussion is to define the different characteristics of crisis management in the context of a project by comparing and contrasting risk management with crisis management. Risk Management To Berg (2010), risk management is a process that encompasses the integration of risk recognition and assessment of these risks, development of strategies to manage the risks, and the mitigation of the inherent risks by utilizing managerial resources. Hillson and Simon (2007) define risks as uncertain conditions or events that, if they occur, have either negative or positive effects on the objectives of a project. Over the decades, particular risk management practices have been designed for certain environments (Hudin and Hamid, 2014). For instance, some practices address risks stemming from legal or physical causes such as death, accidents, or natural disasters (Raz et al., 2002). Conversely, financial risk management emphases on management of risks while using different financial instruments. Nevertheless, the main aim of engaging in the process of managing risks is to lessen distinct risks to a level that made them acceptable (Berg, 2010). They could include different threats that are consequences of technology, the environment, politics, humans, and organizations. Zhang (2009) affirms that in projects, risk management is a process that combines the management and analysis of the risks of a project. The author further indicates that risk management aims at reducing the damage and loss in the future, lessen the total cost of the risks and identify, control and limit the risks’ impact. Conversely, project managers design risk management procedures to limit or eliminate the risks that threaten the achievement of project objectives (Corvellec, 2009). Those who undertake the concept properly ensure the successful completion of a project for performance, time, and cost objectives. Cagliano and Rafele (2015) state that in the contemporary business world, effective management of risks is a paramount element that determines the success of a project based on characteristics such as the variability of actual cost, time, quality enactment of a project in contrast to a project’s expectation due to the pressure added on decreasing costs and time. Similarly, the authors add that failure to address the risks results to missing performance targets, falling behind schedule, and exceeding of the budgets. For this reason, it is important to evaluate and control risks during every phase of a project. A singe project can manifest different risks (Zhang 2009). As a result, dealing with risks present in a project is different from addressing those in a situation. Furthermore, two identical projects can produce completely different risks. During the process of risk management in a project, the project manager must have two key points in mind. These two key points are risk analysis and risk control and arrangement. Zhang (2009) adds that risk analysis primarily involves the identification of potential risks. Moreover, it comprises the quantification of the occurrence and consequences as well as the risk calculation and prioritizing in order of importance. Project managers can identify material or physical safety risks, legal risks, social risks, political risks, or financial risks. Consequently, they may quantify their probability and consequences using methods such as hazard indices and subjective assessments. After identifying the probability of risks and their consequences, project managers develop appropriate approaches with an objective to control, reduce, and eliminate the risks. Risk control and arrangement can occur through the following methods: risk reduction, risk transfer, residual risks, and self-insurance (Tazilah and Rahman, 2014). Crisis Management As discussed above, the process of risk management is an essential element for project managers in the contemporary business environment. Project managers apply risk mitigation and minimisation measures in the course of a project to navigate through the different project events that can potentially compromise the objectives of a project. Hence, the question that prevails is what happens when the risk event with grave consequences happens and becomes a reality? At such a time, the concept of crisis management comes into play. Valackiene (2011) states that failure to plan a response to the event and the project team’s unpreparedness are element that could condemn it to failure. However, effective implementation of crisis management can avoid critical project impacts. Hensgen et al. (2006) define a crisis as those internal events, external events, or a combination of both events, that adds pressure on organisational resources and position the most significant threats to the vitality and security of the organization. To Coombs (2007), the process of managing crises within an organisation’s project is essential since it determines the overall success of the organisation. The author continues to define crisis management as a process that the project team designs to lessen or prevent the losses that a crisis can impose on an organisation since it affects every stakeholder group within the organisation. Failure to apply crisis management in projects can create a loss of market share or lead to financial loss by disrupting operations in an organization (Jaques 2010). On the contrary, effective application of crisis management leads to the sequential handling of the threats. Elliott et al. (2000) identified the key issue during a crisis as the element of safety to the public. If a project manager fails to address the element of public wellbeing, the losses intensify. Organisations only consider financial and reputational concerns after they have remedied public safety. The definitive objective of crisis management is to safeguard the project team, the organisation, and other stakeholders from threats (Davies, 2005). Furthermore, it ought to reduce the impact felt from the threats. Coombs (2007) identifies crisis management as a multifaceted process that consists pre-crisis, the reaction, and the phase after the crisis (Coombs, 2007). The first phase, which is usually before the crisis, known as the pre-crisis phase, deals with preparation and prevention. Coombs (2007) identifies the process of crisis prevention as involving approaches that aim at reducing the known risks that can potentially lead to a crisis. Moreover, Coombs and Holladay (2006) add that the process of preparing for crisis includes the establishment of the plan to manage a crisis, the selection of the team to manage the crisis, the training of this team, and including an evaluation procedure that assess the effectiveness of the developed plan. The crisis response phase involves the phase when the project managers must respond to the crisis. Coombs (2007) asserts that this phase involves the identification of the actions that the project’s management took after the crisis occurs. The author adds that public relations play an imperative role in this phase. It helps develop the messages that managers send to various stakeholders. The post-crisis phase involves investigation of methods to prepare effectively for a crisis in the future. Additionally, this phase fulfils all commitments that the project managers made in the previous phases as well as the follow-up information. In this phase, the organization seeks to return to business as usual (Coombs 2007). Risk and Crisis Management: Comparing and Contrasting Pollard and Hotho (2006) affirm that over the decades, systems that claim to work as risk management have overrun organizations. As a result, managers gain adequate tools for recognizing and mitigating risks. The authors also add that risk management has established an administrative methodology to evaluating and identifying the risk. However, risk management, during an ongoing project, is altogether different. For a fact, individuals can study and implement risk management in projects according to the probability of its occurrence and the consequences, which could be the standard model for risk management. However, people must acknowledge that projects’ risk management must primarily – practically and extensively – deal with tangible threats in definite projects (Pollard and Hotho, 2006). Furthermore, it must analyse them in as much detail as possible. Crises are markedly dissimilar to risks. Based on a project’s nature, risks are potentially probable. Moreover, the project team can map them out to some extent. On the contrary, crises are always unexpected and sudden. If project managers had the ability to anticipate them, it would be possible to establish measures of stopping or preventing them in the first place (Boin and Lagadec, 2000). For this reason, it is evident that risk management is not the same as the challenges that leaders faced in their daily decision-making process. Additionally, management involves establishing proper detachment from the managerial load and boldly taking some risks for the good of a project or the organisation in general. Leading a project requires an individual to face particular risks towards a future that is indeterminate (Boin and Lagadec, 2000). Managers who refuse, or are not brave enough face risks, are ill equipped for managerial positions and responsibilities. Crises management varies significantly from risk management. Crises often surface suddenly without any warning. For this reason, it is virtually impossible for project managers to get ready for the particular issues that are characteristic of the crises’ appearance. Project managers cannot anticipate all that could happen. On the contrary, project managers could develop customary approaches that seek to avoid the worst-case scenarios, in a project, following the emergence of a crisis in order to prevent its escalation. Managers who usually have ready approaches provide standards for methods and structures that effectively addresses any crisis that appears within a project’s implementation. The Defining Characteristics of Crisis Management in the Context of a Project Several defining characteristics of crisis management, in the context of a project, can be derived from the discussion above. One of them is events unpredictability. When designing strategies for crisis management, project managers’ factor in different techniques that are critical in addressing sudden and significant negative events (Mitroff, 2004). From the great array of the available definitions of a crisis, the most common aspect is the unpredictability of events (Hills, 2000). A crisis can either occur because of an unforeseeable consequence of an event or an unpredictable event in general. Either way, crises demand that managers make decisions quickly to limit damage or derailment of the project (Hills, 2000). Therefore, one of the first actions that project managers should undertake in crisis management planning is the identification of an individual to serve as a crisis manager. The attribute of events’ unpredictability comes with many best practices that managers should adhere to during crisis management. First, they should ensure to plan in detail (Mitroff, 2004). In the same token, they should prepare for responses diverse potential crises to a project. Second, crises managers, with the help of project managers, should develop diverse structures and practices that monitor and perceive preceding indications that denote a predictable crisis. Third, they should choose and equip the crisis management team with the skills required to respond to a crisis. Alternatively, they can select a crisis management team outside the company within a record of accomplishment in successful management of crises in their area of business. Finally, managers should purpose to involve as many stakeholders as possible in all action and planning stages. Wysocki (2009) echoes some of these practices through a project uncertainty matrix. The author states that project managers should always purpose to know how the project team understands the project requirements at the beginning of the project and whether they know the specific activities, tasks, and decisions necessary for conducting the work of the project. The second defining attribute of crisis management is responsibility by necessity. When a project manager appoints a crisis manager, the two should collaboratively develop a crisis plan (Mitroff, 2004). In the crisis plan, they should specify the individuals responsible for certain decisions. Moreover, they should specify the recipients of the decisions. A clear description of responsibilities is paramount as it prevents situations where project managers have no idea on who to look to for decisions or consult. Moreover, it ensures quick and efficient communication to the appropriate members of the team. In connection to the responsibility concept, the crisis manager should establish a core team prior to any crisis. Additionally, the manager should take the necessary steps to avail the contact information of each member to the rest of the team (Murphy, 2006). They should ensure that each team member could be contacted immediately a crisis happens. Effective leadership is a paramount element when dealing with a crisis. For this reason, members of the crisis response team should be given the authority to manage the response of the entire project team to crises. The managers may also decide to include external advisors in the crisis response team. The outside advisors may include accountants, legal counsel, and investor as well as public relations firms. The third defining characteristic of crisis management is its characteristic of unknown workforce needs. The attribute of unknown labour needs is closely related to that of events unpredictability. The nature of a crisis causes the project team to spread beyond the boundaries of the project. When a crisis is developing, individuals who have an influence over the project’s outcome identify the potential danger attached to the project’s failure immediately. Such individuals may include the crisis managers, the response team, and the project members. However, on several occasions, unknown or unforeseen parties can become critical players in a project crisis scenario as it unfolds. Based on the abovementioned, projects that are well equipped to handle crisis identify opportunities to establish informal associations. Furthermore, they strive to expand the capacities in responding to the crisis collaborating with diverse stakeholders before a potential crisis occurs. The project managers should choose these stakeholders because of the expertise they can offer during a project’s implementation or during a crisis. For projects that are well prepared, crisis management is dependent upon assumptions made upon critical stakeholders. In some instances, members of the project team confer with relevant stakeholders as they establish their crisis management strategies. Besides, effective managers engage critical external stakeholders in the project’s crisis management simulations and planning. As a result, the project can benefit in other ways such as enhanced resource access and clearer thinking among the members. The fourth attribute of crisis management is overload conditions. Ordinarily, circumstances often force project and crisis managers to assure crisis management under possible overload or instabilities in matters such as communication or information flow (Valackiene, 2009). When an event is a surprise, the timeframe for response is typically short. At such a time, managers usually perceive the event as a crisis, a situation that often produces stress (Valackiene, 2010a). Additionally, project managers are often forced to make critical decisions under stressing conditions such as time shortage, the threat of loss, and pressure to innovate in problem-solving. Sperling (2014) states that a crisis demands managers make critical decisions in strenuous conditions that were uncertain. Moreover, the crisis managers, at the strategic level of the project, must decide and address complex dilemmas without the most paramount information necessary for the project. More importantly, the project managers must make the critical decisions in rapidly changing project settings marked by information overload and miscommunications (Sperling, 2014). The abstract nature and absolute intricacies of a crisis’ conditions and different elements hinder effective management of a crisis. During a crisis initial development, limited information usually leads to uncertainties of response (Valackiene, 2010b). Sperling (2014) adds that the discrepancy that results between the actual characteristics of the situation and its definition undermines the crisis response. At such times, the crisis managers are often tackling the side effects or consequences of the crisis rather than resolving it (James and Wooten, 2005). The primary characteristic of a crisis is usually an explosion of data and communication. At the same time, the decision makers usually suffer due to lack of accurate information. In connection to the element of overload conditions is another attribute of challenges in decision-making and communication. During a crisis, project managers usually receive masses of raw data only to realize that it is very difficult to obtain vital information from the raw data (Brown, 2002). Sperling (2014) notes that when a crisis surfaces, perceptions change due to the persisting contradictory definitions of the project. Boin and Rhinard (2008) identified the combined influence of the need for information and uncertainty can push advisers and experts towards decision-making. As a result, uncertain paths for communication and information flow develops within the project. Additionally, the stress that develops in a crisis may further impair the managers’ sense-making abilities (Sperling, 2014). The author further adds that crises usually apply pressure to the different structures of making decisions within a project. Occasionally, the results of pressure may be positive because centralisation in the hands of a few individuals of the crisis management team may lead to avoidance of the slow decision-making routines (Smith, 2005). Conclusion The ability of a project’s team to weather a crisis largely depends on its ability to identify the risk and the consequent crisis in advance. The project managers should adopt an appropriate response. Moreover, they should communicate the response to every member of the project team and parent organization. A properly designed response gives the team sufficient time and room required to proceed in addressing the crisis. The most effective way to ensure that project managers are ready to manage a crisis is by establishing in advance the right processes for addressing a crisis when one surfaces. The above defining characteristics of crisis management are sufficient evidence that crises are not easy to handle. For this reason, the entire project team should design strategies early enough to ensure that when the crisis occurs, they are well prepared. References Berg, H. (2010) ‘Risk management: Procedures, Methods and experiences.’ RT& A, 2(17) pp. 79-95. Boin, A. and Lagadec, P. (2000) ‘Preparing for the Future: Critical Challenges in Crisis Management.’ Journal of Contingencies and Crisis Management, 8 pp. 185-191. Boin, A. and Rhinard, M. 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