The right preparations can help an organization avert a crisis. Following the guidelines in this article is a good start.
Within hours of the terrorist strike on September 11, assumptions about doing business in America and beyond were altered, perhaps irreversibly. While the rubble was being cleared, many businesses began to reset their courses. At the same time, many in the business community began to ask themselves what lessons they could learn from 9/11. What preparations—if any—could a business make to respond to the unthinkable?
While acts of terror had been committed against the United States, its citizens and its property, they had, with the exception of the Oklahoma City bombing, always occurred overseas. It is unlikely, therefore, that many businesses were prepared to respond to a terrorist strike on American soil. But some businesses, because of their crisis management planning and preparation, were better prepared than others.
They were able to improvise. And as recent history has shown, many organizations that have prepared for blackouts, natural disasters and even the Y2K threats have been able to manage when the unforeseen suddenly explodes. The lesson we can all learn—and learn to apply—is that preparing for the unseen calls for versatility. It is the very foundation of organizational crisis management.
WHAT IS AN ORGANIZATIONAL CRISIS?
Organizations face difficult decisions daily. As the development of new technology outpaces our ability to fully understand its impact, and as global reach relentlessly stretches organizational capabilities, “firefighting” becomes a way of life for many, especially those in management. Some believe that these daily decisions are crises; generally, however, they are not. The reason is that they do not threaten the organization’s viability, which is the distinguishing feature of an organizational crisis. A true crisis, if improperly managed, can destroy an organization.
A vast array of crises occur in business worldwide, including the kidnapping of executives, product tampering, security leaks, unethical behaviour, workplace violence, employee fraud and others. Some organizations believe that crises are anomalies, and for this reason they see no need to prepare for them. Others believe that ongoing day-to-day management successes help to prepare organizations for managing crisis situations. The best firms, however, recognize that taking deliberate steps to prepare for the unforeseen can pay off handsomely.
WHAT IS CRISIS MANAGEMENT?
Crisis management is a systemic approach that engages the whole organization in efforts to avert crises that may affect the firm, and to effectively manage those that do occur. The objective of organizational crisis management is to make timely decisions based on best facts and clear thinking when operating under extraordinary conditions. At its best, crisis management is both proactive and reactive. Invaluable preparations can be made in advance of any incident, and decisions and actions taken during an incident can be optimized if crisis management plans have been put into place. Through a crisis-management approach, organizations identify the relevant antecedents, consequences and lessons that lead to, follow and emerge from crises and near misses.
Effective decisions during a crisis strike a balance between timeliness and certainty. That is, critical decisions and actions can be managed quickly – but not rashly – despite uncertainty and incomplete information. Crisis management enables organizations to identify and attain this balance more readily.
Preparing for the unthinkable
The first step in any crisis management effort is to obtain the attention and buy-in of senior management. Without it, crisis management is doomed. If buy-in is to be obtained, corporate leaders must:
1. Accept the likelihood and their organizations will face crises.
2. Believe that they can ready themselves and their organizations to avert or effectively manage extraordinary incidents.
3. Be willing to devote the time needed to think collectively about the unexpected and the unthinkable.
Generally, executives who have experienced organizational crises are more willing to support and champion crisis management efforts than those who have not had such experiences. Even those who have not been through an organizational crisis can, however, be moved to make preparations by a crisis in their own industry. When a competitor faces a crisis, suddenly the remote “what if” threats take on a new immediacy and intensity.
The mindset of senior management at the beginning of crisis planning ranges from those who champion it to those who are skeptical of its benefits. Nonetheless, if crisis management is to take hold, leaders must be confident that the organization will benefit. With a mindset that supports making preparations, leaders can begin to tackle the “what, where, when and who” of crisis management.
What to prepare for?
Once leaders have accepted that systemic crisis-management preparation is valuable, they can begin by clustering foreseeable and unforeseeable types of crises into three categories: those that the organization is already prepared to manage, that it needs to prepare to manage, and that it chooses not to prepare to manage.
One way of approaching this task is to have leaders develop a list of crises for each of these categories. The next step is to search for similarities among selected crises, identifying how preparations for one type may lead to preparedness for another. During the sorting process, “why” is a critical question. That is “Why are we preparing for the crises we have selected?” and, perhaps more importantly, “Why are we ignoring the ones we have chosen not to prepare for?”
At this stage, the goal is to have the leaders agree on a portfolio of preparations for a limited number of crisis clusters. Ideally, clusters will be identified in such a way that preparations for one type of a crisis will enhance organizational readiness if its sister crisis occurs.
The incidents of September 11 provide examples. Although organizations were not prepared for terrorist attacks, they were prepared to evacuate employees swiftly in the event of fire. In some organizations, codes and networks that had been set up for other potential crises were helpful in quickly verifying the safety and location of employees. The data security measures that some organizations had developed to respond to Y2K threats made it possible for them to activate hot sites, enabling them to recover their data, equipment and procedures instantaneously in secure, off-site locations. These organizations not only saved time and money, but reduced the anxiety of their workforce.
Proactive decisions and actions can help organizations avoid the types of crises that pose the most devastating threats, or effectively manage those most likely to happen. In well-prepared organizations, executives and other key crisis-management personnel gather to discuss strategies for preparing, enhancing and even developing new, innovative options for dealing with the unexpected. In the best-prepared organizations, these key stakeholders actually simulate crises and crisis responses to assess and improve their crisis-management capabilities. Although crisis management approaches vary widely, the improvised responses on September 11 demonstrated that preparations of any kind put an organization on better footing for managing any type of incident that may occur.
No organization is capable of preparing for all crises that might potentially affect it, nor should it attempt to develop that capability. Instead, preparing a portfolio of responses to different clusters of crises increases the likelihood that if a crisis occurs, people will think clearly, to improvise to deal with the immediate situation, gather facts quickly, and make decisions and take action to ensure the best response possible.
Where to look?
Having chosen which types of crises to prepare for, an organization should then assess how well it is positioned to deal with them. Specifically, which organizational strengths and vulnerabilities could facilitate or hinder its response to these selected crises? To address this question, the executive team can make initial assumptions about the organization’s preparedness. Then, employees in key crisis response levels at all levels of the organization, and in all locations, need to be part of deeper fact-finding to find out just how well prepared the company actually is.
In preparing for potential crises, organizations need to consider the availability and accessibility of technologies, human resource skills and competencies, as well as the physical and capital resources that may be needed to manage different kinds of incidents.
To prepare themselves, organizations must consider whether their existing strategies, structures and policies would facilitate or impede their response to crises. They need to be on the lookout for gaps and misalignments that might be hazardous. For example, if one of these crises comes to pass, will current reporting relationships speed up signals, or slow them down? Will the organization’s existing communication systems make it easier to detect and evaluate potential signals for the selected crises?
It is important to assess the potential effects of organizational culture on crisis readiness and response. How would the organization’s culture affect its ability to manage the selected crises? At a fundamental level, misalignment between articulated values and the values in practice (that is, the culture) can act as potential barriers to crisis management. A typical example is found in organizations that rally employees to put safety first while cutting costs, or accelerating production at a rate that compromises or obliterates safety measures.
Culture can also impede crisis management by filtering bad news. In some organizations, this may manifest in a tendency to report only positive information to senior management. In more sophisticated organizations, the bad news may be welcome, provided its bearer also suggests a solution. At the same time, it is necessary to remember that managing a crisis, either potential, smouldering, or full-blown—is for the most part beyond the abilities and reach of individual employees. Early sparks may therefore flame out of control, and invaluable time may be lost, while a well-intentioned employee searches desperately for solutions. The worst case scenario can arise in organizations that are culturally averse to bad news—by punishing the messenger, they miss out on one of their best early warning signals.
When to manage the crisis?
The earlier a crisis is detected, the easier it is to manage. When the first signals of a potential crisis are detected, mustering even minimal resources will enable the organization to manage the situation swiftly. Thus, the organization can douse the initial sparks rather than being forced to engage in full-blown fire containment.
All organizational crises give off early-warning signals.
The challenges for leaders are:
1. To create the means that will allow them to quickly see the first signals of a crisis and their source.
2. To separate valid warning signals from otherwise harmless “noise.”
In the best-prepared organizations, negative information that may foreshadow a crisis moves swiftly from employees to executives. When unexpected events or data suggest that threatening conditions are looming, the message moves rapidly along unclogged communication lines to appropriate decision makers. In some of these organizations, in fact, employees are recognized and rewarded for their part in detecting and reporting potential trouble early.
After they have contained the crisis, companies that engage in systemic crisis management take the time to learn from what has happened. They ask themselves what they did well and what they could have done better, emphasizing opportunities for improvements rather than rationales for assigning blame. In organizations that take crisis management seriously, key employees across all levels and functions take part in this assessment after a crisis or near miss occurs. In the best organizations, the lessons that emerge are communicated widely, and relevant adjustments are institutionalized.
Who can help?
The nature of organizational crises generally causes them to spread beyond organizational boundaries. When a crisis is brewing, the individuals, groups and organizations that can affect the success (or failure) of the impacted organization usually pick up the scent of impending danger swiftly. These stakeholders can be suppliers, customers, competitors, government agencies, and members of the surrounding community, lawyers and the media. Even unforeseen or unknown parties can become critical players in an organizational-crisis scenario as it unfolds.
With this in mind, crisis-prepared organizations seek opportunities to create informal alliances and improve their response capabilities by working with a broad array of key stakeholders well in advance of any crisis. These stakeholders should be chosen for the expertise they can offer, or their need to know. Actually, it’s both if a selected crisis occurs. In well-prepared organizations, assumptions made about critical stakeholders drive crisis management planning. In some cases, those within the organization who deal with crisis management confer with relevant external stakeholders as they create their organization’s crisis management strategy. The best-prepared organizations also engage critical external stakeholders in the organization’s crisis management planning and simulations. The benefits can include cooler tempers, clearer thinking, enhanced resource access, and smoother recovery for the organization and its stakeholders.
There is no way to ensure that an organization will escape crises. Unforeseen events can push any organization beyond the threshold of competent response. But a systemic crisis management approach can expand that competence through the practice of clear thinking, the smooth channelling of resource and information access, and the experience gained in simulated duress.
Years of assisting organizations to prepare for, manage and learn from crises in varied settings across diverse industries has led to the development of the Top 10 tenets listed below. Like many managerial guidelines, they are simple to articulate but challenging to enact. Nonetheless, organizations that institutionalize crisis preparation and adhere to these guidelines will take a big step toward achieving the two primary goals of crisis management: to avert organizational crises and to mitigate those that do occur.
CRISIS MANAGEMENT’S TOP 10
1. Act in a way that would make your mother proud.
Optimal crisis management is crisis aversion. Those who take the threat of organizational crises seriously know that you cannot talk your way out of things that you have behaved yourself into. This proposition holds for organizations as well as the individuals who work for them.
2. NEVER lie.
We live in a world where the truth can be uncovered quickly. Being caught lying about your organization’s inappropriate actions can devastate your organization. Attempted cover-ups can turn a reporter into a folk hero. The payoff for uncovering organizational wrongdoing is huge.
3. Tell the truth and tell it quickly.
Generally, organizations have less than a day to tell their version of the truth. After that, the media and other external stakeholders will have tapped into secondary and tertiary experts who will have their own views on what has happened.
4. Make crisis preparation an ongoing process.
In crisis management, one size does not fit all, and once is not enough. The most effective crisis preparations are those tailored by senior executives to fit the needs and vulnerabilities of their organization, environments, stakeholders and industry. Some organizations are tempted to delegate crisis management to a single staff person, or to consider a corporate crisis management manual as the ultimate evidence of preparedness. Both are insufficient. Crisis management is an ongoing process that requires careful and constant modification by senior executives as core technologies, environments and stakeholders shift. Once preparations are in order, the best-prepared organizations revisit their strategies and consider new contingencies regularly.
5. Remember your employees.
After the smoke has cleared, employees in some organizations lament that they were not able to find out what was going on in their own organization while the crisis was occurring. You do not want your employees to have to rely on the evening news as their source of information about their own company. It is demeaning and dangerous to discount those who will be key to your organization’s survival.
6. Make time to learn after the crisis has passed.
When the threshold of the crisis has passed and business is returning to normal, there is a tendency to want to move on, to get past the trauma that has occurred, to get back to the typical rhythm of business and leave the crisis behind. But, when you do this, you miss extraordinary opportunities for organizational learning. The details that will enable your organization to do better next time are best captured when they are fresh, whether through focused meetings of groups of crisis respondents or through individual discussions with internal and external stakeholders who took part in the crisis response. The time invested in examining what happened, and making adjustments to plans and practices, can pay off when the next crisis occurs, or when you are fortunate enough to be able to avert the next crisis.
7. Designate one spokesperson and surround that individual with experts, as needed.
The easiest way to deliver a consistent message during a crisis is to have one senior executive as spokesperson. To this end, all senior executives should go through crisis communication training. The lessons are invaluable and relatively easy to learn. When a crisis hits, the spokesperson should be surrounded by experts who can elaborate on answers to technical questions.
8. Support messengers of bad news.
Welcome and pursue the reporting of potential problems. When a crisis is looming, your most valuable resource is the individual who informs you about the threatening situation quickly. Reducing internal hierarchical barriers to communication and improving communication with external stakeholders enhances the likelihood that your organization will hear about the situation early, when responses are easiest and far less costly.
9. Build positive relationships in advance.
Once notified that a crisis has broken out, the best an organization can hope for is effective assistance from those within and outside the organization. Some executives assume that others will come to their aid when a crisis occurs. This assumption is often ill founded. You can improve the probability for this, however, if you take the time to build positive relationships with employees and external stakeholders well in advance of any crisis situation. Doing so allows you to have a clearer sense of which individuals you might count on, as well as the ways and extent to which key stakeholders can and will be of assistance.
10. During and after crises, have patience with others…and with yourself.
Trying to think clearly under extraordinary conditions takes a toll on the brain, the heart and the body. It is important to attend to all three during and after a crisis.