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Manager's Guide to Crisis Management
By Jonathan Bernstein, Bruce Bonafede
The McGraw-Hill Companies, Inc.Copyright © 2011The McGraw-Hill Companies, Inc.
All rights reserved.
The Importance of Crisis Management
What is Crisis Management? It's the art of avoiding trouble when you can, and reacting appropriately when you can't.
That's about as simple as it gets. From that definition you can see that crisis management could apply to business situations, to psychological issues, even to problems at home. But the type of crisis management we're talking about in this book has its closest correlation to firefighting.
Every year, tens of thousands of brave firefighters earn headlines for their efforts at fighting fires, as well they should—they save lives, homes, and businesses whenever they can. But the guys rolling on the fire engines are not, in fact, the ones who save us the most money every year. It's the fire inspectors who do that. The fire prevention work of fire inspectors goes on every day, and it goes on unheralded, but in fact it saves more lives, homes, and businesses than do the heroic actions of their firefighting brethren.
That's why, for organizational purposes, we need to define crisis management as the art of preventing loss when possible and minimizing loss when it's not.
Why is crisis management an art and not a science? Because there are no formulas that can be applied to all cases and guarantee success. The number and variety of crises to which any organization is potentially subject is almost limitless. Environmental disasters, legal challenges, employee misbehaviors, labor disputes, supply chain interruptions, product defects, consumer activism, the leaking of proprietary information—the list goes on and on. There are, of course, proven courses of action that, when followed, will help ward off such crises or mitigate their impact—they are the subject of this book—but there's no "one size fits all" approach that can immunize you or your organization against crises.
Types of Crises
While there are myriad examples of different kinds of crises, they can be divided into three general categories:
* Creeping Crises: foreshadowed by a series of events that decision makers don't view as part of a pattern
* Slow-Burn Crises: have given some advance warning, but the situation has not yet caused any actual damage
* Sudden Crises: the damage has already occurred and will get worse the longer it takes to respond
Here are some examples of crises from the healthcare industry. You should be able to develop comparable lists for your industry.
* Lack of a rumor-control system, resulting in damaging rumors
* Inadequate preparation for partial or complete business interruption
* Inadequate steps to protect life and property in the event of emergencies
* Inadequate two-way communication with all audiences, internal and external
* Internet activism
* Most lawsuits
* Most discrimination complaints
* Company reputation
* Lack of regulatory compliance—safety, immigration, environment, hiring, permits, etc.
* Major operational decisions that may distress any important audience, internal or external
* Local/state/national governmental actions that negatively impact operations
* Official/governmental investigations involving your healthcare organization and/or any of its employees
* Labor unrest
* Sudden management changes—voluntary or involuntary
* Marketing misrepresentation
* Patient death—your healthcare organization perceived to be liable in some way
* Patient condition worsened—your healthcare organization perceived to be liable in some way
* Serious on-site accident
* Insane/dangerous behavior by anyone at a location controlled by your healthcare organization
* Criminal activity at a company site and/or committed by company employees
* Lawsuits with no advance notice or clue whatsoever
* Natural disasters
* Loss of workplace/business interruption (for any reason)
* Perceptions of significant impropriety that damage reputation and/or result in legal liability, e.g., publicized involvement of company employee in a group or activity perceived to be a threat to the U.S. government or society; inappropriate comments by a "loose cannon"; business activities not officially authorized by management
Typically, reviewing a list like this triggers thoughts of other situations that need to be addressed during the crisis planning process.
What Is a Stakeholder?
A stakeholder is anyone or any organization that, logically, has a vested interest, "a stake," in what happens to your organization.
No organization can function, let alone succeed, without the implicit if not the explicit support of its stakeholders. It certainly can't stand against their outright opposition. This is what crisis management is all about: retaining the support of stakeholders during adverse circumstances.
Stakeholders can be both internal and external. Let's look at some examples.
* Family members of employees
* Board of directors
* Union leadership
* Customers or clients
* Referral sources
* Influencers in the investment community
* Community leaders
* Media serving all of the above
How Crisis Management Can Benefit Your Business or Organization
Traditional marketing and public relations (PR) exist to promote the value of an organization, but when the stuff hits the fan, you need to be able to stop the value from plummeting. The purpose of crisis management is to preserve what has been gained through promotion, marketing, customer service, distribution, and quality control. That's why costs associated with crisis management, either prevention or response, should logically be perceived as an investment, not an expense.
There are numerous ways crisis management can help an organization facing a crisis:
* Retain goodwill, that intangible asset necessary to the functioning of every organization
* Shore up employee morale
* Minimize the impacts of negative media coverage
* Stave off governmental actions that can cause further challenges
* Protect business operations
* Retain investor confidence
Crisis Management and Traditional Public Relations—Similarities and Differences
Most companies and organizations understand the need for public relations, and they're aware of the benefits such efforts can have. As a result, they direct some funding into such efforts. But without a crisis staring them in the face they're less likely to invest in crisis preparedness.
They don't see that their priorities are entirely backward.
Here are some other ways PR and crisis management are similar and yet differ:
* Both activities use the media, but PR focuses a lot more on traditional and social media than does crisis management.
* PR is proactive. Crisis management, at least in its response mode, is reactive.
* PR seeks media exposure that is 100 percent positive. Crisis management seeks media exposure that is as balanced
Excerpted from Manager's Guide to Crisis Management by Jonathan Bernstein. Copyright © 2011 by The McGraw-Hill Companies, Inc.. Excerpted by permission of The McGraw-Hill Companies, Inc..
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