Crisis Management
Crisis management is a strategic process employed by organizations to effectively address and mitigate the impacts of unforeseen events that threaten their operations, reputation, or stakeholder safety. This approach is crucial in various contexts, including corporate responses to incidents caused by their activities that result in harm or loss, as well as government actions during natural disasters or security threats. A key goal of crisis management is to minimize damage and restore public trust through immediate and transparent responses.
Successful crisis management relies on pre-existing plans and a clear leadership structure to make informed decisions quickly. Organizations gather information to understand the crisis better and establish guidelines on what information to disclose. Transparency and accountability are emphasized; failing to acknowledge the severity of a crisis can exacerbate damage to an organization’s reputation. The process also involves continuous monitoring and adaptation based on stakeholder reactions and emerging information. Notable historical examples illustrate both effective responses, such as Johnson & Johnson's handling of a tainted product crisis, and poor management, as seen in BP's response to the Deepwater Horizon oil spill, highlighting the critical importance of effective crisis management strategies.
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Crisis Management
Crisis management is a process used by organizations to respond to situations that pose a threat to the organization's property, reputation, operations, or continuity, or to its stakeholders or members of the general public. It is an aspect of public relations that is most commonly used in the corporate world in the immediate aftermath of major events, usually resulting directly from company activities, that caused damage, injury, death, environmental degradation, or other forms of significant and widespread harm. Governments also use crisis management techniques to reassure, mobilize, or manage citizens following a natural disaster, military or terrorist attack, or other acute and unexpected safety hazard.
Principles and Techniques
The goal of crisis management is to mitigate damage to the organization, its stakeholders, and/or the general public to the greatest possible degree. Companies and organizations often have crisis management teams already in place, particularly if they are engaged in activities that pose a relatively high likelihood of causing or provoking a crisis situation. In other instances, they may turn to firms that specialize in crisis management to help them address the immediate aftermath of a damaging event and form a plan for mitigating its fallout.
Crisis management models emphasize the need for a preexisting plan that the organization can use in the event of such an emergency. The lack of such a plan typically makes it much more difficult for the organization to successfully manage an unexpected emergency. While the specifics of the techniques used to manage a crisis vary according to the nature of the precipitating event, there are several principles that are applied in the majority of situations. The first such principle is to take immediate action rather than waiting to see how events unfold. A prompt response is universally regarded as one of the most important factors in determining whether the crisis can be successfully defused.
Next, the organization will gather as much information about the nature of the crisis as possible. This enables members of the leadership team to make informed decisions about how to proceed while keeping speculation to a minimum. From there, boundaries of information and confidentiality will be established; the organization will determine what is to be made public and what should be kept secret. Most crisis management experts stress the need for transparency and accountability, especially in the corporate world, as the company's reputation risks further harm if it later comes to light that the business was attempting to downplay the severity of the crisis.
At this point, the specifics of a feasible crisis management plan will typically emerge. The organization's leadership is encouraged to seek multiple expert viewpoints about the best way to proceed. Clear leadership is essential to successful crisis management; confusion about executive authority and the chain of command usually makes it difficult, if not impossible, to implement an effective crisis management strategy.
Once the organization responds to the crisis, it must then carefully monitor the consequences of its actions and the reaction of stakeholders, customers, and/or the general public. If adjustments to its practices are necessary, the organization will usually return to the information-gathering stage and proceed through the process again until the situation has reached a resolution.
Examples
In 1982, Johnson & Johnson faced an unprecedented crisis when seven people in the Chicago area died after taking Tylenol, the company's flagship brand of over-the-counter pain relievers. It was later determined that someone had tampered with the products after they had reached the shelves of local stores by placing lethal amounts of cyanide poison in the bottles.
Johnson & Johnson reacted to the crisis by ordering the immediate recall of all Tylenol products on sale in the United States, a process that resulted in the removal of an estimated thirty-one million bottles from shelves. The recall cost Johnson & Johnson more than $100 million.
Though the recall defused the immediate risk to the public, Johnson & Johnson faced the daunting task of rebuilding its public image and restoring confidence in its products. The company reintroduced Tylenol to the market in a tamper-proof package and delivered the medication in capsules rather than pills to provide an additional level of safety. Johnson & Johnson also offered Tylenol products at a deep discount while conducting an aggressive sales campaign in the medical and health care industries to help rebuild the faith of doctors, hospitals, and caregivers in its products. Within a few years of the event, Johnson & Johnson managed to recover its lost market share, and Tylenol went on to regain its position as one of the top-selling over-the-counter pain medications in the United States. Johnson & Johnson's handling of the situation is widely cited as one of the most successful crisis management campaigns in corporate history.
Conversely, many experts point to BP's handling of the 2010 Deepwater Horizon oil spill as an example of unsuccessful crisis management. After an oil rig exploded and sank in the Gulf of Mexico on April 20, 2010, causing the deaths of eleven people, an estimated 4.9 million barrels of oil spilled into the coastal waters over an eighty-seven-day period, resulting in billions of dollars in environmental damage. Rather than accept responsibility and acknowledge the gravity of the situation, BP's chief executive officer (CEO) Tony Hayward downplayed the severity of the situation, implying that the amount of oil being spilled was insignificant in comparison to the volume of water contained in the gulf. He also insisted that the environmental damage would prove to be minor, inspiring widespread public backlash against the company. Hayward resigned as BP's CEO on October 1, 2010, and BP's share price did not approach the highs it reached prior to the event at any point during the five-year period after the spill.
Bibliography
Latson, Jennifer. "How Poisoned Tylenol Became a Crisis-Management Teaching Model." Time. Time, Inc. 29 Sept. 2014. Web. 9 Feb. 2016. http://time.com/3423136/tylenol-deaths-1982/
Owen, Jo. "BP Oil Spill Crisis Management: How Not to Do It." CBS Money Watch. CBS Interactive, Inc. 11 June 2010. Web. 9 Feb. 2016. http://www.cbsnews.com/news/bp-oil-spill-crisis-management-how-not-to-do-it/
Seeger, Matthew W., Timothy L. Sellnow, and Robert R. Ulmer. "Communication, Organization, and Crisis." Communication Yearbook 21. Ed. Michael E. Roloff. New York: Routledge, 2012. Print.
"7 Steps of Crisis Management." The NonProfit Times. The NonProfit Times Publishing Group, Inc. Web. 9 Feb. 2016. http://www.thenonprofittimes.com/management-tips/7-steps-crisis-management/
Venette, Steven James. Risk Communication in a High Reliability Organization: APHIS PPQ's Inclusion of Risk in Decision Making. Fargo: North Dakota State University, 2003. Print
Walter, Ekaterina. "10 Tips for Reputation and Crisis Management in the Digital World." Forbes. Forbes, Inc. 12 Nov. 2013. Web. 9 Feb. 2016. http://www.forbes.com/sites/ekaterinawalter/2013/11/12/10-tips-for-reputation-and-crisis-management-in-the-digital-world/#2bdd88a42507