Crisis management is a critical organizational function. Failure can result in serious harm to stakeholders, losses for an organization, or end its very existence. Public relations practitioners are an integral part of crisis management teams. So a set of best practices and lessons gleaned from our knowledge of crisis management would be a very useful resource for those in public relations. Volumes have been written about crisis management by both practitioners and researchers from many different disciplines making it a challenge to synthesize what we know about crisis management and public relations’ place in that knowledge base. The best place to start this effort is by defining critical concepts
Crisis is any event that is expected to lead to, an unstable and dangerous situation affecting an individual, group, community, or whole society. It is a situation that is unpredictable, but it is not unexpected.
Common features of Crisis
- The situation materialises unexpectedly.
- Decisions are required urgently.
- Time is short.
- Urgent demands for information are received.
- There is a sense of loss of control.
- Pressures build over time.
- Routine business becomes increasingly difficult.
- Reputation suffers.
Types of Crisis:
- Financial Crisis
- Technological Crisis
- Crisis of Malevolence
- Natural Crisis
- Crisis of Deception
- Workplace Violence
These are the crisis that occurs in an organization due to its prevailing financial conditions. Losses, increase in costs, non-availability of funds, bankruptcy, unable to pay back loans, etc.
Examples of Financial Crisis
- Kingfisher Airlines recently faced a financial crisis.
- Deutsche Bank faced a financial crisis in the USA, in 2009.
Technological crises are caused by human application of science and technology. This occurs when technology becomes complex and the system breaks down. Software failures, Industrial accidents, etc.
Examples of Technological Crisis
- Exxon Valdez, oil spill in Alaska, on March 24, 1989.
- Union Carbide India Ltd, gas leak in Bhopal, on December 2, 1984.
Crisis of Malevolence
When opponents or miscreant individuals use extreme tactics for the purpose of expressing anger or seeking gain from, a company or economic system, perhaps with the aim of destroying it. Product tampering, kidnapping, malicious rumors, terrorism, etc.
Example of Malevolence Crisis
Tylenol (Extra-Strength capsules) murder case in Chicago, on 29 September 1982.
- Natural crises, are natural disasters considered as ‘acts of God,’ are such environmental phenomena.
- Earthquakes, volcanic eruptions, tornadoes, and hurricanes, floods, landslides, tsunamis, storms, and droughts, etc.
Examples of Natural Crisis
- The Power Project of Jaiprakash Associates, at Nathpa, in Himachal Pradesh was devastated by floods.
- The Indian Ocean earthquake (Tsunami), in 2004.
Crisis of Deception
Crisis of deception occurs when management conceals or misrepresents information about itself and its products in its dealing with consumers and others.
Example of Crisis of Deception
- Dow Corning’s silicone- gel controversy in Michigan, USA.
- The Satyam scam, which came to light, in 2009
Workplace Violence and Rumors
Crisis occurs when an employee(s) or former employee(s) commits an act of violence against other employees on organizational grounds. Rumors are when false information about an organization or its products creates crises hurting its reputation.
Example of Workplace Violence and Rumors
- A workplace violence had occurred between the laborers and higher authority, in Vardhman Group of Companies.
- Procter & Gamble’s Logo controversy in 1985.
The Four Stages of a Crisis
A crisis has up to four distinct phases. The goal of crisis planning is to move as quickly from the pre-crisis stage to the post-crisis stage. The ideal response would be to eliminate Stage 2 and 3 below with proper planning and responses.
Stage 1: Prodromal (Pre-Crisis)
This is the warning stage. The event hasn’t happened yet and you may have not even recognized that it could happen. This is the time when you want to assess the impact an actual crisis could have on your company, employees, customers, suppliers, operations and bottom line.
Stage 2: Acute (Crisis)
This is the crisis itself. There’s no turning back now. You will lose some ground, events will occur and you may experience some damage. Ignoring the situation is not an option. The key is to control what you can as much as you can so you can move the situation to the next stage as quickly as possible. The acute stage is the shortest of the four phases.
Stage 3: Chronic (Clean-Up)
This is sometimes referred to as the clean-up phase. This is either a time to breathe a sigh of relief because you handled things well or fight your way through upheaval, financial stress, management shake-ups, the loss of customers, and at its worse, bankruptcy or the loss of your business. This period can last indefinitely if you failed to do proper planning or failed to respond properly.
Stage 4: Crisis Resolution (Post-Crisis)
This is the turning point where you can turn a challenge into an opportunity. Again, in crisis planning the goal is to go from the first stage – the stage where a crisis could occur – to this stage where a full-blown crisis never occurred or was handled quickly and efficiently because you did your due diligence when it comes to planning.
Crisis management is the process by which an organization deals with a major event that threatens to harm the organization, its stakeholders, or the general public.
Crisis Management Plan
- Gather facts.
- Be prepared.
- Communicate quickly and accurately conduct brainstorming.
- Develop policies to minimize crisis.
- Assemble and organize resources.
- Create a Crisis Management Team.
- Execute actions
Example of Unsuccessful Crisis Management
- Union Carbide India Ltd, gas leak tragedy in Bhopal, on December 2, 1984.
- It occurred on the night of December 2–3, 1984 at the Union Carbide India Ltd, pesticide plant in Bhopal, Madhya Pradesh.
- A leak of methyl isocyanate gas and other chemicals from the plant resulted in the exposure of hundreds of thousands of people.
- Estimates vary on the death toll. The official immediate death toll was 2,259 and the government of Madhya Pradesh.
Example of Successful Crisis Management
- The Pepsi Corporation faced a crisis in 1993, which was successfully managed by the company.
- Cadbury’s chocolates – worms in packing.
- In 1993, claims of syringes being found in cans of diet Pepsi were made.
- Company urged stores not to remove the product from shelves while it had the cans and the situation investigated.
- Pepsi released videos and made public, showing the production process to demonstrate that such tampering was impossible within their factories.
- Crisis was managed through effective communication.