Crisis Management

Crisis management is one of the most important elements of any manager’s job, and of any company’s overall operations. In the business world, as in life, things rarely go according to plan. And sometimes those deviations from our plans and ideal conditions present sudden and massive risks or threats. A manager, team, and/or corporate structure with the ability to handle crisis management is crucial to a business’s success. Crisis management helps identify, mitigate, and neutralize those risks and threats. Further, sometimes those risks and threats can even be turned into opportunities.

In this article, we’ll walk you through everything you need to know about crisis management. We’ll break down what it actually is and what strategies & skills are required. Then we’ll offer some examples that will help you design your own crisis management plan for whenever the need arises.

What Is Crisis Management?

Okay, so first off, let’s let ourselves start with the most elementary question we can ask: what is crisis management?

The official crisis management definition is: a process by which organizations respond to unexpected events and conditions that threaten to disrupt the organization’s operations, hurt its reputation, or otherwise threaten its stakeholders. Notice that this is a very broad definition. The kinds of crises that might arise to necessitate crisis management vary significantly. They can include natural disasters, workplace accidents, public scandals, PR mistakes, and more.

The specific ways crisis management can and must be successfully implemented will vary just as much as the kinds of threats that make crisis management necessary. There is no cure-all or one-size-fits-all approach. However, a few basic skills and strategies will help you to design an effective custom crisis management strategy. Learning more about crisis management is an important part of any consultant’s or manager’s education as they prepare to deal with the inevitability of threats and challenges that every organization must navigate.

Crisis Management Strategies

Okay, now that we’ve established a working crisis management definition, let’s start taking a look at the crisis management strategies that lead to more or less successful responses.

• Preparation and Planning: Good crisis management begins far before the crisis arises. Rather than scrambling at the last minute to develop a plan as the crisis is already unfolding, it’s better to begin preparing for the inevitability of a crisis right now. Good crisis management preparation involves establishing communication and response protocols, pre-assigning teams and responsibilities, and organizing resources so they can be deployed efficiently and effectively.
• Risk Assessment: The best medicine is preventative medicine. In other words, the best thing you can do right now is to be proactive about identifying potential threats that might necessitate the need for crisis management. Proper risk assessment not only identifies risks but evaluates their likelihood of occurring and the impacts those risks are likely to have on the organization. Good risk assessment will also help you understand how to channel resources to prevent and respond to crises. A simple example of this is a SWOT Analysis.
• Communication Management and Stakeholder Engagement: When crises arise, they threaten to impact all of an organization’s stakeholders, including employees, customers, shareholders, regulators, the media, and potentially the broader public. Organizations must protect and rebuild their trust with each of these stakeholders through the crisis by being intentional, consistent, and transparent in their communication practices.
• Response and Recovery: Good crisis management strategy involves the rapid deployment of a thorough response. This response should focus on mitigating and/or reversing the crisis, minimizing damage, neutralizing threats to all stakeholders, and returning to normal operations as quickly as possible.
• Legal and Regulatory Compliance: Many crises don’t just involve an organization’s reputation, but also their legal and regulatory standing, which can threaten to disrupt or interrupt an organization’s entire operation. An organization going through a crisis should be prepared to solidify and demonstrate their compliance with all the relevant rules and standards, while also attending to ethical and reputation issues.

Crisis Management Skills

Of course, it’s not as simple as just consulting your crisis management strategies checklist. Designing and executing those strategies depends on crisis management teams having the necessary crisis management skills. Let’s look at some of the most important crisis management skills:

• Leadership: Operating amidst a crisis is one of the hardest things for organizations and the individuals working within it. Leadership is crucial in tough times. Stakeholders will look to leadership for the ability to provide direction, make difficult decisions, and rebuild confidence, unity, and trust.
• Communication: Effective communication is central to every aspect of crisis management. Every level of stakeholder must be engaged through intentional and empathetic communication.
• Problem-Solving: Crises by definition have a way of unfolding as they should not. Navigating them is like navigating stormy seas. Or, put differently, they can resemble history as Winston Churchill defined it: “One damn thing after another.” Crises present management with difficult choices, and management must respond effectively.
• Adaptability: Crises are seldom one thing, but a series of several concurrent things. Further, they alter the operating conditions. Therefore, effective crisis management is not merely the deployment of a single boilerplate strategy. Rather, good crisis management requires adapting fluidly to unfriendly and rapidly changing conditions.
• Empathy: Perhaps the most important skill in crisis management is empathy. A crisis threatens many kinds of stakeholders, each with their own unique vulnerabilities. These stakeholders are much more likely to be tolerant, cooperative, and trusting if they feel heard and prioritized.

Crisis Management Examples

Okay, now that we’ve covered some of the more theoretical dimensions of good crisis management, let’s start looking at it in practice through some crisis management examples. It’s important to note that this is not a comprehensive or exhaustive list of potential crises. There are virtually limitless ways in which the best laid plans can go astray.

• Natural Disasters: Even the most meticulously constructed operation cannot perfectly predict the workings of Mother Nature. The natural world has many ways of refusing to cooperate and threatening an organization, including earthquakes, hurricanes, floods, and more. When these kinds of disasters strike, there is the immediate crisis of protecting life and property. Sometimes crisis management in these scenarios involves evacuation plans and working with authorities and disaster-relief agencies. While a natural disaster seems like it should not immediately threaten an organization’s reputation, reputation is tied to confidence. And if an organization cannot convince its stakeholders that it is capable of recovering from the natural disaster, it can prove fatal.
• Product Failures and Recalls: Quality control is a crucial part of any business’s success. However, this branch of management must contend with the fact that product defects, manufacturing failures, and other quality control issues will inevitably arise with enough time. This is the kind of event that can severely damage a company’s reputation, especially if it endangers the health and survival of the company’s stakeholders.
• Data and Privacy Breaches: With the rise of digital transactions in the business world, businesses are tasked with managing the sensitive information their customers provide. However, malicious actors (and other IT failures) make data breaches an omnipresent threat. If stakeholders lose confidence that a company can make its transactions safe for its customers, that threatens the company’s success.
• Financial Scandals: The larger the organization, the more money moves through it—and the more different human beings interact with the financial operation. Humans being what they are, mistakes are often made. Sometimes funds are mishandled through negligence. Sometimes they are deliberately mishandled through fraud and other forms of misconduct. This immediately threatens a company’s bottom line, and threatens its entire reputation going forward—especially if leadership is implicated in the scandal.
• Personal/Personnel Scandals: Mishandling funds isn’t the only way an organization’s employees at every level can create a crisis. Sex scandals, safety scandals, and abusive or negligent practices relating to diversity and inclusion can all throw a company into crisis.

Crisis Management Plan

For each of the crisis management examples listed above, and for any other crisis that may arise, it’s crucial that an organization be able to design and implement a reliable crisis management plan. In this section, we’ll walk you through the different ingredients of a successful crisis management plan.

1. Risk Assessment: The best crisis management plan begins long before any actual crises arises, and that starts with diligent risk assessment. Organizations must work hard to identify as many potential crises as possible, along with their likelihood, and their potential impacts. This allows the company to begin building the rest of the crisis management plan, so it’s ready to go whenever it’s needed.
2. Response Protocols: The term “fog of war” refers to the difficulty in making good decisions in the midst of a crisis. The effects of the fog of war are why it’s important to establish proper response protocols before the crisis. A successful response protocol for a crisis management plan will establish the procedures to be followed in the different kinds of crises envisioned by the risk assessment phase. These procedures will help govern communication strategies, decision-making processes, and the distribution of resources through the challenges and confusion of the crisis.
3. Crisis Management Team: A successful crisis management plan is highly dependent on having an effective and well-defined crisis management team. Ideally, a company will designate people, roles, and responsibilities for different team members before the crisis arises. However, the crisis may mean that not all the people involved can participate as the original plan may have dictated. So there may need to be some adaptation in this element of crisis management planning.
4. Communication Plan: While the communication procedures for a crisis can be worked out in advance to a limited extent, the communication plan will need to be organized significantly around the messaging needs for that specific crisis. The crisis will help determine the content of the message, as well as the primary communication channels and designated spokespersons. But these considerations can still be anticipated to a large extent.
5. Training and Exercises: A well-designed crisis management plan is likely to fail if everyone’s role is utterly foreign to them. A crisis leaves little surplus time for formal upskilling. Therefore, organizations should educate and train their employees in the roles they’ll be asked to play under certain crisis scenarios.

Crisis Management Plan Example

It’ll be easier to understand how the crisis management plan works by looking more closely at a real-world crisis management plan example. Let’s consider a hypothetical crisis that strikes for a global food manufacturing company called Gastro. The crisis we’ll discuss involves contaminated food products. Here’s how the crisis management plan example might unfold.

• Activation of Crisis Management Team: As soon as the issue is first brought to Gastro’s attention, the pre-defined crisis management team is activated and ready to go. The team is led by the CEO, and for this particular kind of crisis includes senior leadership from several departments, including operations, quality control, legal, communications, and supply chain.
• Assessment of the Crisis and Related Risks: The team first executes a rapid assessment to determine the nature and extent of the contamination issue: affected products, equipment, regions, and distribution channels. They work closely with the head of quality control to determine the cause of the contamination and how to stop it.
• Communication with Stakeholders: Gastro’s crisis management communication team consults the pre-existing communication plan as they draft their key messaging. Once the messaging is signed off on, the team rapidly distributes it via external channels, including social media, press releases, and the company website. This messaging addresses all stakeholders, including consumers, retailers, regulators, and the media. Gastro spokespersons conduct press briefings and interviews to provide ongoing updates and to demonstrate transparency.
• Response and Recall Operations: Having identified the extent of the contamination issue, Gastro performs a comprehensive product recall, while working with the relevant authorities, retailers, and regulatory agencies to prevent any contaminated products from reaching the public. The supply chain team halts production where necessary, conducts the required cleaning and sanitation, and proceeds with enhanced quality control measures to prevent recurrence.
• Business Continuity and Recovery: Gastro already had a pre-existing contingency plan to ensure the continuity of the rest of their operations. They coordinate with suppliers and distributors to shrink disruptions to a minimum. The company uses its communication platforms to begin rebuilding trust with their consumers.
• Learning and Improvement: Once the threats are neutralized, the Gastro team conducts a comprehensive review to evaluate the crisis management plan and response. The lessons that are learned about how to prevent a similar crisis and how to better respond are incorporated into the new crisis management protocols. The company maintains a heightened vigilance going forward, and continues working to rebuild consumer trust by demonstrating their new improvements.

Crisis Management Firms

Of course, a company experiencing a crisis doesn’t have to navigate it alone. There are many large and reputable crisis management firms that specialize in helping companies respond to such large-scale challenges and threats. You may be hoping to work for a crisis management firm yourself. Or, perhaps you’re simply hoping to educate yourself in preparation for a time when you might need to rely on one. In this section we’ll look at some of the best crisis management firms.

• Deloitte: One of the “Big Four” accounting firms, Deloitte is one of the biggest names in consulting across the board, serving a variety of clients big and small, in virtually every industry, and all over the world. Deloitte also provides a fairly comprehensive array of consulting services, including crisis management consulting. Some of the crisis management services Deloitte specializes in include risk assessment, crisis planning, incident response, and reputation management.
• KPMG: KPMG is another globally recognized consulting firm that employs over 200,000 people working in over 140 countries. KPMG offers a full suite of crisis management and response services, such as cybersecurity incident response, financial restructuring, and regulatory compliance.
• PricewaterhouseCoopers (PwC): Like the first two on our list, PwC is a highly recognizable and reputable brand in the global management consulting space. With over 250,000 employees, and serving 420 of the Fortune 500 companies, PwC has extensive experience in helping clients navigate a variety of different crisis scenarios. PwC is particularly noted for helping companies build resilience before a crisis arises, with services including crisis planning, risk assessment, and business continuity management.
• FTI Consulting: While not as much a household name as the first three, FTI is nevertheless a hugely important player in the crisis management consulting landscape. FTI employs over 8,000 people in over 30 countries around the world. FTI is recognized for the following crisis management services: crisis response planning, media relations, communication strategy, and reputation management.
• Edelman: Communication is perhaps the most important public-facing factor in a company’s crisis management plan. Hence, it should come as no surprise that a firm like Edelman, which specializes in global communications, would make the list of best crisis management firms. Edelman specializes in crisis and reputation management, and their areas of expertise include crisis preparedness, response planning, communication management, and stakeholder engagement.

Conclusion

Crisis management may not seem like the most inspiring aspect of running a successful business, but it’s crucial. When you need effective crisis management and don’t have it, it can make or break the company’s entire future and affect the outcomes for huge numbers of stakeholders.

The world’s most resilient, adaptive, and successful companies all devote extensive resources to bolstering their crisis management capacities before crises even arise. Hopefully this article we’ll empower you to help your organization weather its next crisis, so it can emerge even stronger.

 

Additional Resources:

• Top Corporate Training Topics
• The Pyramid Principle & Applied
• Restructuring Consulting: What Is It?
• Effective Leadership in Turbulent Times