Crisis management in
organization
Tutorial 1 - Cognitive failures as causes of organizational
crises
Introduction
Human error has been proposed as the most frequent cause of accidents.
Wagenaar and colleagues (1990)  argue that many unsafe acts are not simply slips, but
intentional and reasoned actions that end in unforeseen results.
 They show that many accident prevention programs on the work floor cannot reduce or
eliminate human error.
Reason (2000)  distinguishes two approaches to the problem of human fallibility: The person
and the system approach.
 He argues that high reliability organizations recognize that human variability is a force
to harness in averting errors, but that they work hard to focus that variability, and that
they are constantly preoccupied with the possibility of failure.
Cognitive failures and accidents
Wagenaar and Hudson
Summary
Industrial accidents  end-result of long chains of events that start with decisions at
management level
 Often these decisions create latent failures  can be grouped into limited number of
general failure types
Latent failures will affect the psychological processes determining the actual behaviour of
workers on the shop floor
 These workers will commit unsafe acts that, provided the system lacks appropriate
defences, will cause accidents
Accidents and cognitive causes  in modern industries, preventative action will be more
effective when aimed at changes based on management decisions
 Reason for this is that many unsafe acts aren’t simple slips but intentional and reasoned
actions that end in unforeseen results.
Introduction
Human errors has been proposes as the most frequent cause of accidents
General accident causation scenario  describes how all accidents originate:
The final event in the generalized scenario is the accident  these are caused by unsafe acts
 In most accidents the actors could not know how their actions would contribute to a
disaster
Between unsafe acts and accidents there is a defense mechanism (black bar)  these guarantee
that most unsafe acts do not cause accidents
 However, if an accident occurs, this must mean that there was a hole in the defense line
Unsafe acts are not random but rather follow psychological precursors which are caused by
general failure types.
 Those failure types are created by management decisions.
Psychological precursors  the unsafe acts that origin on the psychological state of mind, or
patters of reasoning
 General failure types  Influences of physical and organizational environment (e.g.,
lack of time) which provoke these psychological precursors
General failure types are created by management decisions
The typical reaction to accidents is strengthening the defences. Meaning rather than trying to
reduce the errors the systems are made errorproof. This is hard to reach because preventing
every error means anticipating every error in advance, and this is hardly possible.
Defences
The typical reaction to accidents is strengthening the defences (already built in the system)
 Men will always make mistakes and a system should be made ‘foolproof’ whenever
possible.
 A typical best performance for simple tasks is one error in a thousand times
This is hard to reach because preventing every error means anticipating
every error in advance and anticipating all foolish things people will do (which
is not possible)
 Especially because the foolishness may reside in the removal of the
defense itself
Unsafe acts
UNSAFE ACTS  often meant to be prevented by choosing safe workers, educating, and
motivating them to not behave unsafely – not all unsafe acts can be prevented because:
1. Not all unsafe acts are violation of any rule or hazardous behaviors committed in full
awareness of their risks


Unsafe acts lead to accidents only in combination with other unsafe acts
The information about what is happening is not always available to one single person
2. Many unsafe acts are slips
 There are two basic types of errors:
Slips  an error in the execution of an otherwise perfect plan
 It is usually easily discovered and corrected when the operation starts to
deviate from the intended plan
 It is beyond people’s control
Mistakes  occurs through the perfect execution of a wrong plan
 Not easily discovered since, initially, the plan develops as expected and
only at the end it appears the plan has an unintended and disastrous effect
3. Many of the remaining unsafe acts are mistakes for which the consequences are
misjudged
 The mistake is not a violation of a rule, is done in good faith, has consequences that
cannot be foreseen and can only be corrected after the harmful effects become apparent
WARNING, RULES AND PROCEDURES
Introduction of warnings, rules and procedures  most frequently used method for
preventing unsafe acts in situations where design does not prevent them – however:

People do not read warnings (or do what they say)
Only positive effect is hiding warnings on the instructions so that they are not
skipped consciously

People do not envisage a scenario leading to an accident (thus, not reading/following
warnings)

The behaviour prescribed by warnings is optimal whereas rules are binding  there’s
a natural tendency to obey rules when perceived meaningful
Meaningfulness can be increased by with monetary rewards and punishments
Violation of rules are the basis of many accidents
SAFETY AWARENESS
Rising the general level of safety awareness  suggested for the promotion of compliance
with rules and procedures
 People commit unsafe acts and take risks willingly and aware of possible consequences
Raising the level of safety-awareness only helps if people are prepared to deduce the
consequences of their actions  this to:
 See if these are part of an accident scenario; and

See if people can construct such scenarios at the appropriate level of complexity
Not reasonable to expect that either or both conditions will be met thr majority
of cases
Conscious risk-taking can take place only after the risk of particular action has been analyzed
 Safe and unsafe situations aren’t easily distinguished  they look very alike
Impossible accidents  not expected by those partaking in their creation, they are deemed to
be impossible in advance
 Possible accidents  prevented unless their creators are criminals – impossible
accidents are the ones that remain
Inconceivable events  events which cannot readily be explained by the deviation from
normal performance or demands that can be expected from statistical or deterministic grounds
FORWARD AND BACKWARD REASONING
Even when information is available, people have the tendency to use backward reasoning
instead of forward reasoning
 Forward reasoning  the task is to deduce from known actions to an unknown
accident
 Backward reasoning  one starts with known accidents, listing their causes to see
whether the present actions are among them
Limitation  backward reasoning does not apply to unexpected or unusual
accidents
Psychological precursors
A THEORY OF HUMAN ERROR
Psychological precursors of unsafe actions aren’t directly observable  three level theory:
1. Skilled-based level
2. Rule-based level
3. Knowledge-based level
There are two types of mistakes
 Rule-based
 Knowledge-based
1) PRECURSORS AT THE SKILL-BASED LEVEL
SKILL-BASED LEVEL (lowest level)  sequence of preprogramed behavioral segments,
combined with attentional checks
 The checks are needed to establish whether the action is still running according to plan
and to ensure that the plan is still adequate for achieving though desired outcome
As long as these checks look satisfactory, control stays at the skill-based level
Slips  they’re errors in the application of routine actions
 Double-capture slip  occurs when at a checkpoint in the intended sequence the
environment succeeds in triggering an element of an unintended sequence, so that one
is getting on the wrong track
Primarily occurs when two sequences share several common elements

Omission after interruption  precursors of such errors are unwanted interruptions
that disturb the smooth sequence of automated behavior
2) PRECURSORS AT THE RULE-BASED LEVEL
RULE-BASED LEVEL  Problems are identified through some sort of pattern recognition
 When the problem is off a familiar pattern, there is also a stored solution rule that
corresponds to the problem (if-then pattern)
There are many if-then rules competing to become active – ordered in a hierarchical structure
where more general rules dominate the more specific rules
 The specific rules can be viewed as exceptions to the general rules
Predominance of a rule depends on several factors such as:
 The if part should match with the environment
 Rules have a certain strength of their own, which depends on past
success
Rule-based mistakes  Strong-but-wrong: the actor believes he has found the correct
solution, but it is not based on a full analysis of the problem.
 Control was not passed to the knowledge base level which means that there was
considerable certainty with respect to the appropriateness of the solution
 Error types evolving from this if-then model:
First-exception  When an exception is encountered for the first time there is
no specific rule available, meaning that the general rule will be applied in the
wrong situation
Exclusive symptom selection  Often there are symptoms indicating that a
rule is not applicable and symptoms that are merely irrelevant.
 A conscious analysis of symptoms is not made at this level, and it may
easily happen that only a subset of symptoms will determine the choice
among rules.
 Inappropriate selection occurs when the contra-indicative symptoms are
rare and not prominently displayed

All errors at this level are all related to the development or application of incorrect rules
3) PRECURSORS AT THE KNOWLEDGE-BASED LEVEL
KNOWLEDGE-BASED LEVEL  Solutions are thought based on a full understanding of
the ingredients that cause the problem
 Knowledge about functions and relationships can be combined so that original and
creative solutions are found
If applications of the rules doesn’t work, control may be passed to this level
 Mental capacity is sometimes not enough to process all the information
and find a good solution
All theories of this level share two basic features:
 Bounded rationality  the capacity of the mind to formulate and solve complex
problems it's very small compared with the size of the problems whose solution is
required for objectively rational behavior in the real world
 Incomplete problem representation  refers to the fact that, even if our mental
capacity was large enough to use optimal problem solution procedures, then still learn
knowledge about the problem and its context would be insufficient
Knowledge-based mistakes Wrong-but-weak: outcome of an analysis of a new problem.
 There is no guarantee that the adopted plan is correct and consequently the actor will
not execute the plan without continuous checking

Knowledge based error types:
Selectivity  people tend to focus their attention on specific aspects of the
problem, not always the important ones
Limitation of workspace  The number of explanatory models that can be
considered is limited, because they place a heavy burden upon the finite
resources of the conscious workspace
General failure types
General failure types are features of operations that are wrong and have been for a long time
but are not influential without a trigger.
 General failure types promote the psychological precursors which, in turn, promote
unsafe acts
Errors at the level of general failure types  created by those whose responsibility is to
check and remove errors.
 Influences that make the operator think of a short cut, generally created by
management:
Active failures  The unsafe acts that occur right before or during the
accidents
Latent failures  Are created a long time before the accident, they lie dormant
till an active failure triggers their operation
General failure types – divided into three groups:
 Physical environment
 Human behavior
 Management
THREE ERROR TYPES
PHYSICAL ENVIRONMENT:
 Design failures  The problem seems that our knowledge is not used: about 1/3 of the
accidents were breaching well known ergonomic rules
 Missing defenses  should compensate for deficient design, and should be based upon
scenario construction
 Hardware defects  the deviations from the original design
It signals a lack of management control and lack of feedback about conditions
in which the work is actually performed

Negligent housekeeping  failure which is the most readily accessible to managers
It will create psychological precursors such as unwanted attention shifts,
unexpected situations that require improvisation

Error-enforcing conditions  force people to operate in a manner not foreseen by the
system designers
HUMAN BEHAVIOR:
 Poor procedures  stem from bad planning (of procedures and the system as a whole)
and insufficient control
 Defective training  it usually means safety awareness training
MANAGEMENT:
 Organizational failures  the structure, general mood within an organization can
produce the state of mind that produce unsafe acts.
General attribution error  managers perceive successes as their own efforts
and losses are attributed to influences beyond their control


Incompatible goals  balance between commercial goals and safety
Lack of communication  blocked telephone line, language difficulties, etc. The key
problem is, that the absence of knowledge is rarely noticed
Decisions
Four possible feedback loops:
 Loop 1  Feeds back a company’s accident statistics
 Loop 2  carries information about unsafe acts observed at the shop-floor level (many
actions that were causes of accidents cannot be recognized as such in advance)
 Loop 3  tells management about the presence of psychological precursors (info
available only after a thorough examination of shop-floor conditions
 Loop 4  provides feedback with shortest delay
However, no amount of defences or safety awareness will counteract the effects of latent
failures introduced in the boardroom
Conclusion
The most efficient way to fight accidents is by affecting the decisions, so that the event chains
do not even start. Prevention of all sorts of unsafe acts or installation of more and more defenses
will not have a great impact
Human Error: Models and Management
James Reason
Summary
Two approaches to the problem of human fallibility exist:
 The person approach  focuses on the errors of individuals, blaming them for
forgetfulness, inattention, or moral weakness
 The system approach  concentrates on the conditions under which individuals work
and tries to build defences to avert errors or mitigate their effects
High reliability organisations (have less than their fair share of accidents)  recognise that
human variability is a force to harness in averting errors, but they work hard to focus that
variability and are constantly preoccupied with the possibility of failure
Person approach
PERSON APPROACH  focuses on unsafe acts (error and procedural violations) of people
at the sharp end (nurses, physicians, surgeons, etc.) – puts the fault at the person
 It views these unsafe acts as arising primarily from aberrant mental processes such as
forgetfulness, inattention, poor motivation, carelessness, negligence, and recklessness.
The associated countermeasures are directed mainly at reducing unwanted variability in human
behaviour
 Methods: poster campaigns that appeal to people’s sense of fear, writing another
procedure, disciplinary measures, threat of litigation, retraining, naming, blaming, and
shaming.
Followers of this approach tend to treat errors as moral issues, assuming that bad things happen
to bad people
Shortcomings:
 Continued adherence to this approach can spoil the development of institution.
Effective risk management is depending on establishing a reporting culture.
 The same set of circumstances can provoke similar errors, regardless of the people
involved
System approach
SYSTEM APPROACH  humans are fallible and errors are to be expected, even in the best
organisations – use the fault at the system itself
 Errors are seen as consequences rather than causes, having their origins not so much in
the perversity of human nature as in “upstream” systemic factors.
These include recurrent error traps in the workplace and the organisational
processes that give rise to them.
Countermeasures assume that though we cannot change the human condition, we can change
the conditions under which humans work.
 A central idea is that of system defences.
 All hazardous technologies possess barriers and safeguards.
When an adverse event occurs, the important issue is not who blundered, but how and why the
defences failed.
The Swiss cheese model of system accidents
In an ideal world each defensive layer would be intact  In reality, they are more like slices
of Swiss cheese, having many holes.
 These holes are continually opening, shutting, and
shifting their location.
 The presence of holes in any one slice does not normally
cause a bad outcome.
The presence of holes in anyone “slice” does not normally cause a bad outcome.
 Usually, this can happen only when the holes in many layers momentarily line up to
permit a trajectory of accident opportunity
Wholes arise due to 2 reasons:
1. Active failures  unsafe acts committed by people who are in direct contract with the
patient or system – slips
2. Latent conditions  are inevitable within the system, they arise from designers,
builders, procedure writers and top-level management
Can translate into errors provoking conditions within local workplace, create
long-lasting wholes and weaknesses
Error management
High reliability organizations (system approach)  recognizes that human variability in the
shape of compensations and adaptations to changing events represents one of the system’s most
important safeguards.
 They expect to make error and train the workforce to recognize and recover them.
Tutorial 2 - Decision-making biases
Threat Rigidity Effects in Organizational Behavior: A Multilevel
Analysis
Barry M Staw, Lance E Sandelands, Jane E Dutton
Introduction
Organizations attempt to cope with potential sources of adversity by taking actions to enhance
their position in the environment
 Many of these market strategies and techniques have an anthropomorphic quality to
them and could be constructed as a product of a policy-making group or even a single
decision maker
The threat-rigidity thesis
Many well-publicized corporate collapses  can be viewed as failures to alter response in
the face of environmental change
 When place in a threatening situation  an individual's most well learned or dominant
response may be produced but this response may be grossly inappropriate if the task or
learning environment has changed
Two types of effects when a threat occurs:
1. May result in restriction of information processing  such as a narrowing in the field
of attention, a simplification in information codes, or a reduction in the number of
channels used
2. There may be a constriction in control  such that power and influence can become
more concentrated or placed in higher levels of a hierarchy
A threat to the vital interests of an entity, be it an individual, group or organization, will lead
to forms of rigidity
 Threat-rigidity effects can be maladaptive  when the environment has changed
radically, flexibility and diversity in response have survival value
When a threat does not involve major environmental change  rigidity in response may not
be dysfunctional
 A previously successful response to a threatening situation that doesn’t involve major
changes
Individual-level effects
A threatening experience frequently alter states of stress, anxiety and stimulation
Disaster research  two themes are prevalent when it comes to studies of behaviour in
disaster situations:
 The primary psychological effects of crisis are to create feelings of stress and anxiety
in affected individuals
 The anxiety and stress brought on by a crisis elicits behavioral responses of withdrawal,
reduction and critical information processing and constriction in behavioral responses
PSYCHOLOGICAL STRESS  the effects of stress regarding threat-rigidity can be found
in three stems of research:
 Perception  psychological stress interferes with the ability of subjects to identify
and discriminate among visual stimuli
 Problem solving and learning  subjects in stress conditions have been found to be
less flexible in their choice of solution methods than nonstress subjects
 Motor performance  trained subjects in a stress condition perform better than
subjects in nonstress conditions, but untrained subjects in a stress condition perform
less well than nonstress subjects
ANXIETY  relationship between stress and behaviour can be categorized in two sub-streams
of research:
 Studies of visual discrimination and learning  have found that highly anxious
subjects are less sensitive to visual stimulation
 Anxiety, like psychological stress, interferes with visual discrimination, motor
performance involving vigilance, and intellectual test performance
PHYSIOLOGICAL AROUSAL  during periods of threat, individuals become
physiologically activated in addition to experiencing psychic stress and anxiety
 Arousal may narrow the range of cues processed by decreasing sensitivity to
peripheral cues
 Arousal may also reduce flexibility and induce responses that are well-learned or
habituated
Three aspects of the model above are central:
1. The link between threat situations and psychological stress and anxiety
2. The nature of cognitive manifestations of stress/anxiety/arousal
3. The link between cognitive manifestations of stress/anxiety/arousal and properties of
individual behavior
The psychological literature cautions that the performance effects of stress,
anxiety, and arousal are not general
Group-level effects
Threats to the interest and purposes of groups often occur  some so severe as to cause the
break up or faculty or lost to each of its members
GROUP-LEVEL EFFECTS:
THE EFFECTS OF THREAT UPON GROUP COHESIVENESS  an external threat
draws group members together and increases group cohesiveness
 Competition between groups has been found to increase intragroup cohesiveness 
although this does not mean that adversity always draws group members together
 When two groups compete for resources, the losing group may suffer a decrease in
intragroup cohesiveness, while the winners may increase their cohesion further
THE EFFECT OF THREAT UPON GROUP LEADERSHIP AND CONTROL 
members of competing groups identified fewer members as leaders than did members of
cooperating groups, implying a centralization of authority under threat
 The groups that were exposed to an outside threat, were replacing rather than
strengthening existing group leadership
 Tendency for those who are initially most influential to lose some of their power and
for those who were initially second in group influence to attain the leadership role
Failure experience increased influence of elected leader but not that of an
appointed leader
THE EFFECT OF THREAT UPON PRESSURES TOWARDS UNIFORMITY 
pressures toward uniformity arise because group members perceive uniformity as necessary
to move toward a collective goal
 Groups will apply pressure upon deviance to reach consensus on opinions and beliefs
 that pressures for uniformity will increase as a collective goal increase in importance
or as group members become increasingly dependent upon the group
 When individuals deviate on important issues  the group will increase
communication with and exert pressure upon the deviant to change
If the deviant fails to come into line with the rest of the group 
communication may become sharply reduced and he/she may become
excluded from important group tasks
 Groupthink  syndrome of processed characteristics presents in highly cohesive
policy groups
o At the heart of this syndrome are the outcroppings of pressure toward uniformity
When a threat has been attributed to an external source and it is thought likely for a group to
successfully meet the threat  then it can be predicted:
 Increased cohesiveness;
 Leadership support; and
 Pressure for uniformity
Organization-level effects
Severe resources constraints have created a situation in which the welfare or viability of an
organization is threatened
A crisis occurs when three conditions are present:
1. There is a major threat to system survival
2. There is little time to react
3. The threat is unanticipated
 Threat  driving force behind most of the events that the term crisis attempt to
explain
THE EFFECT OF THREAT UPON INFORMATIONAL PROCESSES  there is a
tendency for individuals to identify a dominant and familiar percept in threat situation and
then to simulate new information into it
 Initially, at the detection of a threat, more information is sought to confirm the
presence of the threat
 As the threat became reality, the search for information appeared to decrease  this
reduction in search could have been due to the overloading of communication channels
that often occurs at the onset of a threat
It’s suggested that fewer sources of information are consulted in a crisis,
which explains why there are fewer alternatives available

When confronted with crisis decisions, decision makers solicited advice from
subordinates, presumably only to confirm their decision outcomes or preferences
CONTROL PROCESSES  when there is threat there also appears to be a mechanism shift
in which there is increased centralization of authority, more extensive formalization, and
standardization of procedures
 As the importance of decisions increases, they are made at progressively higher
levels within an organizational hierarchy  presumably because top-level decision
making is less likely to differ from the core values or goals of the organization
 During natural disasters  divisions or units of public-work organizations became
more autonomous – decision were being made without consultation with higher
officials
The centralization may vary according to whether the threat affects a subunit or
an entire organization

A threat may force a control response that results in the strengthening of tightly
coupled links within organizations and the dissolution of weak links
The shift to a more rigid structure seems to be due to decision makers' attempts
to enhance control so as to ensure that organizational members act in a concerted
way in meeting a threat situation
DOMINANCE OF EFFICIENCY CONCERNS  efficiency concerns are manifested in
the tightening of available budgets, increased emphasis on cost cutting, and intensification
of efforts to insure accountability
 Often brought about by a severe decline in performance and a reduction in slack
resources
Threat has generally been conceived as a result of an adverse condition in the environment,
such as:
 Resource scarcity;
 Competition; or
 Reduction in the size of the market
The consequences of threat on the organization can be placed in three groups:
1. Due to an overload of communication channels, reliance on prior knowledge, and
a reduction in communication complexity  there may be a restriction in the
information-processing capacity of the organization
2. Due to a concentration of authority and increased formalization of procedures 
there may be a constriction in control
3. There may be increased efforts to conserve resources within the system though costcutting and efforts for greater efficiency
Toward a multilevel theory
The threat-rigidity thesis finds support at multiple levels of analysis:
 Individual level  there are strong indications of constrictions in information
processing and behavioral response in the face of threat
 Group level  there is evidence of similar effects when a threat is perceived as external
to the group and when there is some expectation of successfully resisting the threat
 Organization level  there is evidence of mechanistic shift, restricting information
and moving control to higher levels in the system
A SYSTEM APPROACH  The effect of threat upon internal control mechanisms may
induce system rigidity
 Under a threat situation, a system is likely to economize in information processing by
decreasing the use of nonessential peripheral channels and by reducing the number and
complexity of information codes employed  such reduction may lead to a
concomitant reduction in response capability or a narrowing in the behavioral repertoire
Under threat the necessity of system response is great and input processes may
be subordinated to output and control processes

When a threat occurs, the entity focuses attention on the source of danger,
economizing on nonrelevant input and processing functions and responding with welllearned or salient behavioral responses.
While such a response pattern works well for threats of a known or repeated
nature, it is less appropriate for threats of unknown dimensions
CROSS-LEVEL EFFECTS
INDIVIDUAL-LEVEL EFFECTS IN GROUP SETTINGS  when individuals are
brought together to reach a decision about an issue, the inputs or knowledge brought to the
decision are, in large part, the cognitions and information of individuals
 If individuals restrict their cognitions and narrow their response repertoire in threat
situations, we should expect similar group level-effects
GROUP EFFECTS IN ORGANIZATIONAL SETTINGS  sometimes (e.g.,
governmental decision making) there’s formal groups ready to use in case of threat situations
 Thus, any rigidities generated by group process under threat may also be manifested
in organizational actions
INDIVIDUAL EFFECTS IN ORGANIZATIONAL SETTINGS  many major decisions
still originate with administrators acting alone or in consultation with very few others
 Members who tie their own personal welfare to that of the organization can be expected
to act for the organization in relatively the same way as they would for their own
idiosyncratic interests
THE DUAL NATURE OF THREAT-RIGIDITY EFFECTS
The maladaptive nature of threat-rigidity effects is limited  there are situations where it
may be functional to rely on well-learned theories and action sequences that worked in the past
and some that didn’t
 Key to whether threat rigidity effect is functional or not may rest and the nature of the
threat itself
Although an organization’s reaction to scarcity can insulate it against immediate
failure, increased efficiency and control can prove maladaptive when scarcity is
symptomatic of more fundamental change
Before you make that big decision...
Daniel Kahneman, Dan Lovallo, Olivier Sibony
Introduction
Executives can’t do much about their own bias  they can, however, recognize and neutralize
those of their teams with the proper tools (such as list of questions which must be used every
time)
Biases distort reasoning in business:
 Confirmation bias  leads people to ignore evidence that contradicts their
preconceived notions
Also includes the fact that people only look for evidence that confirms their

Anchoring  weigh one piece of information too heavily when making decisions

Loss aversion  makes people too cautious
Two kinds of thinking:
1. System one: Intuitive thinking  we respond spontaneously and immediately to the
world around us. There are impressions, associations, preparations, thinking and
intensions.
o These categories are lively and stimulating and lead to quick conclusions for an
enormous accumulation of ideas  However, these energetic, spontaneous
stimulations are unacceptable as a basis for sound business decisions.
System 1 determines our thoughts, and therefore our biases
Produces a constant representation of the world around us and allows us
to do things like walk, avoid obstacles and complete something else all
the same times
2. System two: Reflective thinking  is deliberate, full of effort and generally slow
o Compensates for biases – It does not eliminate bias, but it helps to identify its
influence so midstream corrections can be made.
12 questions  are capable of separating the essence of the useful from System One, and
setting the basis for a sound decision
WYSIATI: “what you see is all there is”  that is mistaken
 The uncertainty is the fact that we never have all the facts when a decision has to be
made – So what you see is not necessarily a revelation, but rather can be a trap
Reviewing recommendations from someone else:
1) Grasp the relevant fact
2) Figure out if the people making the recommendation are intentionally clouding the facts
in some way
3) Apply own experience, knowledge and reasoning
Questions that decision makers should ask themselves:
1) Self-interested bias  Is there any reason to suspect the team making the
recommendation of errors motivated by self interest?
2) Affect Heuristic  Has the team fallen in love with its proposal?
3) Groupthink  Where the dissenting opinions within the team? Where they explored
adequately?
4) Saliency bias  Could the diagnosis be overly influenced by an analogy to a
memorable success?
5) Confirmation bias  Are credible alternatives included along with the
recommendation?
6) Availability bias  If you had to make this decision again in a year what information
would you want, and can you get more of it now?
WYSIATI assumption: What you see is all there is.
7) Anchoring bias  Do you know where the numbers come from?
o Guest estimates are not tested or challenged
o Estimates are based on history, an assumed trend
o Set up low floor price to negotiate
8) Halo effect  Is the team assuming that one person, organization, or approach that is
successful in one area will be just as successful in another?
9) Endowment effect  Are the recommenders overly attached to a history of past
decisions
o Sunk costs fallacy: When considering new investment, we should disregard
past expenditures that don’t affect future costs or revenues, but we do not.
10) Overconfidence planning/ Optimistic biases/ competitor neglect  Is the base case
overly optimistic
11) Disaster neglect  is the worst case bad enough
o Premortem: Project yourself into the future to image the worst has already
happened. Then you would be able to consider whether to mitigate those risk or
reassess the proposal
12) Loss aversion  Is the recommending team overly cautious?
Tutorial 3 - Socio-cultural causes of organizational crises
The Collapse of Sensemaking in Organizations: The Mann Gulch
Disaster
Karl E Weick
Introduction
The Mann Gulch disaster  A lightning storm passed over the Mann Gulch area at 4PM on
August 4, 1949 and is believed to have set a small fire in a dead tree – the next day the
temperature had “explosive potential”
 When the fire was spotted by a forest ranger, the smokejumpers were dispatched to
fight it.
 Sixteen of them flew out  one smokejumper got sick on the airplane, didn't jump,
returned to the base with the plane, and resigned from the smokejumpers as soon as he
landed
 Dodge and Harrison, who scouted ahead, were worried that the thick forest near which
they had landed might be a "death trap”
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The second in command took the crew across to the north side of the gulch and marched
them toward the river along the side of the hill.
Then dodge saw that the fire had crossed the gulch just 200 yards ahead and was moving
toward them
They were soon moving through bunch grass that was two and a half feet tall and were
quickly losing ground to the 30-foot-high flames that were soon moving toward them
at 610 feet per minute
Dodge yelled at the crew to drop their tools, and then he lit a fire in front of them and
ordered them to lie down in the area it had burned. No one did, and they all ran for the
ridge – most died
Since Mann Gulch, there have been no deaths by burning among Forest Service
firefighters, and people are now equipped with backup, better physical
conditioning, the tactic of building an escape fire and the insistence that crew
safety take precedence over fire suppression.
Cosmology Episodes in Mann Gulch
Organization  a series of interlocking routines, habituated action patterns that bring the
same people together around the same activities in the same time and places
 Five criteria for a simple organizational structure:
1. Coordination by direct supervision
2. Strategy planned at the top
3. Little formalized behavior
4. Organic structure
5. The person in charge tending to formulate plans intuitively (thus these being
"extension of his own personality.")
 "Generic subjectivity"  roles and rules exist that enable individuals to be
interchanged with little disruption to the ongoing pattern of interaction.
Cosmology  the ultimate macro perspective, directed at issues of time, space, change, and
contingency as they relate to the origin and structure of the universe.
 Cosmology episode  when people suddenly and deeply feel that the universe is no
longer a rational, orderly system – the combination of collapse of sensemaking and
structure at the same time
These feel like a vu jade (the opposite of a deja vu)  I've never been here
before, I have no idea where I am, and I have no idea who can help me
 The disaster at Mann Gulch was produced by the interrelated collapse of
sensemaking and structure.
o If we can understand this collapse, we may be able to forestall similar disasters
in other organizations.
SENSEMAKING IN MANN GULCH
Most organizational analyses begin and end with decision making

Decision making preferences  often inconsistent, unstable, and externally driven,
the linkages between decisions and actions are loosely coupled and interactive rather
than linear, the past is notoriously unreliable as a guide to the present or the future
Political considerations play a central, perhaps overriding, role in decision making  three
distinct responses to these problems:
1. There has been a shift of work on memory, toward examining naturalistic decision
making, with more attention to situational assessment and sensemaking
2. People have replaced an interest in decision making with an interest in power
3. People are replacing the less appropriate normative models of rationality based on
asocial "economic man" with more appropriate models of rationality that are more
sophisticated about social relations, such as the model of contextual rationality
Contextual rationality  action motivated to create and maintain institutions and traditions
that express some conception of right behavior and a good life with others.
 Thus, organizations become important because they can provide meaning and order in
the face of environments that impose ill-defined, contradictory demands.
Sensemaking  idea that reality is an ongoing accomplishment that emerges from efforts
to create order and make retrospective sense of what occurs
 Emphasizes that people try to make things rationally accountable to themselves and
others
Sensemaking is about contextual rationality  It’s built out of vague
questions, muddy answers, and negotiated agreements that attempt to reduce
confusion
 People in Mann Gulch did not face questions like where should we go, when do we
take a stand, or what should our strategy be?  Instead, they faced the feeling that
their old labels were no longer working.
o They were outstripping their past experience and were not sure either what was
up or who they were.
ROLE STRUCTURE IN MANN GULCH
ROLE SYSTEM  Can be argued that a major contributor to the Mann Gulch disaster was
the loss of structure that kept these people organized, their role system
There were two key events that destroyed the organization that tied these people together:
 Second in command took the crew to the north side:
There was no one at the end of the line repeating orders as a check on the
accuracy with which they are understood

The person taking pictures took over leadership:
The crew is left for a crucial period of time with ill-structured, unacknowledged
orders shouted by someone who is unaccustomed to being firm or noticing
escape routes
IDENTITY AND MORALE  when Dodge told the retreating crew "throw away your
tools!" – a fire crew that retreats from a fire should find its identity and morale strained.
 If the retreating people are then also told to discard the very things that are their reason
for being there in the first place, then the moment quickly turns existential.
Thus, people who had perpetually been almost their own boss suddenly became completely
their own boss at the worst possible moment.
 As the entity of a crew dissolved, the final command from the "crew" leader to jump
into an escape fire was heard not as a legitimate order but as the ravings of someone
who had "gone nuts"
Command lost its basis of legitimacy when the smokejumpers threw away their
organization along with their tools.
PANIC IN MANN GULCH
A panic arises if a group becomes disintegrated  characteristic:
 None of the orders given by superiors are any longer listened to
 Each individual is only solicitous on his own account, and without any consideration
for the rest.
For the smokejumpers, it was not the first time they confronted danger  it was, however, the
first time they confronted danger as a member of a disintegrating organization
 As the ties weakened (when they moved to the river they became more spread out) 
the sense of danger increased, and the means to cope became more primitive
As their group disintegrated, the smokejumpers became more frightened,
stopped thinking sooner, pulled apart even more  in doing so, lost a leaderfollower relationship and access to the novel ideas of other people who are a lot
like them.
 As these relationships disappeared, individuals reverted to primitive
tendencies of flight.
From Vulnerability to Resilience
A closer look at that escape fire allows us to move from a discussion of what went wrong at
Mann Gulch, to a discussion of what makes organizations more resilient
There are four sources of resilience (the ability to adapt):
1. Improvisation and bricolage
2. Virtual role systems
3. The attitude of wisdom
4. Respectful interaction.
1 – IMPROVISATION AND BRICOLAGE
When people are put under pressure, they regress to their most habituated ways of responding
leading to enhancing the crisis
 Creativity is not expected under life-threatening pressure
Creativity  figuring out how to use what you already know in order to go beyond what you
currently think
 Dodge’s idea of burning a hole in a fire was creative
The collapse of role systems need not result in disaster if people develop skills in
improvisation and bricolage
 Bricoleurs remain creative under pressure, precisely because they routinely act in
chaotic conditions and pull order out of them
Thus, when situations unravel, this is simply normal natural trouble for
bricoleurs, and they proceed with whatever materials are at hand
 Knowing these materials intimately, they then are able, usually in the
company of other similarly skilled people, to form the materials or
insights into novel combinations.
2 – VIRTUAL ROLE SYSTEMS
Social construction of reality is next to impossible amidst the chaos of a fire  unless social
construction takes place inside one person's head, where the role system is reconstituted and
run
 Even though the role system at Mann Gulch collapsed, this kind of collapse need not
result in disaster if the system remains intact in the individual's mind.
If each individual in the crew mentally takes all roles and therefore can then register escape
routes and acknowledge commands and facilitate coordination, then each person literally
becomes a group
 Understanding the perspective of all the possible roles in the system in order to reduce
the crisis.
3 – THE ATTITUDE OF WISDOM
Wise people know that they don't fully understand what is happening right now, because
they have never seen precisely this event before
 Extreme confidence and extreme caution both can destroy what organizations most
need in changing times, namely, curiosity, openness, and complex sensing.
It is important to find the balance between confidence, and cautious.
4 – RESPECTFUL INTERACTION
Respectful interaction depends on intersubjectivity  it has two defining characteristics:
1. Emerges from the interchange and synthesis of meanings among two or more
communicating selves
2. The self or subject gets transformed during interaction such that a joint or merged
subjectivity develops.
Perhaps it's more important that you have a partner than an organization when you fight
fires  a partner:
 Makes social construction easier.
 Is a second source of ideas
 Strengthens independent judgment in the face of a majority
 Enlarges the pool of data that are considered.
At Mann Gulch  Sallee and Rumsey stuck together and lived
Partnerships that endure are likely to be those that adhere to Campbell's three imperatives
for social life (based on a reanalysis of Asch's conformity experiment):
1. Trust  Respect the reports of others and be willing to base beliefs and actions on
them;
2. Honesty  Report honestly so that others may use your observations in coming to
valid beliefs; and
3. Self-respect  Respect your own perceptions and beliefs and seek to integrate them
with the reports of others without deprecating them or yourselves.
 If a role system collapses among people for whom trust, honesty, and self-respect
are underdeveloped, then they are on their own – and fear often swamps their
resourcefulness
Structures for Resilience
Unless superordinate goals are overlearned, they will be discarded in situations of danger
What is structure  A complex medium of control which is continually produced and
recreated in interaction and yet shapes that interaction
 What is structuring?  Consists of two patterns and the relationships between them:
1. Meanings  First pattern as informal structure, agency, or social construction 
consists of interaction patterns that stabilize meaning by creating shared
interpretive schemes (Aka meanings)
2. Frameworks  Second pattern as framework of roles, rules, procedures,
configured activities, and authority relations that reflect and facilitate meanings
(aka frameworks)
Structuring (understood as the relation of meanings and frameworks) 
may be a deviation-amplifying cause loop, capable of intensifying either
an increase or decrease in either the two connected elements
 In the Mann Gulch disaster, for example, frameworks and
meaningsdestroyed rather than constructed one another
The only pattern that can maintain resilience in the face of a crisis is a structure in which there
is both an inverse and a direct relationship between role systems and meaning
The resilience can take two forms:
1. Starting from a loss of meaning, which led to further loss of structure  we arrive to
a pattern associated with a deviation-amplifying feedback loop in which an initial
change unfolds unchecked in the same direction
To prevent this amplification, we can retain the direct relation between structure
and meaning and create a inverse relation between them  when meaning
becomes problematic and decreases, this is a signal for people to pay more
attention to their formal and informal social ties and to reaffirm and/or
reconstruct them
 Meaning declines, people pay more attention to frameworks
 As social relations become clearer, the attention shifts back to meanings
2. Starting from change in structure  less structure will lead to more meaning, and
more meaning then produces more structure
When social ties deteriorate, people try harder to make their own individual
sense of what is happening, both socially and in the world
When social relations decline, people pay more attention to meaning, they
ignore frameworks temporarily
 As meanings become clearer, attention shifts back to frameworks
Common points between the two forms:
 Alternation between attention to frameworks and attention to meanings  more
attention to one leads to more ignorance of the other, followed by efforts to correct this
imbalance, creating then a new imbalance
 Social sensemaking may be most stable when it is simultaneously constitutive and
destructive, when it can increase both ignorance and knowledge at the same time
Nondisclosive intimacy  relationships rooted in collective action that stress coordination of
action over the alignment of cognitions, mutual respect over agreement, trust over empathy,
diversity over homogeneity, loose over tight coupling, and strategic communication over
unrestricted candor
 Nondisclosive intimacy may limit the development of emotional ties that keep panic
control in the face of obstacles
 Closer ties permit clearer thinking, which enables people to find paths around obstacles
If there is a structure that enables people to meet sudden danger, who builds and maintains it?
 Intergroup analysis  needed structure consists of many structures, built and
maintained by a shifting configuration of the same people
Excellent crews expect one another to enact any of these four exchanges
 I need to talk to you
 I listen to you
 I need you to talk to me
 I expect you to talk to me
These complement the social imperatives of trust, honesty, and self-respect

These also show the importance of inquiry, advocacy, and assertion when people do
not understand the reasons why other people are doing something or ignoring
something
Excellent captains shift their behaviors between complete democracy and complete autocracy
 They establish competence
 They disavow perfection
 They engage the crew (talk less, listen more)
These activities make sure that the probability that constructive, informed interactions can still
occur among relative strangers even when they get into a crisis.
Tutorial 4 - Organizational-technical causes of organizational
crises
Normal accident theory versus high reliability theory: A
resolution and call for open systems view of accidents
Shrivastava, S., Sonpar, K., & Pazzaglia, F
Introduction
Normal Accident Theory (NAT)  focuses on structure and claims that complex and
tightly coupled structures inevitably trigger system-wide accidents
 If a tightly coupled complex system were to succeed in avoiding an accident  NAT
proponents would attribute the safe outcome to the system in question being not
complicated enough
NAT identifies the key elements of organizational structure and circumstances
at the point of time of an accident.
High Reliability Theory (HRT)  focuses on processes and identifies organizational
initiatives that can prevent such accidents
 In the event of an accident in a highly reliable organization  HRT proponents would
argue that the accident occurred because the organization had ceased being reliable in
that it had not followed recommended processes
HRT focuses on processes related to a dynamic situation and offers insights
about the period leading up to the point of accident
 The two theories cannot be tested as they can rationalize any outcome and almost
always explain away their failure to make a prediction
NAT and HRT: a critical review
NAT
Any unintended and untoward event that disrupts the ongoing or future output of a system
could be viewed as an accident  system is divided in 4 levels:
1. Individual part
2. A unit  Functionally related collections of individual parts
3. Subsystem  arrays of units
4. System  subsystems combine
Failures at the first two levels  they are incidents
 Even if they temporarily disrupt the output of the entire system, do not
qualify as accidents.
Disruptions at levels three and four  would qualify as accidents.
Engineered safety features (ESFs)  such as emergency shut-offs, suppressors are
incorporated in systems to prevent incidents from transitioning into accidents
 Thus, one could avoid component failure accidents through better designed ESFs,
preventive maintenance and operator training
Normal accidents/System accidents  on rare occasions, some complex systems suffered an
accident owing to multiple failures, which interacted with each other in ways that could neither
be anticipated nor comprehended
 One cannot prevent system accidents
Two properties that make systems vulnerable to system accidents:
 Complex interaction  interactions that occur in unfamiliar sequences, or
unplanned and unexpected sequences, and which are either not visible or not
immediately comprehensible
Driven by the presence of components that have multiple functions:
 Physical proximity of components
 Specialized knowledge of personnel that limits their awareness of
interdependencies
 Several control parameters with potential interaction
 The need to decipher unfamiliar or unintended feedback loops and make
inferences

Tightly coupled  when there is minimal time lag between the processes it executes:
In this case:
 The sequence of processing does not vary
 There is only one method available to accomplish a task
 Little slack is possible in supplies, equipment, and personnel
 Buffers and redundancies are inbuilt with there being little scope of
introducing them at a later stage
 Substitution of supplies, equipment, and personnel is not readily
possible, and where possible, it can be done only in a prescribed manner
Te two systemic properties or dimensions are integral to NAT’s main thesis  an odd failure
in technological systems that are at once complexly interactive and tightly coupled can, under
peculiar circumstances, lead to system accidents
 Under certain circumstances, the failure can trigger other failures that can interact
amongst each other in a manner that challenges comprehension
Decentralization  aids organizations to cope with complex interactions.
 The rationale is that an organization can respond to unanticipated interactions in real
time only if it empowers those proximal to the processes to improvise
Centralization  aids in coping with tight coupling
 Only an agency that is in the know to the big picture can be expected to sensibly
override local considerations to ensure the stability of the entire system
Organizations are incapable to cope with system accidents  Organizations operating
complex interactive and tightly coupled systems cannot be simultaneously centralized and
decentralized
NAT also identifies the factors that promote linear interactions and loose coupling within
systems  Thus one can visualize how the interaction and coupling dimensions might be
charted along a continuum to generate a two-by-two matrix:
The quadrants of the matrix have various types of systems (e.g., post office, nuclear power
plant)
 Quadrant 2  tightly coupled and complex interactive systems (what NAT focuses
on)
All systems in this quadrant execute transformation processes  The systems
transform the main raw material that they work with in some fundamental way
NAT’s major weaknesses  NAT’s intra-system levels:
 While it could help delineate technical systems, it has lesser applicability in an
organizational or a socio-technical context, it overlooks the fact that the human mind
has the capacity to engage across all of the four arbitrary levels
HRT
HRT scholars, after studying systems  found that they are all complex technological systems
that put a high premium on reliability
Reliability  The ability to maintain and execute error-free operations – the following
conditions are necessary, but not sufficient, for ensuring reliability:
 A strategic prioritization of safety


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Careful attention to design and procedures
A limited degree of trial-and-error learning
Decentralized decision making
Continuous training often through simulation
Strong cultures that encourage vigilance and responsiveness to potential accidents
Reliability is not the outcome of organizational invariance, instead it results from the
management of fluctuations
 To move closer towards attaining a sufficient condition of reliability, organizations
must also become ‘mindful’
Mindfulness  organizations must have a unique way of looking at the world – it involves:
 Preoccupation with failure  i.e., a suspicion of quiet periods
 Reluctance to simplify interpretations  i.e., a hesitation to generalize and make
assumptions
 Sensitivity to operations  i.e., a high level of situational awareness of the big picture
about what is happening and what one might expect in the immediate future)
 Commitment to resilience  i.e., a tendency to do whatever it takes to ride out a crisis
All under specification of structure  A formal hierarchy allows decisionmaking to migrate with a problem, and can meet the contradictory requirement
of being simultaneously centralized and decentralized
Conceptual slack  divergence in analytical perspective among members of an organization
over theories, models, or causal assumptions pertaining to its technology or production
processes.
 Form of redundancy, adds to the variety of ways in which an organization can respond,
it can lead to an engaged workforce that vigorously debates differing viewpoints and
negotiates to arrive at an acceptable solution
Normalization of deviance  The changes in the harmful direction take place in such small
increments and get injected into daily routines through normalization of deviance so
surreptitiously that it is impossible to detect them until it is too late
 An acceptable outcome of risky behavior in the immediate past is allowed to set the
expectation for risky behavior on the next occasion.
The NAT-HRT debate
NAT
HRT
Focuses on organizational properties that lead
to accidents
Organizations can lower the statistical
probability of systems accidents (but never
lower it to zero) by reducing their complexity
and loosening the coupling amongst their subsystems  Even when it is possible to tweak
Looks for organizational factors and processes
that contribute to reliability
Strategic concern for safety and safe design,
redundancy, simultaneous centralization and
decentralization, training, organizational learning,
and mindfulness  challenges posed by complex
interactions and tight coupling
the two dimensions, financial considerations
and pressures from the powerful elite interfere
Focus upon a culture of reliability is a luxury in
the world of risky systems’
Systems cannot at once be decentralized and
centralized
Of particular importance to HRT is the need to
build an organizational culture that puts safety
first
It may be possible to ensure that decision-making
migrates to where the action is (through under
specification of structures and by affording
conceptual slack) while ensuring buy-in for
centrally determined goals
Ignores the fact that redundancy (duplication in
systems design to insure against failure) can carry
costs by increasing complexities and opportunities
for failure
Summary  NAT holds that regardless of the
intensity of organizational efforts, accidents in
complex and tightly coupled systems, because
of system characteristics, are inevitable
Summary  HRT asserts that accidents, even in
complex organizations that operate hazardous
technologies, are avoidable if the organizations
take enough pains to make the workplace safe
Resolution through a temporal dimension
NAT cannot predict as to when exactly the conditions become ripe for a system accident, one
can only conclude that a system accident can occur at any time
 It is the complexity and coupling of the system, independent of time of operation, that
creates the potential for the rare normal accident  Time is not a factor in NAT
Swiss Cheese Model  The holes may close, shut, and move with the passage of time, when
aligning the perfect conditions for an accident
 NAT implies that the statistical probability of the holes getting aligned increases as the
complexity of interactions and coupling within a system increase
Figure 2: depicts a probable journey of an organization from the time of its inception to the
time it meets with a system accident.
 Point A  In theory organization could suffer from accidents on the very first day of
its operation – In practice, such occurrences are rare
These accidents are more likely to be component failure accidents attributable
to engineering related design errors.
On point A, system is shown as being tightly coupled and complexly
interactive (i.e., the focal system meets the conditions necessary for a system
accident)
Disaster incubation theory (DIT)  with the passage of time, organizations start ignoring
and misunderstanding danger signals – drives the tendency to normalize deviance
Practical drift  The slow steady uncoupling of local practice from written procedures
 A  B: In accordance with HRT
 B  B’: At this point, it confronts a contingency that requires it to become tightly
coupled. It has lost the capability to do so and cannot make sense of what is happening
(too decentralized) – According to NAT predictions
The figure shows the focal system getting loosely coupled through practical
drift and reaching point B
 At this point, it confronts a contingency that requires it to become tightly
coupled – It has lost the capability to do so and cannot make sense of
what is happening.
Conceptual slack  The diversity in the analytical perspective employed by the members of
the organization combined with the willingness to question the current situation and the
respectful acceptance of these questions by the other members, thus allowing new solutions
to emerge.
 The higher the levels of conceptual slack enjoyed, the looser the coupling and the
greater the ability of the system to cope with complexity.
Experience and training  can help reduce complexity and interactions may become linear.
 By improving reliability through training, mindfulness  renewing the system, it can
be seen as travelling back in time.
SCM  The likelihood of the holes aligning would increase during periods of sharp
discontinuity.
 HRT suggest that the holes close in mindful environment  Conversely new ones
would open, if safety concerns were to diminish for some reason.
Thus, we claim that NAT and HRT are not unequal, they refer to the same phenomenon, but at
different time frames.
 We believe that DIT and related notions such as practical drift, migration towards the
boundaries of acceptable performance, and normalization of deviance can help describe
a system’s behavior at different points of time.
Was Three Mile Island a ‘normal accident’?
Hopkins, A.
Introduction
It was not a normal accident, and it originates in management failures (contradicts Perrow’s
view who describes this accident as normal)
Perrow on Normal Accidents
Perrow’s view  that the Three Mile Island incident was a distinctive kind of accident, a
`normal' accident (NAT theory)
 Its normal because complex and tightly coupled system cannot be avoided  Crucial
thing is that normal accidents are unexpected and multiple small failures occur
Turner: Warnings Plus Sloppy Management
Turner’s view  Prior to big accident, there are always warning signs that are missed or
overlooked that could have prevented accident
 Sloppy management  fails to put in place adequate information gathering system
(source of accident)
Allows various processes to operate that may nullify warnings  Good
management would have systems designed to override these tendencies and to
highlight and respond to warning signs
 Overriding the normalization of deviance, group think, cultures of
denial, etc.
The Issue of Multiple Failures
Three-mile Island  water-cooled nuclear reactor which started to loose cooling water, was
close to meltdown, damaged beyond repair and clean up took more than a decade and cost $1
billion
Malfunctions at three-mile island  where not consequential but rather independent of each
other
 Defenses were inadequate (Swiss cheese model)
The Failures
Two malfunctions occur in internal circuit and two in the external:
1. Loss of flow in external circuit meant that heat was not being removed from internal
circuit
2. Emergency pumps were supposed to work but were blacked off for maintenance
3. Heat was longer being removed from internal cooling circuit
4. Light on control panel indicated that valve was closed while it was open
5. Pressure dropped in internal circuit
The Warnings
Incident that happened 17 months earlier followed the same sequences as this one (no lessons
learned)
Internal failures were critical (coolant circuit) even if external failures began the accidents
sequence
No training was provided on how to deal with failures nor how to predict loss of coolant
Even though same accident happened at Babcock and Wilcox and analysis was made, none
cared about reading it and learning how to prevent the accident
Why Were Warnings Ignored?
No one had adequate organizational procedures for attending to past experience
 Not reading that dealing with hazards require much more safety procedures, training
manager was the only one to review similar incidents, general public concerns about
learning degree were neglected
The Applicability of Turner’s Analysis
It’s a story of ignored warnings, inadequate communication and failure of management to focus
its attention on safety
Perrow's Motivation
Shift the blame for accident away from frontline operators
 Operators couldn’t understand what was happening and had to deal with the problem
because the situation was complex
TUTORIAL 5
The effect of a concept mapping intervention on shared cognition
and adaptive team performance over time
Santos, C. M., Uitdewilligen, S., Passos, A. M., Marques-Quinteiro, P., & Maynard, M. T.
Introduction
Teams need to adapt to the changing demands imposed on them by their environments while
ensuring they improve their performance after a change occurs
Two distinct team adaptation phases after the occurrence of a change event are considered:
 The transition (or disruption) phase  occurs immediately after the change event
and is represented by a drop in performance from the pre-change to the post-change
situation.
 The reacquisition (or recovery) phase  entails the gradual increase in performance
after the change as the team recovers by developing novel routines and interaction
patterns
Precursors to adaptive team performance  individual factors, leadership processes,
adaptive processes, shared cognition (i.e., team mental models and transactive memory
systems)
Concept mapping  a practical intervention for facilitating both shared cognition and
adaptive team performance.
 This intervention is based on a cognitive technique broadly used in educational science
to organize and represent knowledge
Strategic persistence  the tendency to persist using a previously successful strategy despite
evidence that it is not successful anymore.
 By collectively building a concept map, team members co-construct ideas and engage
in a mutual process of building meaning.
 Adaptive teams can effectively conserve resources, achieve synergistic process gains,
and, in some contexts, save lives
Aim of study  to investigate the effect of concept mapping intervention on team transition
adaptation and reacquisition adaptation via effect on task mental model and transactive
memory system
Concept Mapping
Concept mapping  a technique to organize and represent knowledge
 It is a form of active learning where individuals are required to develop an organized
structural representation of their domain knowledge and integrate novel information
within this organized knowledge structure
Has been found to be effective for enhancing knowledge retention and transfer
The Effect of Concept Mapping on Adaptive Team Performance
Adaptation to change has been mostly studied by means of the task-change paradigm:


An experimental or pseudo-experimental design where individuals (or teams and
organizations) are confronted with a novel and complex task until they achieve
some degree of mastery of the task
Based on this paradigm, two distinct phases of team adaptation are identified:
Transition adaptation
Reacquisition adaptation
The theory of compilation and performance  teams are able to adapt to unexpected events
when they build rich and shared network structures (i.e., team mental models)
 Those structures are developed across levels and time along a development continuum
where team members learn through reflection, feedback, and sensemaking which
culminate in the team compilation phase
Team compilation  occurs around four phases:
1. Team formation  team members develop individual-level knowledge, skills, and
competencies
2. Task compilation  team members acquire individual task knowledge and
performance skills that allow them to build individual task mastery
3. Role compilation  team members acquire knowledge on the dyadic linkages needed
for coordination and performance
4. Team compilation  team members develop team mental models and adaptive
capabilities
Model of team adaptation postulates that teams develop adaptive performance capabilities by
passing through an adaptive cycle.
Adaptive capabilities  develop around four phases:
1. Situation assessment  team members identify cues, such as disruptions, that serve
as triggers to adaptation
2. Plan formulation  team members decide on a course of action related to the
requirements of the changed task
3. Plan execution  team members carry out a new plan
4. Team learning  team members reflect on results and outcomes of actions and
internalize those actions into the routines that guide their behaviours
The transition phase  represents the immediate adaptive reaction of the team to the changed
environment.
 Here situation assessment is a critical process as the more rapidly a team recognizes
that the situation has changed and makes sense of the novel situation, the more time
team members have for adjusting their routines and behaviours.
 Teams that have developed a network of interconnected linkages and potential
actions via a concept mapping intervention may be better able to rapidly generate
solutions for novel problems.
HYPOTHESIS 1a:

The concept mapping intervention has a positive effect on transition adaptation.
Team learning  a group level process characterized by a combination of behaviours,
including reflection, discussion, and exploration of different perspectives.
HYPOTHESIS 1b:
 The concept mapping intervention has a positive effect on reacquisition adaptation.
The effect of concept mapping on shared cognition
TASK MENTAL MODELS
Team mental models  a common understanding among team members about the important
aspects of the team context
 One type is mental models  a shared understanding among the team members about
important aspects of the task, such as work objectives, team resources, and task duties
Distinction made between:
 Team mental model similarity  the extent to which mental models are similar
among team members
 Team mental model accuracy  the extent to which team members’ mental models
are appropriate for the task according to experts in the respective field
Team training strategy  has a positive effect on knowledge transfer, knowledge
interoperability, and cognitive congruence – two separate aspects:
 A cognitive part  using an information board to structure knowledge
 A communication training part fostering schema-enriched communication
strategies
Argued that when team members collectively build a concept map, they engage in two
processes that have been previously related to shared cognition:
 Co-construction  process by which individuals try to understand ideas provided by
others and contribute with their own ideas, thereby developing mutual understanding
 Constructive conflict  occurs when team members disagree on their interpretation
of the situation and provide an alternative view or perspective.
HYPOTHESIS 2a:
 Task mental model similarity increases immediately after the concept mapping
intervention.
Pitfalls of collective mapping:
 In teams with low epistemic motivation (i.e., teams whose members are unwilling to
invest effort to achieve an accurate understanding of the team task) people often agree
with misinformation
 In “closeminded teams” (i.e., teams whose members agree on inaccurate mental
models), team members do not engage in learning behaviours as they ignore or resist
new information and ideas that challenge the existing ideas
 Groups may exhibit a “negotiation focus” wherein group members focus on
exchanging and negotiating opinions and preferences so that the dominant or
majority position can be identified and settled within the group
Students who explain their own knowledge to others, develop a deep understanding of the
course.
 By creating the concept map, team members may correct misunderstanding or mistakes
in their own as well as other’s understanding and simplify difficult ideas by using
language that other team members can understand
HYPOTHESIS 2b:
 Task mental model accuracy increases immediately after the concept mapping
intervention.
TRANSACTIVE MEMORY SYSTEMS
Transactive Memory Systems  a cognitive structure that combines the knowledge
possessed by each individual team member with a shared awareness of who knows what
 The accuracy dimension  the extent to which team members are correct in the
assessment they make of others’ expertise.
 Role identification behaviours  communications through which team members
share information regarding their specialized knowledge, skills, and abilities with the
rest of the team
HYPOTHESIS 3:
 The concept mapping intervention has a positive effect on teams’ transactive memory
system accuracy.
THE EFFECT OF CONCEPT MAPPING ON SHARED COGNITION AND
ADAPTIVE TEAM PERFORMANCE
An accurate task mental model  allows teams to reprioritize the tasks, develop, and
implement revised strategies that are appropriate to the changed situation.
An accurate transactive memory system  enables teams to correctly locate and use the
knowledge resources that are available within the team, rapidly.
HYPOTHESIS 4:
 The effect of the concept mapping intervention on team performance in the transition
adaptation phase is mediated by the task mental model
(a) Similarity; and
(b) Accuracy; and by
(c) Transactive memory system accuracy.
HYPOTHESIS 5:
 The effect of the concept mapping intervention on team performance in the
reacquisition adaptation phase is mediated by the task mental model
(a) Similarity; and
(b) Accuracy; and by
(c) Transactive memory system accuracy.
Procedure
Results
Effect on adaptive team performance
Hypothesis 1a  Not supported
 The interaction term of transition adaptation with concept mapping intervention was
nonsignificant  there was no significant difference in the drop in performance after
the unexpected change between the experimental and the control condition.
Hypothesis 1b  Supported
 Teams that collectively built a concept map were faster than teams in the control
condition in relearning the task after the unexpected change.
Effect on task mental model similarity
Hypothesis 2a  Supported
 Teams that collectively built a concept map, the task mental model similarity increase
immediately after the intervention, relative to the control condition.
Effect on task mental mode accuracy
Hypothesis 2b  Supported
 For the teams in the concept mapping condition, the task mental model accuracy
increases immediately after the intervention, relative to the control condition
Effect on transactive memory system accuracy
Hypothesis 3  Supported
 For the teams in the concept mapping condition, the transactive memory system is more
accurate immediately after the intervention that in the control condition.
Effect of shared cognition on relation between concept mapping intervention and adaptive
team performance
Shared cognition does not mediates the effect of the concept mapping intervention on transition
and reacquisition adaptation
 Hypothesis 4a  Not supported
 Hypothesis 4b  Not supported
 Hypothesis 4c  Not supported
The concept mapping intervention had a positive and significant effect on:
 Task mental model similarity: Hypothesis 5a  Supported
 Task mental model accuracy: Hypothesis 5b  Supported
The effect of transactive memory systems accuracy on reacquisition adaptation was not
significant
 Hypothesis 5c  Not supported
Conclusion
Concept mapping intervention promotes development of similar accurate task mental models,
accurate transactive memory system
 It therefore helps teams to recover after unexpected change in task that occurs
Tutorial 6 – planning and preparing for crises
Integrating the Crisis Management Perspective into the Strategic
Management Process
John F Preble
Introduction
This paper  explains how adding crisis management’s defensive/preventative capability to
strategic management’s offensive market positioning orientation can yield a more
comprehensive approach to the strategic management of organizations
 Purpose of the paper  is to show how integrating the crisis management
perspective into the strategic management process can provide organizations with a
defensive capability for preventing crisis developments or lessening their effects if a
crisis occurs.
The strategic management process
Perspective model of strategic management  has been found to be an accurate
representation of strategic planners’ perceptions of contemporary practice
Strategic management process model (on figure below)  includes three primary
components:
1. Strategy formulation  determining the future direction of the firm – it usually
includes:
Conducting some form external audit or scan that results in the specification of
key external opportunities and threats, and an internal audit of the organization’s
most important strengths and weaknesses (SWOT)
Also includes the development of a mission and/or vision statement and the
specification of long-term objectives
2. Strategy implementation  modification of organizational structures and processes
to ensure that planned results are obtained
This phase includes processes such as:
 Establishment of annual goals and policies
 The allocation of resources to obtain objectives
 Adjusting motivation and reward systems to better match new strategic
thrusts
3. Strategy evaluation  traditional control processes, involving the review and
feedback of performance to determine if plans, strategies and objectives are being
achieved – resulting information being is to solve problems or take corrective actions
Special alert controls incorporating management repertories  suggested
as a mechanism for an organization to thoroughly and rapidly reconsider a
firm’s basic strategy based on a sudden, unexpected event
STRATEGIC MANAGEMENT PROCESS VULNERABILITY
Strategic planning process objective  to design competitive strategies that enable the firm
to find a position in the industry environment faced by the organization and go beyond current
perceptions of the industry situation to distinguish the enterprise into the future.
While strategic management (SM) process results in strategies that provide a sound offence
in the competitive marketplace  It pays inadequate attention to defensive actions that
could act to prevent unwanted, undesirable and unexpected crises from happening
 These types of crises occurring can undermine success in the marketplace as the firm
may face expensive settlement costs, damaged reputation and survival may be
threatened.
Integrating the crisis management (CM) perspective into the SM process could strengthen it
significantly by directly shoring up this area of vulnerability
Crisis management and strategic management differences
CRISIS MANAGEMENT (CM)
STRATEGIC MANAGEMENT (SM)
Deals with attempts to identify and predict
areas of potential crises, the development of
actions and measures designed to prevent
crises from occurring or from an incident
evolving into a crisis, and minimizing the
effects or disruption from a crisis that could
not be prevented
Concerned with the formulation,
implementation and evaluation of strategies
designed to achieve organizational objectives
While CM and SM are both fields that by their nature are multidisciplinary  the disciplines
represented in each are frequently different:
CM is usually considered to be strategic in
nature and has been defined as encompassing
all phases of the SM process  in the
emergency management literature CM deals with
the tactical decisions and actions at the height
of the emergency period of a disaster
Focuses on how organizations can threaten
their external environment and ecosystem and
how sustainable corporations can be created and
maintained
CM’s primary goals are quality, safety, and
reliability
Focuses more on how the environment creates
opportunities and threats for the firm and on
how to create and sustain competitive advantage.
SM’s primary goal is financial performance
CM advocates broaden SM’s base this to include
unborn future generations, special-interest
groups, politicians, competitors, terrorists &
psychopaths.
SM practitioners consider shareholders,
employees, suppliers, financiers, gov agencies &
customers as major stakeholders.
Primary interest in the environment is inside-out
Primary interest in the environment is outside-in
With the above discussion in mind  it becomes clear why the fields of CM and SM have been
evolving separately thus far.
 It is precisely these differences in perspectives and orientations that provide the
integration opportunity.
CM's perspective is complementary to SM's and, therefore, can be added to the SM process to
broaden it and strengthen it.
 The integration task will also be facilitated by a large area of common ground (i.e.
similarities) that currently exist between CM and SM.
Crisis management and strategic management similarities
Some authors argue that CM should be integrated into SM process because they share six
characteristics:
1. A focus on environmental relations  SM’s primary interest in the environment is
outside-in, while CM is additionally focused on inside-out
2. A complex set of stakeholders  Manager is seen as a system balancer of all of the
competing claims and demands on – CM is concerned with additional constituents,
differences in stakeholder.
3. The involvement of top management  it’s a necessary condition for both SM and
CM efforts to be effective.
4. A concern for the whole organization  The field of SM has been concerned with
the management of the total enterprise – similarly, CM attempts to manage crises that
could potentially disturb the entire organization and is concerned with the survival or
development of its stakeholders, the industry as a whole and the environment
5. The expression of a consistent pattern  Both consistent and emergent processes
6. A representation of emergent processes  Process models that have similar
components and are both conducted continuously
The importance of these two processes are primarily concerned with the long-term survival
and well-being of the organization and the constituents affected by it.
The crisis management process
While crisis management is increasingly being recognized at as an established field, its practice
and theory development are still in formative stages
There are significant barriers to the rapid transference of disaster planning strategies to
developing nations, including:
 Cultural differences
 Knowledge
 Skills
 Resource constraints
 Deficient infrastructures; and
 Political considerations.
Crisis  an organizationally based disaster which causes extensive damage and social
disruption, involves multiple stakeholders, and unfolds through complex technological,
organizational, and social processes
 Should add natural disasters to definition and recognize that implicit in any definition
of a crisis is some element of surprise, the need for a quick response, the threat to
high-priority goals and the stress brought on by any of the above
Crisis management (CM)  a systematic process by which an organization attempts to
predict or identify potential crisis that an organization may encounter, take precautions to
prevent the crises or minimize the effects of the crises.
Normative crisis management process model
Rapid development and acceptance of this approach to CM by financial institutions has been
driven by the recognition that these firms are so dependent on technology and automated
systems that a disruption or crisis lasting just a few days can cause severe financial losses
and even threaten survival.
Normative crisis management process model  The process, which is labelled contingency
planning in the financial industry, proceeds and recycles continuously through the following
steps:
1. Top management initiates contingency planning  senior management and the
board of directors (BOD) are legally and morally responsible for initiating, overseeing
and controlling contingency planning in financial institutions
2. Risk assessment  The management group assigned to the project begins by
conducting an internal and external organization-wide analysis (i.e. audit) of
potential natural, technical and human threats
3. Develop alternative strategies  Several strategies should be developed to help
prevent threats from becoming reality and to prepare for and cope with those threats
that cannot be eliminated – since actual disasters may still occur, it is necessary for
financial institutions to prepare for the worst by formulating and implementing
back-up strategies
4. Plan documentation  It is essential to provide a written plan that documents exactly
what steps are to be taken by whom in the event of an actual disaster
5. Testing  Both procedures for and frequency of testing should be detailed and
incorporated into the overall disaster plan
6. BOD approval  Both the contingency plan and the results with respect to it are
reviewed, approved and recorded by senior management and the BOD
Rationale for the integration of crisis management and strategic management
Crisis management is strategic in nature  there is an inexorable link that binds CM and
SM together.
 The similarities, orientations, and characteristics that the two fields have in common
would seem to help define and support this linkage.
The actual occurrence of an organizational crisis  can cause changes in existing
strategies and strategic actions.
 Conversely, the lack of strategic actions in the form of crisis management repertoires,
can determine crisis outcomes
For crisis management to be an integral part of strategic management an organization's key
managers or top management team must recognize the strategic nature of CM.
 However, several perceptual, psychological, and behavioral processes are at play that
provide ready rationalizations for why serious CM efforts should be minimal or
postponed
Some managers don’t think they need additional CM efforts because:
1. They view contingency planning as the mechanism already in place to handle
unexpected occurrences.
2. They believe their companies to be immune from crises.
3. Bounded emotionality  They are unable to deal with their feelings and the anxiety
associated with crisis situations and, therefore, use various forms of denial as coping
mechanisms
4. Illusion of vulnerability  They believe that no serious risks are involved in pursuing
the current course of action; unconflicted inertia when responding to a threatening
environment
5. They believe that there is little or nothing that organizations can do to mitigate crises.
Crises are not inevitable but are preventable through early incident interventions and
extreme diligence
Integrating CM into the SM process can help to overcome:
 Ready rationalizations that minimize the need for serious CM efforts
 A view that contingency planning is an adequate safeguard against surprises
 The difficulty of denial that threats exist
 Will provide cognitive and emotional rehearsals for coping with crisis situations
An organization’s culture  often plays a major role in whether or not CM efforts are
extensive:
 Firms with “organizational identity” that is narcissistic, self-inflated and internally
focused tend to be weak in CM efforts
Can be characterized as ‘crisis prone’
Managers here might distort their interpretation of danger signals, etc.

Organizations that pursue or have achieved what they perceive as ‘organizational
excellence’ are also less inclined to develop CM plans.
 Integrating CM into SM process can lead to cultural change
Other variables that explain why CM is underemphasized include:
1. Rise in global competition
2. Shifting priorities
3. Short managerial attention spans
4. Pressure for short-term profits
5. Mergers
6. Acquisitions and divestitures
7. Downsizing of employees
8. Scarce resources, etc.
Integrated strategic management process model
Integrated strategic management process model, which incorporates the CM perspective
The normative crisis management process model has been blended into de traditional strategic
management process model
 The combined model represents a procedural integration in that strategy will be
formulated and implemented with crisis procedures incorporated directly into the
process.
 A cognitive/emotional acceptance is also expected to result as conducting these
processes simultaneously leaves much less latitude for managers to consider the fields
as possessing strictly independent boundaries.
STRATEGY FORMULATION  begins with a firm:
 Developing a mission statement
 Identifying the company's key external opportunities and threats and its principal
internal strengths and weaknesses (SWOTs).
 Conducting a crisis audit  which can reveal the firm’s area of vulnerability or
susceptibility to potential crises
Crisis audit  designed to examine the potential for failure, so that one does not only focus
on the positive aspect but also on areas of vulnerability or susceptibility to potential crises, so
the risks can be exposed for consideration and reflection
 Products and processes should be evaluated carefully to determine their potential to
create a hazardous situation.
 A wide array of worst-case scenarios must be written to determine worst-case
contingencies.
 Companies may decide to use brainstorming sessions to develop a greater
consciousness of how crises can develop.
 Environmental impact assessments are recommended in order to identify potential areas
of failure in social and technological systems
STRATEGY IMPLEMENTATION  develop strategies that take advantage of an
organization's internal strengths, minimize weaknesses, fight off threats to the frm or to the
environment by the firm, and to exploit opportunities emanating from the market environment
or through the reduction or redesign of potentially harmful products or systems.
 Articulation of company policies and annual goals that are designed to help achieve
long-term goals
 Formalization and documentation of detailed crisis plans
 Setting up crisis management teams (CMT) that can swing into action when a disaster
strikes has been a most popular crisis readiness strategy
Should include a core group of managers with general CM skills and different
sets of specialists who can be called in quickly to manage different types of
crises


Preparing for crises provides an opportunity for cognitive rehearsal of coping with high
uncertainty
Media communications with the public are considered key to the success or failure of
any crisis situation
The objective is to build public trust through direct and open communication
After crisis rehearsals, firm must seek formal approval and commitment from
senior management and the board of directors
STRATEGY EVALUATION  after the crisis plan has been written, crisis teams have been
formed, a detailed crisis communications strategy has been articulated and several
simulations/rehearsals have been run – formal approval and commitment is necessary


The information obtained is used to solve problems, take corrective actions, re®ne
strategies and reward performance.
Special alert controls blended into the process and crisis readiness is continually
determined through periodic simulations and drills
Mission impossible? Planning and preparing for crisis.
Allan McConnell, Lynn Drennan
Introduction
CRISIS PREPAREDNESS  should be high on institutional and policy agendas
 Logic is that we need to give serious consideration to strong, well-resourced and
forward-thinking contingency planning if we want to tame and gain control over crisis
when it hits
This paper explores the difficulties in translating this ideal into practice. It focuses on four key
difficulties.
1. Crises and disasters are low probability events but they place large demands on
resources and have to compete against front-line service provision.
2. Contingency planning requires ordering and coherence of possible threats, yet
crisis is not amenable to being packaged in such a predictable way.
3. Planning for crisis requires integration and synergy across institutional networks,
yet the modern world is characterized by fragmentation across public, private and
voluntary sectors.
4. Robust planning requires active preparation through training and exercises, but
such costly activities often produced a level of symbolic readiness which does not
reflect operational realities.
Key task for policy makers and crisis managers  to establish institutional procedures and
create cultural climates which develop capacities to cope with whatever extraordinary threats
come their way
‘Ideal’ rules for crisis planning and preparedness
Definitions of crisis abound  debate on whether ‘crisis’ can be defined in a positivist manner
(with a rigid set of criteria) or an interpretative one (where the existence of a crisis depends
entirely on individual perceptions)
Crisis tend to be characterized by three sets of conditions:
 Severe and largely unexpected threats
 High uncertainty
 The need for urgency in decision making
There are no universal rules as to how organizations and policy-makers should prepare
 Many analysts and practitioners have developed a broad, movable and often abstract
set of principles which then need to be translated into good practice.
Perry and Lindell (2003)  suggest that pre-crisis planning processes should:
1. Be based on accurate knowledge of threats and likely human responses.
2. Encourage appropriate action by crisis man- agers.
3. Encourage flexibility in responses.
4. Promote inter-organizational coordination.
5. Integrate plans for each hazard into a multi-hazard approach.
6. Involve the training of relevant personnel.
7. Provide for testing through drills and exercises.
8. Be adaptable as part of an ongoing process adjustment to new circumstances.
9. Be a strong advocate in the face of inevitable resistance to resource commitments for
low probability events.
10. Recognize the differences between crisis planning (preparedness) and crisis
management (implementation and performance).
Alexander (2005)  Provides a draft standard for emergency planning including eighteen
criteria
Boin & Lagadec (2000)  Preparation is more than simply planning, but also about
anticipation and developing strategies to ensure organizational resilience in the event of a
crisis presenting itself. Key imperatives:
 Crisis management should be on the agenda of decision-making elites
 Organizations should facilitate resilience through systems for detecting weak and nonconventional signals
 Organizations should be engaged in continuous efforts for preparation
Mitroff (2001)  Portrayal of organizations as like onions:
 Each layer forming a part of a greater whole: technology, structure, human actors,
culture and top management psychology
Reality of crisis preparedness  is composed of a multitude of formal and informal
practices and policies that vary across organizations and policy sectors.
 These variations are rooted in factors such as differing organizational goals, culture and
resources.
Those least prepared  tend to be dismissive of threats and have little or no
con- tingency planning.
Mid-range types  gives fairly serious consideration to threats and the need
for plans, although institutional preparedness tends to be an ‘add on’ to existing
practices and values.
High preparedness organisations  give high priority to threats and the need
for contingency planning.
 In this type, pre-crisis planning is embedded in all aspects of
organisational structures, practices, policies and culture.
A range of policy tools associated with contingency planning varies from ‘hard’ laws through
to ‘soft’ conventions  Specifically:
 Laws  impose binding obligations on organizations to develop contingency plans.
 Policy guidelines and recommendations  do not have the force of law but are
strongly encouraged by higher political authorities, to the point that public institutions
cannot reasonably avoid implementing them.
 Codes and Protocols  are written documents that do not have legal force but are
agreements about practices to be followed. They may come from higher political
authorities but can also be developed within and between organizations.
 Conventions  are ‘custom and habit’ and not codified in documents. All
organizations contain elements of convention to varying degrees, in the tacit
assumption that staff should be ready and willing to deal with any extraordinary threats
to the organization and its personnel.
The ‘real world’ displays varying practices and levels of planning/ preparedness which stand
in contrast to the broad ideals of crisis management  there is fundamental tension between:
(a) The ‘ideals’ of crisis preparedness; and
(b) The unpredictability of crisis and the realities of organizational and political life.
High potential impact of crisis vs. low priority of crisis management
Although crisis have a high potential impact, one has not devoted sufficient resources to the
cause of crisis preparedness  Several important factors can be identified.
1. Crises are low probability events  Therefore, contingency planning amounts to a
demand for resources to cope with an event or events that may never happen.
In the face of low probability events, organizations may suffer from a range of
maladaptive behaviors stemming from:
 Bureaucratic politics
 Poor intelligence gathering and processing
 Cultural ‘blind spots’; or even
 An ‘it couldn’t happen here’ mentality.
2. One of the main driving forces behind public policies is that they are a product of
minimum winning coalitions, policy monopolies, advocacy coalitions and policy
communities.
Contingency planning by public institutions does not have as strong a coalition
behind it to install crisis preparedness at the top of institutional agendas
3. In a world of tight public expenditure constraints and extensive state intervention
in areas such as health, education, transport and defense, contingency planning is low
on the list of political priorities.
In the competition for resources between low likelihood scenarios and front-line
delivery of public services, the battle is an uneven one.
4. An organization subject to crisis experiences may find its resources diverted to tackling
the ‘last crisis’, rather than planning for battles to come.
Such reliance on ‘historical analogies’ may prove less conducive to awareness
of new threats and new contexts which lie just around the corner.
Need for planning and order vs. uncertainty and disorder of crisis
Only through prior planning can we hope to deal successfully with a crisis if it arises
 However, crisis is neither amenable to being packaged into neat scenarios, nor are
institutional pre-crisis plans so easily constructed
Each organization can potentially be subject to a multitude of threats, but it is difficult to
produce a single plan that covers all the potential challenges emerging from crisis situations
 This is because the range of crisis possibilities and outcomes is so vast that crisis will
always have the tendency to conflict with the instincts of those who seek advanced
coherence and an ordering of possibilities
For some institutions, the belief that whichever type of disaster we can anticipate, a degree of
shared planning and coordination should be the basis for emergency preparedness 
Two different variations are in evidence:
 One generic plan, containing some recognition of measures needed for different types
of threats/disasters.

Separate plans for different types of threats/ disasters, but with some coherence
given through integrated management arrangements.
Benefits of such approaches:
 Cost effective and efficient operationally
 Good politics, they create the impression of cohesion and control
Dangers of such approaches:
 They may attempt to create synergies and predictabilities which exist
only on paper and do not reflect the real threats and dilemmas which
vary across hazards
 Generic model might mask political priorities
 The all-hazards approach cannot be stretched to every potential crisis
situation
 Failure to develop a separate plan for a new, high profile and
newsworthy threat, leaves political leaders and their officials open to
accusations of complacency
Issue: planning in general requires a maximalist approach, involving considerable amount
of detail, however decision making under crisis circumstances typically lacks the type of
evidence-base that would normally be available for routine decision-making.
 The more elaborate a contingency plan is, the less likely it will be of use in a crisis
because it necessarily must focus on a narrow range of threats, doing so in such detail
that no-one can read and/or remember
 Significant aspects of crisis responses must then be improvised, based on immediate
circumstances and time constraints
Crisis pulls planning in a minimalist direction, because it requires considerable room for
individual autonomy in responding to extraordinary and unpredictable circumstances as they
arise.
Organizations engage in ‘sensemaking’ whereby people interpret events and scenarios in the
context of existing choices and commitments.
 It constrains the meaning imposed on situations
 It filters projections, plans and proposals through pre-existing experiences
 It tries to create a sense of order, control and assuredness, despite the fact that crises
can create unimagined uncertainty and disorder
Need for an integrated approach vs. realities of institutional fragmentation
A general tendency among crisis management practitioners to recommend coordinated preplanning for crisis.
 Result: Relations within and between institutions are united through common goals,
strategies, plans, and allocation of responsibilities throughout shared networks.
Such calls for integration in pre-crisis planning are not so easy to realize in practice 
Political systems are vertically and horizontally fragmented.
 Vertical fragmentation  is constitutionally entrenched or created through laws and
convention

Horizontal fragmentation  refers to the dispersal of policy and administrative
functions across the same levels of governance
Such dispersal of power and authority can pose a number of difficulties for the integration
of crisis preparedness:
1. Layers or levels of government or governance often are subject to different political
control  Therefore, there is the potential for conflict between different political
agendas and priorities.
2. Layers or levels of non-elected governance have their own individual bureaucratic
specialisms and interests in health, defense, policing, education and so on.
3. Public authorities often need to coordinate with non-governmental organizations
(NGOs).
Potential difficulties vary between volunteers not being involved in the
planning process, conflicts between volunteers and professionals, volunteers
overstepping or/and lacking resources such as training
4. In the modern public sector, there is an increasing tendency towards public-private
partnerships and this trend is being reflected in contingency planning.
Difficulty of bringing together organizations with fundamentally different
values, cultures and goals
5. Local communities are often brought into the contingency planning process
 This is a breeding ground for bureaucratic politics, where a major priority of each
organization is the defense of its own interests.
The broad picture emerging, therefore, is that planning for crisis requires an integrated
approach from institutions with different political priorities, mandates, legal status, cultures,
resources, planning cycles, information capacities and communication system.
 Broad intent is to bring intra- and inter- organizational cohesion (within and
between government agencies and departments) in the pursuit of common goals 
there has been a “trickle down” impact on contingency planning.
In terms of crisis preparedness, we should be open to the possibility that joined up crisis
preparations do not necessarily lead to joined up responses
 Tension between the integrated logic of contingency planning, and the disaggregated
nature of public, private, voluntary and community bodies
Need for active planning and readiness vs. symbolic readiness
Good practice does not stop with a plan on paper  It also involves a variety of interactive
means by which those who will potentially be involved in a crisis situation, are given
appropriate training and testing – the broad philosophy running through these activities is
that:
 People are a vital resource in crisis preparation;


Their outlook and understanding of crisis can be reshaped;
Crisis preparedness can be improved as a result, leading to more effective management
and decision-making in the event of a crisis.
A number of activities are at the disposal of public authorities in the quest to ensure adequate
training in preparation for crisis.
We should be aware that use of a range of exercises is neither inevitable nor necessarily
equated with highly robust preparedness for crisis:
1. Pre-crisis activities and exercises can be expensive, and the nearer the simulation of
reality, the greater the expense
Such exercises cannot be conducted in every public institution for every
possible scenario
2. Even when exercises are conducted, adjustments in policies, practices and behaviors
are by no means inevitable
Lack of funding, shared sense within organization that it is well prepared
anyway and fine tuning isn’t necessary, etc.
3. Crises do not respect organizational training and planning
Crises are chaotic, unpredictable, threatening, and do not provide crisis
managers with the time or the information they would ideally like before
making decision
The changing world of pre-crisis planning
For many decades in the post-war period, the context of contingency planning was that
national threats were considered to be from “external” aggressors, rather than “internal”
failures in critical infrastructures.
 The nature of threats has now taken on more of a transnational character 
Contingency planning has become a much more relevant issue for public authorities
We have seen four main types of pre-crisis planning reforms in recent years.
A common theme is a classic response to crisis  a centralization of powers within
government and a shift towards ‘harder’ policy tools, rather than leaving contingency planning
to ‘soft’ discretion and convention.
1. Public authorities have created new, peak bodies to focus on civil contingencies.
2. Many countries have reviewed their contingency arrangements and strengthened
preparations through additional resources and detailed central requirements/guidance.
3. New legislation has placed legal requirements on some institutions for contingency
planning.
4. Contingency planning has been built into many requirements for good governance
and policy improvement and is subject to audit.
Conclusion
1. A conservative tendency in crisis preparedness would involve playing down threats,
adopting a ‘can cope’ outlook, and being resistant to investing scarce resources in drawing
up plans and rehearsing for events which may never happen
2. A more reformist approach would recognize the real threats that crises can pose,
recognize the real possibility that the organization may be unable to cope, and show
willingness to engage in all the sorts of preparations and planning that conservatives are
more likely to resist
3. High levels of crisis preparedness are not ‘mission impossible’ but they are very difficult
to achieve
The struggle is compounded because pre-planning requires the advance cooperation of
fragmented and often conflicting interests, while ‘paper’ preparedness exercises are often
simpler and cheaper than active readiness through trial and simulations
Tutorial 8 – Voice behaviour during crises
Employee voice and silence
Morrison, E. W. c
Introduction
Employees see things all the time in the course of doing their work and interacting with
customers and other employees: problems that are brewing, inefficiencies, inappropriate
activities, opportunities for improvement, strategic issues, etc.
 Yet they do not necessarily say anything about these observations to individuals
within their organization who might be able to take action.
VOICE AND SILENCE WITHIN ORGANIZATIONAL BEHAVIOR
Employee voice  informal and discretionary communication by an employee of ideas,
suggestions, concerns, information about problems, or opinions about work-related issues to
persons who might be able to take appropriate action, with the intent to bring about
improvement or change
Silence  the withholding of potentially important input or to instances when an employee
fails to share what is on their mind
 Its not speaking up when one has a suggestion, concern, information about a problem,
or a divergent point of view that could be useful or relevant to share
THE IMPORTANCE OF UNDERSTANDING VOICE AND SILENCE
If voice is withheld within an organizational context, both performance and employee
morale may suffer
There’s evidence suggesting that employees are often very hesitant to engage in voice,
particularly when the information could be viewed by the recipient as negative or threatening
Organizational leaders are often unaware of this tendency toward silence.
 Often fail to see the issues and problems that frontline employees see
 May believe that employees feel free to communicate upward (failing to recognize
reluctance and fear)
 May have distorted sense of how their organization is performing
OBJECTIVES OF THIS REVIEW
Paper focus on understanding not just when and why employees engage in voice, but also when
and why they so often do not, and on the consequences of these choices
 Key question  why employees often see things but keep that information to
themselves
A brief history of research on voice and silence
VOICE IN RESPONSE TO DISSATISFACTION
1980s: voice was defined as  actively and constructively trying to improve conditions
through discussing problems with a supervisor or co- worker, taking action to solve problems,
suggesting solutions, seeking help from an outside agency, or whistleblowing
 Notion of voice as voluntary improvement-oriented communication
VOICE AS A FORM OF EXTRAROLE BEHAVIOR
1990s: voice started to be recognized as  important form of extra role behaviour, or one of
the ways in which employees can go above and beyond the requirements of their jobs
EMPLOYEE SILENCE
Employee silence  the withholding of any form of genuine expression about a perceived or
experienced injustice from persons capable of effecting change
Voice and silence should be integrated
 Silence is failure to voice, and voice is a choice to not remain silent
 Measures of silence can be used to infer the extent to which an employee is or is not
engaging in voice
RELATED RESEARCH STREAMS
Issue selling  the efforts by an employee to get organizational leaders to pay attention to an
issue that the employee sees as particularly important
 It entails behaviors such as identifying allies, building a coalition, and preparing a
formal presentation
Whistle-blowing  the disclosure of illegal, immoral, or illegitimate practices to persons or
organizations that may be able to effect action
Core assumptions in the literature
There are two key assumptions in the literature:
1. Employees do not necessarily share their ideas and concerns and that the tendency
toward silence often dominates the inclination to voice.
2. Voice is important for organizations and, by implication, that silence is harmful. It is
worth considering both of these assumptions.
EMPLOYEES OFTEN WITHHOLD INPUT
The assumption that employees often fail to speak up when they have potentially important
information or ideas

There is evidence supporting the idea that voice is not necessarily the default option
when employees have ideas, concerns, or opinions and that silence is not an uncommon
choice in the workplace.
Employees do not necessarily share their ideas and concerns
 The tendency toward silence often dominates the inclination to voice
WITHHOLDING OF INPUT IS HARMFUL
Employee voice is very important (even necessary) for an organization to function effectively
 Silence is dysfunctional and harmful
Employee silence has been implicated in a range of large-scale organizational
failures
Voice has beneficial effects for employees (sense of control, feeling of being valued), and
silence creates dissatisfaction, stress and cynicism
 Voice  has been associated with range of positive organizational outcomes
 Silence  has implicated in organizational failures o individual acts of silence can
become self-reinforcing,
Producing norms of silence within work units and organizations that can be highly
dysfunctional and difficult to break
Why employees engage in voice or remain silent: traditional view
INITIAL MOTIVATION TO ENGAGE IN VOICE
Starting condition for voice or silence  A an employee either is aware of a problem or
opportunity or has an idea, concern, or perspective that might be relevant or important to share
or convey
 Employee must have something to potentially say
If this is the case, there exists the latent voice oportunity  the employee could choose to
engage in voice if he/she is sufficiently motivated and able to do so
Motivation for voice is prosocial in nature  voice is motivated by the desire to bring
about a constructive change for the organization or for one or more stakeholders
 The likelihood of voice should be greater to the extent that the employee has a strong
desire or sense of obligation to help the organization operate more effectively or more
appropriate vis-à-vis its employees, customers, or the external community
Primary intent  to bring about positive change, improvement, or redress and not merely
complain or get a positive outcome for oneself
Studies showing a relationship between employee voice and a variety of internal motivational
states reflecting a sense of commitment to the well-being of one’s organization, co-workers, or
customers  these include:
 Felt responsibility for constructive change




Sense of obligation
Workgroup or organizational
Conscientiousness; and
Customer orientation
Previous studies findings:
 Employees with high duty orientation are more likely to view voice as within their
role and are thus more likely to engage in voice
 Employees with high achievement orientation are more likely to view voice as
outside of their role and are thus less likely to engage in voice
When opportunities to voice arise  employees who prioritize the interest of
the group tend to speak up, whereas those who are more likely to focus on
consequences for the self tend to remain silent

Silence is less likely when organizations have caring climates (benevolent and
prosocial behaviour) and more likely when organizations have instrumental climates
(self-interest)
EFFICACY AND SAFETY CALCULUS
The underlying motivation for voice is an internalized sense of commitment to improvement
or to helping others  no attention has been given to this
 Primary emphasis has been on the decision calculus that occurs when an employee is
considering whether or not to speak up.
Focus has been on 2 key judgements:
1. Efficacy  employee’s perception about whether engaging in voice will be effective
in bringing about the desired result
2. Safety or risk  employee’s perception of whether engaging in voice will have
negative consequences for the self or for one’s relationships with others.
Individuals are more likely to engage in voice as their judgements of efficacy
and safety increase, and more likely to remain silent as they decrease
Employee acquiescence  a deep form of silence in which an employee has essentially given
up hope of improvement and feels completely powerless to speak up
Acquiescence can be caused by:
 Fear to be viewed as troublemaker or complainer, lose respect or support from others,
receive a negative performance review, get assigned to undesirable projects, not be
considered for promotion, or even get fired
 Fear that sharing own views or concerns will upset others or cause others to suffer
negative repercussions
 Being cognizant of the social discomfort created by difficult conversations and the
transmittal of bad news
 Power asymmetry


The more personally risky that voice is perceived to be, the less likely an employee
will be to speak up with ideas or concerns
Voice will be curtailed if employees do not feel that their input will be taken
seriously and acted upon or that they may suffer negative consequences for sharing
their ideas or concerns
Voice is more likely when managers solicit input and engage in consultative behaviours
 Employees more likely to engage in voice to their direct supervisors when the direct
supervisors have positive relationships with those at higher levels in the hierarchy
A broader view of why employees engage in voice or remain silent
Two significant gaps:
1. Focus has been mainly on the deliberate and rational processes by which employees
weigh costs, benefits, and likely success
2. Desire to achieve various types of positive outcomes for the self can also play a role in
motivating and supporting voice
NONCONSCIOUS PROCESSES AND EMOTIONS
Silence  often stems from automatic processes that involve little if any conscious or
calculative consideration of costs and benefits
 This may be particularly likely when an employee is in a situation that evokes a high
level of fear
Even if supervisors are objectively very approachable and open to input, employees may
remain silent because of deeply held schemas about the riskiness of speaking up in a
hierarchy
 This suggests that employees are hardwired to be reticent when interacting with
superiors and to avoid any behaviour that could be seen as a challenge to authority
Culture  Is another factors which might play a role in silence are:
 E.g., on a high-power distance culture or one that emphasizes respect for the elders –
more likely to exhibit silence
Implicit beliefs about voice  can also become socially shared and embedded
within an organization or work unit
Anger  increase likelihood of whistle-blowing, can help overcome silence by pushing an
employee toward action
 Highly angry employees may speak up even when the rational choice would be to
remain silent
 Employees who have greater knowledge about how to manage their emotions not only
engage in voice more frequently, but also experience a stronger positive relationship
between voice and performance evaluations
OTHER MOTIVES RELATED TO THE SELF
When employees are deciding whether to engage in voice  they may consider not just how
this behavior could lead to organizational or unit-level improvement, but also how it could
potentially advance their own interests

Personal restitution, self-promotion, and political motives  may also be relevant in
motivating voice behavior
Engaging in voice can sometimes have positive image effects
 An individual’s personal identity and desire to behave in a way that is consistent with
that identity can also drive voice behavior
Putting it all together: antecedents and outcomes of voice and silence
MOTIVATORS AND INHIBITORS
Starting point: latent voice opportunity  It becomes either voice or silence depending on
motivators and inhibitors
 These factors are individual-level and contextual factors that can either strengthen or
attenuate the link between a voice opportunity and subsequent behaviour
 Behaviour at any moment in time can be viewed as an equilibrium between driving
forces that encourage movement or change and restraining forces that discourage it
Employees will engage in voice only when the motivators are stronger than
the inhibitors
There are different mechanisms through which they can operate:
Motivators can:
1. Operate by strengthening the desire to make a positive difference in one’s workplace
(intensify prosocial motivation)
2. Operate by impacting the subjective expected utility calculus that underlies the
decision to engage in voice or remain silent
3. Operate through a pathway that is largely automatic and independent of deliberate
decision making
Inhibitors can:
1. Reduce the prosocial drive and commitment to make a difference, increasing
apathy or resignation.
2. Can alter the expected utility calculus by reducing the employee’s assessment of
capability, efficacy, and safety
3. Inhibit action via automatic or nonconscious processes
MOTIVATORS
Individual dispositions
Job and organizational
attitudes and perceptions
Emotions, beliefs, and
schemas
Supervisor and leader
behaviour
Other contextual factors
Extraversion
Proactive personality
Assertiveness
Conscientiousness
Duty orientation
Customer orientation
Organizational identification
Work-group identification
Felt obligation for change
Job satisfaction
Role breadth
Control or influence
Organizational support
Anger
Psychological safety
Openness
Consultation
Leader-member exchange
Transformational leadership
Ethical leadership
Leader influence
Group voice climate
Caring climate
INHIBITORS
Achievement orientation
Detachment
Powerlessness
Fear
Futility
Image or career risks
Abusive leadership
Job and social stressors
Climate of fear or silence
Formal voice mechanisms
Instrumental climate
Hierarchical structure
Change-resistant culture
OUTCOMES OF VOICE AND SILENCE
Outcomes  can be divided in two categories:
1. Organization or work-unit outcomes
2. Outcomes for the employee
Groups and organizations perform better when employees share their ideas and concerns
 Performance suffers when there is a high level of silence
Too much input  can overload decision making and make it very difficult to reach
consensus and take action
Voice on unit-level turnover  voice may increase subsequent turnover if managers are not
able or willing to be responsive to the issues raised
Studies regarding the outcome of an employee after voice – found:
 Engaging in voice can harm one’s career success.
 Another study found a positive relationship between voice and appraisals
 Subjects liked the employee more, attributed stronger prosocial motives to him, rated
his performance more highly, and considered the behaviour to be more constructive,
when the message included a solution and when the employee was seen as highly
trustworthy.
 Voice behaviour is viewed more positively when it happened sooner rather than
later and when speaking up was normatively encouraged.
Studies on how managers respond to both the act of engaging in voice and the content of the
message – found:
 When voice is seen as supportive of the status quo rather than challenging, managers
are more likely to regard the employee as loyal and are less likely to feel threatened
 as a result, they are more likely to endorse the message.
 Voice has a more positive effect on performance evaluations to the extent that the
employee is effective at regulating his or her emotions while engaging in voice
 Voice is more likely to lead to favourable outcomes when the employee and manager
both agree that the employee is engaging in a high level of voice
 Employees are rated more negatively and are more likely to be terminated when they
overestimate their level of voice relative to the estimations made by their managers
Groups and organizations perform better and have less turnover when employees voice
suggestions and concerns
 Voice can impact how an employee is evaluated and viewed by others
These relationships are contingent on both what the employee voices and how
the employee engages in voice  these affect the target’s receptivity to the
message and the attributions that he/ she makes about the employee’s motives
Effects of voice on unit-level performance are likely to depend on the specifics
of what and how one communicates, too.

Effects of voice depend also on the recipient, because managers and leaders differ in
their openness to upward input and ability to act upon it
IMPLICATIONS FOR SCHOLARSHIP AND PRACTICE
Some key features of model on figure 1:
1. Explicitly acknowledges issue awareness as a starting point
2. Highlights that there are both motivators and inhibitors that come into play in
determining whether a given voice opportunity results in voice or silence
These motivators and inhibitors operate not just through their effects on efficacy
and cost calculations, but also through their effects on prosocial motivation and
non-calculative automatic processes
3. It highlights that one cannot draw conclusions about the effects of voice and silence,
particularly for the employee, without taking into consideration the nature of the
message, how it was conveyed, and how the recipient interpreted the behaviour and
responded to the message.
Model highlights different things managers can do to encourage and enable more upward
input, including:
 Foster higher levels of identification with the common enterprise in order to
strengthen employees’ drive to make a positive difference
 Consult with employees and convey sincere receptivity to their input
 Nurture a workplace climate that places value on honest communication
Active efforts need to be taken to counterbalance inhibiting forces and to ensure that they
are not reinforced by:
 Negative leadership behaviours
 A climate of fear; or
 A work environment that causes employees to feel disengaged or powerless.
When one is voicing criticism or information about a serious problem  the likelihood of
that information being taken seriously and acted upon is greater if one is able to present it in a
way that is less directly threatening to the recipient and also provide a potential solution
rather than just information about the problem.
Future research opportunities: where to go from here
RESEARCH ON OUTCOMES
Some important things to note:
 Felt obligation is more strangely related to promotive voice, whereas psychological
safety is more strongly related to prohibitive voice
 Responses to voice may differ depending on the type of message conveyed


Independent of how the employee speaks up, they may engage in voice more gently or
more forcefully, which can affect how others respond
An employee may need time to decide whether, when, and how to communicate an idea
or concern, and will often not engage in voice right away
May decide to gather more info, talk to trusted colleagues, or more carefully
think through the pros and cons of raising a particular issue
Tutorial 9 – Crisis communication
Faster, hotter, and more linked in: Managing social disapproval
in the social media era
Wang, X., Reger, R. K., & Pfarrer, M. D.
Introduction
In 2017, a social media video of a United Airlines passenger being forcibly removed from a
plane was viewed more than 6.8 million times within a few days  caused a drop of nearly
one billion dollars in the airline’s market capitalization
 These rapid and sweeping effects of constituents’ negative evaluations were
unimaginable before the social media era
The social media era  presents new challenges for how a firm manages its negative
evaluations.
Social disapproval  constituents’ general enmity (i.e., hostility) toward a firm that reflects
their intuitive negative perceptions
 Generated when constituents react intuitively and negatively to organizational
events they learn about from traditional media, social media, or journalists’ social
media practices
Constituents  diverse individuals who observe, evaluate and potentially interact with a
firm

They transcend stakeholder group boundaries including those more directly engaged as
well as more passive observers and often rely on cognitive shorthand and intuitive
processing to evaluate firms
Firms must be aware, not only of negative evaluations by active stakeholders
but also, from those constituents who may have previously been uninterested or
uninformed
Media’s greater velocity, emotionality, and communality increase the likelihood that social
disapproval will spread faster and more empathetically among a more varied set of constituents
Social disapproval and the media
Social media  the group of internet-based platforms and applications that allow the creation
and exchange of constituent-generated content
 It has changed the way in which three media characteristics (velocity, emotionality,
and communality) serve as mechanisms to generate and transports social
disapproval
 Despite the shift to social media, research has continued to focus on the influence of
journalist-led, traditional media in the generation and dissemination of social
disapproval
The social media era has changed how constituents learn about firm events, as well as how
they engage and react
SOCIAL DISAPPROVAL MECHANISMS IN THE TRADITIONAL VERSUS SOCIAL
MEDIA ERA
Authors argue that the greater velocity, emotionality, and communality in the social media
era versus the traditional media era affect how firm information spreads and how
constituents evaluate this information
Key media characteristics which serve as influential mechanisms in the social media era:
 Velocity  how quickly constituents perceptions reach other constituents
 Emotionality  level of affective appeals and responses that content elicits among
constituents
 Communality  grows when a collective identity emerges among a varied set of
mutually supportive constituents, even among those who never met in person
Traditional media have reduced the effects of these three mechanisms to
generate and spread disapproval
Velocity:
Journalists in the traditional media  had primary agency in determining the velocity by
which negative information reached constituents – for two reasons:


Journalists prioritized in-depth analysis and fact-checking over speedier reporting and
adhered to publication cycles (e.g., daily newspapers and weekly magazines) which
delayed information dissemination
Constituents has access only to what journalists could verify and publish in each
publication cycle
In the social media era  more actors (firms and constituents) have agency in affecting the
velocity by which information spreads
 Firm content is published immediately, and feedback is often directly shared among
constituents
 The speed-driven nature also increased (e.g., newspapers update their websites
continuously)
Emotionality:
Most traditional media  followed norms that dictated the tempering of emotionality in
favor of objectivity, leading to more dispassionate coverage
 Provided fewer opportunities for constituents to directly express their emotions about
firms  instead they dampened constituents’ emotions with more balanced reporting
In the social media era  content exhibits greater emotionality
 Constituents are affected by events they can relate to and by content from others whom
they know and care about
 There is less concern for censorship which makes constituents’ greater emotional
responses amplified
 Traditional media has been influenced by the social media era to adopt greater
emotionality in their reporting
Communality:
Traditional media  their one-way communication channels limited constituents’ ability
to find others who shared their concerns and thus restricted communality from developing
 Journalists primarily wrote for stakeholders (e.g., investors and industry insiders) who
had more ‘ideological consistency’ with the firm than with most varied sets of other
constituents – thus, difficult for constituents to form communal ties against a firm
In the social media era  opportunities to build communality are greater
 Social media era content exhibit greater communality, providing constituents extensive
opportunities to share their disapproval for firm actions
 By cultivating shared grievances, constituents are more likely to feel united by a shared
sentiment of “us against them”
The social disapproval management process in the social media
A firm manages its social disapproval through a set of coordinated strategies which attempt
to influence constituent’s perceptions:
 Communications; and
 Actions
Authors theorize that the effectiveness of a firm’s response strategies depends on how it
manages given that social disapproval spreads faster and more empathetically
A firm seeks to prevent negative event from generating into social disapproval by:
 Selecting a proactive transparency strategy
 If the event is publicly disclosed  firm seeks to contain disapproval through a reactive
reticence strategy
 If the reactive reticence strategy fails,  the firm then engages in additional strategies
that emphasize deliberation and accommodativeness
The effects of key contingencies (event severity, actor prominence, and message
inauthenticity) on a firms ability to manage social disapproval throughout this process
 Figure 1 illustrates the relationships between our key constructs as well as the
mechanisms that underlie our propositions.
PREVENTING
SOCIAL
TRANSPARENCY
DISAPPROVAL
THROUGH
PROACTIVE
Today, when a firm has knowledge of events that could generate social disapproval  the
firm may choose to:
1. Be secretive; or
2. Be transparent and proactively disclose the information
Proactive transparency  firm’s intentional self-disclosure, or timely sharing of useful
information, about its actions with constituents
 Self-disclosure  typically include information about the event and actions the firm
is taking to fix the problem, make restitution, and prevent the problem from reoccurring
 Argued that a proactive transparency strategy will reduce the likelihood of social
disapproval generating in the social media era  by limiting its greater velocity,
emotionality, and communality
A proactive transparency strategy can:
 Minimize the velocity by which social disapproval is generated
A firm must weigh the risks of proactive transparency against the possibility
that the information is made public by others who may alter and spread it in
ways more likely to generate social disapproval than a self-announcement

Self-disclosure allows a firm to set the initial tone of the story, potentially negating
constituents’ emotional expressions
Proactive transparency may reduce emotionality by framing events more
analytically and thus prevent social disapproval from generating

May be viewed as the firm voluntarily siding with constituents because the firm
appears to have willingly disclosed information that is potentially damaging
Self-disclosure may be viewed as a signal of the firm’s integrity that may
negate constituents’ communality of “us against them” and prevent social
disapproval from generating
PROPOSITION 1:
 A proactive transparency strategy helps prevent social disapproval from generating in
the social media era
CONTAINING SOCIAL DISAPPROVAL THROUGH REACTIVE RETICENCE
When others are the first to reveal a firm’s negative actions  the firm has the option of:
1. Responding widely; or
2. Pursuing a reactive reticence strategy; or
3. Not to respond at all
 Reactive reticence strategy: the firm’s choice to limit the scope of its response
Reticence  suggests a firm may choose to ignore a negative disclosure by others, or send
a private message to a narrow set of constituents that would appear to others as silence
 Theorized that reactive reticence to others’ disclosure of the firm’s negative actions is
more effective today at containing social disapproval and thus preventing isolated
discontent from spreading
Reticence  may be more likely to contain disapproval in the social media era by
addressing the era’s greater velocity, emotionality, and communality in ways distinct from
those we in order to achieve proactive transparency
Reactive reticence is more effective today at containing social disapproval
 Reactive reticence allows a firm to wait and see whether constituents ignore or
forget an issue  may lead to a better outcome than an ill-conceived mass response
that keeps a story alive and increases the velocity by which it spreads.
While the potential velocity of social disapproval following any given
disclosure about a firm is high, the actual velocity of many negative disclosures
is low.

Reactive reticence may limit constituents’ emotional engagement with a story and
disrupt the greater emotionality of the social media era
A reticent firm may be better off waiting to see which sparks the social media
era may fuel

Reactive reticence can impede the development of communality
By limiting other constituents from adding additional complaints to the
original disclosure, reactive reticence can contain the greater communality of
the social media era
PROPOSITION 2:
 A reactive reticence strategy helps contain social disapproval in the social media era
ATTENUATING SOCIAL DISAPPROVAL IN THE SOCIAL MEDIA ERA
To reduce social disapproval from spreading  the authors argue that:
 Slower, more deliberative responses primarily mitigate the social media era’s greater
velocity; whereas
 More accommodative strategies primarily reduce the era’s greater emotionality and
communality
Response deliberateness  refers to how quickly or slowly a firm responds to social
disapproval
 Theorized that a slower response (i.e., one that isn’t impulsive nor immediate but
reflects the firm’s deliberations about the issue) is more effective at tempering the
social media era’s greater velocity
Firms should not respond until they have gathered enough information about
the event
PROPOSITION 3:
 A more deliberative strategy helps attenuate social disapproval in the social media era
Response accommodativeness  more accommodative responses accept responsibility and
acknowledge a firm’s role in the events that led to constituents’ negative perceptions
 Theorized that a more accommodative response will attenuate social disapproval by
disrupting the greater emotionality and commonality of the social media era
Accommodative responses are more important in the social media era because:
 In the traditional media era a more accommodative response was less necessary to
attenuate social disapproval as a narrower more homogeneous set of constituents was
more likely to give firms the benefit of the doubt
 A more accommodative response reduces constituents’ motivation for emotional
expression and reflects the appropriateness of their concerns which reduces the ‘us
against them’ sentiment
PROPOSITION 4:
 A more accommodative strategy helps attenuate social disapproval of the social media
era
KEY CONTINGENCIES IN MANAGING SOCIAL DISAPPROVAL
Event severity  the amount of financial and human loss or the extent of environmental
damage
Theorized that event severity in the social media era also incorporates the social resonance
of an event
 Social resonance  reflects constituents’ views of salient issues (e.g., corporate
power, race relations, workplace gender issues or gun control) – shared perceptions of
issue salience can act as a ‘social glue’
Social resonance of an event can affect the social disapproval management
process by prompting a firm to proactively disclose events today that were
deemed objectively trivial in the past, but which might resonate strongly with
constituents
 An accommodative response  may be especially adept at handling the higher levels
of emotionality and communality in constituent’s disapproval of socially resonant
events
Actor prominence  firms that have a high level of visibility among constituents, typically
through media exposure
 Argued that the social media era has created an additional consideration relating to high
visibility – constituent prominence – that has not been the focus of prior research
(e.g., swifties, beliebers, etc.)
 They have more followers that see the initial post and these are more likely to share the
post to attract more attention and status
Suggested that this form of actor prominence can affect the social disapproval
management process by requiring firms to pay attention to, and manage the
opinions of, individuals beyond journalists who have the power to foment social
disapproval

Finally, if a prominent constituent catalyzes social disapproval, a firm may be able to
enlist other prominent constituents as evangelists to attenuate its spread
Message inauthenticity  a firm’s lying, acting hypocritically, or presenting “a mismatch
between appearance and reality”
 This from of inauthenticity can affect the social disapproval management process in
novel ways not anticipated by current theory
Firm exhibit caution when considering a slower, more deliberative response
to inauthentic message
Mixed messages: Crisis communication-dismissal (in)coherence
and shareholder trust following misconduct
Hersel, M. C., Gangloff, K. A., & Shropshire, C.
Introduction
Following disclosure of financial misconduct  a transgressing firm faces the difficult task of
convincing shareholders that it remains worthy of their capital.
 Firms have a few well-documented crisis management tactics they can use to manage
shareholders’ evaluations of their trustworthiness (e.g., executive dismissal and
crisis communication)
Firms can send costly mixed messages to shareholders when they fail to
utilize these tactics in a coherent manner.
This paper  investigates how a firm’s communication about its transgression influences
shareholder reactions to its dismissal of an executive following misconduct
 Claimed that shareholders assess whether dismissing an executive resolves the
underlying problems causing the misconduct in the context of the firm’s
communication between the disclosure of the misconduct and the executive dismissal
Post-transgression crisis management strategies
When shareholders learn of a firm’s misconduct  the firm often attempts to shape their
understanding of what happened and how the problem is being resolved to mitigate
shareholders distrust
Post-transgression communication  conveys a firm’s version of events and provides a
backstory about the underlying problems that caused the misconduct
Shareholders consider the informational cues embedded in what a firm says and does
following a transgression as they reassess their relationship with the firm
 Shareholders may be skeptical of the firm’s version of events and may view the
transgressing firm as an unreliable source of information
Firms may be able to regain shareholder trust if they present what
shareholders deem to be a reasonable explanation and resolution to the
problem.
How shareholders respond to the announcement of executive dismissal  depends on
whether the dismissal is coherent with the firm’s post-transgression communication.
 If an executive dismissal logically addresses the underlying problems, then
shareholders are likely to deem the overall crisis management strategy appropriate,
reasonable, and trustworthy.
Coherence  the quality of being logical and consistent, or the degree to which a set of
interrelated elements combine to form a unified whole
 A coherent crisis management strategy  indicates a carefully planned and
orchestrated response where the corrective action is calibrated to the disclosed offense.
The coherence of a firm’s crisis management strategy lends it trustworthiness
and credibility.
 Perceived inconsistencies between the executive dismissal and the firm’s
communicative explanation about the root of the problem may cause shareholders to
question the firm’s willingness or ability to fix problems
On the aftermath of financial misconduct  transgressing firms may engage in incoherent
crisis management for a few key reasons:
 Incoherence may be unintentional:
Firm leaders may not have complete information at the beginning of the
process – good faith attempts to downplay the severity may be inconsistent with
the measures necessary to fix the problem once fully understood
Rushing to apologize to shareholders and assure them that the problem is
received the attention it deserves – a firm might give shareholders the
impression that the transgression is more severe than it reality

Incoherence may be intentional:
Existing theories on crisis and stakeholder management may promote
incoherence between what the firm says and does
The authors posit that (in)coherence between a firm’s dismissal of an executive and its posttransgression communication  plays an important role in the firm’s ability to rehabilitate
shareholder trust via executive dismissal
POST-TRANSGRESSION COMMUNICATION
Firm’s crisis communication  provides shareholders with information about the
misconduct
 Through them, a firm can convey its version of what happened and who is responsible
for this misconduct  can influence shareholders expectations about what the firm
should/will do about it
There are three elements of transgression-related communication that influence
shareholders reactions
 First two elements  related to firms expressed attitude toward the transgression
and provide cues to its seriousness
 Third element  informs transparency, sourcing and attribution related to the
communication
The three elements of transgression-related communication that influence shareholders
reactions:
SEVERITY
MINIMIZATION
FIRST-PERSON
DISCLOSURE
Apology,
accommodativeness,
repentance, remorse and
sympathy
Denial, defensiveness, and
downplaying
Functional language that does
not directly convey content
but personalizes and connects
a message to the firm’s
leader(s)
It is a communicative
sentiment that includes
remorseful language
expressing ‘sincerest
apologies,’ ‘deep regret,’
sympathy, and other
accommodative statements
A firm may choose to defend
itself by depicting a
misstatement as an
unintentional or technical
error, downplaying the
seriousness of a
misstatement, or even
questioning whether a
misstatement occurred at
all
Functional language,
including first-person
pronouns linking a firm’s
leader to the disclosure,
influence investor judgments
about culpability (e.g., CEO
using “I” statements in taking
responsibility)
BLAME ACCEPTANCE
Implies that the firm engaged
in misconduct takes
responsibility and intends
to avoid similar violations
in the future  thereby
accommodating shareholders
concerns
Effusive blame acceptance
and expressions of remorse
can lead shareholders to
perceive wrongdoing as
intentional and dishonest
Accepting blame confirms
that the firm violated legal
or social standards of
acceptable business practices
Implies that the transgression
was inadvertent or minor.
This communicative element
implies the transgression is
isolated and not associated
with a pervasive ethical
failure or widespread
deficiency within the firm.
Using first-person disclosure
can link the communicator
to the message, enhance the
credibility of the firm’s
message, and influence the
audience’s perceptions of
openness and transparency
Given its association with
transparency, first-person
disclosure (or lack) may
influence how shareholders
infer meaning from a firm’s
transgression-related
accounts.
If underlying problem is
never communicated to
shareholders  they would
view any subsequent
executive dismissal as
unexpected and as a sign that
the transgression was more
serious than originally
acknowledged.
When a firm avoids
minimizing the severity of a
misstatement, it conveys to
shareholders that the
misconduct is significant
and consequential
Direct communication from a
firm’s leader could provide
the sense of credibility that
shareholders need to accept
the firm’s account
Occasionally firms attempt to minimize the severity of their
transgression while simultaneously accepting blame.
Firm leaders can tactically
use first-person disclosure as
a substitute for actual
forthrightness (e.g., saying
the problem is being handled
through internal channels)
It signals the firm’s
recognition that a major
problem occurred and
commitment to resolving it
EXECUTIVE DISMISSAL
Dismissing an executive following financial misconduct  can signal to shareholders that
the firm is addressing the underlying problem, so there should be no concern of recidivism
 In rare cases firms explicitly terminate an executive’s employment due to their role
in the transgression  clear signal that they were responsible
Often, an executive suddenly retires early or departs from another job opportunity (often
a professional courtesy or to limit reputational damage)  timing connects them to the
transgression
 These approaches introduce ambiguity and leave shareholders to interpret what the
dismissal means in the context of a firm’s transgression.
Types of dismissal:
 CEO dismissal  signals that the firm is addressing a major strategic problem or
ethical failure that requires a top-down solution
 CFO dismissal (context of financial misstatement)  suggest that the firm is
addressing issues specific to the duties of the CFO
Research has shown that CFO dismissals are typically disciplinary in nature and
those following a restatement are associated with a technical failure

CFO dismissal + CEO retention  signals to shareholders that the root cause of the
misstatement is isolated to the technical reporting of the firm’s financial records
rather than a major, systematic or pervasive problem that threatens the firm beyond
financial reporting
SUMMARY
How facets of post-transgression communication (i.e., blame acceptance, severity
minimization, and first-person disclosure) influence shareholder reactions to the type of posttransgression dismissal (i.e., CEO vs. CFO dismissal), is an open question.
The authors examine:
 Firms’ crisis management strategies that include the dismissal of a top executive (CEO
or CFO)
 Whether the (in)coherence between dismissal decisions and crisis communication
predicts shareholder reactions to the executive dismissal
Study 1: fuzzy-set qualitative comparative analysis
In study one, the stock market reactions to post-transgression crisis management
strategies of firms that mistreated their financial reports is examined
CONTEXT: FINANCIAL MISSTATEMENTS
The authors study crisis management strategies that:
 Mistreated financial statements
 Publicly disclosed their misstatement to shareholders; and
 Dismissed their CEO or CFO within 90 days following the disclosure of their
mistreatment
OUTCOME CONDITIONS: FAVORABLE AND UNFAVORABLE MARKET
REACTIONS
It was operationalized the outcome of interest, shareholder reactions, as the cumulative
abnormal return (CAR) of each firm’s stock price in response to the announcement of a CEO
or CFO dismissal.
A firm’s abnormal returns  are the difference between the firm’s actual return and the
return predicted by the market model for normal market movement and are commonly used to
capture market reactions to events.
CAUSAL CONDITIONS: CRISIS MANAGEMENT TACTICS
It was considered:
 Relevant communicative attributes (i.e., blame acceptance, severity minimization, and
first-person disclosure); and
 Two types of executive dismissal (i.e., CEO dismissal and CFO dismissal).
 Each of these crisis management tactics provides informational cues about what
happened, who was involved, and what the firm is doing to fix the problem.
Authors discuss measures for each tactic described conceptually above and provide summary
statistics and calibration of set membership in Table 1
ANALYSIS:
Tables presented:
 Rows in the table report the conditions and summary statistics
 Columns in the table delineate specific configurations that met the specific threshold
 Solid circles indicate that the condition was present in the configuration (i.e., its
presence contributed to causing the outcome).
 Crossed circles indicate that the cue was an absent causal condition in the configuration
(i.e., its absence contributed to causing the outcome).


Blank spaces indicate that its presence or absence does not matter (i.e., did not
contribute) to causing the outcome.
The size of each circle is presented as reflective of its core causal vs. peripheral
contributing condition (i.e., large circles v. small circles)
CONFIGURATIONS SUFFICIENT FOR FAVORABLE MARKET REACTION
1) Major violation, CEO dismissal:
TABLE 2: reveals that markets reacted favorable when transgressing firms:
 Avoided first-person disclosure
 Accepted blame; and
 Did not minimize the misstatement’s severity prior to dismissing the CEO.
Blame acceptance indicates culpability, while an absence of severity minimization suggests the
problem is substantive and perhaps pervasive.
 The firm’s communications include minimal first-person disclosure from executives 
appears to divorce the firm from the wrongdoing and, perhaps, the wrongdoer.
When the CEO is dismissed in this configuration  the market reacts favorably – because
of the coherence between what the firm has communicated, the way in which it has
communicated it, and the type of dismissal.
 CEO dismissal is consistent and logical with expectations set in the firm’s posttransgression communications.
2) Isolated reporting error, CFO dismissal:
TABLE 2: reveals that markets reacted favorable when transgressing firms:
 Used first-person disclosure
 Minimization of the misstatement’s severity; and
 CFO dismissal
Transgression-related communications indicate that the misstatement was the result of an
accounting error or oversight

The use of first-person disclosure appears to increase the credibility of this message.
CONFIGURATIONS SUFFICIENT FOR UNFAVORABLE MARKET REACTIONS
3) Major violation, CFO dismissal:
TABLE 2: reveals that markets did not react favorable when transgressing firms:
 Absence of minimization
 Accepted blame; and
 Dismissal of the CFO.
This signals a substantial and possibly pervasive problem (not an isolated error) as the root
cause of the misstatement.
 Shareholders likely perceived the decision to dismiss the CFO to be illogical or
insufficient because of the communicative elements after disclosure of firm’s
misconduct
This configuration is similar to configuration 1  difference is dismissal of CFO instead of
CEO
 This suggest that when firms accept blame for a misstatement without minimizing
its severity, shareholders appear to expect a CEO dismissal and react unfavorably
if the CFO is dismissed instead.
4) Ambiguous problem, unexpected dismissal:
TABLE 2: reveals that markets did not react favorable when transgressing firms:
 Provided first-person disclosure (connecting the firm to the wrongdoing or wrongdoer)
 Provided little backstory regarding the underlying problem
 Neither accepting blame nor minimizing misstatement severity
 The firms in these cases provide first-person disclosure but failed to inform
shareholders via communications to the degree that they could understand the problem
and why the executive dismissal would resolve it.
This combination of cues is confusing and may appear to be an intentional obfuscation of the
underlying problem.
 Without sufficient information, shareholders may be unable to formulate clear
expectations of the appropriate corrective action.
In this case, the underlying problem may be so ambiguous that neither CEO nor CFO
dismissal mitigates shareholder concerns about transgression reoccurrence.
SUMMARY FINDINGS
Study 1  demonstrated that shareholder reactions to post-transgression executive dismissal
are partly a function of how well the dismissal resolves problems explicitly or implicitly
conveyed within the firm’s misconduct-related communication.
Coherence between the dismissal and the preceding transgression-related communications
tends to generate favorable shareholder reactions,
 Whereas incoherence between those crisis management tactics tends to generate
unfavorable shareholder reactions.
Study 2: policy capturing study
Study two  digs deeper into investors’ perceptions and the decision-making policies that
they use to evaluate firms following misconduct.
 It allows to examine how investors interpret cues embedded in firms’ crisis response
strategies (i.e., communications, dismissals) to make decisions about the firms in which
they invest.
Policy capturing  draws on aspects of experimental and survey methods by asking
respondents how they would react to hypothetical but realistic scenarios
MEASURES
To test the relationship on Figure 1B  it was coded the communicative sentiment and
executive dismissal as indicator variables
Three primary dependent variables to test the theory about shareholder reactions to posttransgression communications and dismissal:
 Respondents’ perceived (in)coherence
 Respondents’ expectation of recidivism
 Respondents’ likelihood of increasing/reducing holdings
ANALYSIS AND RESULTS
Model 1-3 (Table 5) – Figure 2:
Respondents assessed whether the communication and type of dismissal fit together as they
evaluated the coherence of the firm’s crisis management strategy
 Figure 2 presents an interaction plot for the relationship
FIGURE 2: demonstrate that shareholders were more likely to view crisis management
strategies as coherent when the type of dismissal provided a logical resolution to the
problem described in the firm’s prior communication.
Shareholders reported relatively higher perceptions of coherence in two scenarios:
Scenario 1 – coherent:
 Blame acceptance; and
 CEO dismissal
Scenario 2 – coherent:
 Severity minimization; and
 CFO dismissal.
Shareholders reported relatively higher perceptions of incoherence in two scenarios:
 When the dismissal did not track logically from the prior communication
Scenario 1 – incoherent
 Blame acceptance; and
 CFO dismissal
Scenario 2 – incoherent
 Severity minimization; and
 CEO dismissal.
Model 4-7 (Table 5) – Figure 3:
Figure 3 examine the instrument’s effect on respondents’ expectation for recidivism
Shareholders expected a lower likelihood of recidivism in two scenarios:
Scenario 1 – lower recidivism expected:
 Blame acceptance; and
 CEO dismissal
Scenario 2 – lower recidivism expected:
 Severity minimization; and
 CFO dismissal.
Shareholders expected a higher likelihood of recidivism in two scenarios:
Scenario 1 – higher recidivism expected:
 Blame acceptance; and
 CFO dismissal
Scenario 2 – higher recidivism expected:
 Severity minimization; and
 CEO dismissal.
Model 7-10 (Table 5) – Figure 4:
Figure 4 examine the likelihood that respondents would increase/reduce their holdings
Shareholders were more likely to increase their holdings when the communication matched
the type of dismissal – two scenarios:
Scenario 1 – likelihood to increase holdings:
 Blame acceptance; and
 CEO dismissal
Scenario 2 – likelihood to increase holdings:
 Severity minimization; and
 CFO dismissal.
Shareholders were more likely to reduce their holdings when the communication did not
match the dismissal
Scenario 1 – likelihood to reduce holdings:
 Blame acceptance; and
 CFO dismissal
Scenario 2 – likelihood to reduce holdings:
 Severity minimization; and
 CEO dismissal.
Model 10  tests the mediating effect of perceived (in)coherence as a mechanism for this
interaction
 Shareholders’ perceptions of (in)coherence as a statistical mediator of the effect of the
interaction between blame acceptance and CEO dismissal on their reported likelihood
of increasing or reducing their holdings
Shareholders’ perceptions of (in)coherence mediate the effect of the interactive
relationship on the likelihood that shareholders would increase/reduce their holdings.

It was also found causal chain between perceptions of (in)coherence and the
behavioral dependent variable
CONCLUSION
Based on these results it is concluded that:
1. Shareholders jointly considered the firm’s post-transgression communication and
executive dismissal to determine (in)coherence of the firm’s crisis management
2. Their assessment of the strategy’s (in)coherence influenced the likelihood they would
increase/reduce their holdings.
Discussion
Results of Study 1 reveal multiple and asymmetric paths to favorable and unfavorable
shareholder reactions following CEO and CFO dismissals in the wake of misconduct
Three meaningful patterns emerged:
1. Shareholders react favorably to dismissal when it provides a coherent resolution to
the problem explicitly or implicitly described in the firm’s preceding communication
(and unfavorably otherwise)
2. When executives communicate to shareholders directly, first-person disclosure
combines in complex ways to explain the influence of (in)coherence on shareholder,
any executive dismissal seems illogical to shareholders
3. When a firm fails to provide enough information about the misconduct’s underlying
cause, any executive dismissal seems illogical to shareholders.
Study 2 provides important insight into how investors use cues in combination in their decision
policies.
These results revealed that:
 Shareholders recognize (in)coherence in firms’ crisis management efforts
 Shareholders recognition of (in)coherence subsumes the direct and interactive effects
that specific types of communications and dismissal have on their intentions to adjust
their holdings.
 Thus, crisis management (in)coherence plays a substantive role in driving outcomes
related to shareholder trust repair.
Conclusion
How a firm manages the aftermath of financial misconduct can impact its relationship with
shareholders and other non-financial stakeholders
Firms must make high-stakes decisions about their responses after misbehavior is publicly
disclosed
 Including what they say to shareholders about their misconduct and whom they hold
responsible via dismissal.
Findings reveal shareholders’ distaste for mixed messages in the aftermath of financial
misconduct.
 Results suggest that firms must align what they do with what they say about their
misconduct to maximize the likelihood of reestablishing shareholders’ trust.
Tutorial 10 – Crisis and organizational learning
Learning through rare events: Significant interruptions at the
Baltimore & Ohio Railroad Museum
Christianson, M. K., Farkas, M. T., Sutcliffe, K. M., & Weick, K. E.
Introduction
Rare events  events that occur outside the everyday experience of organization and, as such,
are frequently portrayed as unique, unprecedented, or even uncategorizable
Rare events as significant interruptions:
 Exaggerations of a type of stimulus that organizations routinely encounter on a smaller
scale
 Interruptions  defined as a “break in continuity”
Authors suggest that the issue for learning is not so much an issue of what people learn “from”
rare events, rather an issue of what they learn “through” the rare event
Organizational learning  the revision of response repertoires in ways that improve
organizational performance
 Occurs when an organization’s members revise their beliefs in ways that, when the
beliefs are acted on, improve the organization’s performance.
Response repertoires  the stock of routines, habits, and roles that have been experience, as
well as the capability to recombine portions of the stock in novel ways
 Response repertoires include both realized and latent potential
Case study analysis:
Data collected through interviews
 Sample of nine key employees of the B&O Railroad Museum, supplemented with
archival materials
Findings reveal that rare events trigger learning in three ways:
1. Rare events act as audits of existing response repertoires
o Prior weaknesses and lack of preparation become salient targets for new
learning, and behavioral potential is unmasked and converted into action
2. Rare events disrupt and can strengthen organizing routines
o Interruptions provide opportunities to reorganize routines, particularly those
involvin interpreting, relating, and re-structuring  these produce quicker and
more efficient responses to subsequent interruptions
3. Rare events redirect organizational identity
o The learning that occurs in responding to rare events may alter how it defines
itself.
The B&O Railroad Museum
The B&O Railroad Museum case  In February 2003, the roof of the museum collapsed
onto the world’s most historic and comprehensive collection of American railroad equipment.
 The collapse occurred when the museum was preparing for the Fair of the Iron Horse
(a large fundraising event)
The museum had been struggling financially for a while
 The culture was largely fragmented, and the administrative and curatorial staff rarely
interacted with each other.
During preparations for the fundraiser:
 Snowstorm dumped more than two feet of snow on the city of Baltimore.
 In the morning, two of the Roundhouse’s 22 roof sections had collapsed under the
weight of the snow.
 The collapse damaged the gas system and triggered the sprinklers, which poured six
inches of water on the museum’s collection.
Although museum senior management realized that something was wrong  it wasn’t until
daylight that they could see just how much damage there was.
 The roof continued to cave in section by section and by midmorning the cathedral-like
Roundhouse had half of its circular roof gone and the railroad collection it held was
damaged by roof debris, snow, and water
They decided to rebuild the museum.
 Months later, with the roof repair almost complete  The museum’s intact upper
clerestory roof and lantern were declared structurally unsound and required
replacement.
 The fair, the record snowfall, the roof collapse, the destruction of artifacts, and the
discovery of unexpected damage late in the rebuild were all rare events.
Methods
DATA ANALYSES
Inductive qualitative approach
 Grounded theory approach, iterating back and forth between data and theory
Findings
Learning from rare events  the learning associated with a rare event occurs separately
from the event (after the event) and is subject to the simplifications of hindsight.
Learning through rare events  learning occurs throughout the course of the rare event
and that the people who generate the lessons are the same people who apply them
 Refers to discovering and strengthening a set of organizing routines that facilitate
the resumption of activity as the interruption winds down
Actions taken during the event are strengthened, revised, or extinguished



Because those actions are tied to the preexisting response repertoires, they are less
unique and less idiosyncratic than is the rare event itself.
These actions taken tend to transform an exceptional setting into one that is more
orderly and organized
Acts of organizing  become stronger and more flexible not only within a single rare
event as it unfolds but also across a series of rare events
Rare Events Audit Existing Response Repertoires
Rare events trigger an “audit” of the organization’s current response repertoires, revealing
lack of preparation and weaknesses as well as latent behavioral potential.
AUDITS OF WEAKNESS
The roof collapse was clearly a brutal audit
 It uncovered an unsound building, an underinsured collection, limited ability to contain
damage to the collection, and emergency response plans rendered inaccessible because
they were buried in rubble.
These audits (associated with the collapse itself) were preceded by earlier audits that
uncovered more basic weaknesses that triggered learning.
 E.g.: some of the staff did not have the capabilities/interest to handle newer, more
complex tasks – these people were replaced by others who had experience
As the museum faced the day-to-day challenges inherent in putting on such a large-scale event,
staff learned how to identify underlying weaknesses and how to address them through new
patterns of activity.
 This enriched the organization’s response repertoire for coping with interruptions and
enabled people to get into action more quickly when faced with a second rare event
(roof collapsing)
AUDITS OF STRENGTH
Rare events reveal hidden strengths
 Rare events are particularly suited to unmasking latent behavioral potential because
their rarity does not automatically trigger well-practiced responses.
Once unmasked, this latent potential can be converted into action.
The B&O Museum experienced multiple interruptions
 Later interruptions such as the roof collapse gave more evidence of unmasked
behavioral potential (e.g., how skilled museum staff became at relating with other
organizations) than did earlier interruptions such as the fair
More than other types of interruptions, rare events are particularly suited to unmasking latent
behavioral potential because their rarity doesn’t automatically trigger well-practiced response
Rare Events Strengthen Organizing Routines
Rare events disrupt routine organizing and trigger learning that reorganizes at least three
basic routines: interpreting, relating, and re-structuring.
Interruptions create consciousness of things previously taken for granted, and this can
trigger learning.
Routines and habits “get turned inside out”
 When interruptions occur (especially significant ones caused by rare events)  routines
of organizing become more visible, more subject to modification, and more
consequential in determining an organization’s fate.
Routines  repetitive, recognizable patterns of interdependent actions, carried out by multiple
actors
Three interruptions occurred:
 Everyday operations interrupted by preparations for the upcoming fair
 Preparations for the fair interrupted following the roof collapse
 Scheduled reopening of museum interrupted by newly discovered damage
As museum staff responded to repeated interruptions, routines that were initially tentative
became stronger and more elaborated
Staff realized that the museum could take advantage of the temporary cessation of operations
not just to restore what had existed before, but also to re-think what would make the museum
appeal to a wider public
 Museum significantly improved its performance on multiple dimensions
INTERPRETING
Significant interruptions generate ambiguity and uncertainty, which require interpretation
 Interpretations establish initiating conditions that guide future action and learning
RELATING
Relating reflects the social nature of work and organizations.
Three elements relate on the notion of relating:



Contribution  e.g., staff members reworked their own ideas about what they
contributed to museum performance
Representation  e.g., how those contributions fit together into collective outcomes
Subordination  e.g., what the museum and its constituencies needed
 Strengthened routines for relating were evident in the sense giving that followed the
collapse.
Sensegiving  the process of attempting to influence the sensemaking and meaning
construction of others toward a preferred redefinition of organizational reality
 The audience for senegiving (e.g., after roof collapse) can be divided in two categories:
An internal audience  e.g., museum staff and volunteers, the Board of
Governors
An external audience  e.g., the general public, railroad fans, potential
donors, etc.
The internal audience received both verbal and nonverbal sensegiving:
 Verbal sensegiving  mainly took the form of reassurance
 Nonverbal sensegiving  primarily related to emotions.
Nonverbal sensegiving may have been just as important as verbal sensegiving
in helping employees manage emotions
RE-STRUCTURING
Re-structuring refers to a general capacity to rebuild structures and routines that prove to
be inadequate.
 The activity of restructuring is an act of organizing that can, itself, develop over time
and be executed more quickly and more skillfully
To maintain core functions, organizations may need to learn how to:
 Re-structure the performative aspects of their routines (the content of the routine);
 While maintaining the ostensive aspects (the spirit of the routine)
Rare Events Redirect Organizational Identity
Rare events trigger learning that can redirect organizational identity.
The ambiguity and uncertainty generated by rare events provided an opportunity for museum
staff to re-imagine and redirect the identity of the organization.
Organizational identity  that which organizational players find to be distinctive, central,
and enduring about the organization
 Has been treated as a potential constraint on organizational learning
If the organization innovates beyond what actors already see as central and enduring, then
identity is threatened  thus, organizational identity serves as a selection mechanism for
learning:
 Organizing routines that affirm the organization’s identity  are selected and
strengthened
 Organizing routines that challenge the identity  are weakened or extinguished.
Rare events have the potential to disrupt this mechanism by raising questions about
previously assumed qualities of the organization.
 This questioning offers an opportunity for an organization to learn more about itself,
its environment, and its relationship to its environment.
In responding to a rare event  the members of an organization learn more
about
 What the organization can do (based on audits and attempts at
organizing); and
 How the organization is seen by others (based on feedback that is
attracted by the rare event).

This intensified act of self-reflexive learning may itself constitute a change of identity
Discussion
This study offers a process-based perspective on organizational learning during rare events.
Several ideas about organizational learning are proposed:
 Conceptualizing rare events as interruptions
 Focusing on what is learned during rare events
 Treating routines of interpreting, relating, and re-structuring as sites of learning during
rare events
 Illustrating that rare events produce tighter coupling of events across time; and
 Showing how rare events can redirect identity.
If a rare event is conceptualized as a significant interruption,  then we pay closer attention
to:
 The activity that was interrupted
 The momentum of the activity that was interrupted
 The shortcomings that were revealed; and
 The actions mobilized to recover from the interruption.
Advantage of thinking about rare events as a form of interruption  it allows both
organizations and scholars to focus on the more general aspects of rare events
 To the extent that a rare event is just another interruption, organizations can learn
more about how to handle the rare event by attending more closely to how they
handle the more common interruptions
Rare events provide a brutal audit of organizing activities such as interpreting, relating, and
restructuring  These jointly stabilize the disordered situation and guide the recovering
 Interpreting, relating, and re-structuring are the malleable processes through which
people learn about the specifics of the rare event.
 To improve these acts of organizing is to learn more about learning itself and to
become more competent at dealing with interruptions both big and small.
When learning occurs through rare events  the nature and magnitude of the learning may
not be apparent until subsequent rare events
Multiple learnings occur throughout an unfolding rare event  true whether the event unfolds
slowly and voluntarily (Fair of the Iron Horse)
 slowly and involuntarily (clerestory roof rebuild); or
 rapidly and involuntarily (Roundhouse roof collapse).
Rare events tightly couple the past to the future  rare events can trigger both a loss of
meaning and a surge of meaning
 This surge of meanings flows in two directions:
Away from the disruption toward earlier times; and
Away from the disruption toward future possibilities.
Significant interruptions provoke people to re-think identity.
 What needs to be further learned to fit old routines
Rare events  raise questions about previous views of identity, unsettle those views, and
trigger further learning
Future Directions, Implications, and Conclusions
The case illustrates threat-rigidity as neither inevitable nor inherently negative
 Parts of the museum (from case study) were made rigid to maintain flexibility elsewhere
Study suggests that leaders should keep their organizations in motion
Organizations can increase the number of interruptions they face by creating interruptions
Managers should be mindful of moments of learning in which recurring responses such as
those of interpreting, relating, and re-structuring:
 Successfully manage the nonrecurring stimuli associated with mundane/exotic
interruptions