CRISIS MANAGEMENT
Key issues
Crisis Management
Crisis management is the process by which an
organization deals with a major unpredictable event
that threatens to harm the organization, its
stakeholders, or the general public
Elements of a Crisis
Three elements are common to most definitions of crisis:
(a)a threat to the organization,
(b) the element of surprise,
(c)a short decision time
(d)a need for change
Crisis management - 1
Crisis management consists of:
• Methods used to respond to both the reality and
perception of crises
• Establishing metrics to define what scenarios
constitute a crisis and should consequently trigger the
necessary response mechanisms.
• Communication that occurs within the response phase
of emergency management scenarios
Crisis Management - 2
The credibility and reputation of organizations is heavily
influenced by the perception of their responses during
crisis situations
Crisis Management - 3
* respond to a crisis in a timely fashion makes for a
challenge in businesses.
* must be open and consistent communication
throughout the hierarchy to contribute to a successful
crisis communication process.
Types of Crises
• Natural disasters
• Malevolence
• Technical breakdowns
• Human breakdowns
• Challenges
• Mega-damage
• Organizational misdeeds
• Workplace violence
• Rumors
Crisis Management
Technological crises
- caused by human application of science and
technology
- when technology becomes complex and coupled and
something goes wrong in the system as a whole
(Technological breakdowns)
Crisis Management
Crises of organizational misdeeds
- when management takes actions it knows will harm or
place stakeholders at risk for harm without adequate
precautions
Crisis Management
Types of crises of organizational misdeeds:
- crises of skewed management values
- crises of deception
- crises of management misconduct.
Crisis Management
Crisis management model - Gonzalez-Herrero and Pratt 95
• Successfully diffusing a crisis requires an
understanding of how to handle a crisis – before it
occurs
- issues management
- planning-prevention
- the crisis
- post-crisis
Contingency
Planning
• Plan in advance
• Rehearse via simulation
• Stipulate who the spokesperson is
• Speed and efficiency in response to crisis
• Offer accurate information or it will backfire
• Plan offers info and guidance to help decision makers deal
with long-term effects of decisions
Role of apologies in
crisis management
• Controversial - for fear of legal outcomes
• Evidence says that a compensation and sympathy are
effective
• True contrition includes sympathy for victims and offers of
compensation to offset losses or suffering
TOYOTA –
CRISIS MANAGEMENT FAILURE
Toyota’s communication strategy:
“Too little, too late”
Beyond the quality problem
Toyota mismanaged the crisis
TOYOTA
Basic Rules Violated
• For senior mgmt: crises must become their #1 priority
immediately.
• Integrity of firm threatened - immediate hands-on
control of CEO/team
• Sticking accelerators in 2008 - not treated as a serious
matter
TOYOTA
Basic Rules violated
Find facts & solutions fast:
- Toyota managers at first in denial
- accepted a ‘patch’ (remove floor mats), not solution
- when crisis exploded -- engineering solution/stopped
production
- Even today no one outside of Toyota knows what the
real problems are – open to speculation and rumors
TOYOTA
Basic rules violated
Communicate fully and accurately:
- to all constituents to sustain trust
- err on side of protecting consumers & maintain trust
with a recall
What Toyota did:
hushed problem and hoped it go away