Issues Management and Crisis Management Chapter 6 Issues Management and Crisis Management Issues Management and Crisis Management Chapter 6 Prepared by Deborah Baker Texas Christian University Business and Society: Ethics and Stakeholder Management, 7e • Carroll & Buchholtz Copyright ©2009 by South-Western, a division of Cengage Learning.  All rights reserved

Chapter 6 Learning Outcomes Issues Management and Crisis Management Chapter 6 Learning Outcomes Distinguish between the conventional and strategic approaches to issues management. Identify and briefly explain the stages in the issues management process. Describe the major components in the issues development process and factors in actual practice. Define a crisis and identify the four crisis stages. List and discuss the major stages or steps involved in managing business crises. 2

Chapter 6 Outline Issues Management Crisis Management Summary Issues Management and Crisis Management Chapter 6 Outline Issues Management Crisis Management Summary Key Terms Discussion Questions Issues Management Approaches to Issues Management The Changing Mix of Issues The Issues Management Process The Issues Development Process Issues Management in Practice Crisis Management The Nature of Crises The Four Crisis Stages Managing Business Crises Summary

Introduction to Chapter 6 Issues Management and Crisis Management Introduction to Chapter 6 This chapter focuses on issue and crisis management, and the planning processes required to improve stakeholder management and to respond to stakeholder expectations.

Conventional Approach Strategic Management Approach Chapter 6 Issues Management and Crisis Management Issues Management Conventional Approach Strategic Management Approach Narrow Focus Broad Focus

Conventional Approach Chapter 6 Issues Management and Crisis Management Issues Management Conventional Approach Issues fall within the domain of public policy or public affairs management. Issues typically have a public policy / public affairs orientation or flavor. An issue is any trend, event, controversy, or public development that might affect the corporation. Issues originate in social / political / regulatory / judicial environments.

Strategic Management Approach Chapter 6 Issues Management and Crisis Management Issues Management Strategic Management Approach Issues management is typically the responsibility of senior line management or strategic management staff. Issues identification is more important than it is in the conventional approach. Issues management is seen as an approach to the anticipation and management of external / internal challenges to the company strategies, plans, and assumptions.

Strategic Issue Management Chapter 6 Issues Management and Crisis Management Strategic Issue Management Figure 6-2 8

Issues Definition Issue Chapter 6 Issues Management and Crisis Management Issues Definition Issue A matter that is in dispute between parties. The dispute evokes debate, controversy, or differences of opinion.

Characteristics of an Emerging Issue Chapter 6 Issues Management and Crisis Management Issues Definition Characteristics of an Emerging Issue Terms of the debate are not clearly defined Issue deals with matters of conflicting values and interest Automatic resolution is not available Issue is often stated in value-laden terms Trade-offs are inherent

Issues Management Process Chapter 6 Issues Management and Crisis Management Issues Management Process Basic Assumptions Issues can be identified earlier, more completely, and more reliably Early anticipation widens the range of options Early anticipation permits study and understanding of the full range of issues Early anticipation permits organization to develop a positive orientation towards the issues Organization will have earlier identification of the stakeholders Organization will be able to supply information to influential publics earlier and more positively, creating better understanding

Model of Issues Management Process Chapter 6 Issues Management and Crisis Management Model of Issues Management Process Identification of Issues Analysis of Issues Prioritization of Issues Formulation of Issue Responses Implementation of Issue Responses Evaluation, Monitoring, and Control of Results Figure 6-3

Identification of Issues Chapter 6 Issues Management and Crisis Management Identification of Issues Scan the environment Identify emerging issues and trends

Identification of Issues Chapter 6 Issues Management and Crisis Management Identification of Issues Leading Forces as Predictors of Social Change Leading events Leading authorities / advocates Leading literature Leading organizations Leading political jurisdictions

Identification of Issues Chapter 6 Issues Management and Crisis Management Identification of Issues Figure 6-4

Issues Selling and Buying Chapter 6 Issues Management and Crisis Management Issues Selling and Buying Issues Selling Relates to middle managers exerting upward influence in organizations as they try to attract the attention of top managers. Issues Buying Top managers adopt a more open mind-set for the issues that matter to their subordinates.

Analysis of Issues Who (which stakeholders) is affected by the issue? Chapter 6 Issues Management and Crisis Management Analysis of Issues Who (which stakeholders) is affected by the issue? Who has an interest in the issue? Who is in a position to exert influence? Who has expressed opinions on the issue? Who ought to care about the issue? Who started the ball rolling? (Historical view) Who is now involved? (Contemporary view) Who will get involved? (Future view)

Probability-Impact Matrix Chapter 6 Issues Management and Crisis Management Ranking of Issues Xerox Approach High priority Nice to know Questionable PPG Approach Priority A Priority B Priority C Probability-Impact Matrix High Medium Low Probability of Occurrence Impact on Company

Filtering and Ranking of Issues Chapter 6 Issues Management and Crisis Management Filtering and Ranking of Issues Figure 6-5

Ranking of Issues Five Filter Criteria Strategy Relevance Chapter 6 Issues Management and Crisis Management Ranking of Issues Five Filter Criteria Strategy Relevance Actionability Criticality Urgency

Other Issues-Ranking Techniques Chapter 6 Issues Management and Crisis Management Other Issues-Ranking Techniques Polls / Surveys Expert panels Content analysis Delphi Technique Trend extrapolation Scenario building Use of precursor events or bellwethers

Formulation and Implementation of Responses Chapter 6 Issues Management and Crisis Management Formulation and Implementation of Responses Formulation The response design process Implementation The action design process Plan clarity Resources needed Top management support Organizational structure Technical competence Timing

Issues Development Process Chapter 6 Issues Management and Crisis Management Issues Development Process Issues Development Process The growth process or life cycle of an issue

Issue Development Life Cycle Process Chapter 6 Issues Management and Crisis Management Issue Development Life Cycle Process Figure 6-6

Issues Management in Practice Chapter 6 Issues Management and Crisis Management Issues Management in Practice Companies that adopt issues management processes … develop better overall reputations develop better issue-specific reputations perform better financially Provides a bridge to crisis management

Chapter 6 Issues Management and Crisis Management Crisis Management To manage a crisis one first must understand that crises: Occur abruptly Cannot always be anticipated or forecast May not occur within an issue category http://www.crisisexperts.com @

Crisis Management Basic Causes of a Business Crisis Acts of God Chapter 6 Issues Management and Crisis Management Crisis Management Basic Causes of a Business Crisis Acts of God Mechanical problems Human errors Management decisions / indecisions

The Nature of Crises Crisis Definitions Chapter 6 Issues Management and Crisis Management The Nature of Crises Crisis Definitions A major, unpredictable event that has potentially negative results and its aftermath may significantly damage an organization and its employees, products, services, financial condition, and reputation. A low-probability, high-impact event that threatens the viability of the organization and is characterized by ambiguity of cause, effect, and means of resolution, as well as by a belief that decisions must be made swiftly.

How a Crisis Should NOT be Handled Chapter 6 Issues Management and Crisis Management Crisis Management How a Crisis Should NOT be Handled Minimizing the issue Stonewalling Too little, too late From Figure 6-7

Types of Crises Economic Physical Personnel Criminal Information Chapter 6 Issues Management and Crisis Management Types of Crises Economic Personnel Physical Criminal Information Reputational Natural disasters

Outcomes of Major Crises Chapter 6 Issues Management and Crisis Management Types of Crises Outcomes of Major Crises Escalated in intensity Subjected to media and government scrutiny Interfered with normal business operations Damaged the companies bottom line Resulted in major power shifts

Crisis Management: Four Stages Chapter 6 Issues Management and Crisis Management Crisis Management: Four Stages Prodromal Crisis Stage Warning—precursor Symptom —precrisis Acute Crisis Stage Point of no return Crisis has occurred Crisis Resolution Stage Patient is well/ whole again Chronic Crisis Stage Lingering on—perhaps indefinitely; period of self-doubt; self-analysis Learning Figure 6-8

Pattern of a Poorly-Managed Crisis Chapter 6 Issues Management and Crisis Management Pattern of a Poorly-Managed Crisis Early indications that trouble is brewing occur. Warnings are ignored / played down. Warnings build to a climax. Pressure mounts. Executives are often overwhelmed or can’t cope. Quick-fix alternatives look appealing. Hasty moves create trouble. Clamming-up versus opening-up options present themselves. Most firms choose the former. A siege mentality prevails.

Managing Business Crises Chapter 6 Issues Management and Crisis Management Managing Business Crises Fink’s Three-Stage Model Identifying the crisis Isolating the crisis Managing the crisis

Managing Business Crises Chapter 6 Issues Management and Crisis Management Managing Business Crises BusinessWeek’s Five Steps in Managing Crises Identify areas of vulnerability Develop a plan for dealing with threats Form crisis teams Simulate crisis drills Learn from experience

Managing Business Crises Chapter 6 Issues Management and Crisis Management Managing Business Crises Monsanto’s 10R’s for Handling Public Policy Crises Respond early Recruit a credible spokesperson Reply truthfully Respect the opposition’s concerns Revisit the issue with follow-up Retreat early if it’s a loser Redouble efforts early if it’s a critical company issue Reply with visible top management Refuse to press for what is not good public policy Repeat the prior statement regularly

Managing Business Crises Chapter 6 Issues Management and Crisis Management Managing Business Crises Augustine’s Six Stages of Crisis Management Avoiding the crisis Preparing to manage the crisis Recognizing the crisis Containing the crisis Resolving the crisis Profiting from the crisis

Crisis Communications Chapter 6 Issues Management and Crisis Management Crisis Communications Identify crisis communication team Identify key spokespersons Train your spokespersons Establish communications protocols Identify and know the audience Anticipate crises Assess the crisis situation Identify key messages to communicate Decide on communication methods Be prepared to ride out the storm

Components of Crisis Plans Chapter 6 Issues Management and Crisis Management Components of Crisis Plans Media communications 99% Employee communications 98% Crisis management team 94% Communications with elected officials 86% CEO / senior executive involvement 82% Documentation / written policy / handbook 81% Website communications 77%

Be First, Be Right, Be Credible Chapter 6 Issues Management and Crisis Management Be First, Be Right, Be Credible Be First Be Credible Be Right Get message out first to control content and accuracy Be open, honest, and speak with one consistent voice Say and do the right thing

Benefits of Crisis Management Chapter 6 Issues Management and Crisis Management Benefits of Crisis Management Fewer disruptions to every life for consumers, employees, and citizens Preparing for one type of crisis may be beneficial when other types of crises strike

Key Terms Prodromal crisis stage Acute crisis stage Chapter 6 Issues Management and Crisis Management Key Terms Prodromal crisis stage Acute crisis stage Chronic crisis stage Crisis resolution stage Crisis teams Crisis communications Ten steps of crisis communication Being first Being right Being credible Issues management Crisis management Portfolio approach Issue Emerging issue Issues selling Issues buying Probability-impact matrix Issues development process Crisis