Human Resources Crisis Management and Contingency Management HL ONLY

Learning Objectives To explain the difference between crisis management and contingency planning Evaluate the costs and benefits of contingency planning Discuss how far it is possible to plan for a crisis

What disasters could your house face?

What disasters could your business face?

Whole industry crisis Whole country crisis Individual company crisis Write down some examples of each one

Crisis management Refers to the management of operations before, during and after the event of a crisis Contingency planning Is about being proactive, development plans before an event happens. A ´what if´ approach

What can a business do to avoid the following ‘disasters’? Fire in building Power supply breakdown Virus infection Theft of equipment Theft of customer data Think about working in the headquarters of a bank

What implications did this have for Pemex

What other types of crisis might a business face? What other types of crisis might a business face? Hostile takeover Faulty/dangerous products Environmental disaster Major customer withdrawing orders Physical destruction e.g. bombing / earthquakes / Physical destruction e.g. bombing / earthquakes / fires Strikes by workforce

What areas of a business could a crisis affect? Marketing: public image under threat – PR Ad campaigns Promotions to increase sales Personnel: Leadership style …crisis usually requires direct authoritarian leadership; internal and external communication that is rapid and direct; external communication that is informative and truthful. Training Recruitment Operations: particularly if JIT Storage/warehousing Machinery Finance: ad campaigns; environment clean up; compensation

Can crisis be avoided? Companies can have contingency plans established in order for staff to know how to deal with a crisis when it occurs

Contingency Plan content A list of the most critical business functions; A list of the facilities, hardware, software, data, personnel and other equipment necessary to support those functions A back-up procedure A method for getting in touch with all key personnel A recovery procedure Education and training of personnel involved in implementing the plan Regular drills to test the effectiveness of the plan

Contingency Plans Value Sense of security Limits damage Speeds up recovery process Informs staff training Preventative measures can be part of CSR Limitations Costly and time consuming – Including opportunity cost Needs reviewing Lack of predictability

Key steps in contingency planning 1. Identify the potential disasters – some could be the same for all businesses, some maybe specific to the industry 2. Assess the likelihood of these occurring 3. Minimise potential impact 4. Plan for continued operations

Contingency Plan Cadbury’s withdraws products made in China Cadbury’s is fined In each case: Identify the cause of each event Identify the potential threat What actions could have been taken to prevent these events? Rank each event on a scale of 1 – 10 in terms of seriousness to the future success of Cadbury’s Justify your answer

Strategy tactics – what would the school do if a bomb went off if you were in the centre of town during a college trip? Strategy tactics You are head of ICT at a bank and a ‘tape’ of all customer Data has been lost in transit! Strategy tactics What are the implications to Pemex if the main FUEL lines break? How would you have reacted? Strategy tactics – what if Richard Branson died in an accident? How should the Virgin conglomerate react?