2. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 5-1 Chapter 5 Issues Management and Crisis Management 1 Issues Management and Crisis Management Search the Web The Wilson Group is a major consulting firm that specializes in crisis management such as chemical spills: www.wilson-group.comwww.wilson-group.com

3. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 5-2 Chapter 5 Issues Management and Crisis Management 2 Chapter Five Objectives Distinguish between the conventional and strategic management approaches to issues management Identify 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 Outline the major stages in managing business crises

4. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 5-3 Chapter 5 Issues Management and Crisis Management Chapter Five Outline Issues Management Crisis Management Summary

5. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 5-4 Chapter 5 Issues Management and Crisis Management Introduction to Chapter Five This chapter focuses on issue and crisis management and the planning processes required to improve stakeholder management and to respond to stakeholder expectations.

6. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 5-5 Chapter 5 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 develop- ment that might affect the corporation. Issues originate in social/ political/ regulatory/ judicial environments. 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 management of external/internal challenges to company strategies, plans, and assumptions.

7. Issues Management 5-6

8. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 5-7 Chapter 5 Issues Management and Crisis Management Issues Management The Changing Issues Mix A changing mix of issues often creates a cumulate effect that managers must face

9. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 5-8 Chapter 5 Issues Management and Crisis Management Issues Management Issue Definition and the Issues Management Process An issue is a matter that is in dispute between two parties

10. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 5-9 Chapter 5 Issues Management and Crisis Management Issues Management Issue Definition and the Issues Management Process Emerging issues –Terms of the debate are not clearly defined –Parties have conflicting values and interest –Automatic resolution not available –Issue is often stated in value laden terms –Trade-offs are inherent

11. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 5-10 Chapter 5 Issues Management and Crisis Management Issues Management Issue Definition and the 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 issues –Early anticipation permits a positive orientation towards the issues –Early anticipation allows for better identification of the stakeholders –Early identification provides the opportunity for the organization to supply information about the issue earlier

12. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 5-11 Chapter 5 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

13. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 5-12 Chapter 5 Issues Management and Crisis Management Issues Management Process Identification of Issues Scan the environment Identify emerging issues

14. Issues Management Process 5-13

15. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 5-14 Chapter 5 Issues Management and Crisis Management Issues Management Process Analysis of Issues Which stakeholders are affected by the issue? Who has an interest in the issue? Who is in a position to exert influence? Who ought to care about the issue? Who started the ball rolling? (Historical view) Who is now involved? (Present view) Who will get involved? (Future view)

16. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 5-15 Chapter 5 Issues Management and Crisis Management Issues Management Process Ranking of Issues Xerox approach –High priority –Nice to know –Questionable Probability-Impact matrix –Probability of occurrence –Impact on company

17. Issues Management Process 5-16

18. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 5-17 Chapter 5 Issues Management and Crisis Management Issues Management Process Formulation and Implementation of Responses Formulation is the response design process Implementation is the action design process and might include: –Plan clarity –Resources needed –Managerial support –Organizational structure –Technical competence –Timing

19. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 5-18 Chapter 5 Issues Management and Crisis Management Issues Management Process Evaluation, Monitoring and Control Constant evaluation of results of their responses to the issues to keep strategy on track –Social audit

20. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 5-19 Chapter 5 Issues Management and Crisis Management Issues Development Process Issues development process is the growth process or life cycle of an issue

21. Issues Development Life Cycle Process 5-20

22. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 5-21 Chapter 5 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 Search the Web The Lexicon Communications Corporation is a major consulting firm that specializes in crisis management. To learn more, check out the Lexicon web site www.wilson-group.comwww.wilson-group.com

23. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 5-22 Chapter 5 Issues Management and Crisis Management The Nature of a Crisis Crisis Definitions A major, unpredictable event that has potentially negative results that can significantly damage an organization A low-probability, high-impact event that threatens the viability of the organization that has an ambiguous cause, effect and resolution

24. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 5-23 Chapter 5 Issues Management and Crisis Management The Nature of a Crisis Types of Crises Economic Informational Human recourse Reputation Psychopathic Natural

25. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 5-24 Chapter 5 Issues Management and Crisis Management Crisis Management: 4 Stages Prodromal Crisis Stage Warning—precursor Symptom —precrisis Prodromal Crisis Stage Warning—precursor Symptom —precrisis Acute Crisis Stage Point of no return Crisis has occurred Acute Crisis Stage Point of no return Crisis has occurred Crisis Resolution Stage Patient is well/ Whole again Crisis Resolution Stage Patient is well/ Whole again Chronic Crisis Stage Lingering on—perhaps indefinitely; period of self- doubt and self-analysis Chronic Crisis Stage Lingering on—perhaps indefinitely; period of self- doubt and self-analysis Learning

26. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 5-25 Chapter 5 Issues Management and Crisis Management Managing Business Crises Fink’s Three-Stage Model Identifying the crisis Isolating the crisis Managing the crisis

27. Managing Business Crises Business Week’s Steps in Managing Crises 5-26

28. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 5-27 Chapter 5 Issues Management and Crisis Management Managing Business Crises Augustine’s 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

29. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 5-28 Chapter 5 Issues Management and Crisis Management Crisis Communications Identify crisis communication team Identify key spokespersons Train your spokesperson Establish communications protocols Identify and know the audience Anticipate crises Assess the crisis situation Identify key messages to communicate Determine communication methods Prepare to ride out the storm

30. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 5-29 Chapter 5 Issues Management and Crisis Management Acute crisis stage Chronic crisis stage Conventional approach Crisis Crisis communications Crisis management Crisis resolution stage Crisis teams Emerging issue Issue Issue development process Issues management Probability-impact matrix Prodromal crisis stage Strategic management approach to issues management Ten steps in crisis communications Selected Key Terms