1. Lecture 11 Elements of Crisis & Comprehensive Crisis Management 1

2. 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 2

3. 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 3

4. Crisis Management - 2 The credibility and reputation of organizations is heavily influenced by the perception of their responses during crisis situations 4

5. 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. 5

6. Types of Crises Natural disasters Natural disasters Malevolence Malevolence Technical breakdowns Technical breakdowns Human breakdowns Human breakdowns Challenges Challenges Mega-damage Mega-damage Organizational misdeeds Organizational misdeeds Workplace violence Workplace violence Rumors Rumors 6

7. 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) 7

8. Crisis Management Crises of organizational misdeeds - when management takes actions it knows will harm or place stakeholders at risk for harm without adequate precautions 8

9. Crisis Management Types of crises of organizational misdeeds: -crises of skewed management values -crises of deception -crises of management misconduct. 9

10. Crisis Management Crisis management model Successfully diffusing a crisis requires an understanding of how to handle a crisis – before it occurs -issues management -planning-prevention -the crisis - post-crisis 10

11. 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 11

12. 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 12

13. TOYOTA – CRISIS MANAGEMENT FAILURE Toyota’s communication strategy: “Too little, too late” Beyond the quality problem Toyota mismanaged the crisis 13

14. TOYOTA Basic Rules Violated For senior Manager: 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 14

15. 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 15

16. 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 16

17. Comprehensive Crisis Management 17

18. Before During After Before During After 1. Crisis Types 2. Crisis Mechanisms 3. Crisis Systems 4. Crisis Stakeholders Expose Weaknesses Expose Weaknesses Build Capabilities Build Capabilities Enact Capabilities Enact Capabilities Learn Redesign Learn Redesign To Enact Is NOT To React To Enact Is NOT To React To Enact Is To Be Proactive To Enact Is To Be Proactive 18

19. The Manager’s Crisis Index : The Lukaszewski Group Potential Crisis Situations A Abortion Accidents Adverse Government Actions AIDS Anonymous Accusers W Whistleblowers Over 120 items & the list seems endless!! Situation Hopeless?? 19

20. CRISIS FAMILIES EXT ECON ATTACKS EXT INFO HR / REP PSYCHO OCCUP-HEALTH MEGA-DAMAGE ORG / SOC TECH / ECON BREAKS CRIMINAL LEGAL NATURAL DISASTERS GOVT REGULATORY 20

21. Breaks Loss of Key Equipment, Plants, Supplies Breakdown of Key Equipment, Plants Loss of Key Facilities Major Plant Disruption 21

22. Psycho/Criminal Product Tampering Kidnapping Hostage Taking Terrorism Workplace Violence 22

23. Economic Labor Strikes Labor Unrest Labor Shortage Major Decline in Stock Price and Fluctuations Market Crash Decline in Major Earnings 23

24. Human Resource Loss of Key Executives, Personnel Rise in Absenteeism Rise in Vandalism and Accidents Workplace Violence 24

25. Informational Loss of Proprietary and Confidential Information False Information Tampering with Computer Records Loss of Key Stakeholder Information 25

26. Natural Earthquakes Fires Floods Explosions Typhoons Hurricanes 26

27. Reputation Slander Gossip Sick Jokes Rumors Damage to Corporate Reputation Tampering with Corporate Logos 27

28. CRISIS FAMILIES EXT ECON ATTACKS EXT INFO HR / REP PSYCHO OCCUP-HEALTH MEGA-DAMAGE ORG / SOC TECH / ECON BREAKS CRIMINAL LEGAL NATURAL DISASTERS GOVT REGULATORY T F NORMALABNORMAL 28

29. CRISIS FAMILIES EXT ECON ATTACKS EXT INFO HR / REP PSYCHO OCCUP-HEALTH MEGA-DAMAGE ORG / SOC TECH / ECON BREAKS CRIMINAL LEGAL NATURAL DISASTERS GOVT REGULATORY T F NORMALABNORMAL NS 29

30. Which Family Is Planned For Most and Why? 30

31. CRISIS FAMILIES EXT ECON ATTACKS EXT INFO HR / REP PSYCHO OCCUP-HEALTH MEGA-DAMAGE ORG / SOC TECH / ECON BREAKS CRIMINAL LEGAL NATURAL DISASTERS GOVT REGULATORY T F BREAKS NORMALABNORMAL NS 31

32. Which Family Is Planned For Least and Why? 32

33. CRISIS FAMILIES EXT ECON ATTACKS EXT INFO HR / REP PSYCHO OCCUP-HEALTH MEGA-DAMAGE ORG / SOC TECH / ECON BREAKS LEGAL NATURAL DISASTERS GOVT REGULATORY T F PSYCHO NORMALABNORMAL NS CRIMINAL 33

34. Thank You 35