Download - Crisis Mngmt
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Is the process by which an organization deals witha major event that threatens to harm the
organization.Is the art of making decisions to head off mitigate
the effects of such an event , often while the eventitself is unfolding. This often means makingdecisions about your institutions future while youare under stress and while you lack key pieces of
information .
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Business &Government
familyEducational
institutions
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Natural crisisTechnological crisis Confrontation crisisCrisis of malevolenceCrisis of organizational misdeedsWorkplace violence
Rumors
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Natural crisis, typically natural disasters considered as
'acts of God; are such environmental phenomena asearthquakes, volcanic eruptions, tornadoes andhurricanes,floods,landslides,tsunamis,storms,anddroughts that threaten life,property,and the
environment itself.
Example : 2004 Indian ocean earthquake (Tsunami)
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Technological crisis are caused byhuman application of science and
technology. Technologicalaccidents inevitably occur when
technology becomes complex andcoupled and something goes wrong
in the system as a whole.
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Example: Chernobyl disaster, Exxon Valdez
oil spill
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Confrontation crisis occur when discounted individualsand/or groups fight businesses, government, and
various interest groups to win acceptance of their
demands and expectations.
Example: Rainbow/ PUSH(People United to ServeHumanity) boycott of Nike
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An organization faces a crisis of malevolence whenopponents or miscreant individuals use criminalmeans or other extreme tactics for the purpose of
expressing hostility or anger toward, or seeking gainfrom, a company, country, or economic system, withthe aim of destabilizing or destroying it. Sample crisisinclude product tampering, kidnapping, malicious
rumors, terrorism and espionage.Example: 1982 Chicago Tylenol murders.
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Example: 1982Chicago Tylenol
murders.
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Crisis occur whenmanagement takes actionsit knows will harm or placestakeholders at risk withoutadequate precautions.Some crisis are caused notonly by skewed values anddeception but deliberateamorality and illegality.
Example: Martha StewartFraud case
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Crisis occur when an employee or former employeecommits violence against other employees on
organizational grounds.Example: John DuPont ,a multimillionaire,
convicted of murdering Olympic Wrestler DaveSchultz
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Rumors
False information about an
organization or its products
creates crisis hurting the
organizations reputation.
Sample is linking the
organization to radical groupsor stories that their products are
contaminated.
Example: Procter & Gambles
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Erica James, an organizational psychologist at theuniversity of Virginias Darden Graduate School ofBusiness, identifies two primary types of
organizational crisis. James defines organizationalcrisis as any emotionally charged situation that, onceit become public, invites negative stakeholder reactionand thereby has the potential threaten the financialwell-being, reputation, or survival of the firm or some
portion thereof.1. Sudden crisis
2. Smoldering crisis
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Sudden crisis are circumstances that occur withoutwarning and beyond an institution's control.
Consequently, sudden crisis are most often situations forwhich the institution and its leadership are notblamed.
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Smoldering crisis differ from sudden crisis in that theybegin as minor internal issues that, due to managersnegligence, develop to crisis status. These are situations
when leaders are blamed for the crisis and its subsequenteffect on the institution in question.
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Signaldetection
Containment &damage control
learningBusinessrecovery
Preparation &prevention
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Signal detection is the stage in a crisis in which leaders should,
but do not always, sense early warning signals(red flag) that
suggest the possibility of a crisis. The detection stages of a
crisis include:
Sense-making: represents an attempt to create order andmake sense, retrospectively, of what occurs.
Perspective-taking: the ability to consider another persons or
groups point of view.
d
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It is during this stage the crisis handlers beginpreparing for or averting the crisis that had beenforeshadowed in the signal detection stage.
Organizations primary mission is to prepare for andprevent the escalation of crisis events.
Preparation and prevention
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When crisis hits, organizations must be able tocarry on with their business in the midst of thecrisis while simultaneously planning for how theywill recover from the damage the crisis caused.Crisis handlers not only must engage in continuityplanning( determining the people, financial, andtechnology resources needed to keep theorganization running), but will also actively
pursue organizational resilience.
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In the wake of crisis, organizational decision makersadopt a learning orientation and use prior experienceto develop new routines and behaviors that ultimately
change the way the organization operates. The bestleaders recognize this and are purposeful and skillfulin finding the learning opportunities inherent in everycrisis situation.
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Rapid response
Stay calm
Be visible
Put people before business Tell the truth
To get to business as soon as possible
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Odwalla juice e-coil outbreak in 1996
health officials in Washington stateinformed the company that they had discovered a link betweenseveral cases of E.coil 0157:H7 and Odwalla fresh apple juice.
One child died and more than 60 people in the
Western United States and Canada became sickafter drinking the juice.
Sales plummeted by 90%,Odwalla's stock price
fell 34%.
Customers filed more than 20 personal-injury
lawsuits and the company looked as though it could well bedestroyed
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Odwalla's CEO Stephen Williamson ordered a
complete recall of all products containing apple or carrot juice. This recall covered around
4,600 retail outlets in 7 states. On all media interviews, Williamson expressed
sympathy and regret for all those affected andimmediately promised that the company wouldpay all medical costs
Internal communication:
Williamson conducted regular company-wide
conference calls on a daily basis, giving employeesthe chance to ask questions and get the latest
information.
This approach proved so popular that the practice
of quarterly calls survived the crisis.
External communications:-
Within 24 hours, the company had an explanatoryweb site (its first) that received 20,000 hits in 48
hours.
All possible attempts were made to provide up to
the minute, accurate information.
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The next step was to tackle the problem of contamination.The company switched from unpasteurized juice to aprocess called "f lash pasteurization" which would guarantee
that E-coli had been destroyed without compromisingflavor.
Within months of the outbreak, the company had in placewhat some experts described as "the most comprehensivequality control and safety system in the fresh juice
industry."The new process was communicated in all advertising andpublic outreach campaigns
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The company's values spoke of nourishing people - andwhen the crisis came it was an adherence to honest,straight talking and accepting responsibility that helped toget the company through.
There are critics who refuse to credit the company with anyintegrity whatsoever - but even these will concede that as
an exercise in crisis management, Odwalla stands as anexample of best practice that few can match.
The year after the crisis, Odwalla was voted "Best BrandName in the Bay Area" by San Francisco Magazine. This
was the first indication amongst many that Odwalla'sreputation had survived.
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