CRISIS MANAGEMENT

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CRISIS MANAGEMENT

• Key issues

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Crisis Management

• Crisis management is the process by which an
  organization deals with a major unpredictable
  event that threatens to harm the organization,
  its stakeholders, or the general public

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Elements of a Crisis

• Three elements are common to most definitions of
  crisis
• a threat to the organization,
• the element of surprise,
• a short decision time
• a need for change

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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

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Crisis Management - 2

• The credibility and reputation of organizations
  is heavily influenced by the perception of their
  responses during crisis situations

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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.

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Types of Crises

• Natural disasters
• Malevolence
• Technical breakdowns
• Human breakdowns
• Challenges
• Mega-damage
• Organizational misdeeds
• Workplace violence
• Rumors

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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)

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Crisis Management

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

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Crisis Management

• Types of crises of organizational misdeeds
• crises of skewed management values
• crises of deception
• crises of management misconduct.

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Crisis Management

• Crisis management model - Gonzalez-Herrero and
  Pratt 95
• Successfully diffusing a crisis requires an
  understanding of how to handle a crisis before
  it occurs
• issues management
• planning-prevention
• the crisis
• post-crisis

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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

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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

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TOYOTA CRISIS MANAGEMENT FAILURE

• Toyotas communication strategy
• Too little, too late
• Beyond the quality problem
• Toyota mismanaged the crisis

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TOYOTABasic Rules Violated

• For senior mgmt 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

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TOYOTABasic 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

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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