Crisis management is the application of strategies designed to help an organization deal with a sudden and significant negative event.
A crisis can occur as a result of an unpredictable event or as an unforeseeable consequence of some event that had been considered a potential risk. In either case, crises almost invariably require that decisions be made quickly to limit damage to the organization.
According to Regester. M. (1995), a PR consultant and a crisis management contributor hedefines a crisis as “an event that causes the organization to become the subject of widespread potentially unfavorable attention from the media and other external groups such as shareholders, politicians, trade unionists and environmental pressure groups who, for one reason or another, have a vested interested in the actions of the organization.”
Importance of Crisis Management in an organization
The large-scale industrial and environmental disasters in the 80s triggered the study of crisis management and it is considered to be the most important process in public relations. Crisis management is perhaps even more relevant and important to today’s businesses in terms of safeguarding data, ethical supply chains, cross-cultural communication, safe products and man-made environmental disasters. The technology advancements in today’s business world have transformed productivity and communication. Businesses struggle to keep up with the pace of technology development resulting in the mad rush and push to prove otherwise. It is this haste to keep up with the modern world where crisis management is key. Many businesses react to crises rather than planning for them. Crisis management in the modern world is now more important than ever.
Types of crisis in organizations
- Natural disaster
- Technological crisis
- Confrontational crisis
- Crisis of malevolence
- Crisis of organizational Misdeeds
- Workplace violence
Advantages of crisis management
- Crisis management plans can equip organization to withstand threats to their survival better.
- Awareness of potential threats can put an organization in a better position to take early action, often helping to avoid more serious problems.
- Effective crisis management plans can help companies to achieve improved levels of regulatory compliance.
- Appropriate planning for potential industry-wide crisis can give a company the upper hand over ill-prepared competitors.
- Effective communications during a crisis can help determining how the company’s core values and benefits have helped it to overcome a major challenge, potentially enhancing public perception of the company.
- Literally save lives, save money and save an organization from devastation. Any organization that is not prepared for the crisis will be constantly at risk.
- Determine which crisis an organization is likely to face and the possibility of each.
- It prepares you to the bad event so that when it happens you don’t panic nor give an emotional decision.
Disadvantages of crisis management
- Crisis management planning may seem expensive.
- Attempts to plan exhaustively for every conceivable threat can be counterproductive.
- Excessive focus on potential threats can divert management focus on how to capitalize on growth opportunities of the organization.
The table below shows a survey about relation between change management and crisis management that conducted by the students of University of national and world economy, Sofia, Bulgaria.
33.8% of the respondents point out that the 2008 financial and economic crisis had a negative impact on their organizations. According to respondents the number of gradual crises exceed sudden ones: 28.9% definitely state that crises in organizations are gradual, while 16.2% – sudden. This means that there is good potential for managerial reaction in terms of timely identification of the signs of a crisis in the organization as a base for an adequate reaction. On the other hand, the statement that crisis management is in close relationship with change management is once again justified: 78.6% of the respondent’s state that crises in their organizations are related to inefficient change management (see Table 3). It can be concluded that organizations in the information and communications technologies sector exhibit various skills related to the implementation of flexible methods for change management in the process of effective crisis decision making. Crisis should increasingly be seen as a natural phenomenon which means that managers should be familiar with them and to be capable of offering appropriate solutions so that they can quickly and successfully be dealt with.
We live in a society continually affected by natural disasters, such as earthquakes, storms and floods, and by organizational crises. Regardless of where you live or the kind of work you do, many different types of crises have the potential to significantly disrupt your life. No community and no organization, is immune from crises.
Corporate crisis management is as a systematic process that has the potential to identify and predict crises during the process of trying. Then in front of them take preventive measures to minimize its impact. It is clear that managers cannot be prepared against all types of crisis. However, if they are to crisis management as an integral part of their strategic management responsibility, the possibility is that the crisis is greatly reduced organizations. According to crisis management and its relation to the technical and operational planning is very important.