Crisis Management

In today’s business environment companies operate at the mercy many risks due to globalisation of business activities, advancement of technology and changes to customer trends.
Companies have risk management policies in place. However, no matter how risk-proof a business tries to be, there are always those unexpected threats that occur and require immediate attention.

Many African countries including Zimbabwe have experienced a fair share of crises in recent years. These crises have been as a result of by political unrest, economic instability, natural disasters and unruly public disorder. In Zimbabwe, the recent Cyclone Idai is a pure example of a crisis that affected business owners in the Eastern
Highlands. In addition, the recently announced Zimbabwean monetary policy which established an interbank market for foreign currency and the introduction of RTGS$ also resulted in crisis for some, if not all business organisations.

Crisis can be categorised as:

Natural crisis – This refers to crisis that arise of natural phenomena such as earthquakes, droughts and cyclones.
Technological crisis – These crisis develop due to technological failures such a corruption software.
Employee behaviour – This crisis develops when employees partake in criminal activities
Management failure – Actions or decisions by management negatively impact the organisation.
Smouldering crisis – Neglecting minor issues in the beginning lead to crisis later

A crisis can be described as a highly potential risk with a low probability of occurrence but with expected high reactionary costs and consequences. A crisis threatens stability and shakes the confidence of stakeholders. In simpler terms, a crisis is a testing time for an organisation that may shake the foundation of an organisation and
place it in a vulnerable state.

A crisis can be as result of internal or external forces. Internal crises may include leakage of a company’s intellectual property by a disgruntled employee or the death of the company’s CEO whist an external crisis may be a significant change in a nation’s political stability. Internal crises can be mitigated and controlled by identifying possible risks, placing appropriate and effective internal controls and monitoring of those risks.

Crisis management is a process of identifying crises triggers and application of strategies to deal with the unforeseen disruptive even(s) which may threaten an organisation’s reputation and adversely affect its stakeholders. The essence of crisis management is responding to crises in a timely, appropriate and professional fashion.

However, there is a thin line between crisis management and risk management. Risk management involves the practice of identifying risks and creating a set of response options to effectively manage those situations. Crisis management on the other hand can be likened to being put in a corner with very limited options on how to navigate the situation.
Crisis management requires rechannelling of human and financial resources from their normal tasks in order to deal with a crisis. Rechannelling resources will put a dent in day to day operational activities. In summary, risk management is a preventive measure whist crisis management is a reactionary event.

Crisis management can be categorised into three stages namely pre-crisis, crisis-response and post crisis phases.

Pre-crisis
Identification of a crisis

Before most crises strike there are always early warning signs. However, most businesses may underestimate the warning signs because they many consider themselves too large of an organisation to be susceptible to such a threat or the threat is simply ignored as it may have a low probability of occurrence.

First step in a crisis is to identify and accept that there is a crisis at hand. A crisis always presents itself with three undeniable characteristics i.e. financial loss, disruption of operations and brand/reputational damage. The next step after identifying a crisis is to quantify its financial, social and environmental impact. During the quantifying stage, it is also important to note that crisis do not occur as a single isolated event. A crisis may start a reactionary chain for other crises and these need to be identified and quantified as well.

Crisis response

Appointment Professional Crisis Management Team

A crisis management team needs to be appointed to manage the crisis. The crisis management team should include senior executive members including the CEO and CFO, legal counsel and third party independent consultants. The Crisis management team should identify and appoint a spokesperson(s) to manage all public relations issues. The spokesperson(s) needs to be trained and learn how to effectively communicate to stakeholders in a way that promotes stakeholder confidence. The spokesperson is also encouraged to remain truthful and honest when addressing stakeholders.

The Crisis management team also has the responsibility of communicating to the employees on how to handle the situation at hand and request employees to maintain confidentiality.

Action plan

When faced with a crisis stakeholders especially customers, investors and financiers become impatient, angry and confused and this may worsen the crisis. Stakeholders want facts and they want them fast. They want to know what caused the crisis and intended action plan in the short and long term. The action plan needs to be documented, authorised and endorsed by the highest authority of that organisation.

Communication channels

Effective communication channels that can be employed are bulk text messages, press statements, radio and television statements. However, these methods maybe traditional and may not convey critical information in time and are subject to many procedures that create unnecessary delays.

Social media has become a powerful instrument for communicating to large audiences at a low costs. It also provides the timeliness and urgency of information delivery to affected stakeholders. The ability to immediately respond to a crisis sends a positive message to stakeholders, restores confidence and protects the organisation’s reputation. Social media platforms afford organisations the opportunity to engage and control conversations with stakeholders and respond to their concerns.

It is also important for an organisation to maintain minimum social media platforms as a communication channels.

An organisation’s presence on too many social media platforms may result in other social media platforms being neglected thus leading to misinterpretation of information. Organisations need to create an authentic social media foot print so that stakeholders can distinguish between authentic and malevolent social media platforms. During the crisis, it is critical to keep stakeholders updated and informed about any new developments, facts and activities.

Monitoring

Another important tool in crisis management is brand monitoring. Brand monitoring involves the practice of continuously being informed about the brand’s performance using various channels such as social media platforms, newspapers and online content. Nowadays, tools such as google alerts can be used for timely delivery of information about an organisations brand. Brand monitoring helps to review public perception of the brand and allows timely response to those with concerns. Brand monitoring can also contribute to online brand recovery.

Recovery

Furthermore, recovery from crisis should be seen as an opportunity to regenerate, restructure or realign an organization. The essence of recovery should not be necessarily a return to previous normality. It may mean moving toward a model of business and organizational structures that represent a new normaliturthermore, recovery from crisis should be seen as an opportunity to regenerate, restructure or realign an organization. The essence of recovery should not be necessarily a return to previous normality. It may mean moving toward a model of business and organizational structures that represent a new normalitCrises recovery does not automatically means that the organisation should return to a position before the crisis occurred. Recovering from crises should also be viewed as an opportunity to be innovative and to improve, realign and restructure and stimulate corporate entrepreneurship.

Crisis Management should be taken seriously and it may have serious effects on the going concern of the entity.

Crises are inevitable and businesses need to learn to rise above the crises, take ownership and have a recovery plan. Organisations need to study past crises they have experienced and learn from that.

1 Comment

  1. Ronald dzinduwa

    On point …thank you very much for en-lighting us about crisis management because it is becoming a major blow for many organization as we speak.

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