Crisis Management Definition
A crisis is an abnormal situation, or even a perception, that is beyond the scope of normal day-to-day business and which poses threats to the operation, safety and reputation of an organisation (DBERR, 2008). Crisis management is a series of functions or processes that help to identify, study and forecast crisis issues, and also to derive specific means that would enable an organisation to prevent or cope with a crisis (Darling et al., 1996). It involves the systematic attempt to prevent organisational crises and/or to manage those crises should they occur (Pearson & Clair, 1998).

A crisis is defined by the dictionary as a 'critical moment or turning point.' A business book, on the other hand, might define a crisis as a substantial, unforeseen circumstance that can potentially jeopardize a company's employees, customers, products, services, fiscal situation, or reputation. Both definitions contain an element of urgency that requires immediate decisions and actions from people involved. Crisis Management is the process of preparing for and responding to an unpredictable negative event to prevent it from escalating into an even bigger problem, or worse, exploding into a full-blown, widespread, life-threatening disaster. Crisis management involves the execution of well-coordinated actions to control the damage and preserve or restore public confidence in the system under crisis. In the context of corporate governance, excellent crisis management is a 'must' whenever a crisis occurs because of the crisis' enormous potential impact on the company's reputation and financial standing. Poor handling of a crisis situation can ruin the confidence of the customers or the public in a company and jeopardize its survival, a situation that normally takes a long time to correct, if it still is reparable at all. Such is the importance of public perception of a company's handling of a crisis situation thatmedia coverage management has become an important ingredient of crisis management. In fact, the definition given by the American Institute for Crisis Management (ICM) for the word 'crisis' underscores the association of a crisis with media coverage by default. ICM defines 'crisis' as "a significant business disruption which stimulates extensive news media coverage. The resulting public scrutiny will affect the organization's normal operations and also could have a political, legal, financial, and governmental impact on its business." Crisis management doesn't start only when a crisis arises and ends when 'the last fire has been put out'. Crisis management requires actions before a crisis happens, while the crisis is unfolding, and after the crisis has ended. In fact, crisis management is divided into these three stages: 1) pre-incident stage, which involves identification of potential crisis situations and developing contingency plans for responding to each of them; 2)incident stage, which involves management of an ongoing actual crisis situation itself; and 3) post-incident stage, which includes corrective and preventive actions to preclude the recurrence of

the same crisis situation and business recovery actions to restore public confidence in the brand or the company. There are many different ideas or theories on how to best manage a crisis situation. These differing ideas, nonetheless, have some common elements: 1) the need to anticipate potential crisis situations and prepare for them; 2) the need to provide accurate information during a crisis; 3) the need to react as quickly as possible to the situation; 4) the need for a response that comes from the top; and 5) the need for long-term solutions.

Crisis management is a business plan of action that is implemented quickly when a negative situation occurs. The Institute for Crisis Management defines a business crisis as a problem that: 1) disrupts the way an organization conducts business, and 2) attracts significant new media coverage and/or public scrutiny. Typically, these criseshave the capacity to visit negative financial, legal, political, or governmental repercussions on the company, especially if they are not dealt with in a prompt and effective manner. Over the past several years, high-profile public relations disasters (the Firestone tire problems on Ford sport utility vehicles, various product recalls, disturbing product tampering incidents) have thrown an intense spotlight on the issue of crisis management. Indeed, as companies have witnessed the damage that poor crisis management canwreak on business fortunes, a growing percentage of firms have intensified their efforts to put effective crisis management strategies in place. Hundreds of potential threats exist for every organization. Corporate crises can take the form of plant fires, loss of competitive secrets, workplace violence, product defects, embezzlement and extortion, industrial accidents,sabotage, and natural disasters. Any of these events²as well as numerous others²can cause an immediate and prolonged financial loss to a company, require an intensive communications effort directed to investors, employees, consumers and other entities, and may present a series of regulatory, community relations and competitive challenges. To assess whether a particular company has a higher exposure than others to categories of crisis, a company may employ a risk or crisis manager who may prepare statistical models, review industry data, or work with consultants to understand how one or more crises could impact the organization. Once this process of risk is completed, many companies then design a Crisis Management Plan (CMP) to determine how negative events can be avoided or reduced in scope. But business consultants and public relations experts counsel all companies to put CMPs in place, no matter how remote such threats seem. Indeed, many businesses are able to secure lower insurance premiums if they have written crisis management procedures in place, which is a sure indication of the importance of such plans.

and ultimately more costly smoldering crises that are likely to be brewing in your business. boycotts. Irvine. unbudgeted expenses. since they are less likely to have the deep financial pockets to weatherunpleasant public relations developments. president of the Institute for Crisis Management. and 2) an already established crisis management strategy. more complicated. and management has a tough time admitting errors because it reflects on their egos and abilities. by the media and the public. sudden death or disability of a key person. natural disasters. "Before the crisis. noted in Communication World that the Institute characterizes most business crises as one of two types: sudden crisis or smoldering crisis. "We define a sudden crisis as a disruption in the company's business that occurs without warning and is likely to generate new coverage. penalties. are defined by the Institute as "any serious business problem that is not generally known within or without the company. They may be caused be shortcuts to win contracts. "In some instances. Small businesses that are faced with public relations crises are far more likely to escape relatively unscathed if they can bring two weapons to bear: 1) a solid record as a good citizen. attorneys' fees. provided they adhere to several fundamental rules of behavior.000 in fines. But business consultants and public relations professionals agree that small business enterprises can do a lot to minimize the damage done by sudden flare-ups of bad news. Smoldering crises. etc. Diminished sales as a result of unfavorable publicity. "You really need to be focused on the less dramatic. and the need to retrieve lost customers through additional advertising. recall/collection programs. and other costs." he said. legal damage awards. depending on the amount of advance notice and the chain of events in the crisis. business crises often throw multiple financial blows at companies. In short.Sudden Crisis and Smoldering Crisis Robert B." said media consultant Virgil Scudder in an interview with Communication World. customer allegations. or indecisions. are the most widely recognized of these blows. Added expenses often come knocking in the areas of increased insurance premiums. it is often the slow-burning smoldering crisis that causes the most damage to a company's image and bottom line. it is important to build good will and good relations on a daily basis. which may generate negative news coverage if or when it goes 'public' and could result in more than U." Irvine added. they often are tough to detect and then to resolve because they directly or indirectly involve management decisions. meanwhile. $250. government investigations. or workplace violence. After all." This grim truth is especially evident among small businesses that are rocked by crises. will be determined in part by what they think of you at the ." According to Irvine. media investigations. while companies need to make sure that they prepare as best they can for sudden crises. but others can have a significant cumulative impact as well.S. "The way you are treated in a crisis. questionable actions by top producers or someone who has had an unblemished record with your organization and is close to retirement. PREPARATION BEFORE THE CRISIS. Examples of such events include business-related accidents. "It has been said that 30 years of hard work can be destroyed in just 30 seconds." Small Businesses and Crisis Management "A good image is a terrible thing to lose!" noted Bill Patterson in Public Relations Journal. reimbursements. "crisis situations may be either sudden or smoldering." Examples of smoldering business crises include indications of significant regulatory action. The problem is that these smoldering crises often are the result of management decisions.

or one that offers little response at all in the hopes that the whole mess will just go away. It may be helpful for this person to attend media training in order to practice interview techniques." The other vital component of crisis management preparation is the creation of an intelligent and forceful strategy for dealing with various crises if they do occur. they should select a company spokesperson in advance." But business owners and managers who choose to put off assembling a CMP do so at significant risk. aggressive. and adept at presenting a positive image for your business. And if they know the facts. television²is often predicated on realizing that representatives of those media outlets are not infallible. "There are two things you should not assume on the part of any journalist. good on camera. "And. in this new public relations discipline of reputation management." Writing in Public Relations Journal. newspaper. is an essential element of any CMP. Bill Patterson offered a similar assessment of the importance of building a "reservoir of good will" in the community: "The most important rule in defending. "Pick someone who is cool under pressure. "Perception is truth. preserving. Tell them the facts. Scudder suggested that effective interaction with various media²radio. These messages may include any points you want the public to keep in mind during the negative publicity. such as an impressive safety or environmental record. "Knowledge and perspective. Second. it is vital that you do all you can to make sure that your message is accurately presented to any media providing coverage of the crisis. Be open and honest with media and customers alike²Such a stance may well garner sympathy with customers and consumers. "It is a distant thought that can quickly be relegated to the back of the mind. even though most executives don't like it. and timely fashion is mandatory. As Stephanie Smith and Kim Hunter pointed out inCommunication World. credible. Third. Actions taken by a communicator during the first moments of a crisis can affect perceptions of an individual or company well after the crisis is resolved. regardless of whether or not a crisis strikes. effective communication is crucial to a favorable public perception." In order to ensure that your company's perspective is heard." wrote Patterson. particularly if the crisis is one over which the . the hours and days immediately following the eruption of a crisis are often the most important in shaping public perception of the event. "For many executives. But consultants offer other tips as well. do not assume they know what the facts add up to. Following are a list of other actions that small businesses should take when confronted with a crisis management situation: 1. When a crisis does erupt. Finally. In an article for Entrepreneur. "in the throes of a crisis. prompt and proactive communication should be acornerstone of any business's crisis containment strategy. Do not assume they know the facts." he said. Gordon suggested that companies prepare a list of key people to contact in case of an emergency." wrote Patterson. a crisis is something that happens to someone else. Indeed. Kim Gordon outlined several steps small businesses can take to be prepared in the event of a crisis. the media establishes the perception of your organization. RESPONDING DURING THE CRISIS." In addition. small businesses should prepare positive messages about their operations that can be disseminated to media contacts in the event of a crisis. then. A company that has a good CMP in hand is far more likely to make good use of this time than one that is forced into a pattern of response by on-the-spot improvisation.beginning of the crisis situation. So. replaced by concern for profit and productivity." Gordon stated. First." Effective communication with media. companies should perform an assessment to determine their most likely sources of vulnerability. or enhancing a reputation is that you work at it all year long. dealing with the media in an organized.

the public. "Only one story must come from the company. . Irvine. July 15. "A Blueprint for Crisis Management: Understanding What It Takes to Weather the Inevitable Storm. company has little control. 5. This confuses the public. and so that you can get your message across. and it must always be consistent." Utilize only one spokesperson²Consultants can cite countless instances in which companies faced with a business crisis compounded their problems by using multiple spokespeople who gave conflicting statements. "Take the perspective of the people who are out there. "The Coming Revolution in Issues Management: Elevate and Simplify." React quickly²Scudder noted that a company's actions in the early stages of a crisis "will determine how the coverage of the client and the crisis goes and whether you are perceived as good guys who had an accident or bad guys. Jerry L. April 2001. and community groups can be a valuable part of a crisis response plan." Arm yourself with the facts²Companies can hurt themselves terribly when they make public statements based on incomplete knowledge of events. Do not lie or mislead the media. industry. arrange a meeting with representatives so that they can be kept informed and ask questions. "Under Fire: Will a Crisis Take Your Company Down? Here's How Deft Handling Can Turn Public Opinion Around. Clark.2. Are your company's production processes arousing the ire of local civic or environmental groups (and the growing interest of local media)? Arranging a meeting in which they could register their concerns might relieve the situation somewhat (again. July 15. South Western Publishing. 1993." said Scudder. Spokespeople should be candid without being unduly negative. Establish and maintain contact with other important groups²Depending on the nature of the crisis. Susan.1997. Bryan. Stay on message²Engaging in speculation and/or rambling discourses does not help your company's cause. Kim." contended Patterson." Communication World. that your company signals a genuine interest in hearing their thoughts. and give people what they want to know. Thomas A. 4. 6. Robert B. Is the crisis likely to have an impact on the company's labor union or general work force? If so. communication with employee. or investigating agencies²The discovery of one single lie casts every statement that your company makes into doubt. "When you have several people talking to the media during a crisis. Laurence." Entrepreneur. 1995. January 1998. 3. Crisis In Organizations: Managing and Communicating in the Heat of Chaos. June 16. provided that your company shows a genuine interest in hearing them out and responding to legitimate concerns). Gorski. 1997. "Don't Walk Away «" Super Marketing." Association Management. of course. Further Reading: Barton. 7. often leading them to believe what you are saying is untrue. "What's a Crisis. so that they do not view the meeting as acynical public relations ploy). Anyway?" Communication World. Is your company faced with an embarrassing allegation of racial discrimination orharassment? Perhaps a meeting with local religious and/or civil leaders would help (provided. Gordon. several versions of what happened usually end up in the various media. such asmalicious product tampering. be truthful. "Be candid.

crisis management involves dealing with threats after they have occurred. February 1997. and cope with a serious situation.Keating. Jane. especially from the moment it first occurs to the point that recovery procedures start. If change is not needed. Wikipedia: Crisis management Top Home > Library > Miscellaneous > Wikipedia Crisis management is the process by which an organization deals with a major unpredictable event that threatens to harm the organization. "Virgil Scudder Tackles Crisis Tactics. November 10. "Controlling a Crisis. or the general public. and (c) a short decision time. 2000. Smith. Bill. November 1993. hostile. It is a discipline within the broader context of management consisting of skills and techniques required to identify. See also crisis. (b) the element of surprise. Stephanie. the event could more accurately be described as a failure or incident. understand. which involves assessing potential threats and finding the best ways to avoid those threats. assess. its stakeholders. Three elements are common to most definitions of crisis: (a) a threat to the organization. Simms. November 9. or a hostage crisis that is beyond the capability of the lead federal agency. "Crises Impact on Reputation Management.[1] Venette[2]argues that "crisis is a process of transformation where the old system can no longer be maintained." Public Relations Journal. Politics & Society > Military Dictionary (DOD) Measure to resolve a hostile situation and investigate and prepare a criminal case for prosecution under federal law. Crisis management will include a response to an incident involving a weapon of mass destruction. See also: Disaster Planning Military Dictionary: crisis management Top Home > Library > History. Patterson. ." Communication World. "Proactive Approach Minimizes Damage to Image." Atlanta Business Chronicle. In contrast to risk management." Therefore the fourth defining quality is the need for change. Lauren. and Kim Hunter. special improvised explosive device.2000." Marketing. hostage.

2 Crises of deception 2.3 Contingency planning 4.4 Preparation and prevention Diffusion of innovation theory 4.3 Crises of management misconduct 2.7 Learning 4 Models and theories associated with crisis management o o o o o o o o o 4.7 Rumors 3 Crisis Leadership o o o o o o o 3.5 Containment and damage control 3.2 Management crisis planning 4.6 Business recovery 3.5.3 Signal detection 3.1 Crises of skewed management values 2.7 Role of apologies in crisis management 4.6 Workplace violence 2.5 Structural-functional systems theory 4.Contents [hide] 1 Introduction 2 Types of crisis o o o o o 2.9 Unequal human capital theory 5 Examples of successful crisis management .4 Crises of malevolence 2.1 Natural crises 2.2 Smoldering crises 3.4 Business continuity planning 4.3 Confrontation crises 2.1 Crisis management model 4.2 Technological crises 2.8 Crisis leadership 4.5 Crises of organizational misdeeds    o o 2.1 Sudden crises 3.

3 Elected officials and crisis management 9 Professional Organizations 10 See also 11 References 12 Further reading 13 External links Introduction Crisis management consists of:   Methods used to respond to both the reality and perception of crises. Crisis management methods of a business or an organization are called Crisis Management Plan.2 Crisis as Opportunity 8 Public sector crisis management o o o 8. [3] .2 Ford and Firestone Tire and Rubber Company 6.1 Tylenol (Johnson and Johnson) 5.3 Mattel 5.2 Government and crisis management 8. Crisis management is occasionally referred to as incident management.  Communication that occurs within the response phase of emergency management scenarios.1 Impact of catastrophes on shareholder value 7.3 Exxon 7 Lessons learned in crisis management o o 7.1 Bhopal 6.1 Schools and crisis management 8. Establishing metrics to define what scenarios constitute a crisis and should consequently trigger the necessary response mechanisms.o o o o 5.2 Odwalla Foods 5. although several industry specialists such asPeter Power argue that the term crisis management is more accurate.4 Pepsi 6 Examples of unsuccessful crisis management o o o 6.

[4] Lerbinger[5] categorized seven types of crises 1.The credibility and reputation of organizations is heavily influenced by the perception of their responses during crisis situations. Crisis is also a facet of risk management. Some technological crises occur when human . landslides. property. it is important to identify types of crises in that different crises necessitate the use of different crisis management strategies. The related terms emergency management and business continuity management focus respectively on the prompt but short lived "first aid" type of response (e. Crisis of skewed management value 6. Types of crisis During the crisis management process. Natural disaster 2. Technological crises 3. putting the fire out) and the longer term recovery and restoration phases (e.[4] Potential crises are enormous. typically natural disasters considered as'acts of God. but crises can be clustered. volcanic eruptions. moving operations to another site). There must be open and consistent communication throughout the hierarchy to contribute to a successful crisis communication process. The organization and communication involved in responding to a crisis in a timely fashion makes for a challenge in businesses. although it is probably untrue to say that Crisis Management represents a failure of Risk Management since it will never be possible to totally mitigate the chances of catastrophes occurring. and droughtsthat threaten life. Confrontation 4.[4][5] Example: 2004 Indian Ocean earthquake (Tsunami) Technological crises Technological crises are caused by human application of science and technology. tornadoes and hurricanes. Crisis of deception 7. Crisis of management misconduct Natural crises Natural crises. Malevolence 5.' are such environmental phenomena asearthquakes.g. storms. and the environment itself. tidal waves. floods.g. Technological accidents inevitably occur when technology becomes complex and coupled and something goes wrong in the system as a whole (Technological breakdowns).

People tend to assign blame for a technological disaster because technology is subject to human manipulation whereas they do not hold anyone responsible for natural disaster.[4][5] Examples: Chernobyl disaster. perhaps with the aim of destabilizing or destroying it. This state of lopsided values is rooted in the classical business creed that focuses on the interests of stockholders and tends to view the interests of its other stakeholders such as customers. Example: Rainbow/PUSH¶s (People United to Serve Humanity) boycott of Nike Crises of malevolence An organization faces a crisis of malevolence when opponents or miscreant individuals use criminal means or other extreme tactics for the purpose of expressing hostility or anger toward. kidnapping. and espionage. a company. blockade or occupation of buildings. Sample crises include product tampering. ultimatums to those in authority. and various interest groups to win acceptance of their demands and expectations. and the community. When an accident creates significant environmental damage. terrorism. malicious rumors. or seeking gain from. Exxon Valdez oil spill Confrontation crises Confrontation crises occur when discontented individuals and/or groups fight businesses. the crisis is categorized as megadamage.error causes disruptions (Human breakdowns[4]). The common type of confrontation crises is boycotts. country.[4][5] Example: 1982 Chicago Tylenol murders Crises of organizational misdeeds Crises occur when management takes actions it knows will harm or place stakeholders at risk for harm without adequate precautions.[4] Samples include software failures. Crises of skewed management values Crises of skewed management values are caused when managers favor short-term economic gain and neglect broader social values and stakeholders other than investors. and crises of management misconduct.[4] Lerbinger[5] specified three different types of crises of organizational misdeeds: crises of skewed management values. and resisting or disobeying police. or economic system. Example: Sears sacrifices customer trust[clarification needed] . and other types are picketing. sit-ins. and oil spills. industrial accidents. employees. government. crises of deception.

[4] Example: Procter & Gamble's Logo controversy Crisis Leadership Erika Hayes James.´ [7] 1. Sample is linking the organization to radical groups or stories that their products are contaminated.Crises of deception Crises of deception occur when management conceals or misrepresents information about itself and its products in its dealing with consumers and others. invites negative stakeholder reaction and thereby has the potential to threaten the financial well-being. identifies two primary types of organizational crisis. once it becomes public. reputation.[6] James defines organizational crisis as ³any emotionally charged situation that. or survival of the firm or some portion thereof. Sudden crisis 2. Example: DuPont¶s Lycra[clarification needed] Rumors False information about an organization or its products creates crises hurting the organization¶s reputation. Example: Martha Stewart fraud case Workplace violence Crises occur when an employee or former employee commits violence against other employees on organizational grounds. Example: Dow Corning¶s silicone-gel breast implant Crises of management misconduct Some crises are caused not only by skewed values and deception but deliberate amorality and illegality. Smoldering crises . an organizational psychologist at the University of Virginia¶s Darden Graduate School of Business.

[8] James categorizes five phases of crisis that require specific crisis leadership competencies. of what occurs. Consequently. These are situations when leaders are blamed for the crisis and its subsequent effect on the institution in question. but do not always. positive intent. Business recovery 5. Smoldering crises Smoldering crises differ from sudden crises in that they begin as minor internal issues that. The detection stages of a crisis include: Sense-making: represents an attempt to create order and make sense. James's research demonstrates how leadership competencies of integrity. Organizations such as the Red Cross's primary mission is to prepare for and prevent the escalation of crisis events. and transparency impact the trust-building process. . retrospectively. Signal detection 2. for example. sudden crises are most often situations for which the institution and its leadership are not blamed. James¶s case study on crisis in the financial services sector. Perspective-taking: the ability to consider another person's or group's point of view. sense early warning signals (red flags) that suggest the possibility of a crisis. Walmart has been described as an emergency relief standard bearer after having witnessed the incredibly speedy and well-coordinated effort to get supplies to the Gulf Coast of the United States in anticipation of Hurricane Katrina. explores why crisis events erode public trust in leadership. due to manager¶s negligence.[8] Each phase contains an obstacle that a leader must overcome to improve the structure and operations of an organization. [9] 1. mutual respect. Containment and damage control 4. capability. Preparation and prevention It is during this stage that crisis handlers begin preparing for or averting the crisis that had been foreshadowed in the signal detection stage. Preparation and prevention 3.Sudden crises Sudden crises are circumstances that occur without warning and beyond an institution¶s control. develop to crisis status. Learning Signal detection Signal detection is the stage in a crisis in which leaders should.

organizations must be able to carry on with their business in the midst of the crisis while simultaneously planning for how they will recover from the damage the crisis caused. Crisis handlers work diligently during this stage to bring the crisis to an end as quickly as possible to limit the negative publicity to the organization. safety. The art is to define what the crisis specifically is or could be and what has caused it or could cause it. and move into the business recovery phase. Models and theories associated with crisis management Crisis management model Successfully defusing a crisis requires an understanding of how to handle a crisis ± before it occurs. legal and government impact. financial. but will also actively pursue organizational resilience. organizational decision makers adopt a learning orientation and use prior experience to develop new routines and behaviors that ultimately change the way the organization operates. and post-crisis (Gonzalez-Herrero and Pratt. Management crisis planning No corporation looks forward to facing a situation that causes a significant disruption to their business. 1995).Containment and damage control Usually the most vivid stage. the goal of crisis containment and damage control is to limit the reputational. planning-prevention. financial. Gonzalez-Herrero and Pratt created a four-phase crisis management model process that includes: issues management. Learning In the wake of a crisis.[10] . Crisis handlers not only must engage in continuity planning (determining the people. political. and other threats to firm survival. Public scrutiny can result in a negative financial. especially one that stimulates extensive media coverage. Business recovery When crisis hits. and technology resources needed to keep the organization running). the crisis. The best leaders recognize this and are purposeful and skillful in finding the learning opportunities inherent in every crisis situation. Crisis management planning deals with providing the best response to a crisis.

Contingency planning Preparing contingency plans in advance. The first hours after a crisis breaks are the most crucial. and the plan should indicate how quickly each function should be performed. (2) an individual or other unit of adoption that has knowledge of or experience with using the innovation. Providing incorrect or manipulated information has a tendency to backfire and will greatly exacerbate the situation. the process involves: (1) an innovation. The structural-functional theory identifies information flow in organizations as "networks" made up of members and "links". as part of a crisis management plan. Developed byEverett Rogers. (3) another individual or other unit that does not yet have . the team members will act more quickly and effectively. As a result. Information in organizations flow in patterns called networks. one must identify the critical functions and processes that are necessary to keep the organization running. The plan should clearly stipulate that the only people to speak publicly about the crisis are the designated persons. but the long-term effects of every decision. The contingency plan should contain information and guidance that will help decision makers to consider not only the short-term consequences. Crisis management teams can rehearse a crisis plan by developing a simulated scenario to use as a drill. At its most elementary form. Then each critical function and or/process must have its own contingency plan in the event that one of the functions/processes ceases or fails. Testing these contingency plans by rehearsing the required actions in a simulation will allow for all involved to become more sensitive and aware of the possibility of a crisisis. information should be accurate.[11] Diffusion of innovation theory Another theory that can be applied to the sharing of information is Diffusion of Innovation Theory. Structural-functional systems theory addresses the intricacies of information networks and levels of command making up organizational communication. is the first step to ensuring an organization is appropriately prepared for a crisis. When preparing to offer a statement externally as well as internally. in the event of an actual crisis. such as the company spokesperson or crisis team members. so working with speed and efficiency is important.[10] Structural-functional systems theory Providing information to an organization in a time of crisis is critical to effective crisis management. the theory describes how innovation is disseminated and communicated through certain channels over a period of time. First. Diffusion of innovation in communication occurs when an individual communicates a new idea to one or several others. a business continuity plan can help minimize the disruption.[10] Business continuity planning When a crisis will undoubtedly cause a significant disruption to an organization.

Johnson & Johnson recalled and destroyed . and some argue that apology opens an organization up for possible legal consequences. A third competency includes identifying obvious and obscure vulnerabilities of the organization. a murderer added 65 milligrams of cyanide to some Tylenol capsules on store shelves. killing seven people. discrimination lawsuits can invite negative stakeholder reaction.knowledge of the innovation. are as effective as an apology in shaping people¶s perceptions of the organization taking responsibility for the crisis because these strategies focus on the victims¶ needs. Role of apologies in crisis management There has been debate about the role of apologies in crisis management. The final competency is learning from crisis to effect change. In a recent study of managers in a Fortune 500 company. Examples of successful crisis management Tylenol (Johnson and Johnson) In the fall of 1982. two less expensive strategies."[12] Crisis leadership James identifies six leadership competencies which facilitate organizational restructuring during and after a crisis. damage the company's reputation. because the test of crisis demonstrates how well the institution¶s leadership structure serves the organization¶s goals and withstands crisis.[13] Unequal human capital theory James postulates that organizational crisis can result from discrimination lawsuits. Crisis leadership research concludes that leadership action in crisis reflects the competency of an organization. The first entails building an environment of trust. [14] James¶s theory of unequal human capital and social position derives from economic theories of human and social capital concluding that minority employees receive fewer organizational rewards than those with access to executive management. and threaten corporate survival. race was found to be a predictor of promotion opportunity or lack thereof.[15] Thus. Two other competencies include making wise and rapid decisions as well as taking courageous action. Another competency entails reforming the organization¶s mindset. "However some evidence indicates that compensation and sympathy. [8] Developing effective human resources is vital when building organizational capabilities through crisis management executive leadership. A communication channel is the means by which messages get from one individual to another. The sympathy response expresses concern for victims while compensation offers victims something to offset the suffering. including three in one family. and (4) a communication channel connecting the two units.

including the death of a small child. Mattel had responded to more than 300 media inquiries in the U. At week's end. The Mattel CEO Robert Eckert did 14 TV interviews on a Tuesday in August and about 20 calls with individual reporters. when another bottle of tainted Tylenol was discovered in a store. has been plagued with more than 28 product recalls and in Summer of 2007. expressed remorse. a public relations staff of 16 was set to call reporters at the 40 biggest media outlets. Odwalla conferred with the FDA and Washington state health officials. recall announcement by federal officials. Though upset by the situation. earning high marks from consumers and retailers.[18] Mattel Mattel Inc. and Tylenol sales swiftly bounced back to near pre-crisis levels. detailed symptoms of E. They told each to check their e-mail for a news release outlining the recalls. established a toll-free telephone hot-line to answer consumer questions and offered refunds or exchanges to customers who had purchased Tylenol capsules. alone. coli poisoning.[17] Odwalla Foods When Odwalla's apple juice was thought to be the cause of an outbreak of E. The company "did everything it could to get its message out. By the week's end. amongst problems with exports from China. and explained what consumers should do with any affected products. it took only a matter of minutes for the manufacturer to issue a nationwide warning that people should not use the medication in its capsule form. coli infection.. Johnson & Johnson was ready."[19] .31 million capsules at a cost of $100 million. Within 24 hours. James Burke. Tamper-resistant packaging was rapidly introduced. just after the 7 a. they were appreciative of the company's response. faced two product recall in two weeks.effective thermal processes that would not harm the products' flavors when production resumed. All of these steps were communicated through close relations with the media and through full-page newspaper ads. it immediately and indefinitely canceled all television commercials for Tylenol.through the help of consultants .S. the toy maker. the company lost a third of its market value. Responding swiftly and smoothly to the new crisis. and took responsibility for anyone harmed by their products. Colorado and British Columbia was traced to unpasteurized apple juice manufactured by natural juice maker Odwalla Inc. sent out press releases which announced the recall. concern and apology. California. an outbreak of E. coli bacteria in Washington state. In October 1996. At Mattel.m. The affable CEO. Forty-nine cases were reported.[16] Johnson & Johnson was again struck by a similar crisis in 1986 when a New York woman died on Feb. invited them to a teleconference call with executives and scheduled TV appearances or phone conversations with Mattel's chief executive. appeared in television ads and at news conferences informing consumers of the company's actions. established a schedule of daily press briefings. 8 after taking cyanide-laced Tylenol capsules. Odwalla then developed .

[20][citation needed] Examples of unsuccessful crisis management Bhopal The Bhopal disaster in which poor communication before.[21] Ford and Firestone Tire and Rubber Company The Ford-Firestone Tire and Rubber Company dispute transpired in August 2000. Pepsi urged stores not to remove the product from shelves while it had the cans and the situation investigated. Operating manuals printed only in English is an extreme example of mismanagement but indicative of systemic barriers to information diffusion. A third video news release showed surveillance from a convenience storewhere a woman was caught replicating the tampering incident. the world's top-selling sport utility vehicle (SUV). This led to an arrest. According to Union Carbide¶s own chronology of the incident (2006). The company simultaneously publicly worked with the FDA during the crisis.[citation needed] This made public communications effective throughout the crisis.Pepsi The Pepsi Corporation faced a crisis in 1993 which started with claims of syringes being found in cans of diet Pepsi. After the crisis had been resolved. The Bhopal incident illustrates the difficulty in consistently applying management standards to multinational operations and the blame shifting that often results from the lack of a clear management plan. radial ATX and ATX II tire treads were separating from the tire core²leading to grisly. A second video news release displayed the man arrested. a day after the crisis Union Carbide¶s upper management arrived in India but was unable to assist in the relief efforts because they were placed under house arrest by the Indian government. illustrates the importance of incorporating cross-cultural communication in crisis management plans. According to American University¶s Trade Environmental Database Case Studies (1997). and after the crisis cost thousands of lives. Symbolic intervention can be counter productive. along with coupons for further compensation. The corporation was completely open with the public throughout. which Pepsi made public and then followed with their first video news release. the corporation ran a series of special campaigns designed to thank the public for standing by the corporation. during. spectacular crashes²Bridgestone/Firestone recalled 6.5 million tires. In response to claims that their 15-inch Wilderness AT. local residents were not sure how to react to warnings of potential threats from the Union Carbide plant. These tires were mostly used on the Ford Explorer. showing the production process to demonstrate that such tampering was impossible within their factories.[22] . a crisis management strategy can help upper management make more calculated decisions in how they should respond to disaster scenarios. This case served as a design for how to handle other crisis situations. and every employee of Pepsi was kept aware of the details.

fowl. One of the key conclusions of this study is that "Effective management of the consequences of catastrophes would appear to be a more significant factor than whether catastrophe insurance hedges the economic impact of the catastrophe". killing thousands of fish. and those that did not recover on stock price. . 4 years after the incident. they blamed consumers for not inflating their tires properly. even laying blame. (Non-recoverers). The average cumulative impact on shareholder value for the recoverers was 5% plus on their original stock value. the company had neither a communication plan nor a communication team in place to handle the event²in fact. on other groups such as the Coast Guard. These responses also happened within days of the incident. lost their livelihoods. especially Native Americans. by contrast.The two companies committed three major blunders early on. (Recoverers). did not react quickly in terms of dealing with the media and the public. Then they blamed each other for faulty tires and faulty vehicle design. but suffered a net negative cumulative impact of almost 15% on their stock price up to one year afterwards. a tanker belonging to the Exxon Corporation ran aground in the Prince William Sound in Alaska. University of Oxford . the company did not appoint a public relations manager to its management team until 1993.[24] Lessons learned in crisis management Impact of catastrophes on shareholder value One of the foremost recognized studies conducted on the impact of a catastrophe on the stock value of an organization was completed by Dr Rory Knight and Dr Deborah Pretty (1995. So the net impact on shareholder value by this stage was actually positive. and sea otters. at times.commissioned by the Sedgewick Group). Exxon established its media center in Valdez. a location too small and too remote to handle the onslaught of media attention. and the company acted defensively in its response to its publics. Hundreds of miles of coastline were polluted and salmon spawning runs disrupted. 1989. Exxon.[23] Exxon On March 24. numerous fishermen. Templeton College. Then they said very little about what they were doing to solve a problem that had caused more than 100 deaths²until they got called to Washington to testify before Congress. This study undertook a detailed analysis of the stock price (post impact) of organizations that had experienced catastrophes. the CEO. The study identified organizations that recovered and even exceeded pre-catastrophe stock price. say crisis experts. The non-recoverers remained more or less unchanged between days 5 and 50 after the catastrophe. did not become an active part of the public relations effort and actually shunned public involvement. The Exxon Valdez spilled millions of gallons of crude oil into the waters off Valdez. First. Lawrence Rawl.

[28] A national study conducted by the University of Arkansas for Medical Sciences (UAMS) and Arkansas Children¶s Hospital Research Institute (ACHRI) has shown that many public school districts have important deficiencies in their emergency and disaster plans (The School Violence Resource Center. In response to that reality. Schools and crisis management In the wake of the Columbine High School Massacre.[citation needed] .[6] Additionally. strategies and practices have been developed and adapted across multiple disciplines. immediately addresses both the damage and implications for the company¶s present and future conditions. potential damage to reputation can result from the actual management of the crisis issue. steady leadership of an elected official. [6] Research shows that organizational contributory factors affect [25] the tendency of executives to adopt an effective "crisis as opportunity" mindset.While there are technical elements to this report it is highly recommended to those who wish to engage their senior management in the value of crisis management. as well as opportunities for improvement. Since pressure is both a precipitator and consequence of crisis. crisis management policies. [26] James contends that most executives focus on communications and public relations as a reactive strategy. no sector of society is immune to crisis. a public health crisis or a terrorist attack that leaves the public seeking comfort in the calm. financial well-being. leaders who perform well under pressure can effectively guide the organization through such crisis. on the other hand. While the company¶s reputation with shareholders. Whether a school shooting. 2003). educational institutions at all levels are now focused on crisis management. [27] Crisis leadership. [8] Public sector crisis management Corporate America is not the only community that is vulnerable to the perils of a crisis. and survival are all at stake. and shootings on college campuses including the Virginia Tech massacre. In response the Resource Center has organized a comprehensive set of resources to aid schools is the development of crisis management plans. companies may stagnate as their risk management group identifies whether a crisis is sufficiently ³statistically significant´. the September 11 attacks in 2001.[citation needed] Crisis as Opportunity To address such shareholder impact. management must move from a mindset that manages crisis to one that generates crisis leadership.

many political philosophers have considered this to be one of the primary roles of government. President Abraham Lincoln said. and foster collective learning from the crisis experience. In times of crisis. politics and crisis go hand-in-hand. This plan is intended to integrate public and private response by providing a common language and outlining a chain-of-command when multiple parties are mobilized. Federal Emergency Management Agency (FEMA) within the Department of Homeland Security administers the National Response Plan (NRP). To help coordinate communication during the response phase of a crisis. suicide. communities and members of organizations expect their public leaders to minimize the impact of the crisis at hand. size. and the United States National Guard at the federal level.[31] The NRP is a companion to the National Incidence Management System that acts as a more general template for incident management regardless of cause. Indeed.[31] FEMA offers free web-based training on the National Response Plan through the Emergency Management Institute. Emergency services. we expect some new disaster with each newspaper we read. or complexity. The NRP recognizes the private sector as a key partner in domestic incident management. In this extreme environment. CAP helps create a consistent emergency alert format to reach geographically and linguistically diverse audiences through both audio and visual mediums. the U. child abuse.[30] Government and crisis management Historically. ³We live in the midst of alarms.S. state. the media and law enforcement officials.Crisis management plans cover a wide variety of incidents including bomb threats.[33] . natural disasters. such as fire and police departments at the local level. policy makers must somehow establish a sense of normality. particularly in the area of critical infrastructure protection and restoration. drug abuse and gang activities ± just to list a few. government at all levels ± local.´[citation needed] Crisis management has become a defining feature of contemporary governance. It is based on the premise that incidences should be handled at the lowest organizational level possible.[citation needed] Elected officials and crisis management Historically. while critics and bureaucratic competitors try to seize the moment to blame incumbent rulers and their policies. In describing crisis.[32] Common Alerting Protocol (CAP) is a relatively recent mechanism that facilitates crisis communication across different mediums and systems. and national ± has played a large role in crisis management.[29] In a similar fashion the plans aim to address all audiences in need of information including parents. anxiety beclouds the future. often play integral roles in crisis situations.

Crisis leadership then involves five critical tasks: sense making. Meaning making refers to crisis management as political communication. Terminating a crisis is only possible if the public leader correctly handles the accountability question. Turnaround Management Association (International) 4. the political risks and opportunities they encounter. and learning. Learning. 4. literature and contacts to turnaround professionals and academics. Experts in crisis management note that leaders who take this responsibility seriously would have to concern themselves with all crisis phases: the incubation stage. a crisis often opens a window of opportunity for reform for better or for worse. the pitfalls they need to avoid. decision making. Institute for Turnaround (England) 3. The necessity for management is even more significant with the advent of a 24-hour news cycle and an increasingly internet-saavy audience with ever-changing technology at its fingertips.[33] Public leaders have a special responsibility to help safeguard society from the adverse consequences of crisis. Sense making may be considered as the classical situation assessment step in decision making. refers to the actual learning from a crisis is limited. 3. and the aftermath. Some are: 1. 2. Decision making is both the act of coming to a decision as the implementation of that decision. meaning making. leaders must deal with the strategic challenges they face.[33] A brief description of the five facets of crisis leadership includes:[34] 1. 5. Institut für die Standardisierung von Unternehmenssanierungen (Germany) See also   Common Alerting Protocol Contingency plan . the errors they make.In the face of crisis. and the paths away from crisis they may pursue. Professional Organizations There are a number of professional industry associations that provide advice. The authors note. the onset. terminating. Turnaround Management Society (International / Focus on Europe) 2.

(1999).. L. D. T. Building communication theory (3rd ed. S. Retrieved 2007-10-11. R. 2. W. ^ "Incident or crisis? Why the debate?". 5. and Responding (2nd ed. NJ: Erlbaum. 4. T. (Spring 2007).. R. ^ a b c d James. Journal of Financial Transformation 125 (2): 601± 7.. ^ Seeger. Erika. ^ James. 6.. E. J.PMC 236121. & Womack. 12. ^ Venette. & Ulmer. Ongoing crisis communication: Planning. 9. . 11. ^ a b c "Rigor and Relevance in Management". IL: Waveland Press. Retrieved 2010-06-22. O. CA: Sage. (1997). Managing.Communication Yearbook 21: 231±275. ^ a b c "Crisis Leadership". Thousand Oaks. "In the wake of the financial crisis: rebuilding the image of the finance industry through trust". T. ^ Coombs. The crisis manager: Facing risk and responsibility. M. Roberts. managing. ^ a b c d e f g h i Coombs.Leadership Preview. (2003). PMID RePEc:ris:jofitr:1382. Prospect Heights. 10. D.).). Mahwah. J (2009). (2007). MI: UMI Proquest Information and Learning. "Leadership as (Un)usual: How to Display Competence In Times of Crisis". Retrieved 2010-06-22. and responding. 3. ^ Infante. Ongoing Crisis Communication: Planning. (Spring 2007). organization and crisis". 7. W. ^ a b c d e Lerbinger. (1998). 12Manage. "Communication. Risk communication in a High Reliability Organization: APHIS PPQ's inclusion of risk in decision making. Retrieved 2010-06-22. ^ James. (1997). A. CA: Sage. Thousand Oaks.Leadership Preview. Sellnow. "Leadership as (Un)usual: How to Display Competence InTimes of Crisis". Rancer. E. Ann Arbor.          Crisis Cross-cultural communication Emergency services Emergency management Federal Emergency Management Agency ISO/TC 223 Societal Security Management Management by exception Risk Management Social Responsibility References 1. Retrieved 2010-06-22. W.

10. ^ "Crisis management".forbes. we have a problem!" .0. "Coping with catastrophe". Bhopal: Anatomy of a Crisis. ""Hudson. 5). 24. http://www. ^ Dwyer. ^ Goldman.. Retrieved 2010-06-22. Retrieved 2007-10-08. 21.1177/0021886307313824. (1987). 27. H. Organizational Science 11: 493. Advances in Developing Human Resources 10: 352. Reckard. USA Today. Forbes. The Journal of Applied Behavioral Science 44: 94. ^ Rudolph.493. Fast Company. Vol. (2002). Retrieved 2010-06-22. Retrieved 2007-1015.11.htm. E. 2008). LA Times. Time. D. Routledge Academic. L. E. 2000. ^ "The Pepsi Product Tampering Scandal of 1993". Lynn Wooten (2010).. (Vol.doi:10. J. ^ Shrivastava. "How to Stay Loose in a Tight Spot". ^ "Campus Security Summit" (RealMedia Streaming Video). ^ Ackman. Hutchison. Retrieved 2007-1013. James. J. E.13. 29.[dead link] 17. Routledge Academic. doi:10. James. 11. (Vol. Leading Under Pressure. Ballinger Publishing Company.doi:10.usatoday. (2007).1287/orsc. "Linking Crisis Management and Leadership Competencies: The Role of Human Resource Development". (May. S. ^ James.1177/1523422308316450. No. doi:10. ± Oct. ^ James.story?page=1&coll=la-headlines-pe-business. 1998). 14.5. 22. "Toward an Understanding of When Executives See Crisis as Opportunity". ^ James. Retrieved 2010-06-22. F. Retrieved 2009-04-30. 44. 28. Prepared Foods. http://www. 18. . 15. (2004-03-17). P.15202. 25. 3. Erika. ^ "The Wall Street Journal Community".[dead link] 23.[dead link] 20. Retrieved 2007-10-14. H. Leading Under Pressure.Hudson Food's inability to handle a crisis management program". (2001). 2008). Erika (Sept. L. Retrieved 2010-06-22. E. "Race-Related Differences in Promotions and Support: Underlying Effects of Human and Social Capital". (1986-02-24). 16. E.1207/s15327728jmme2004_2.html. Kansas City Public Schools. ^ Pauly. "Why Discrimination Lawsuits Are a Noteworthy Crisis". 2007. Erika.. No. ^ James. 19. (2005). Journal of Mass Media Ethics 20 (4): 231± 249.. ^ Dezenhall. Retrieved 2007-10-06. E. 1. Retrieved 7 September 2009.3471349. "Moral fables of public relations practice: The Tylenol and Exxon Valdez cases". 26. ^ James. Lynn Perry Wooten (2010). A. ^ Warner.

Westport.  Davidson. (2003). Davidson.0)" (PDF). (2004). "Inclusion and Power: Reflections on Dominance and Subordination in Organizations".Industrial-Organizational Psychologist 41 (1). 2002. "Here and There: A Conversation about Identity". New York: Cambridge University Press.  Davidson. (2005). MA: Blackwell Publishing.  Davidson. sabotage. "Leading in Black and White: Working across the Racial Divide in Corporate America". (2007). L. West Sussex. M. Boin. Stern and B. (2003).  Davidson.N. (2004).30.N.  Office of Security and Risk Management Services (October 2007). England: John Wiley and Sons Ltd. Freeman (Eds. E.). (2007). (2002). Blackwell Encyclopedic Dictionary of Business Ethics. Hart. W. Code Red in the Boardroom: Crisis Management as Organizational DNA.1468-5973. IndustrialOrganizational Psychologist39 (2).2007. ^ "Emergency Management Institute Home Page".N. T. M. M.N. P.doi:10. (2006). E. Further reading  Barton.N. M. . M. ^ Hellsloot. Hart and E. CT: Praeger. "Diversity that matters". Retrieved 2007-10-15. M. Stern (2005). IndustrialOrganizational Psychologist 41(3). The politics of crisis management: Public leadership under pressure. ^ a b "Quick Reference Guide for the National Response Plan (version 4. "Leveraging Difference for Organizational Excellence". M.  Davidson (2001). 32. "Crisis Management Workbook". (2005).  Coombs. Batten Briefings 2 (1).. ^ "Resource guide for crisis management in Virginia schools" (PDF). P. Ethics in Human Resource Management. disaster. Edward P. Batten Briefings 3 (1).N. "Diversity and inclusion: What difference does it make?". Journal of Contingencies and Crisis Management 15 (3): 168±169. Crisis leadership now: A real-world guide to preparing for threats. New York.   Davidson. and scandal.H. Fairfax County Public Schools.Industrial-Organizational Psychologist 40 (1). A. Virginia Department of Education.[dead link] 31. Werhane. Sundelius". in P. 33. (2004). Crisis and Security Management.00519. 34. R.N. Risk. "Making the Tough Calls: Negotiating Exclusion in Inclusive and Diverse Organizations".Personnel Psychology 75 (2). "Review of "The politics of crisis management: Public leadership under pressure" by A. May 2006.  Borodzicz.1111/j. Malden.x.  Davidson. I. NY: McGraw-Hill. ^ a b c Boin.

 Davidson.J. "Inclusion: What can I and my organization do about it?". Crisis Leadership: Planning for the Unthinkable. In R."contains a collection of articles on crisis management.".  Dezenhall. Ian I. Mitroff. New York: Prometheus Books. "Managing diversity and second-order conflict". (1999). Paul Review of Educational Research 71 (4)..). B.N. M.  Erickson. Sex Roles 45 (5/6). Backinprint.A.. (2001). Crisis management: Planning for the inevitable. http://www.H. Bies. (2005). Portfolio Hardcover. (2003).  Public Relations Review 35 (1). (1999).  Mitroff.J.N. CT: JAI Press Inc. R. R. Managing Crises Before They Happen: What Every Executive Needs to Know About Crisis Management. (2001). S. Emergency Response Planning for Corporate and Municipal Managers (2nd ed. (2003). "The value of being included: An examination of diversity change initiatives in organizations". Bies.&#32. M. Gus Anagnos (2000). Sheppard. Davidson. (2001).A. (2007). J.   Mitroff.). Weber. Damage control: Why everything you know about crisis management is wrong. Burlington.  Davidson. New York: John Wiley.H..  Ferdman (2002). The role of emotion in negotiation: The impact of anger. In R. Ian I. Research on Negotiation in Organizations. Sheppard.  Ferdman (2002).  Friedman. New York: AMACOM. Lewicki. (Eds. E. Research on Negotiation in Organizations. Friedman. Greenwich. (Eds. Federal Emergency Management Agency (September 2007). Inc.J.  Davidson.sciencedirect. Nail 'em!: Confronting high-profile attacks on celebrities & businesses. Ian I. MA: Elsevier. (2007). R. (1999). Industrial-Organizational Psychologist 39(3). Lewicki. "Mentoring in the preparation of ethnically diverse graduate students".  Department of Homeland Security. "Drawing the line: Are some differences too different?".). Performance Improvement Quarterly 12 (1). CT: JAI Press Inc. "The impact of race on styles of dealing with conflict". The role of emotion in negotiation: The impact of anger. E.J.. IndustrialOrganizational Psychologist39 (4). "National Response Plan". M. New York: AMACOM. Amherst.N.N.. R.  Dezenhall. Why Some Companies Emerge Stronger And Better From a Crisis: Seven Essential Lessons For Surviving Disaster.   Fink. . Greenwich. (2006). M. Journal of Conflict Management 12 (2).

Crisis Management and Communication. How to Gain and Maintain Control (2nd ed. Larry. Smith.     Crisis Manager Newsletter. CA: Sage Publications. R. Thousand Oaks. Effective crisis communication: Moving from crisis to opportunity.  Smith. Dan Millar. 2007. Crisis Management and Communication Entry Institute for Public Relations article CRISIS MANAGEMENT AND BUSINESS CONTINUITY A short program offered at MIT TURNAROUND MANAGEMENT ASSOCIATION Certifying Body for Certified Turnaround Professionals/Crisis Managers  The International Research Group on Crisis Communication Publications and crisis institutions database This entry is from Wikipedia. Larry.. the leading user-contributed encyclopedia. Washington. Dan Millar. PhD (2002). San Francisco. L. R. M.). Before Crisis Hits: Building a Strategic Crisis Plan.. Sellnow. It may not have been reviewed by professional editors (see full disclaimer) . T. PhD (2002). DC: AACC Community College Press. United Kingdom Government Business Link. W. a free collection of 600+ articles on crisis management-related topics. CA: International Association of Business Communicators. External links  Crisis management and business continuity planning. & Seeger.  Ulmer. (2006).