Identifying A Crisis and Managing it Effectively

Editor’s Note: I am very happy to be publishing this informative guest post, written by talented Public Relations graduate, Charlotte Lyng.

Organisations deal with problems every day; unsatisfied customers, rising prices, disrupted services, late shipments etc., but these do not necessarily constitute a crisis. Crises are something bigger and different than everyday problems. They attract public attention through news coverage.

The UK’s Department for Business Innovation and Skills defines a crisis as:

“an abnormal situation, or even perception, which is beyond the reputation of an organisation” (Crown 2010).

Person and Clair describe an organisational crisis as:

“a low- probability, high- impact event that threatens the viability of the organisation and is characterised by ambiguity of cause, effect and means of resolution, as well as by belief that decisions must be made swiftly” (Person and Clair cited in Efficient Unit 2009:4).

In other words, a crisis is a sudden and unwanted situation that has the potential to threaten the integrity or reputation of your company if not handled properly or responded to immediately.

It is difficult to predict all crises, but there are certain steps your organisation can take, in order to prepare for them. Through knowledge, preparation, calmness, control and communication, your organisation can secure the best possible outcome from a crisis. This is also recognised as crisis management.

What is crisis management?

Ultimately, crisis management is a process used to protect or reduce the impact of damages a crisis might have on your organisation’s reputation or credibility and in turn, upon your stakeholders. As it is a part of a process, the Institute for PR categorizes the process into three phases:

1. Pre-crisis: Prevention and preparation planning
2. Crisis response: When management has to respond and deal with the crisis
3. Post-crisis: Re-examining what happen to be better prepared for the next crisis (Coombs 2007)

The essence of crisis management is effective communication and the principle of crisis mismanagement is making a bad situation worse. The crux of crisis management “is about seizing the initiative – taking control of what has happened before it engulfs [your] organisation. Planning to manage for crises and issues is the key to [your] corporate survival” because now more then ever before, your company profits are tied up to your reputation (Regester and Larkin 2008: 206). How you handle a crisis can make significant differences to your brand image and market value.

Being unprepared usually leads to mismanagement of crises

Often organisations operating within the same industry do not learn from each other’s failures, which consequently can result in the ignorance of potential warning signs. This has resulted in the world witnessing numerous CEOs and higher management teams mismanaging their crises. They simply make the situation worse by relying on the ‘head in the sand’ approach; ignoring the crisis as they receive negative press attention (Nolan 2012). Micky Arison, the Chief Executive and owner of Carnival Corporation, the brand behind Costa Concordia, demonstrated a textbook example of this trait when he failed to communicate with the public when one of his cruise ships ran aground of the west coast off Gigolo, Italy on the 13^th of January 2012.

Crises can only be managed upwards through effective communication

Failure to implement a crisis management approach usually leads to mismanagement. Being unprepared when the unexpected happens, organisations quickly end up in a defensive position as they react to the conditions of the crisis instead of their own initiative. This has the potential to put the organisation in a negative spotlight, potentially creating an arrogant and unsympathetic image to the public. As companies are more commonly exposed to a constantly evolving media environment, crisis management strategies have to adapt respectively. This requires a holistic and in-depth understanding of how emergencies and crises are perceived by the public, as well as a careful balance of revealing specific points of interest and relevant information in stages that ease public pressure.

How about you?

Is your company or organisation prepared to manage a crisis competently and effectively? What about when the crisis breaks online and begins to go viral? Have you invested in a strategic and thorough crisis management plan?