Crisis Management Hits Close to Home

I live in Colorado, and as I write this we are in the after shock of the movie theater tragedy.  A sudden crisis certainly, but by our Governor’s account the “…first responders, police and ambulances, arrived almost immediately and that undoubtedly saved lives.” These heroic teams had anticipated a crisis and prepared to act decisively. This allowed them to react, focus, communicate and ultimately save countless lives.

This event made us realize the extreme differences in the level of crises that may present themselves and we can only hope we do not find ourselves in anything remotely similar. It also caused many of us to ask, “What does our crisis management plan look like?”

An effective manager immediately engages in crisis management when a situation arises. The process of preparing for and responding to an unpredictable negative event and to prevent it from escalating is a skill we all aspire to have.  The key is not to put yourself in a crisis mindset, because then your ability to act rationally is lost.  Work hard to keep your feet firmly planted as you objectively determine the best way to manage the crisis at hand.

According to The Institute for Crisis Management (ICM), a business crisis is “Any problem or disruption that triggers negative stakeholder reactions that could impact the organization’s financial strength and ability to do what it does.” Or simply put, it is a substantial, unforeseen circumstance that can potentially jeopardize an organization’s employees, customers, products, services, fiscal situation or reputation.

ICM research finds that most crises are caused by Management Decisions or Indecision. This occurs if the problem is not serious, it goes undetected, or is not handled until it becomes a crisis.  The rest generally fall under Acts of God, mechanical problems and human error.

Crises can be categorized in two areas:

Sudden Crisis

A disruption in business which occurs without warning. An example would be a business-related disaster that hinders operations and endangers employees; such as a snow storm causing a breakdown in the heating system.

Smoldering Crisis

Any serious business problem not generally known within or out of a business’s four-walls that when it is discovered or goes “public,” it  could result in fines, penalties, legal damage awards, out of budget expenses and business disruption.  Examples would be an OSHA violation or a customer allegation of overcharging.

To put this in context of the stories in the press last year, 61% of crises were considered smoldering, while 38% were sudden. In either case, as managers it is part of our job to prepare as best we can, giving ourselves and our employees’ tools and guidelines we can use as aides to help us through what may or may not come. Even knowing the tools are there and having the training  to use them is an instrumental piece to getting everyone into a calmer state so they can manage a crisis more effectively.

The critical elements of a Crisis Management plan for all managers are:

Anticipate potential crisis situations and prepare for them

1. Give accurate information during a crisis
2. React as quickly as possible to the situation
3. Communicate a response that comes from the top
4. Create long-term solutions

Let’s address #1 – Anticipating a potential crisis and preparing for it.

The book, Successful Executives Handbook by Personnel Decisions International suggests:

• If you are “fighting fires” all the time,  look at the broader context to find proactive measures to prevent this behavior
• Keep a list of unforeseen problems that now require your attention. Is there a theme?
• Ask your direct reports to identify trends, compare the lists and look for               connections.
• Challenge others to anticipate issues and provide clear feedback about their proactive and reactive plans.

Every manager should work toward anticipating potential crisis situations that your business may encounter and formulate and document contingency action plans for them. This is a basic requirement for any crisis management program. And when anything goes wrong, deal with it then, don’t ignore the situation.  The initial “pain” of managing proactively will almost always be far less severe than the ultimate, possibly irretrievable damage caused by denial escalating  the problem.

By, Debra Koenig, President of B2A Consulting | 30 years of experience as a  business executive with leadership and consulting skills in Fortune 500 and private equity portfolio companies.