The Need for More Crisis Management Knowledge (Ch 1)
A crisis can be defined as some breakdown in a system that creates shared stress. There are two distinct types of crises; a disaster and an organizational crisis. A disaster is a sudden event that seriously disrupts routines of systems, which may require a response from multiple government units. An organizational crisis is an unpredictable event that threatens important expectancies of stakeholders related to health, safety, environmental, and economic issues and can seriously impact an organization’s performance and generate negative outcomes. Some negative outcomes of organizational crises include; lost productivity, a drop in earnings, injuries and deaths to stakeholders, structural or property damage, tarnishing of a reputation, damage to a brand, and environmental harm.
There is a three-stage approach to crisis management:
- Precrisis: Entails actions to be performed before a crisis is encountered. Involves single detection, prevention, and crisis preparation.
- Crisis Event: Begins with a trigger event to a crisis, and ends when the crisis is considered to be resolved. Involves crisis recognition and crisis containment.
- Postcrisis: When a crisis is resolved and deemed to be over, an organization must consider what to do next. Procrisis actions help make an organization better prepared for the next crisis, make sure stakeholders are left with a positive impression or the organization’s crisis management efforts, and check to make sure the crisis is truly over.
Stakeholder activism is one of many developments that is increasing the need for effective crisis management. The internet has allowed consumers, shareholders, employees, community groups, and activists to become increasingly more vocal when dealing with organizations. For example, recently we have seen a surge in stakeholder reactions towards inadequate customer service of major airlines. These reactions have magnified the organizational crises of these airlines and have further promoted stakeholder activism.
If organizations do not take responsible action to reduce or eliminate known or foreseeable risks that could result in harm, they could be held liable through negligent failure to plan. There are many defensive efforts than an organization can use to defend itself from liabilities, such as crisis preparation, crisis prevention, and due diligence. Crisis management acts as a form of due diligence, or efforts to avoid harm, and can protect an organization against impending lawsuits.
Effects of the Online World (Ch 2) & Crisis Management (Ch 8)
With internet and social media, the information behind truth, rumor, and speculation, moves far more rapidly than before. Social media acts as a bridge between crisis management and the online world, as organizations can quickly issue responses to crises and await feedback. In other cases, social media can be the cause of a PR crisis: Red Cross’ rogue tweet and the light-hearted response (Praetorius, 2011). http://www.huffingtonpost.com/2011/02/16/red-cross-rogue-tweet_n_824114.html
A villain challenge is simply one more battle in a larger war. The stakeholders are generally activists groups that have been attempting to portray the organization as a villain that needs reform. Managers can respond to the villain challenge with refutation, repression, reform, and repentance. A pro of the refutation strategy would pertain to when the challenge is wrong or reflects the views of only a very limited number of stakeholders. A con of the refutation strategy would pertain to the increased damage from a challenge if stakeholders can prove the organization is lying about meeting expectations.
One example of successful social media crisis management is Domino’s response to their perceived quality, due to a few social media scares over the years. Dominos launched an advertisement campaign that has become legendary for it boldness, sharing comments from focus groups about what people thought about the product. Domino’s accepted the criticism and promised to “work days, nights, and weekends” to get better. Domino’s went from a stock price of $8.76 per share in 2010 to a stock price approaching $160 in 2016, and the second-largest pizza chain in the world (Taylor, 2016). https://hbr.org/2016/11/how-dominos-pizza-reinvented-itself
The Pre-Crisis Phase
Proactive Reputation Management (Ch 3)
Single detection entails the search for warning signs and will reduce the likelihood of a crisis developing. Single detection begins with scanning, a systematic search of both the organization and factors of the environment. Crisis managers will then evaluate the information they have collected for warning signs. The warning signs with the greatest potential of signaling danger will be monitored.
Today’s consumers hold companies and organizations to a higher standard, which had been reinforced by the internet and the desire for transparency. According to a study by Cone Communications, “91% of global consumers expect companies to do more than make a profit, but also operate responsibly to address social and environmental issues” and “90% would boycott a company if they learned of irresponsible or deceptive business practices” (2015). Corporate social responsibility, or the initiative to take responsibility for the effects of an organization, is now part of the key evaluation criteria for reputations. A negative reputation prior to a crisis makes the crisis more difficult to manage. http://www.conecomm.com/research-blog/2015-cone-communications-ebiquity-global-csr-study
Ben & Jerry’s has been known for successful CSR efforts. The company came out against Recombinant Bovine Growth Hormone (rBGH) in 1989, which was based on concern about its adverse economic impact on family farming. In 1990, eight million Ben & Jerry’s pints with a “Support Farm Aid” message entered the market in support of Farm Aid. Farm aid in a non-profit organization whose mission is to keep family farmers on their land. Ben & Jerry’s also supports the growing consumer movement for transparency and the right to know what’s in our food supply and is committed to non-GMO sourced ingredients. Ben & Jerry’s CSR efforts over the years have been proven successful because the company has claimed significant market share and has a positive reputation. Ben & Jerry’s reputation acts as a competitive advantage, as more consumers are moving towards the direction of becoming environmentally friendly (Social Responsibility, 2017). http://www.benjerry.com/whats-new/2014/corporate-social-responsibility-history
The interrelationship between proactive management functions has allowed for broader system for detecting crisis warning signs. Issues management, reputation management, and risk management all work to reduce threats that could lead to crises. Crisis managers will use the collected information of the proactive functions to assess the situation and figure out what needs to be done.
The Crisis Prevention Process (Ch 4)
Issues and reputation management emphasizes external threats, while risk management has more of an internal focus. A difference in functions revolves around the sources that are scanned for threats. The sources are then combined to provide a comprehensive set of sources that crisis managers can scan. Environmental scanning is a popular tool which refers to watching the environment for changes, trends, events, and emerging social, political, or health issues. During the scanning process, crisis managers should look for known warning signs of crises, known as red flags.
There are many ways for collecting information. Crisis managers often use content analysis, interviews, surveys, focus groups, and informal contacts as collection tools. A common weakness in information collection is the degree of reliability. With content analysis, coders must trained to draw comparisons in consistent manners. A stakeholder map is the first step in soliciting information from stakeholders. The crisis team identifies the stakeholders relevant to the most highly ranked crises.
Threat analysis is based on two factors; likelihood and impact. Likelihood is the probability that a threat will become a crisis. Impact is the effect the crisis can have on stakeholders and an organization. Typically, each threat is given a score from 1 to 10 for likelihood and impact. Crisis managers then determine whether each threat warrants further attention or action.
For reputation, crisis managers must determine if an expectation gap exists before evaluating likelihood and impact, as reputations are built stakeholder expectations. Expectations, such as adequate pay and medical benefits for employees, must be identified and isolated. The two types of expectation gaps are performance, when an organization is not doing what it needs to do to meet expectations, and perception, when stakeholders fail to perceive that the organization is meeting expectations.
Stakeholder perception is key. If stakeholders are not aware of certain efforts, there is a gap. When determining the likelihood and impact of an expectations gaps, crisis managers must examine the salience of the stakeholder. Stakeholder salience, their importance to an organization, is a function of legitimacy, power, and willingness, and can be translated into likelihood and impact.
Preventive action occurs when threats have been evaluated. If a threat is serious enough, action is taken to diffuse it. These actions create changes that eliminate or reduce the likelihood of threats becoming crises. One example of a preventive action is the implementation of stricter safety procedures regulating the unloading of chemicals.
The most effective way to determine if specific problem resolutions were satisfactory to disgruntled stakeholders is to assess the feedback from stakeholders, which will serve as the measure of success. If stakeholders perceive the organization is meeting expectations, the expectation gap will successfully close.
A paracrisis occurs when crisis managers must publicly manage a crisis threat, and often relates to rumors, challenges, and product harm. To effectively manage a paracrisis, crisis managers must become aware of public responses and decide upon appropriate actions.
Crisis Preparation: Part 1 (Ch 5) & Crisis Management (Ch 5 & 8)
Crisis managers diagnose vulnerabilities by first assessing the likelihood of occurrence and the severity of damage. A crisis management team or a consultant will compile a list of potential crises that should be assessed. A final analysis will then be formed, based on the likelihood and impact.
A crisis management team acts as a core element of crisis preparation. Selection involves choosing the people best suited for the tasks. Training then helps the selected people become more proficient at performing tasks. Organizations spend millions of dollars each year on selection and training processes.
Selecting a spokesperson for a crisis doesn’t necessarily mean starting with CEO, which is sometimes advised not to do. The primary responsibility for the spokespeople is to manage the accuracy and consistency of the messages coming from the organization. Spokespeople must have the ability to work with media by listening and responding to question. Spokespeople practice responding to questions through media training, or rehearsals.
Carsten Sphor’s response to the German Wings disaster of 2015 is just one example of a successful crisis spokesperson. Carsten Sphor, the CEO of Lufthansa, was the immediate spokesperson after a piolet deliberately crashed a plane into the French Alps. Carsten Sphor vowed to ensure pilots are fully checked in all aspects of health and delivered sentiments to all families involved (Brown, 2015). http://blog.rdpr.co.uk/the-best-and-worst-crisis-communications-case-studies
Crisis Preparation: Part 2 (Ch 6) & Crisis Management (Ch 5 & 8)
A crisis management plan is a written aspect of the crisis planning process, which provides advice and reminders that can help the crisis team in its efforts. An effective CMP should be flexible, rather than being overly prescriptive, and should demonstrate practical value. It must also be manageable and user-friendly. The most desirable CMP is a short document in an easy-to-use flipchart format, with each section having a different tab for easy identification.
With CMP in place, crisis managers must make sure the physical setup of the crisis communication system is prepared. Elements of the crisis communication system include the mass notification system, the crisis control center, and the intranet and Internet. All preparation elements should be reviewed and updated regularly to maintain a state of readiness for crises.
The Crisis Phase
Crisis Recognition (Ch 7)
While gaining a better understanding of a crisis, a crisis management team engages in knowledge management. The crisis-related knowledge is used to guide decision making and create the messages sent to various stakeholders. Furthermore, members of a CMT must be aware of the problems associated with information collection, knowledge creation, and knowledge management.
There is a pressure on a crisis team to acquire information and to process it into knowledge quickly and accurately if the team is to operate effectively in a crisis. However, there are several problems relating to information-processing. These problems include:
- Serial Reproductive Errors: The more people a message passes through before reaching its final destination, the greater the likelihood of the message being distorted.
- The MUM Effect: People in organizations have a tendency to withhold negative information completely.
- Message Overload: People are given more information than they can completely manage.
- Information Acquisition Biases: Because the amount of available information exceeds the human ability to make sense of it, people naturally use selective perception.
- Group Decision-Making Errors: Groups are more prone to decision-making errors when they fail to use critical thinking skills.
Crisis Response (Ch 8)
The best way to respond to a crisis is to be quick, consistent, and open. Researchers have found that organizational managers and the organization are viewed as more credible when the organization reported the crisis before other sources, which is known as stealing thunder. Crisis teams must also create and deliver messages that can be clearly and easily understood.
Apple’s flawed iOS 8 crisis of 2014 is one of many examples of successful crisis responses. The update caused some users to lose cell service, while other posted about Touch ID not working. Spotting user complaints on social media, Apple moved quickly to contain the damage, pulling out iOS 8 within an hour of its launch and offering services to those affected. The complaints quickly subsided (Well handed, 2014). http://mengonline.com/blog/2014/11/26/well-handled-four-cases-of-successful-pr-crisis-management/
Message maps help to establish consistency when there are multiple spokespersons, which is essential to building the credibility of the response. A consistent message is more believable than an inconsistent one.
The Situational Crisis Communication Theory is part of a growing body of research that applies attribution theory to crisis management. In PR, the SCCT has used attribution theory to develop and test a set of recommendations for using crisis response strategies.
The attribution theory is based on the belief that people assign responsibility for negative, unexpected events.
There are several crisis response strategies, each with pros and cons. These strategies include; attacking the accuser, denial, scapegoating, excusing, justification, compensation, apology, reminding, ingratiation, and victimage.
With the art of apologizing, the crisis manager publicly states that the organization takes full responsibility for the crisis and asks for forgiveness. Taking responsibility can act as both an asset for crisis communication and a liability, as expenses will increase. It is best to apologize when there is evidence that the organization is the primary actor responsible for the crisis.
Crisis communication should continue throughout the life cycle of a crisis. While the initial response has a mass media emphasis, follow-up communication can be better targeted to individual stakeholders. Follow-up communication can deal with the financial implications of the crisis.
The Post-Crisis Phase
Post-Crisis Concerns (Ch 9)
When a crisis ends, it is critical that crisis managers evaluate their efforts. Organizations learn to improve their crisis management through evaluation. The crisis team should first examine all phases of its performance. Then, the crisis impact should be evaluated, which should be less damaging than what was originally anticipated.
There are many post-crisis actions that can be taken. If the cause of the crisis is still under investigation by government officials, the organization must cooperate and remain transparent. Follow-up communication, as mentioned before, is also crucial.
Praetorius, Dean. The Red Cross’ Rogue Tweet. Huffington Post. Accessed May 11, 2017. http://www.huffingtonpost.com/2011/02/16/red-cross-rogue-tweet_n_824114.html
Taylor, Bill. How Domino’s Pizza Reinvented Itself. Harvard Business Review. Accessed May 11, 2017. https://hbr.org/2016/11/how-dominos-pizza-reinvented-itself
Cone Communications. Global CSR Study. Accessed May 11, 2017. http://www.conecomm.com/research-blog/2015-cone-communications-ebiquity-global-csr-study
Ben & Jerry’s. Socially Responsible Cause Ben & Jerry’s has advocated for. Accessed May 11, 2017. http://www.benjerry.com/whats-new/2014/corporate-social-responsibility-history
Brown, George. Roland Dransfield. Crisis PR. Accessed May 11, 2017. http://blog.rdpr.co.uk/the-best-and-worst-crisis-communications-case-studies
American Marketing Association. Executive Circle. Accessed May 11, 2017. http://mengonline.com/blog/2014/11/26/well-handled-four-cases-of-successful-pr-crisis-management/