Part II: Crisis Management

Chapter 7: So if hits the fan-Now What?

Business Crises:

-Business crises are foten created by mosmanagement of the company-injudicious epxansion and diversification. Fradukent bahaviour has led to demise of some major businesses in recen years (eg. Enron);
-Business crises are the result of the failure to have in place an issue management system which enables companies to spor greater forces at work..

-of course, when looking at different copr. crises, hindsight is the best of all management tools.

How the Might Fall:

-no company, no matter how financially successful, powerful or reputable , is immune to crises.
-very often, orgs ignore the warning signals, which are so obvious in hindsight.
-"accident category " crises ;
Some pitfalls drawn from cases:

• -the consufion of image with reality;
• the belief that because it hasn't happened in the past it won't happen in the future;
• the vain hope that because "procedures" have been written the accident can't happen;
• a failure to communicate appropriately

CEOs are not infalliable:

-the common threat is that in almost every case there is one person in chargem u. the founder of the business,  an optimist, risk-taker etc.
-acc to vets in the business industry :one reliable indicator of a company that will eventually run into trouble is having a charismatic, high-rpofile chairman;
-There is one sure way to buy the company time when it is on the dge of trouble, it is to appoint a new chief executive.

Product-Related Crises:

-the cost of dealing with product recalls can be huge.- costs of lost production , plus costs for rebuilding public confidence in products;

Who Will Have A Crises?

-Some comp believ their size, location or the type of business they are in, will protect them;
-Others believe issues and crisus mngt is a luxury;
-or believe crisis is inevitable cost of doing business;
- In the authors experience: some executives have difficulty admitting to themselves that their companies could face a crisis because in doing so they would have to question the excellence of their company and in some cases even their own proffesionalism;

-Others, subscribe to the fallacy that well-managed companies simply do not crises.

-Ian Mitroff divides "crisis-prone" corporations into 2 types:

1. Destructive companies-which beleive it is theur fundamental right, even thei duty to exploit human, financial and natural resources for the rpofit of their shareholders;//for destructive companies little can be done;
2. Tragic companies-which understand the need for change but don't have the emotional or cultural resources to make it happen//Tragic companies can be halped by outside experts, analysts who can identofy problems not apparent to those too close to them;

-there used to be an attitude -what you didn'tknow won't hurt you (nowadays courts say , you should have known);

-No organization is safe form a crisi and the potentially lasting damage it can cause. It is no longer a question of whether a mojor crisis will strike, it is only a matter of when, which type and how;

What Kind of Crisis Will Happen?

-The following crises were regarded as most likely to occur:

• environmetal pollution;
• product defect;
• sabotage
• death/kidnapping of senior mngt member;
• tech breakdown;
• industrial dispute;
• fraud & Dirty tricks (white-collar crimes)
• heath risks
• pressure groups
• sexual harassment
• discrimination

-The authors definition of Crisis:

-An event which causes the company to become the subject of widespread,potentially unfavourable, attention form the international and national media and other groups such as customers, shareholders, employees, and their families, politicians, trade unionists and environmental pressure groups who, for one reason or another, have a vested interest in the activities of the organization.

Foot -in-mouth disease: Careless talk costa reputation:

-sometimes all it takes is a careless phrase, a throwaway line or an "off the record comment";
-u. it is the consequence of a company or individual having no empathy for its most important stakeholders-not holding them sarcosanct and being dismissive of them;

Summary:

• beware of the ass-kissing of advisers;
• Don't confuse image with reality;
• Don't believe it can't happen because it hasn't in the past (before);
• Don't belive that writing the "procedures" will prevent it from happening;
• Communicate at all times at all levels;
• Faced with disaster, consider the worst possilbe scenario;
• Be prepared  to demonstrate human concern for what has happened;
• Never underestimated genuine concerns of customers;