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IR Blog: Crisis Management: Always a HOT topic – PART 2)

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By Simona D’Agostino Reuter 

Crisis Management: Always a HOT topic – PART 2)

Communicate with honesty, candor and openness while acknowledging risk”

 

There are many types of issues facing businesses, but what counts as a true crisis?

A Business Crisis can be anything that negatively effects a company’s reputation or bottom line. Unfortunately, it’s not always clear when an organization is in the initial stage of a crisis. Many events at first blush may not appear to be serious. For instance, we may all agree that the death or resignation of a key person in any organization could very well be serious for any company, but it depends on how the key that person really was. Natural catastrophes, product recalls, accidents caused directly or indirectly by the company, labor disputes, computer data losses, etc.. some crises, such as industrial accidents and product harm, can result in injuries and even loss of lives. Crises can cause financial loss by disrupting operations, creating a loss of market share/purchase intentions. The list is somehow endless. Luckily some are temporary. Some can cause the demise of a company.

In a crisis we need to focus on communicating quickly, sending messages through the financial market and the media, both traditional and social media, to reach a wide spectrum of stakeholders, while being in compliance with all the regulations.

The messaging are important to communicate the ethical commitment to resolving the crisis in order to do what is right and effective for the company’s stakeholders.

In their paper, “Incorporating Social Media in Risk and Crisis Communication” Veil, Buehner and Palenchar (Professors in Public Relations at the University of Tennessee) recommend the following:

  1. Communicate with honesty, candor and openness while acknowledging risk
  2. Collaborate and coordinate with credible sources
  3. Meet the needs of the media and remain accessible
  4. Communicate with compassion, concern and empathy
  5. Accept uncertainty and ambiguity

 

To go more in-depth, it is important to define better what is a Crisis Management – usually identifying Pre and Post Crises Phases.

 

What is the Crisis Management?

We believe it is a process designed to prevent or lessen the damage a crisis can inflict on an organization and its stakeholders. It can be divided into three phases: (1) pre-crisis, (2) crisis response, and (3) post-crisis. The pre-crisis phase is concerned with prevention and preparation. The crisis response phase is when management must actually respond to a crisis. The post-crisis phase looks for ways to better prepare for the next crisis and fulfills commitments made during the crisis phase including follow-up information.

 

Pre-Crisis

Prevention is designed to reduce known risks that could lead to a crisis. This should be part of an organization’s risk management program. We believe preparation includes drafting a crisis management plan, selecting and training the crisis management team, and conducting exercises to test the crisis management plan and crisis management team.

According to the Best Practice, the Crisis Preparation can be identified by the following:

Crisis Management Plan

A crisis management plan is a reference tool which provides lists of key contact information, reminders of what typically should be done in a crisis, and forms to be used to document the crisis response.

Crisis Management Team

Larry Barton (American professor and risk management consultant, a pioneer of the crisis management)  in 2001 identifies the common members of the crisis team as public relations, legal, security, operations, finance, and human resources. We should now amend the list of common members to include the social media manager.

Spokesperson

A key component of crisis team training is spokesperson training. Organizational members must be prepared to talk to the news media during a crisis.

Pre-draft Messages

Crisis managers should pre-draft messages that will be used during a crisis. More accurately, crisis managers may create templates for crisis messages – statements by top management, news releases, social media messages.

 

 

Crisis response

It is what management does and says after the crisis hits. Public relations plays a critical role in the crisis response by helping to develop the messages that are sent to various publics. A great deal of research has examined the crisis response. That research has been divided into two sections: (1) the initial crisis response and (2) reputation repair and behavioral intentions.

Initial Response

The initial crisis response guidelines focus on some key points:

  1. Be quick and try to have initial response within the first hour.
  2. Be accurate by carefully checking all facts.
  3. Be consistent by keeping spokespeople informed of crisis events and key message points.
  4. Make public safety the number one priority.
  5. Use all of the available communication channels including the social media, web sites, Intranet, and mass notification systems.
  6. Provide some expression of concern/sympathy for victims
  7. Remember to include employees in the initial response.
  8. Be ready to provide stress and trauma counseling to victims of the crisis and their families, including employees.

Reputation Repair and Behavioral Intentions

In general, a reputation is how stakeholders perceive an organization and it’s considered as a valuable, intangible asset for any company and is worth protecting. But the threat posed by a crisis extends to behavioral intentions as well. Increased attributions of organizational responsibility for a crisis result in a greater likelihood of negative word-of-mouth about the organization and reduced purchase intention from the organization.

It should be noted that reputation repair can be used in the crisis response phase, post-crisis phase, or both. Not all crises need reputation repair efforts. Frequently the instructing information and expressions of concern are enough to protect the reputation. When a strong reputation repair effort is required, that effort will carry over into the post-crisis phase. Or, crisis managers may feel more comfortable waiting until the post-crisis phase to address reputation concerns.

Post-Crisis Phase

In the post-crisis phase, the organization is returning to business as usual. The crisis is no longer the focal point ofmanagement’s attention but still requires some consideration. As noted earlier, reputation repair may be continued or initiated during this phase. There is important follow-up communication that is required. First, crisis managers often promise to provide additional information during the crisis phase. Second, the organization needs to release updates on the recovery process, corrective actions, and/or investigations of the crisis. The organization should seek ways to improve prevention, preparation, and/or the response.

However, experts have found organizations are very bad at learning from crises..

 

Here below a short list of Post-Crisis Phase best practices

  1. Deliver all information promised to stakeholders as soon as that information is known.
  2. Keep stakeholders updated on the progression of recovery efforts including any corrective measures being taken and the progress of investigations.
  3. Analyze the crisis management effort for lessons and integrate those lessons in to the organization’s crisis management system.
  4. Scan the Internet channels for online memorials.
  5. Consult with victims and their families to determine the organization’s role in any anniversary events or memorials.

 

Conclusion

It is difficult to comprise all that is known about crisis management into a single paper. What we know is that while crises begin as a negative/threat, effective crisis management can minimize the damage and in some case allow an organization to emerge stronger than before the crisis. Nevertheless, crises are not the ideal way to improve an organization. To conclude, because no organization is immune from a crisis so all must do their best to prepare for one.

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