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Crisis Management Training by Iowa State University
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  • 1. CRISIS MANAGEMENTCRISIS MANAGEMENT Key issuesKey issues
  • 2. Crisis ManagementCrisis Management Crisis managementCrisis management is the process by which anis the process by which an organization deals with a major unpredictable eventorganization deals with a major unpredictable event that threatens to harm the organization, itsthat threatens to harm the organization, its stakeholders, or the general publicstakeholders, or the general public
  • 3. Elements of a CrisisElements of a Crisis Three elements are common to most definitions of crisis:Three elements are common to most definitions of crisis: (a)(a)a threat to the organization,a threat to the organization, (b)(b) the element of surprise,the element of surprise, (c)(c)a short decision timea short decision time (d)(d)a need for changea need for change
  • 4. Crisis management - 1Crisis management - 1 Crisis management consists of:Crisis management consists of: • Methods used to respond to both the reality andMethods used to respond to both the reality and perception of crisesperception of crises • EstablishingEstablishing metricsmetrics to define what scenariosto define what scenarios constitute a crisis and should consequently trigger theconstitute a crisis and should consequently trigger the necessary response mechanisms.necessary response mechanisms. • CommunicationCommunication that occurs within the response phasethat occurs within the response phase of emergency management scenariosof emergency management scenarios
  • 5. Crisis Management - 2Crisis Management - 2 The credibility and reputation of organizations is heavilyThe credibility and reputation of organizations is heavily influenced by the perception of their responses duringinfluenced by the perception of their responses during crisis situationscrisis situations
  • 6. Crisis Management - 3Crisis Management - 3 * respond to a crisis in a timely fashion makes for a* respond to a crisis in a timely fashion makes for a challenge in businesses.challenge in businesses. * must be open and consistent communication* must be open and consistent communication throughout the hierarchy to contribute to a successfulthroughout the hierarchy to contribute to a successful crisis communication process.crisis communication process.
  • 7. Types of CrisesTypes of Crises • Natural disastersNatural disasters • MalevolenceMalevolence • Technical breakdownsTechnical breakdowns • Human breakdownsHuman breakdowns • ChallengesChallenges • Mega-damageMega-damage • Organizational misdeedsOrganizational misdeeds • Workplace violenceWorkplace violence • RumorsRumors
  • 8. Crisis ManagementCrisis Management Technological crisesTechnological crises - caused by human application of science andcaused by human application of science and technologytechnology - when technology becomes complex and coupled andwhen technology becomes complex and coupled and something goes wrong in the system as a wholesomething goes wrong in the system as a whole (Technological breakdowns)(Technological breakdowns)
  • 9. Crisis ManagementCrisis Management Crises of organizational misdeedsCrises of organizational misdeeds - when management takes actions it knows will harm or- when management takes actions it knows will harm or place stakeholders at risk for harm without adequateplace stakeholders at risk for harm without adequate precautionsprecautions
  • 10. Crisis ManagementCrisis Management Types of crises of organizational misdeeds:Types of crises of organizational misdeeds: - crises of skewed management valuescrises of skewed management values - crises of deceptioncrises of deception - crises of management misconduct.crises of management misconduct.
  • 11. Crisis ManagementCrisis Management Crisis management modelCrisis management model -- Gonzalez-Herrero and Pratt 95Gonzalez-Herrero and Pratt 95 • Successfully diffusing a crisis requires anSuccessfully diffusing a crisis requires an understanding of how to handle a crisis – before itunderstanding of how to handle a crisis – before it occursoccurs - issues managementissues management - planning-preventionplanning-prevention - the crisisthe crisis - post-crisispost-crisis
  • 12. ContingencyContingency PlanningPlanning • Plan in advancePlan in advance • Rehearse via simulationRehearse via simulation • Stipulate who the spokesperson isStipulate who the spokesperson is • Speed and efficiency in response to crisisSpeed and efficiency in response to crisis • Offer accurate information or it will backfireOffer accurate information or it will backfire • Plan offers info and guidance to help decision makers dealPlan offers info and guidance to help decision makers deal with long-term effects of decisionswith long-term effects of decisions
  • 13. Role of apologies inRole of apologies in crisis managementcrisis management • Controversial - for fear of legal outcomesControversial - for fear of legal outcomes • Evidence says that a compensation and sympathy areEvidence says that a compensation and sympathy are effectiveeffective • True contrition includes sympathy for victims and offers ofTrue contrition includes sympathy for victims and offers of compensation to offset losses or sufferingcompensation to offset losses or suffering
  • 14. TOYOTA –TOYOTA – CRISIS MANAGEMENT FAILURECRISIS MANAGEMENT FAILURE Toyota’s communication strategy:Toyota’s communication strategy: ““Too little, too late”Too little, too late” Beyond the quality problemBeyond the quality problem Toyota mismanaged the crisisToyota mismanaged the crisis
  • 15. TOYOTATOYOTA Basic Rules ViolatedBasic Rules Violated • For senior mgmt:For senior mgmt: crises must become their #1 prioritycrises must become their #1 priority immediately.immediately. • Integrity of firm threatened - immediate hands-onIntegrity of firm threatened - immediate hands-on control of CEO/teamcontrol of CEO/team • Sticking accelerators in 2008 - not treated as a seriousSticking accelerators in 2008 - not treated as a serious mattermatter
  • 16. TOYOTATOYOTA Basic Rules violatedBasic Rules violated Find facts & solutions fast:Find facts & solutions fast: - Toyota managers at first in denialToyota managers at first in denial - accepted a ‘patch’ (remove floor mats), not solutionaccepted a ‘patch’ (remove floor mats), not solution - when crisis exploded -- engineering solution/stoppedwhen crisis exploded -- engineering solution/stopped productionproduction - Even today no one outside of Toyota knows what theEven today no one outside of Toyota knows what the real problems are – open to speculation and rumorsreal problems are – open to speculation and rumors
  • 17. TOYOTATOYOTA Basic rules violatedBasic rules violated Communicate fully and accurately:Communicate fully and accurately: - to all constituents to sustain trustto all constituents to sustain trust - err on side of protecting consumers & maintain trusterr on side of protecting consumers & maintain trust with a recallwith a recall What Toyota did:What Toyota did: hushed problem and hoped it go awayhushed problem and hoped it go away