Study Notes, Week Eight


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Study Notes, Week Eight

  1. 1. Module 7 – Confronting a Crisis Module 7 CONFRONTING A CRISIS7
  2. 2. #Module 7 – Confronting a Crisis #.3 Objectives On completing this module you should be able to: • define crisis management; • understand the difference, and relationship, between crisis management and issues management; and • understand the concept of crisis planning and crisis response. Learning Resources Set Text Heath, Chapter 9. Selected Readings 7.1: Barton, L. 1991, ‘When managers find themselves on the defensive’, Business Forum, Winter, pp. 8–13. At this point you might find it useful to revisit Selected Reading 5.2 to refresh your understanding of the key issues raised. 7.1 What is Crisis Management? In your set text, Heath quotes Fink (1986) as defining a crisis in the following way: ‘an unstable time or state of affairs in which a decisive change is impending – either one with the distinct possibility of a highly undesirable outcome or one with the distinct possibility of a highly desirable and extremely positive outcome.’ Heath goes on to quote Weick (1988): ‘Crises are characterized by low probability of high consequence events that threaten the most fundamental goal of an organization.’ Crisis management is a closely related discipline to issues management in that it centres around maintaining positive relationships with key stakeholders by ensuring an organisation behaves in a way which is consistent with stakeholder values and managing the messages those stakeholders receive during a reputation-threatening incident.
  3. 3. # . 4 PRL2001 – Issues Management and Strategic Planning Similarly to issues management, crisis management is not simply a communication function that is enacted in the face of a particular set of circumstances. Rather, it involves: • the analysis of the risks to which an organisation is exposed; • negation of those risks where possible through organisation-wide strategic planning; and • implementation of communication plans which interlock with logistical, incident response plans (i.e. the plans which dictate how an organisation will react to the physical dimensions of a crisis incident). The pages of business, marketing and news publications are littered with stories of organisations which have failed to anticipate the risks to which they are exposed; failed to put plans in place to negate these risks or respond in times of crises; and failed to respond appropriately when risks eventuated in crises. The Exxon Valdez oil spill, the Tylenol cyanide poisonings, the grounding of the Iron Baron, the Arnotts extortion attempt: all of these situations represented the eventuation of predictable risks. All had enormous repercussions for the organisations involved. The reputations and futures of all of these organisations hinged on the effectiveness of their crisis plans and their ability to put those plans into action once the worst had happened. Over recent decades, crisis management has become a critical discipline for organisations throughout the world – particularly those in ‘high risk’ industries such as mining, utilities, food production, construction, transportation and health. Advances in technology have made the ‘global village’ concept of the 60’s a reality. Today, an event can occur and be broadcast to audiences world-wide within minutes. Information is readily available through the electronic media, through specialist publications and through the Internet. Minority groups are increasingly vocal and savvy in their use of the media as a communication vehicle and the media itself increasingly plays the role of an ethics ‘watch dog’ for business and government. All of these elements have combined to ensure that, if an incident or accident, which can be interpreted as threatening the rights or well-being of stakeholders, occurs, the media is more than likely to pick the story up. Depending on the ‘news worthiness’ of the situation, the story can quickly achieve state, national or even international prominence. It is important to realise however, that just like the communication elements of issues management, crisis communication is not simply about communicating with the media and controlling the messages which feature within that medium. It is about establishing and maintaining positive, two-way relationships with all of an organisation’s important stakeholder groups, both in anticipation of a crisis and when the organisation does face a reputation-threatening situation.
  4. 4. #Module 7 – Confronting a Crisis #.5 Activity 7.1 Look through the pages of newspapers, business and marketing publications that have been published over the past 12 months. Outline three situations where an organisation has faced a potentially reputation-threatening situation. What impact (or potential impact) might these situations have on the organisations concerned? 7.2 Crisis Management and Issues Management – A Comparison In your set text, Heath states: ‘… crisis management is an issues management function that entails issues monitoring, strategic planning, and getting the house in order, to try to avoid events that trigger outrage and uncertainty and have the potential of maturing into public policy issues. If all of these management pieces are in place, then crisis communication – especially media relations – is easier to manage.’ Issues and crisis management are not the same discipline, although there is a great degree of overlap between the two and they share many of the same elements.
  5. 5. # . 6 PRL2001 – Issues Management and Strategic Planning A situation may begin its life as an issue and develop into a crisis situation: Barton (1991), for instance, describes how the AIDS issue became a crisis for New England Telephone when an HIV positive worker was harassed by co-workers and protests and boycotts from angry activists resulted. Similarly, a crisis can lead to an issue: In 1999 for instance, two of Australia’s leading radio commentators, John Laws and Alan Jones were accused of giving favourable endorsements and ‘editorial coverage’ to organisations in exchange for large, regular payments directly to the announcers themselves. This situation became known as the ‘cash for comment’ story and resulted in hearings before the Australian Broadcasting Association and considerable public backlash for radio station 2UE, as well as the announcers themselves. This crisis resulted in an ongoing issue for many Australian businesses, in terms of the public’s ongoing suspicion of perceived ‘deals’ between media commentators and public and private organisations and ongoing sensitivities in terms of businesses’ ethics in this area. As we have seen throughout this subject so far, issues management is about: • Identifying the stakeholders who are relevant to an organisation • Monitoring the opinions and perceptions of those stakeholders within the organisation’s internal and external environments. Also, monitoring the progressive effect of those opinions and perceptions on public policy. • Monitoring broader trends within the organisation’s external environments. • Identifying potential issues (i.e. situations where a gap exists between stakeholders’ expectations and the real or perceived behaviour of the organisation). • Monitoring and analysing these potential issues to evaluate their potential impact on the organisation. • Integration with the organisation’s strategic planning process. The organisation may modify its own behaviour or change corporate policy to help close the gap between its corporate values and operational practices and the expectations of its stakeholders. • Two-way communication with stakeholders to ensure that positive relationships are built and that stakeholders’ perceptions of the company’s behaviour or values are based on fact. Crisis management involves: • Having effective issues management systems in place including: – awareness of important stakeholders; – effective environmental scanning and issues analysis procedures; – implementation of corporate responsibility initiatives and effective two-way communication with stakeholders.
  6. 6. #Module 7 – Confronting a Crisis #.7 • Analysing the risks to which an organisation is exposed. • Prioritising those risks according to likelihood and severity of impact. • Categorising major risks. • Analysing the formal and informal communication and incident response systems an organisation has in place. • Negating risk where possible. • Putting plans in place which will assist the organisation safeguard its most important relationships in a time of crisis. • Responding to reputation-threatening incidents or accidents by: – implementing a responsible strategic response on the part of the organisation; – communicating quickly and honestly with key internal and external stakeholders in a way which manages the messages they receive in relation to the incident. 7.3 The Importance of Clear Communication with Stakeholders As outlined by Stickels (1994): ‘no business, large or small, can afford to think that if a crisis does arise it is no one else’s business. Shareholders, clients and employees will all want to know what has happened and how their company is dealing with a problem.’ The essence of successful crisis management is the maintenance of positive two-way relationships between an organisation and its stakeholders both in anticipation, and in the event, of a crisis. The creation and maintenance of these relationships as part of planning is discussed both in module 6 and later in this module. In the event of a crisis, communication with stakeholders must occur as quickly as possible, it must be honest and it must be ongoing. Some of the stakeholders with whom an organisation may need to communicate in a crisis situation may include: • Staff; • Any staff, contractors, customers or neighbours who have been injured (in a situation where an accident triggers a crisis situation); • The families of those injured or killed;
  7. 7. # . 8 PRL2001 – Issues Management and Strategic Planning • Board members; • All three levels of government (elected representatives and bureaucrats); • Neighbours; • Business associations/industry bodies; • Customers/clients; • Suppliers; • Investors/shareholders; • The Australian Stock Exchange (if the organisation involved is a listed company); • Emergency services and their media units; • Special interest groups (such as environmental groups or local tourist associations if the trigger incident is environmentally related); • Health agencies and experts (particularly where the incident may threaten or be perceived as threatening the wellbeing of the surrounding community); • Local community; • Media; • Competitors; and • Industry commentators. As you can see, in a crisis situation – particularly one where media coverage is instantaneous – communication with stakeholders can quickly become a huge task. It is therefore essential to have detailed plans in place outlining how this communication will occur, what channels it will utilise and who will take responsibility. 7.4 The Role of Corporate Responsibility In module 6 we discussed how critical it is for an organisation to be constantly depositing ‘corporate credit points’ by actively implementing and illustrating to stakeholders its own standards of corporate responsibility. Corporate responsibility is particularly important in relation to crisis management. An organisation that is perceived by its stakeholders as being responsible, ethical and contributing to its community will be at an enormous advantage over an organisation with the opposite reputation. In November 1999, for instance, an accident killed four mine workers at the Northparkes mine near Parkes in New South Wales.
  8. 8. #Module 7 – Confronting a Crisis #.9 Media coverage immediately after the accident portrayed the company as one of Australia’s most modern mining organisations, with safety practices among the best in the nation’s mining industry. Company spokespeople for parent company, North Limited were portrayed as compassionate towards their workers and the families of those killed. The accident was regularly referred to in media coverage as ‘rare’ and the company was quoted as saying the accident would be investigated ‘fully and openly to ensure this doesn’t happen again.’ List of References Fink, S. 1986, Crisis Management: Planning for the Inevitable, American Management Association, New York. Stickels, G.1994, ‘Be prepared for company crises’ Business Review Weekly, 20 June, pp. 84–5.