What Is a Crisis?
Not only individuals but corporations as well face crises. A crisis is a situation that occurs unexpectedly and puts one in a bad position with initially bad perspectives to find a way out of this situation towards a better position. So, how do crises affect organizations?
Organizations may face either a natural crisis; a hurricane i.e., that physically destroys the business or a human induced crisis. There are two kinds of human induced crises, either an internal or an external. Internal means that one of the employees did something that put the company in a bad situation; external means that someone from outside affects the company’s situation. A human induced crisis is worse than a natural disaster, because it harms the company’s reputation, economy, and may bring the company into a situation where her existence is endangered.
Thus the definition of crisis for organizations is:
“A crisis is a major catastrophe that may occur either naturally or as a result of human error, intervention or even malicious intent. It can include tangible devastation, such as the loss of an organization’s credibility or other reputational damage. The latter outcomes may be the result of management’s response to tangible devastation or the result of human error.”
Crisis Characteristics:
The element of surprise.
- The company is suddenly confronted with facts, it has not been aware before.
Insufficient information.
- The company does not have all the facts, but is suddenly in the position of explaining.
The quick pace of events.
- Things escalate very rapidly.
Intense scrutiny.
- The executives are unprepared for the media spotlight.
The danger of the new millennium is the internet. Hackers and identity thieves try to hack into the computer systems of corporations to steal their customers’ identities. If hacker succeeds in stealing identities from a corporation, this corporation will have a heavy damage in its reputation.
The other major danger for corporations, are people who deliberately and intentionally try to harm a company’s reputation, by setting up web sites reporting negative and generally fictional, and wrongful stories. This is in so far dangerous as those people become opinion leaders in a media with a high and ever growing audience.
How to prepare for crises
First of all it is important for every organization to be aware that it can face a crisis anytime. The organization has to assess the risk of a crisis to occur and prepare its communication department appropriately. Plans have to be developed about potential crises and the best way to deal with those crises. Before a possible respond to the constituencies can be planned, it has to be determined which effect the crisis and the company’s respond will have on the constituencies. Furthermore, it is to be determined which constituencies will be affected by the crisis and to which constituencies to respond and how. So, the communication objectives have to be set for potential crises. While determining the strategy and the communication objectives it is important to analyze the channels and choose the best one; because the best strategy and thought-out objectives in combination with the wrong choice of channel is like casting pearls before the swine.
A different team should be assigned for every crisis, because different problems require different kinds of expertise. Assigning different teams to handle different crises helps the organization put the best people in charge of handling the crisis and communications.
A formal plan should include:
- A list of whom to notify in an emergency.
- An approach to media relations.
- A strategy for notifying employees.
- A location to serve as crisis headquarters.
- A description of the plan.
Communicating during the Crisis
* The first step is to get control of the situation. This includes defining the problem.
* The second step is to gather as much information as possible.
* The third step is to set up a centralized crisis management center.
* Fourth step is to communicate early and often.
* In the fifth step it is to understand the media’s mission in this crisis.
* The sixth step is to communicate directly with affected constituents.
* Step seven is to remember that despite the crisis, the business has to continue.
* Finally in the eighth step plans should be made in order to avoid another crisis immediately.
The last thing that can be said is that any experience in life brings on further, a good one, one step, and a bad on three steps. So it is also for companies a great experience if they successfully overcome crises. They learn a lot and are able to prepare better for next potential crises.
Examples: Crises from the Past 25 Years
1982, Johnson & Johnson’s Tylenol Recall:
In late September and early October of 1982, seven people died after taking Tylenol capsules that had been laced with cyanide. Johnson and Johnson removed the potentially deadly product from shelves; 31 million bottles of Tylenol were recalled. Johnson and Johnson decided to try to save the brand rather than come out with a new identity for the product, due to the goodwill it had built up over the years with constituencies ranging from doctors to the media. . Furthermore, the company reacted in a caring and human way, rather than simply looking at the incident from a purely legal perspective.
1990, The Perrier Benzene Scare:
In January 1990, a technician in the Mecklenberg County environmental Protection Department in Charlotte, North Carolina, discovered a minute amount of benzene, 12.3 to 19.9 parts per billion, in the water. Two days after the crisis broke Perrier announced that the problem occurred due to a cleaning fluid, containing benzene, which had been mistakenly used on a production line; only affecting North America. Three days later it was discovered that the real cause of the contamination were defective filters at its spring. The announcement of Perrier before discovering the source of the contamination was a fatal decision. From a market share of 44.8 percent in 1989, Perrier had only a market share of 5.1 percent by 2005.
1993, Pepsi Cola’s Syringe Crisis:
In June 1993 a syringe was found in a can of Pepsi Cola. Unlike Perrier, Pepsi Cola showed concern for the public and demonstrated resoluteness in getting to the bottom of the problem. After intensive investigation, it has been found out that the allegations were wrongful, it was a hoax. Pepsi Cola could maintain its position as market leader.
Experiences:
During my internship in a company, the birds’ disease prevalent and in the latest news; because this company had many employees visiting Eastern Asia for business purposes, it faced the birds’ disease as potential crisis. In order to prepare for this crisis it ordered vaccination to cover all employees in case of an outbreak of the virus; the vaccination packages were distributed to every branch division.
At another company where I worked part-time, every department had a responsible person, who was a different one every week, that was carrying a big suitcase on a Friday home and brought it back the Friday after, where the suitcase switched the person. In this suitcase, there was a formal plan of what to do in a crisis, specifically in case the headquarter would not exists anymore. This measure was a reaction on the attacks of September 11, 2001. This company considered such an attack as a potential crisis. In order to be prepared for such a crisis, this suitcase included the most important data of a department, not electronically, but in form of paper. Furthermore, any material that was necessary to run or recover the business in such a crisis was included in this suitcase.
References:
Argenti, Paul A. (2007). Corporate Communication (4th ed.). New York, NY: McGraw Hill, pp. 211-236.
Links:
http://www3.niu.edu/newsplace/crisis.html
http://www.firstmonday.org/issues/issue7_4/bucher/
http://ezinearticles.com/?Crisis-Communications-Planning-or-What-To-Do-Before-During-Or-After-It-Hits-The-Fan&id=428179
http://www.e911.com/monos/A001.html
http://findarticles.com/p/articles/mi_qa3669/is_200107/ai_n8977451
http://www.101publicrelations.com/blog/cat_crisis_communications.html
Not only individuals but corporations as well face crises. A crisis is a situation that occurs unexpectedly and puts one in a bad position with initially bad perspectives to find a way out of this situation towards a better position. So, how do crises affect organizations?
Organizations may face either a natural crisis; a hurricane i.e., that physically destroys the business or a human induced crisis. There are two kinds of human induced crises, either an internal or an external. Internal means that one of the employees did something that put the company in a bad situation; external means that someone from outside affects the company’s situation. A human induced crisis is worse than a natural disaster, because it harms the company’s reputation, economy, and may bring the company into a situation where her existence is endangered.
Thus the definition of crisis for organizations is:
“A crisis is a major catastrophe that may occur either naturally or as a result of human error, intervention or even malicious intent. It can include tangible devastation, such as the loss of an organization’s credibility or other reputational damage. The latter outcomes may be the result of management’s response to tangible devastation or the result of human error.”
Crisis Characteristics:
The element of surprise.
- The company is suddenly confronted with facts, it has not been aware before.
Insufficient information.
- The company does not have all the facts, but is suddenly in the position of explaining.
The quick pace of events.
- Things escalate very rapidly.
Intense scrutiny.
- The executives are unprepared for the media spotlight.
The danger of the new millennium is the internet. Hackers and identity thieves try to hack into the computer systems of corporations to steal their customers’ identities. If hacker succeeds in stealing identities from a corporation, this corporation will have a heavy damage in its reputation.
The other major danger for corporations, are people who deliberately and intentionally try to harm a company’s reputation, by setting up web sites reporting negative and generally fictional, and wrongful stories. This is in so far dangerous as those people become opinion leaders in a media with a high and ever growing audience.
How to prepare for crises
First of all it is important for every organization to be aware that it can face a crisis anytime. The organization has to assess the risk of a crisis to occur and prepare its communication department appropriately. Plans have to be developed about potential crises and the best way to deal with those crises. Before a possible respond to the constituencies can be planned, it has to be determined which effect the crisis and the company’s respond will have on the constituencies. Furthermore, it is to be determined which constituencies will be affected by the crisis and to which constituencies to respond and how. So, the communication objectives have to be set for potential crises. While determining the strategy and the communication objectives it is important to analyze the channels and choose the best one; because the best strategy and thought-out objectives in combination with the wrong choice of channel is like casting pearls before the swine.
A different team should be assigned for every crisis, because different problems require different kinds of expertise. Assigning different teams to handle different crises helps the organization put the best people in charge of handling the crisis and communications.
A formal plan should include:
- A list of whom to notify in an emergency.
- An approach to media relations.
- A strategy for notifying employees.
- A location to serve as crisis headquarters.
- A description of the plan.
Communicating during the Crisis
* The first step is to get control of the situation. This includes defining the problem.
* The second step is to gather as much information as possible.
* The third step is to set up a centralized crisis management center.
* Fourth step is to communicate early and often.
* In the fifth step it is to understand the media’s mission in this crisis.
* The sixth step is to communicate directly with affected constituents.
* Step seven is to remember that despite the crisis, the business has to continue.
* Finally in the eighth step plans should be made in order to avoid another crisis immediately.
The last thing that can be said is that any experience in life brings on further, a good one, one step, and a bad on three steps. So it is also for companies a great experience if they successfully overcome crises. They learn a lot and are able to prepare better for next potential crises.
Examples: Crises from the Past 25 Years
1982, Johnson & Johnson’s Tylenol Recall:
In late September and early October of 1982, seven people died after taking Tylenol capsules that had been laced with cyanide. Johnson and Johnson removed the potentially deadly product from shelves; 31 million bottles of Tylenol were recalled. Johnson and Johnson decided to try to save the brand rather than come out with a new identity for the product, due to the goodwill it had built up over the years with constituencies ranging from doctors to the media. . Furthermore, the company reacted in a caring and human way, rather than simply looking at the incident from a purely legal perspective.
1990, The Perrier Benzene Scare:
In January 1990, a technician in the Mecklenberg County environmental Protection Department in Charlotte, North Carolina, discovered a minute amount of benzene, 12.3 to 19.9 parts per billion, in the water. Two days after the crisis broke Perrier announced that the problem occurred due to a cleaning fluid, containing benzene, which had been mistakenly used on a production line; only affecting North America. Three days later it was discovered that the real cause of the contamination were defective filters at its spring. The announcement of Perrier before discovering the source of the contamination was a fatal decision. From a market share of 44.8 percent in 1989, Perrier had only a market share of 5.1 percent by 2005.
1993, Pepsi Cola’s Syringe Crisis:
In June 1993 a syringe was found in a can of Pepsi Cola. Unlike Perrier, Pepsi Cola showed concern for the public and demonstrated resoluteness in getting to the bottom of the problem. After intensive investigation, it has been found out that the allegations were wrongful, it was a hoax. Pepsi Cola could maintain its position as market leader.
Experiences:
During my internship in a company, the birds’ disease prevalent and in the latest news; because this company had many employees visiting Eastern Asia for business purposes, it faced the birds’ disease as potential crisis. In order to prepare for this crisis it ordered vaccination to cover all employees in case of an outbreak of the virus; the vaccination packages were distributed to every branch division.
At another company where I worked part-time, every department had a responsible person, who was a different one every week, that was carrying a big suitcase on a Friday home and brought it back the Friday after, where the suitcase switched the person. In this suitcase, there was a formal plan of what to do in a crisis, specifically in case the headquarter would not exists anymore. This measure was a reaction on the attacks of September 11, 2001. This company considered such an attack as a potential crisis. In order to be prepared for such a crisis, this suitcase included the most important data of a department, not electronically, but in form of paper. Furthermore, any material that was necessary to run or recover the business in such a crisis was included in this suitcase.
References:
Argenti, Paul A. (2007). Corporate Communication (4th ed.). New York, NY: McGraw Hill, pp. 211-236.
Links:
http://www3.niu.edu/newsplace/crisis.html
http://www.firstmonday.org/issues/issue7_4/bucher/
http://ezinearticles.com/?Crisis-Communications-Planning-or-What-To-Do-Before-During-Or-After-It-Hits-The-Fan&id=428179
http://www.e911.com/monos/A001.html
http://findarticles.com/p/articles/mi_qa3669/is_200107/ai_n8977451
http://www.101publicrelations.com/blog/cat_crisis_communications.html
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