Are you ready?
Our economy is in a global financial crisis. Our environment is suffering from a global warming crisis. International tension is being caused by a terrorism crisis and our health is at risk of the swine flu crisis. We live in a society where sensational crises are no longer rare as daily media coverage reminds us of the risks we face. While most businesses insure their operations against the obvious threats, a large majority are still operating without the protection of a specific issues or crisis management plan.
From litigation and product recalls to environmental concerns and employee actions, the issues, crises, risks, disasters and scandals that cast an ominous cloud over the business world are often unpredictable, demanding and fast-paced.
The Institute of Crisis Management (ICM) in the United States has defined a business crisis as “any problem or disruption that triggers negative stakeholder reactions that could impact the organisation’s financial strength and ability to do what it does.”
Ideas and attitudes towards the kinds of crises that may suddenly overwhelm an organisation may typically include an employee strike; a natural disaster; astounding allegations; faulty products; employee death or injury; industrial disputes or a terrorist act. In reality, your business may not be faced with a sensational scandal that makes headline news but instead a crisis for your business could develop from a financial risk or insurance problem, a court case or even standard work practices.
In business-related crises, the figures showed that executives and managers were responsible for more than half of all crises, on average, while employees were credited with causing 31 per cent, and external forces triggered the remaining 18 per cent on average in the past ten years.
The fact is, very few crises actually occur without any prior warning, which is where we can separate the management of issues and crises.
Businesses are bound to face a crisis when they are ignore the complexity of the environment they operate in. Therefore, watching the surrounding environment for developing issues should be one of the most important functions of strategic planning. The kinds of elements that make up the business environment and can be influenced but not controlled include politics, economy, religion, law, competition, media, social and technology.
The issues that environmental scanning should attempt to uncover are any developments that might potentially affect the business. The issue could simply be a news story, new legislation, a competitive threat or an opinion blog about the business. In fact, it seems to be social media that has caused the most headaches for businesses more recently.
With the maturing of technology and mass gatherings through the Internet, blogs and other forms of social media actually have the power to make or break a company. Think about it, a person no longer has to complain to just one friend about bad service he may have a had on an international flight - a blogger can communicate his complaint to millions of people around the world, permanently.
A case in point to highlight the nature of social media was a video that was posted on YouTube and showed two employees of American pizza company Domino’s defacing its food. News of the video spread quickly through online social media and rocketed from 20,000 views to 760,000 views in just one day. Unfortunately, while all employees can make silly mistakes, the nature of technology means those mistakes can now end up on the Internet for the world to see, leaving your brand in a very vulnerable situation.
The good news is, even issues in the social media forum can be effectively managed, if you know about them.
Once an issue does emerge during the day-to-day scanning of the business, it must be closely monitored and anticipated regularly as its potential threat to the business either increases or decreases.
Issues management focuses on identifying issues that are likely to mutate into crisis and creates plans to solve the issue when it is still in hibernation mode. Often by preparing ahead, the publics’ opinions can be influenced and the issue can be averted, before it reaches explosive proportions.
On the other hand, a crisis is simply an issue ignored. Where a business fails to plan ahead to control a crisis, key publics including customers may form riotous opinions and lose faith in the company, so the business will face the difficult task of changing the opinions of the public during the height of the crisis. Undoubtedly, the way a business deals with a crisis is vital to its future success. If the business remains in favour with its publics, its existence will be continuous, but an organisation that has a poor reputation in the eyes of its publics, will consequently fizzle.
According to the International Air Transport Association (IATA), which represents a sector that continues to substantially be affected by global crises, planning for a crisis was essential.
‘It is sobering to reflect that 80 per cent of the corporations which have experienced a disaster, without prior planning to deal with the crisis, have found themselves out of business within five years,’ the IATA reported in 2003.
Multi-national corporations, publicly-listed companies, not-for-profit organisations and small to medium businesses of all sizes should anticipate, assess, respond to and manage an array of complex situations by having an operational issues and crisis management plan for protection, whenever the need arises.
A crisis plan will ensure you can quickly assess the likely impact the crisis will have on the operations of your business, show you how to take control of the situation and then how to implement a business recovery process with minimal impact on the business itself, your employees and your customers.
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