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What will cause your next organizational crisis?

By Kim Harrison,

Consultant, Author and Principal of www.cuttingedgepr.com

Crises are rare events. They are unexpected, unwanted and unpleasant. Experience shows if you don’t plan for crises, the consequences are much worse when a crisis is triggered. Find out how your organization’s next crisis could be caused.

International surveys show organizations are generally not prepared to deal with crises. But first we need to know what we are talking about: A crisis is any issue, problem or disruption triggering negative stakeholder reactions that can threaten the organization’s viability. Notice that a crisis is about communicating with stakeholders, and is not about dealing with an operational emergency.

Around 80% of businesses around the world believe they are only 12 months from a potential crisis. Yet only 54% have a crisis plan in place. Why this poor situation???

In a crisis preparedness study conducted by Burson-Marsteller/Penn Schoen Berland in 2011, 826 decision makers interviewed globally gave general reasons for lack of crisis preparedness. These reasons amounted to indifference and cost. Expressed attitudes were:


•33% thought a crisis plan would be rarely needed

  • 18% thought it would be too difficult to set up or manage
  • 14% thought it would be too expensive
  • 13% thought other matters were a higher priority

Most common reasons nominated in the Burson Marsteller study for crisis causes:

  • 31% Controversial company development (eg retrenchments)
  • 20% Logistic difficulties (eg transport, delivery problems)
  • 19% Danger to product safety (defective or contaminated parts)
  • 18% Technical accidents (eg natural disaster or explosion)
  • 16% Online or digital security failure

HOWEVER

Analysis by issue and crisis expert Tony Jaques* found the real causes of crises are more likely to be:

  • Poor maintenance practices
  • Human error
  • Bad planning
  • Material failure
  • Unethical or dishonest behaviour
  • Unresponsive culture
  • Leadership failure
  • Poor judgment
  • Insufficient training, eg maintenance workers, designers or accountants

*Jaques, T. (2007). ‘Issue management and crisis management: an integrated, non-linear, relational construct’. Public Relations Review, 33(2), pp. 147-157.


Benefits of crisis planning

Companies with a plan recover faster, especially in short-term crises. Those with a plan are more likely to handle the crisis effectively:

Type of impact

Plan in place

No plan

Drop in revenue

30%

41%

Cutbacks and retrenchments

22%

33%

Loss of corporate reputation

15%

22%

Destabilisation of entire company

16%

21%

(Burson-Marsteller / Penn Schoen Berland 2011 Crisis Preparedness Study.
Interviews of 826 decision makers globally in May-June 2011.)

Sudden versus smouldering crises

Around 60% of crises have been smoldering. They are predictable. Only about 40% are sudden and totally unexpected. Analysis conducted by crisis experts of thousands of US cases over 10 years to 2010 found managers knew about smoldering concerns, or should have known about them before they turn into major issues and crises. Planning would minimise most of these.

This analysis of the origins of crises found:

  • 50% management was responsible
  • 32% employees were responsible
  • 18% other reasons

Year after year, most business and organizational crises are caused by people in a leadership or management position or other employees.

If managers are responsible for 50% of crises through inaction etc and other employees a further 30%, then 80% of crises can be anticipated and responses planned – because people know about them early. Result: better reduction of impact or prevention. Therefore sound planning is vital to avoid or minimise crises.

Find out in another of my coming articles, “How vulnerable in a crisis are you?” what you can do to identify the most likely types of crises your organization faces and what you can do to prevent or minimize these crises from happening.

About the Author

Kim Harrison is a recognized authority in the public relations field. His website, www.cuttingedgepr.com, provides a wealth of informative articles and resources on public relations techniques and management.

 

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