2. Crisis
A crisis is an unforeseen event that causes restlessness among
the people of an organization. Different types of crises can
happen to an organization, requiring adept management to keep
the company working toward its goals. Understanding crises and
how to resolve them can help your organization prepare for any
type of situation.
3. What are crises in an organization?
A crisis is a sudden and unplanned event that causes an
organization to become unstable. It can be caused by internal or
external factors.To prevent serious damage to the company, it is
important to address the factors that instigated the crisis and
prevent further escalation.
4. Properties of Organizational Crisis
• The issue typically threatens the survival of the
organization
• The problem takes the organization by surprise, and
managers were unprepared to face the crisis
• The problem forces the organization to make abrupt
and weighty decisions to save itself
5. 8 types of crisis in the workplace
1. Financial crisis
• Loss of revenue
• Inflation
• Bankruptcy
• Loss of market
• Sudden change in market trends
6. 8 types of crisis in the workplace
Ways to deal with a financial crisis include:
• Having a crisis fund for such situations or finding alternative sources
of liquidity
• Creating better strategies to generate revenue
• Changing your business model or finding new markets
• Finding partners that can provide emergency funds
• Having a crisis management plan to recover your operations and
mitigate the damage
7. 8 types of crisis in the workplace
1. Financial
2. Technological crisis
3. Personnel crisis
4. Organizational crisis
8. 8 types of crisis in the workplace
4. Organizational crisis- There are three basic types of
organizational crises, including:
• Crisis of deception: A deception crisis occurs when an
employee from a company misrepresents information about the
organization, which damages its reputation and misleads others.
Taking legal and disciplinary action against the employee is an
effective strategy for managing this crisis.
9. 8 types of crisis in the workplace
4. Organizational crisis- There are three basic types of
organizational crises, including:
• Crisis of management misconduct: In this situation, a crisis
occurs because management involves itself in unethical actions
such as selling fake products, selling customers' confidential
information, or engaging in illegal activities.
10. 8 types of crisis in the workplace
4. Organizational crisis- There are three basic types of
organizational crises, including:
• A crisis of skewed management values: This happens when
management makes a decision that helps the organization profit
in the short term without consideration for long-term
consequences, which puts investors' money at risk. Management
may withhold information about investments or misuse their
powers to achieve their aims.
11. 8 types of crisis in the workplace
1. Financial
2. Technological crisis
3. Personnel crisis
4. Organizational crisis
5. Natural crisis
6. Confrontational crisis
7. Crisis of malice
8. Human-made disasters
12. Types of Crisis Management
Strategies
Proactive crisis management
• This strategy requires planning for a potential crisis to either prevent it
or mitigate its effects on your operations. It involves identifying threats,
monitoring them, and creating plans to reduce their impact on your
organization. For example, setting aside an emergency fund or having
spare manufacturing plants in case the one in your factory suddenly
stops working both constitute proactive crisis management.
13. Types of Crisis Management
Strategies
Responsive crisis management
• This is a strategy that helps address crises to limit their impact
on your company's operations. Entering a partnership with a
new distributor after losing your most important logistics
provider is an example of responsive crisis management.
14. Types of Crisis Management
Strategies
Recovery crisis management
• Recovery crisis management helps a company stabilize
operations after a sudden disruption it could not predict. For
example, a company can negotiate new raises with an employee
union after a week of strikes grounded operations to recover
from that crisis.
15. Crisis Management Model
A crisis management model is the conceptual framework for all
aspects of preparing for, preventing, coping with, and recovering
from a crisis. By viewing events through a model, crisis managers
gain context and can better apply best practices.
16. Proactive vs. Reactive Crisis Management
Model
The different approaches along a crisis management maturity
model, from most to least advanced, are as follows:
• Pre-emptive Crisis Management: This approach seeks to
prevent or resolve a crisis at its earliest sign.
• Proactive Crisis Management: In this approach,
organizations take initiative early in the crisis and seek to shape
how events unfold.
17. Proactive vs. Reactive Crisis Management
Model
• Responsive Crisis Management: This occurs when there is little
warning of a crisis. However, thoughtful and quick analysis can lead to
effective action that accounts for long and short-term results.
• Reactive Crisis Management: This is often a panic-driven or knee-
jerk reaction. Emotions like fear play a leading role, and objective
thinking is largely absent from the crisis response.The company faces
crises defensively and, following the crisis, the business may experience
problems, high turnover of senior leaders, or even business failure.
18. Crisis Management Model
Can Alpaslan and colleagues’ model focus on stakeholder involvement
and view the crisis management maturity continuum as follows:
• Proactive Crisis Management: All stakeholders that could
potentially be harmed should participate in crisis preparation. In the
response phase, the organization anticipates knock-on effects and
voluntarily discloses the most negative information before the
media discovers it.
19. Crisis Management Model
Accommodative Crisis Management: The organization
accepts that a crisis is possible and involves a broad set of
stakeholders in preparation. In a crisis, the company accepts
responsibility, voluntarily meets the needs of the victims, and tells
the truth.
20. Crisis Management Model
Defensive Crisis Management: The business prepares only
for crises with high expected costs and involves stakeholders
only if required by law. During a crisis, the organization resists
admitting full responsibility but does admit some.The company
only does what is mandated by law.
21. Crisis Management Model
Reactive Crisis Management: The organization denies the
possibility of a crisis and any negative consequences. In a crisis,
the company denies all responsibility, closes off communications,
and hides the truth. Its stance is uncooperative.
22. Crisis Management Model
Scenario-Based vs Capacity-Based Model
• In this newer context, scenario-based planning holds limited value, since this
kind of preparation hinges on facing a known hazard, which triggers a set series
of actions. Organizations fare better by developing their capacities to handle
any kind of crisis, even ones that are completely new. Companies can still detail
response plans for common kinds of calamities, like fires, but compared to the
scenario-based model, a capacity-based model emphasizes building capacities
like communications, financial backup plans, and readiness for remote work.
23. Fink’s Model of a Crisis and Other Lifecycle
Crisis Management Models
Steven Fink (1986) Crisis Management: Planning for the
Inevitable
24. Fink’s Model of a Crisis and Other Lifecycle
Crisis Management Models
• The prodromal stage covers the period between the first signs
and crisis eruption. During this period, Fink states that crisis
managers should be proactively monitoring, seeking to identify signs
of a brewing crisis, and trying to prevent it or limit its scope.
• The acute stage begins when a trigger unleashes the crisis event.
This phase entails activation of crisis managers and their plans.
25. Fink’s Model of a Crisis and Other Lifecycle
Crisis Management Models
• The chronic stage encompasses the lasting effects of the crisis,
such as after a flood or a hurricane when teams repair damage
to buildings and roads. Finally, the resolution stage represents
the end of the crisis and a time for internalizing what went
wrong through root-cause analysis and implementing changes
to ensure there is no repetition.
26. Mitroff’s Five-Stage Crisis Management
Model and Portfolio Model
Ian I. Mitroff described five crisis stages in 1994, which also follow a
similar lifecycle progression:
• Crisis signal detection
• Probing and prevention (probing refers to looking for risk factors)
• Containment
• Recovery
• Learning
30. Incident Command System Model
• The incident command system model is unique in that it
originated in the real world and was then formalized as a model
(other models began as conceptual frameworks). Incident
command started in the 1970s as a model for California
agencies to manage wildfires.
31. Incident Command System Model
• The incident command system divides work into five broad areas,
including operations and logistics, as well as a hierarchy of roles and
responsibilities for key players that provides a clear chain of
command and communication. Each fire department or company
site replicates the structure, so teams automatically know their
counterparts and share common terminology and integrated
communications.Therefore, coordinating and working together becomes
relatively straightforward, and teams spend less time organizing the
response and more time responding.
32. Incident Command System Model
• The incident command system model is useful because it offers
a framework for the unified command of a crisis, scales well,
makes efficient use of resources, and facilitates communication
among people from different departments or organizations.
33. Most Influential Crisis Management
Theories
AttributionTheory and Situational Crisis Communication
Theory
• Attribution theory holds that companies suffer reputation and
business harm when the public blames them for a crisis. Situational
crisis communications theory builds on this idea by recommending
that businesses tailor crisis communications to the crisis’ potential
to hurt the company’s reputation.
34. Most Influential Crisis Management
Theories
Attribution theory starts from the premise that it is human nature to
seek to explain why events occur, especially sudden and damaging
incidents like crises. Typically, people attribute responsibility to an
entity, such as a company, or a situation. When people blame an
organization, they direct negative emotions toward it. Coombs found
that this can result in damage to the organization’s reputation, reduced
intention to do business with the company, and increased tendency to
speak negatively to other people about the organization.
35. Most Influential Crisis Management
Theories
• In situational crisis communications theory, Timothy Coombs said
crisis managers must first determine the threat to the company’s reputation
by assessing which of three clusters the crisis fits into:
• the victim cluster (the organization is a victim); the accidental cluster (the
organization unintentionally caused the crisis); or the intentional
cluster (the organization intentionally acted wrongly).The clusters have an
escalating potential to harm the company’s reputation because of the level
of responsibility attributed to the company (minimal, low, or strong).
36. Theory of Apology
• Keith Michael Hearit (2011) Crisis Management by Apology, developed
the theory of apology, which states that companies often avoid apologies
in favor of making no public comment because of concerns that
apologizing increases their liability or weakens their position in lawsuits.
However, contended that a public relations-driven strategy, in which the
organization apologizes and seeks to be candid, is more effective.
• the term corporate apologia, means using rhetoric to protect your
reputation while explaining what happened.
37. Image Restoration or RepairTheory
• Image repair theory, also known as image restoration theory, focuses on
rebuilding an organization’s reputation when it has been damaged by a crisis.
• William Benoit (1995) Accounts, Excuses, and Apologies: A Theory of Image
Restoration Strategies, focuses on the messages a company should
communicate during a crisis by offering five categories of image repair
strategies: denial, evasion of responsibility, reducing perceived offensiveness of
the action (such as with compensation), corrective action, and mortification
(confessing and begging forgiveness).
38. Structural FunctionalTheory in Crisis
Management
• Structural functionalism comes from sociology and looks at society
as a structure made up of institutions that function together to keep
the whole running, like organs that work together to keep the body
functioning.
• In crisis management, this theory explains how organizational
communication relies on a structure made up of networks for
information to flow and a hierarchy of people who manage the process.
39. ChaosTheory and the Butterfly
Effect in Crisis Management
• Chaos theory comes from mathematics and holds that some systems are so
complex that small differences in starting conditions can make them act very
differently and unpredictably.
• This characteristic inspired the concept of the butterfly effect, in which a
butterfly flapping its wings in Brazil can theoretically cause a tornado in Texas.
This potential (for small changes to have unpredicted effects) can make these
systems appear completely random, even when they may not be.
40. StakeholderTheory of Crisis Management
• In 2009, Alpaslan, Mitroff, and Sandy Green published a theory that
focused on the role of stakeholders in crisis management.They
argued for including stakeholders in crisis preparations and
responses- not because of their power or influence on financial value,
but due to factors such as potential for injury.
• Authors said crises can reorder the importance of a stakeholder
group, and managers who understand stakeholder theory consider
and incorporate the needs and values of a range of stakeholders.
41. ResilienceTheory and Business
Continuity Planning
• Resilience theory holds that having one or more protective
factors can help individuals survive adversity with less harm. In
business, resilience theory helped give rise to business continuity
planning, which seeks to make companies more resistant to failure.
• A business continuity plan is similar to a crisis management plan in
that it anticipates emergencies and disruptions that could occur
and defines actions to regain normalcy in the company.
42. ResilienceTheory and Business
Continuity Planning
• Outlines five elements crafting normality, affirming identity anchors,
making use of communication networks, putting alternative logic to work,
and emphasizing positive feelings while downplaying negative ones.
• Integrated risk management is another resilience-boosting business
practice. In integrated risk management, company culture is attuned to risk,
and organizations seek to evaluate the risks in all their activities jointly,
rather than in isolation.Technology-enabled practices support this
integration, and the result is better risk-reduction decisions for the whole
enterprise.
43. ContingencyTheory
• Asserts there is no single best method to organize or lead a company, and that
decisions should be made contingent on circumstances. Because crises are fluid,
complex, and uncertain. Crisis managers must adapt their response to make it
contingent upon the situation.
• Crisis leaders and communicators should take into account a range of external
factors, such as threats, the marketplace environment, social and political
support, the characteristics of public stakeholders, and the complexity of the
issue.
• Internal factors include characteristics of the organization and other threats.
44. Diffusion of InnovationTheory
• The diffusion of innovation theory by Evertt Rogers (1962) Diffusions of Innovations
describes how new ideas spread and become accepted as when about 20 percent
of the population adopts a new behavior, 70 percent of the remaining people will adopt
it, too.
• This idea has influenced crisis management by shaping efforts to change behavior and
attitudes in emergencies. Specifically, the diffusion of innovation theory can identify
behaviors that might be most easily changed, the people who might adopt new practices
(and influence others), and the most effective ways to spread new ideas.
• An example application of this theory is the effort by public health agencies to get
people to wear masks during a pandemic.
45. Theory of Human Capital
• The theory of human capital comes from economics and frames
individual characteristics such as education, health, and birthplace as
factors that contribute to a person’s productivity and income.
• In crisis management, inequalities of human capital - such as disadvantages in
education and healthcare and unfair income distribution among classes and
races - can lead to or exacerbate crises. For example, when reflected in
lower wages or job status, these inequalities make companies
vulnerable to discrimination lawsuits, damaged morale, and
reputation harm.
46. Coombs 10 Crisis Communications
Best Practices
• Provide all victims or potential victims with instructions, such as
recall information.
• Express sympathy to all victims, along with information about
corrective actions and trauma counseling.
• For crises in which the organization faces minimal blame and
there are no so-called intensifying factors (history of crisis and
negative past reputation), the above two steps will suffice.
47. Coombs 10 Crisis Communications
Best Practices
• If there is an intensifying factor, offer excuses and/or justification.
• The same response applies to a crisis in which blame is low and
there is no crisis history or poor past reputation.
• If there is low attribution of responsibility and an intensifying factor,
add compensation or an apology to the first two steps.
• If the public strongly attributes responsibility to the organization,
offer the first two steps as well as compensation or an apology.
48. Coombs 10 Crisis Communications
Best Practices
• Use compensation any time a victim experiences serious harm.
• Supplement any response with the remind and ingratiate
strategies.
• Save denial and attacking the accuser for crises that involve
rumors and challenges in which a stakeholder contends the
organization is acting wrongly.
