2 Crisis ManagementCrisis management is the process by which an organization deals with a major unpredictable event that threatens to harm the organization, its stakeholders, or the general public
3 Elements of a CrisisThree elements are common to most definitions of crisis:a threat to the organization,the element of surprise,a short decision timea need for change
4 Crisis management - 1 Crisis management consists of: Methods used to respond to both the reality and perception of crisesEstablishing metrics to define what scenarios constitute a crisis and should consequently trigger the necessary response mechanisms.Communication that occurs within the response phase of emergency management scenarios
5 Crisis Management - 2The credibility and reputation of organizations is heavily influenced by the perception of their responses during crisis situations
6 Crisis Management - 3* respond to a crisis in a timely fashion makes for a challenge in businesses. * must be open and consistent communication throughout the hierarchy to contribute to a successful crisis communication process.
7 Types of Crises Natural disasters Malevolence Technical breakdowns Human breakdownsChallengesMega-damageOrganizational misdeedsWorkplace violenceRumors
8 Crisis Management Technological crises caused by human application of science and technologywhen technology becomes complex and coupled and something goes wrong in the system as a whole (Technological breakdowns)
9 Crisis ManagementCrises of organizational misdeeds - when management takes actions it knows will harm or place stakeholders at risk for harm without adequate precautions
10 Crisis Management Types of crises of organizational misdeeds: crises of skewed management valuescrises of deceptioncrises of management misconduct.
11 Crisis ManagementCrisis management model - Gonzalez-Herrero and Pratt 95Successfully diffusing a crisis requires an understanding of how to handle a crisis – before it occursissues managementplanning-preventionthe crisispost-crisis
12 Contingency Planning Plan in advance Rehearse via simulation Stipulate who the spokesperson isSpeed and efficiency in response to crisisOffer accurate information or it will backfirePlan offers info and guidance to help decision makers deal with long-term effects of decisions
13 Role of apologies in crisis management Controversial - for fear of legal outcomesEvidence says that a compensation and sympathy are effectiveTrue contrition includes sympathy for victims and offers of compensation to offset losses or suffering
14 TOYOTA – CRISIS MANAGEMENT FAILURE Toyota’s communication strategy:“Too little, too late”Beyond the quality problemToyota mismanaged the crisis
15 TOYOTA Basic Rules Violated For senior mgmt: crises must become their #1 priority immediately.Integrity of firm threatened - immediate hands-on control of CEO/teamSticking accelerators in not treated as a serious matter
16 TOYOTA Basic Rules violated Find facts & solutions fast:Toyota managers at first in denialaccepted a ‘patch’ (remove floor mats), not solutionwhen crisis exploded -- engineering solution/stopped productionEven today no one outside of Toyota knows what the real problems are – open to speculation and rumors
17 TOYOTA Basic rules violated Communicate fully and accurately:to all constituents to sustain trusterr on side of protecting consumers & maintain trust with a recallWhat Toyota did:hushed problem and hoped it go away