Crisis Management in Business – How to Fight and Win

  • 5 min read

What is Crisis Management?

As a business owner, how would you react when faced with a crisis? Would you fight or flee? If you fight, you are adept at crisis management. Crisis management is defined as the process by which a business deals with a sudden emergency situation. Three elements common to a crisis are:

  • Threat to the organisation
  • The element of surprise
  • A short decision time

In this article, I have discussed major factors businesses have to consider in crisis management. This includes:

  • The seven step BCP Plan, ensuring continuity of business in the event of a crisis.
  • Crisis Communication, which has become a vital component of crisis management
  • Expert crisis management and how it builds up Company value.

Kinds of Crisis

A business could face various kinds of crisis. These include natural disasters, technological crisis like data breach, economic crisis, organisational misdeeds, workplace violence (common in factory settings), man made disasters like fires or pandemics. The way an Organisation’s management and its managers deal with crisis reflect on its survival. This is why a Business Continuity Plan (BCP) is essential to every Organisation that wishes to survive and thrive in a crisis.

Business Continuity Plan for Crisis Management

A Business Continuity Plan (BCP) is a formal document which illustrates how a firm will respond when confronted with unexpected business disruptions. A Company’s risk management strategy has the BCP at its core and it involves:

  • Identifying risks
  • Determining how those risks affect operations
  • Implementing safeguards and procedures to mitigate the risks
  • Testing procedures to ensure they work
  • Reviewing the process periodically

Steps in a BCP

Though every business and every Company in a line of business is unique, there are common steps to be taken in Business Continuity Planning. If you are part of the crisis management team in an Organisation this is what you will broadly do to establish a BCP:

Step 1: Regulatory Review

Bodies that govern the business environment of the country have compliance requirements. Thus, you would conduct a regulatory review at Company level, to ensure that probable regulatory breaches are effectively handled.

Step 2: Risk Assessment

Risk assessment means identifying business risks and prioritising them based on severity and likelihood of occurrence. The level of risk that can be borne, is a decision based on the acceptance threshold of the Company and its investors.

Step 3: Business Impact Analysis

In this third step you will be studying the impact the risk has on business. Impact means costs and loss of profits associated with a crisis. A BIA should include each functional area of the business. This includes finance, operations, trading and HR, as it is important to discover where recovery is most critical.

The other kind of impact that is not generally covered in a formal BCP but is important, is the impact on people. Employee morale, customer loyalty and investor backing are affected when a business faces a crisis. Successful handling of the people impact will indicate whether a firm will successfully survive a crisis. This is the reason short term measures like employee layoffs don’t work, as the impact on all stakeholders is permanent.

Step 4: Strategy Plan and Development

You start to think about the overall strategy and begin to organise and develop the plan.

Step 5: Incident Response Plan

An incident response plan is a preparation for ‘WHEN’ an incident happens. If an incident disrupts business, you need to assign responsibilities and specific actions to specific employees. Don’t forget to make your plan realistic to both your company as well as its vendors.

Step 6: Plan Testing & Training

You need to schedule BCP Testing throughout the year. The best instance of consistent testing are the fire drills that occur regularly in corporate office premises. BCP should be similarly tested.

Step 7: Communication

You need to communicate with key personnel quickly during an incident, as keeping them abreast will be crucial. The BCP should determine who will be responsible for contacting necessary parties and how. External communication is key in todays digital age, as your stakeholders will be observing how you handle the crisis. Mobile devices are available with every one of your customers and stakeholders, providing an opportunity for successful crisis communication to external stakeholders. When crisis strikes, you have mere moments to begin to gain control over the narrative of the story. In those moments, if your stakeholders gave you the advantage of benefit of the doubt, you get an opportunity to reach those who matter most to your Company. Wouldn’t this help you retain customers?

These are the seven steps that you need to follow to handle almost every kind of crisis/ disaster. Nevertheless, however detailed a BCP of an Organisation, without the right kind of leadership it would be difficult to survive a crisis. 

Crisis Management Communication

Social media is addictive. We want to constantly show up sensationally on social media, which is oftentimes at the expense of our safety and survival. For an Organisation, this shows that handling communication during times of a crisis is an important as handling the crisis itself.

Corporates have faced major challenges as well as opportunities due to the reality of real time and sensational news. What matters in these times of media onslaught is that in the event of a crisis, Companies have to communicate with speed on their capabilities to handle it. A successful crisis management team needs to handle the actual crisis as well as manage crisis communication.

Crisis Communication in the age of Social Media

In 2016, Southwest Airlines was suddenly struck by a wide-reaching technology failure. This prompted the airline to cancel thousands of flights. Over the course of four days, the company worked to respond to customer complaints quickly and effectively on social media. Southwest did several things right in its social media response. It apologized profusely for the inconvenience, admitted fault, and continually posted updates as the crisis unfolded. Unfortunately, the Company’s social media team was overwhelmed by the onslaught of customer-service requests and complaints. Not long after the outage began, the team started to lag behind in responding to complaints on Twitter and Facebook. Southwest did not consider that such a crisis is bound to impact all of its social media channels. It failed to post an apology on its Instagram account. As a result, the account received hundreds of angry comments and Southwest did not respond to any of them.

This is an example of a team unprepared to handle a crisis and disregarding vital aspects of crisis communication.

Empathy in Crisis Communication

More recently, in response to the Covid-19 crisis- Uber laid off nearly 3,700 employees via Zoom calls by relaying a common message to them. Uber’s crisis management strategy lacked empathy which plays a huge role in crisis communication. An onslaught of negative publicity on social media hit the company immediately following the firing. What could Uber have done to handle this more sensitively? To begin with, they could have assured each employee individually of a severance package. They could also have collaborated with human resources teams of other businesses to ensure their employees were placed. Social media would have then softened their stance on the Company.

Influencers are vital

Another vital aspect of social media crisis communication that Companies neglect is Influencers. Influencers can make or break public opinion about a Company. An incident at the Edtech company Byjus will serve to illustrate this. An influencer on the social media platform LinkedIn circulated a video of a manager at Bjyus abusing his team. The video went viral and as a consequence, Bjuys faced substantial negative backlash.

A winner in social media communication uses Influencers to their advantage, to generate positive public opinion. An Organisation cannot substitute effective crisis communication for efficient crisis handling, however, the two combined act to pull the company out of a crisis. My advice to future managers in handling crisis is to look for that one risk in your function that you could tackle. Then think of the one thing that YOU could do to proactively minimise that risk and convert it into an opportunity.

I incorporated excerpts from this article in a presentation I had made to students at K.J. Somaiya Institute of Management Studies & Research on Crisis Management.

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