Crisis Management for Businesses

Crisis Management for Businesses

Crisis Management for Businesses 974 638 VP Legacies

Whether it’s a small-scale error or a company-wide occurrence, mistakes happen and moments of crisis are common.

A crisis can result in significant economic consequences and damage to a company’s brand. Mitigating this can be a long and expensive process. Plus the more parties there are involved, the much higher the stakes are. It is important to keep employees and shareholders happy, so executives should structure and manage their company in such a way that crises are less likely to occur.

This is why every business needs a crisis management plan in place, regardless of its size. These preventative measures lessen the likelihood of a crisis and, in case there is one, ensure that the right protocols exist to minimize further damage.

The key component of a crisis management plan is effective communication. To implement an overall crisis plan, it is vital to consider a strategy for both internal and external communication. While managing a crisis, your company needs to control the flow of information to ensure that key stakeholders understand what is happening without gaining access to excess details that could potentially cause liabilities.

But even the best planning with the best crisis communication isn’t fool-proof. Both internal and external factors can cause a business crisis. They can be small issues that grow over time or sudden issues with an immediate threat, such as a data breach. In either case, a crisis can significantly disrupt a company’s ability to carry out daily functions normally. It might put the entire health of the company at significant risk with permanent long-term effects. 

Any event that might negatively affect a business in the short or long run can be classified as a crisis. It needs to be managed according to a Crisis Management strategy and plan.

 

What Is Crisis Management?

 

For any business crisis, Crisis Management is the term for resolving a negative impact on a company. Crisis management and crisis response mean preventing further damage while allowing the business to recover quickly from any damage.

Crisis Management involves confronting the issue and those involved directly, as well as managing its ripple effects with various stakeholders and public relations entities. To maintain personal connections with stakeholders and minimize damage to relationships, build a communication strategy that keeps everyone feeling informed and assured.

 

Why Is Crisis Management Important?

Crisis management is an important strategy, which is why plans to manage a crisis can be both costly and detrimental to a business. A crisis management strategy also holds companies liable for any wrongdoings and restores the public’s trust. In one famous PR crisis, the management of one Starbucks location called the police on two African-American men who did not order anything, and said they were waiting for a friend. The men were arrested. Rather than ignore complaints or defend their actions, Starbucks issued an apology and closed its United States locations for one day to conduct anti-bias training. This internal communication strategy helped employees understand the gravity of the personnel crisis and sent the external message that Starbucks would do better to eliminate racial bias. 

 

Types of Crisis Management

 

 

There are three categories of Crisis Management that exist in an organization:

 

  1. Responsive

Responsive Crisis Management involves having an action plan ready for handling various types of crises that may affect a business. These plans are designed to be acted upon immediately. They should include clear guidelines and protocols on what to do, who to involve, and crisis response to outside entities. Responsive plans generally concern rare but somewhat predictable financial or crises with employees.

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A communication strategy for responsive crisis management will focus on internal stakeholders, ensuring that they know how to respond to safety and liability issues as well as how to communicate externally with other stakeholders who may be affected. This communication strategy may not require frequent contact or excessive details, since you cannot predict exactly how a crisis may unfold.

2. Proactive

 

 

Proactive Crisis Management is also about anticipating potential future issues and having plans in place to prevent them. However, these plans are generally about crises that are easy to prepare for but difficult to control ahead of time. For example, companies avoid accidents by ensuring that employees follow safety protocols. Companies examine safety studies and put protocols in place in the case of a natural disaster. These forms of crisis management and early crisis control may involve actively monitoring signs of crises forming in early stages.

Proactive crisis management is another process that requires long-term corporate communication. Employees must be informed about safety protocols from the moment they start working at your company. Both employees and executives should frequently be updated on changes in regulations and protocol.

3. Reactive

Reactive Crisis Management focuses on damage minimization during later phases of crisis. It’s the third form of crisis management that covers the unknown and involves protocols put in place that can be applied to any type of crisis that doesn’t have a dedicated plan in place. This type of crisis management is the hardest to solve and the most complex, since it covers an unknowable number of unpredictable risks for a business.

Since reactive crisis management must occur quickly, it is important to implement a communication strategy that is concise and action-oriented. While rebuilding long-term professional or client relationships is also a key component, a clear and concise plan for primary actors involved in the crisis management plan must take priority.

 

Types of Crises to Be Prepared For

There are many crises a business needs to be prepared for. Here are a few common forms:

 

Accidents

Any accident within an organization will need crisis management and streamlined crisis communication. For example, a fire at the head office or manufacturing plant can result in employee injuries and a shutdown of operations. These severe accidents can also be a PR crisis if the origin of the problem turns out to be negligence in enforcing safety standards, in which case crisis response to the media dictates how long the problem will last.

Rebuilding relationships with employees is as important as rebuilding relationships with external stakeholders, if not more so. Communicate with employees to regain their trust so that they know future accidents will be minimized, and so that they are aware of potential compensation. This step will dictate the way media and external stakeholders will view your company, and you can proceed by admitting culpability and summarizing how you’ll take action. 

 

Natural disasters

Natural disasters such as earthquakes, tornadoes, and floods can have long-lasting impacts on a business. They can result in extensive damage to infrastructure and shut down day to day operations for a long period of time. Crisis communication during early crisis phases is especially important in preventing injuries.

For natural disasters, personnel look to you in order to figure out what to do. It is important to communicate with employees in a calm manner to ensure that they feel safe. Since you will often have to share difficult news about budget cuts and potential job losses, deploy information with as much compassion as possible and avoid using too much automation to get out this messaging.

 

Technology issues

 

 

With many organizations turning to increasingly complex systems to run critical workflows and operations, technology disasters are proving to be the most common, expensive, and ill-prepared crises a business might face. These crises might be due to malevolent security breaches and hacks that disrupt technology-powered operations. They might be cyber-crime security breaches. Technology crises might also come in the form of system-wide outages due to internal overuse or improper use of tools.

Employ a rapidfire communication strategy with channels that can reach everyone with as much speed as possible. This will ensure that none of the employees exacerbate the issue at hand and maximize their own security before the problem is fixed.

 

Conflict of Interest

Even political and regulatory issues can lead to a crisis. Any conflict of interest can lead to a business crisis if it wasn’t identified earlier on, and can result in damage to an organization’s brand. Regulatory missteps can also be crises if policies are breached blatantly. These crises originate from poor communication between departments within a company, and can be easily prevented if companies take steps to integrate business operations.

Since conflicts of interests can leave clients and partners feeling overlooked, it is important to maintain a sense of personal connection with these stakeholders. Communicate with them in person to execute damage control due to political issues. For regulatory issues, issue out messaging in the most time-efficient channels.

 

Public perception issues

 

 

Many businesses face media or public relations issues such as the spread of false rumors or product issues when used by consumers in the market. Keep in mind that PR crises might also arise as a byproduct as another kind of crisis. True or false, all allegations need to be appropriately managed and addressed so that the PR crisis doesn’t cause long-lasting damage to the business.

Issues of public perception usually require a more comprehensive communication plan that uses multiple forms of messaging. This may include press releases, interviews, and even ad campaigns. First, make sure that everyone in the company who is communicating to outside parties understands the strategy and voice you choose to implement.

Related: The Ultimate Guide To Hiring Executives For Your Company

 

Financial issues

When certain assets lose value or a business cannot pay its debt, financial crisis might ensue. A business needs to be prepared for sudden market shifts or competitor threats, even if they are in good financial standing. Prepare employees for financial issues with anticipatory messaging so that budget cuts do not come as a surprise.

 

Personnel crisis

 

 

Employees or other related stakeholders that carry out unethical or illegal behavior in a work-related interaction are a threat to a business. For example, employees sometimes leave a business office with intellectual or confidential material, and share it with a third party for personal gain or even by mistake. In such cases, guidelines need to be in place on how to handle these issues, who to contact, and what communication to disseminate internally and to the public. To provide crisis control for this particular example, many companies have employees sign non-disclosure agreements.

It is important to communicate directly with someone who breaches protocol so that they understand the damage they have caused. If an employee feels threatened by someone, ensure that they feel safe by communicating with them one-on-one.

 

Have a Crisis Management Plan in Place

Developing a Crisis Management Plan is an essential step in crisis control for a business. 

This plan lays out a way for employees in an organization to classify a crisis and then follow the relevant process or steps to managing the crisis and communicate to employees. Some companies even have a designated crisis manager.

The crisis control plan is developed to have any proactive measures in place that can prevent the crisis from developing, and any active monitoring sequences in place. If a crisis occurs, the plan provides the guidelines to mitigate any damage and ensure recovery as fast as possible.  

Here are some guidelines for drafting a good crisis management plan:

 

  • Crisis communication between the individual personnel, groups, and teams that are required for crisis control. This will include tasking directly responsible individuals with managing the crisis response, and noting others who should be kept in the loop on progress (like the CEO)
  • Training and refresher courses on how to handle the crisis should be outlined. Examples include fake fire drills or disaster response exercises that the business must perform. It should also include specialized training for those directly involved with managing the crisis, and mandatory recertifications.
  • Plans should include clear and detailed steps to follow during a crisis. This is important, and a business needs to act fast. This is why the steps have to be clear and without ambiguity.
  • Outline any relevant tools or systems that can be used to monitor an impending crisis and manage the aftermath. For example, building fire systems that need to be operated in the event of a fire. 
  • Relevant external contacts should be listed. This should be contact information such as the Police, Emergency Medical Service, SEC, etc. It’ll depend on the type of crisis at hand. 
  • A communication plan should be included here and list out any mass communication that should be sent out to employees and external media to ensure no rumors or misinformation is spread. 

Communication strategy functions on two levels in a crisis management plan. First of all, the crisis management plan itself often involves communication to external media outlets. Second of all, and more importantly, effective communication is required throughout the entire process to ensure that all of the employees know what to do. An effective communication plan will ensure that personal connections and long-lasting relationships with your employees can whether the storm of any crisis.

 

Final Thoughts

All businesses should have a crisis management plan in place regardless of size. The dangers can be catastrophic, both monetarily or even physically – leading to loss of life. As a result, it’s important that any potential hazards are planned for and considered by using proper crisis risk protocol. Handling crises will also avoid any permanent negative effects on the business and any punitive or criminal issues from external authorities after the crisis is over. 

Communication during a crisis is highly important. To help you figure out an effective way to relay information during and before a crisis, VP Legacies can help you build an effective corporate communication strategy. After finding your pains and gains, we’ll provide custom-built solutions that will help you be able to communicate in any scenario, including the very worst of crises.

Related: The Ultimate Guide to Building a Corporate Communication Strategy