Crisis management is an essential component of business continuity planning and something every organization needs to implement as part of its business processes. You may be thinking, “That’s never going to happen to my business!” – but the risk is always there.
Read on to learn about typical crises businesses can face, crisis management strategies, and how to prepare your business for when crisis strikes.
What is Crisis Management?
Crisis management is defined as "the process undertaken by any organization to prevent, prepare for, and respond to events that threaten to harm people or property, seriously interrupt operations, damage reputation, or impact the bottom line.” Crises can cost you money, hurt productivity, and threaten the long-term health and prosperity of your business. Especially if you aren’t prepared.
Overall, the goal of crisis management is to respond both quickly and effectively in order to minimize damage and position your organization for recovery once a crisis has passed.
All good crisis management efforts go through three core stages: pre-crisis, crisis response, and post-crisis. Pre-crisis focuses on preparedness and prevention; the crisis response involves actually managing the crisis; and the post-crisis stage focuses on recovery, analysis, and integrating lessons learned to prepare for the next potential crisis.
Types of Crises
HubSpot defines eight types of crises businesses can face. We are going to highlight the top six that you may encounter.
1. Financial Crisis
Typically caused by a significant drop in demand for a company’s product or service, a financial crisis can occur when a business's assets lose value and the company can't afford to pay off the debt.
2. Personnel Crisis
A personnel crisis occurs when an employee or an individual who's associated with the company is involved in illegal or unethical misconduct.
3. Organizational Crisis
An organizational crisis is a situation where a company has significantly wronged its employees or consumers. These organizations use their customers for the benefit of the company rather than creating mutually beneficial relationships.
4. Natural Crisis
Depending on where your organization is located, natural disasters like hurricanes, earthquakes, and tornados may be rare, but they can still have a significant impact on your business. If your business is in an area that is exposed to extreme weather, you will need to prepare an emergency crisis response in the unfortunate event that you are affected.
5. Confrontation Crisis
Confrontation crises can arise in many ways. You could be dealing with a fight among your employees, public upset with your organization, or even a disagreement among top leadership that spiraled out of control. In every case, the parties involved are all looking to get their demands met.
6. Workplace Violence Crisis
Workplace violence crises occur when a current or former employee commits an act of violence against other employees. As these types of crises can come on suddenly, it could be difficult to act before it escalates further or even becomes fatal.
Crisis Management Strategies
Anticipate a Crisis
Nobody can see the future, but that doesn’t mean you can’t plan ahead. Anticipating a crisis can sound daunting, but it’s really about identifying areas where a crisis could occur.
This involves knowing every step or misstep that could result in a crisis and thinking about what the consequences would be of each step you take. Being hypervigilant will help you remain aware of everything going on in your business and nip potential problems in the bud before they get out of hand.
When you anticipate a problem, this can help you pinpoint preventable situations, modify current operation methods, and craft possible responses to a future, related crisis.
Set Clear Objectives
It is important to set clear and detailed objectives when it comes to a crisis. These goals and objectives can be modified as needed, as crises are known to change as they run their course. Still, starting with a strong base allows you and your team/employees to build a solid plan.
Predicting when a crisis is going to hit is difficult, and it’s easy to think a crisis situation won't happen to you. However, you can end up blindsided if you fail to plan, with your business taking the hit.
When it comes to enacting your plan, back up your objectives with legal actions and relevant documentation. This will yield better outcomes for your organization, including financially.
Consistent Communication is Key
Effective crisis management is rooted in excellent communication. Having solid communication allows for clarity and direction in otherwise uncertain and confusing times.
Keeping an open and well-established communication network is crucial. This allows you to communicate all potential risks and crisis concerns with your employees, the public, your customers, and legal parties.
Establish Preventative Measures
Prevention is always better than scrambling for solutions. You can’t prepare for everything, but you can focus on establishing preventative measures where possible.
Look at the objectives you set and the potential problems you identified and take preventative action. This includes evaluating your company’s policies, philosophies, and strategies, as well as having a plan in place to adapt your business or enact operational changes if need be.
Appreciate and Recognize Your Employees
Once the crisis situation has settled, it’s important to recognize the efforts of your employees. Whether their role was major or minor, show appreciation for each member of your staff who participated in the crisis management efforts. Every effort by your team contributed to the solution of the crisis, and appreciation goes a long way.
Recognizing and rewarding your team doesn’t just let them know they are doing a great job. It also improves morale and motivation, and contributes to a supportive, healthy work environment.
Crisis Reminders for Employers
When managing a crisis, leadership is arguably the most critical success factor required. With good leadership, good things will follow. Keep in mind the following things when facing a crisis.
Attend to Problems. A good leader should remain completely aware of the situation at hand and avoid neglecting any issue that could become a full-blown crisis later on. Taking care of problems when they arise helps to mitigate or contain a crisis when it occurs.
Avoid Panicking. When a crisis hits, it’s easy to slam the panic button. As a leader, be mindful that you set the tone for your workforce. Reassure your team as the crisis unfolds and help your team work together. Keeping a level head also ensures you see the situation clearly and act accordingly.
Be Honest, Build Trust. Without honesty and trust, employers are sure to face an uphill battle. You have a duty to your employees to remain truthful and transparent about the situation at hand. Without this, it is easy for the situation to spiral out of control. In a crisis, it is vital that employees trust in their employer – their leader. The best way to build that trust is through demonstrating empathy and understanding in your communications before, during, and after the crisis.
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