Defining Crisis Management
January 2004
Crisis management is all about protecting your customers, brand and business. In this article, Chief Executive of Docleaf, David Perl looks at the need for planning and preparation.
Introduction
Crisis management has taken on a new meaning since the dawn of the third millennium. The horrific events of 9/11 were soon followed by atrocities committed in Bali, Jakarta and Mombassa. As if this was not enough we then witnessed the global impact SARS had on the travelling public. However, it is not only world events that can have a damaging impact on your company when it comes to dealing with crises.
Defining the crisis
How do you define a crisis? One of the best descriptions we at Docleaf heard was it is when ‘when the hairs on the back of your neck stand up on end and you have that sinking feeling in the pit of your stomach’. Perhaps a more realistic definition would be ‘any situation which has the potential to affect confidence in a company, or its products, or which can interfere with its ability to continue operating normally’.
Whatever the cause, companies are now realising that in order to better protect their customers, brand and business, they have to be pro-active as well as reactive in dealing with such events.
Reasons to prepare
There are a number of factors that are forcing companies to adopt a more pro-active approach to crisis management. Many organisations are now working towards the inclusion of crisis management as part of the corporate culture. So why go to the all the bother of being better prepared? The following points adequately demonstrate that it just makes good business sense:
Protecting your brand and reputation.
Whilst difficult to calculate, brand value can take years to build and moments to destroy. Business savvy organisations now realise that one of their greatest assets is their reputation and everything should be done to protect this.
Pan American paid the ultimate price of business failure following the Lockerbie disaster. In crisis management circles, it is acknowledged that the airline could have done a lot more to better manage this event. Compare this to Scandinavian Airlines exemplary handling in the aftermath of the Milan airport collision. This demonstrated that businesses can and do survive even the most horrific of disasters.
Putting people before profits.
It makes good business sense to take care of your customers not only in your day to day operation, but even more so when things are going wrong. People can be very forgiving, but only if they feel you are acting in a ‘caring and compassionate’ way and acting as if you have nothing to hide.
Litigation:
I have spoken to many bereaved people and survivors who have litigated against corporations because of the ‘inhumane’ way that organisation acted in the aftermath of a crisis. In addition, "class actions" and "no win - no fee" practices prevalent in the USA and UK are making it easier then ever for dissatisfied clients to take legal action.
In the UK, we are starting to see charges of "corporate manslaughter” brought against company directors, if thought to be negligent in their duties. I would argue that any organisation that moves or accommodates people has a duty of care to take care of those people when things have gone wrong.
It is all in the planning and preparation:
You will only get one chance to respond effectively in a crisis and ideally, you do not want to be on the learning curve during the crisis. Docleaf advocate a three pronged approach:
- Planning and preparation
- Training and testing
- Support and response which in itself should cover the 3 main areas of:
- Operational control
- Communications – internal and external
- Supporting affected people
Adequate preparation for dealing with incidents includes the development of a Crisis Response Manual and the formation of a Crisis Response Team. In addition regular training and dress rehearsals will need to be undertaken to maintain familiarity with the plans and to also test the viability and effectiveness of the corporate response.
Alongside this companies should also make provision to supply additional resources at the time of a crisis, including trained psychological trauma counsellors and befrienders, access to communication specialists and on-call crisis management specialists to ‘mentor’ your team through the crisis.
The benefits of getting it right::
One recent study by the insurance giant Marsh, demonstrated that for every $1 invested in contingency planning, returned a benefit of $7 in averted losses in the control of a crisis. Other benefits would include the following
- You will be better able to protect your customers, business and your brand.
- Your executives and staff will be trained to respond more effectively.
- You will have a marketing advantage.
- You could reduce litigation and insurance premiums.
- You will be able to address all the issues that will impact you and your hotel in a crisis situation
Finally:
It is no longer “will we have a crisis?” but “when will we have a crisis?” - The only thing for sure is tomorrow you are one day closer to it. The key to success, as most things in life is preparation and practice will go a long way to ensuring the odds are stacked in your favour when coping with the unexpected.
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