Management veterans and scholars can differ on the exact stages of business crisis management. Some say there’s four; some say six. But most agree that once a trauma to an organization has been brought under control, its leaders’ next steps may be the most important of all.
In Summary: The Six Stages of Crisis Management
Ian Mitroff, Professor Emeritus at the USC Marshall School of Business at the University of Southern California, provides a model for how leaders can detect, mitigate, and recover from events that threaten their organization.
Phase 1: Signal Detection
Create early warning signals—or red flags—related to a potential crisis event so that a business can effectively respond once those signals appear.
For example, if a social media marketing campaign begins to get a flurry of negative reactions, particularly with key words or hashtags related race or gender, those are signals to move the campaign into a crisis response stage.
Phase 2: Crisis Preparation
Identify the leaders and employees who should be involved in making decisions and the course of action they should take. For a marketing crisis, the team members to respond may include the CMO, senior management, HR staff, and marketing and PR departments. The general plan, apart from removing the campaign from the public, would include issuing a statement, collect feedback about the campaign from the public, and field questions from stakeholders.
Phase 3: Crisis Containment
Here is the moment to execute the crisis management plan. In the process, leaders should evaluate the plans being used and to adapt new response methods as they gather more information about the crisis.
Phase 4: Crisis Recovery
When the crisis is adequately contained, the focus should shift to moving as much of the business as possible back to normal operations.
Phase 5: Learning
Even once normal business resumes, leaders should carve out time and space to reflect. What conditions led to the crisis? How could they have been prevented? How did the organization’s response worked or didn’t work? Shame and blame should be kept out of the discussions.
Phase 6: Redesign
The answers yielded in stage five should form the basis of an organization’s go-forward plan. Often this can include redefining crisis warning signals and the process for responding to them.
Crisis leadership is not just good for business—that is, the proverbial bottom line—it is also necessary—it is also necessary for the existential, emotional, and spiritual bottom line.
—Ian Mitroff, Why Some Companies Emerge Stronger and Better From a Crisis
In Focus: Recovery and Repair
Once a crisis is contained, recovery and repair can begin. An organization’s success or failure can hinge on three key practices during this critical period.
1. Information Collection
Leaders should create a feedback mechanism to collect insight from key stakeholders affected by the crisis while the crisis is occurring, as well as after it's contained. This will help leaders get a reliable data set for making decisions, figuring out what went wrong and determining actions moving forward.
A business's reputation is about integrity as well as values matching action. Communications, both internal and public, that take genuine accountability are paramount. It's essential for moving from the damage control phase to repair and rebuilding public and internal trust.
This is true even if a business didn’t cause the crisis, but still had a part in public, consumer or employee harm. The goal is to emerge with a trustworthy brand narrative and a credible pledge to do better in the future
Once a company’s leadership takes responsibility, continued transparency on what actions have and will be taken must support the statements. Whether that’s radically changing processes, procedures or personnel; or compensating affected parties; you need share the plan to demonstrate that your solution isn’t simply to go to back to business as usual (particularly if conventional practices led to the crisis in the first place).
With smart crisis management planning and clear communication, business leaders can prepare for a host of dangerous scenarios that may arise and build a stronger and more resilient organizations in the process.
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