Organizational Crisis Management
Organizations operating in the 21st century are experiencing more dynamic challenges because of advanced technology and intense competition. Just like individuals are reminded that each life rain must fall, a crisis must occur in each business. Organizational crisis ranges from loss of data due to computer hinges, loss of equipment, and financial scandals, to loss of lives due to violence among employees or outside attacks such as from terrorists, and recently COVID-19. Companies have no control over these happenings but can develop strategic plans that help them minimize the negative impact on their operations (OECD, 2020). According to a study by Oxford Executive Research Centre, companies that have a laid-out disaster recovery plan and can execute it can reduce the negative impact by up to 60%, while those unable to execute it recorded an initial loss of 11% of their capitalization and 15% on average stock price (OECD, 2020). Coming up with a strategic plan that addresses the perceived future conditions and plans and adequately prepares the right actions to address them not only controls crisis but also creates a competitive advantage for the affected organization.
How can leaders anticipate, prevent, limit and control the chaos
The most effective way of managing chaos is through strategic planning, as it establishes a readiness across the organization to meet the already foreseen challenges. Unlike in the past centuries, today’s strategic plans not only focus on achieving the organization’s goals but also includes exploring the competitive environment, analyzing strategic alternatives, and coordinating actions of implementation (John-eke & Eke, 2020). This empowers an organization to react quickly and flexibly and make the appropriate decisions based on facts and clear thinking, even under unusual circumstances. Crisis planning should be done actively and revised more often to ensure measures put against the different forms of crisis remain relevant with the changing times and dynamics. In most cases, the laid-out crisis plan does not perfectly fit the crisis when it occurs. Therefore, organizational leaders ought to be flexible enough to adjust the plan to fit the situation.
Sufficiently detailed, comprehensive crisis plans do not happen by chance; there are several steps management could follow to make it happen. The first one is forming a team that is made up of the organization’s most efficient top managers, as the decisions they come up with determine the survival of the organization after a crisis. The second step is analyzing vulnerabilities; the chosen team has to think of potential vulnerabilities outside the common ones, such as fire and hurricanes. In addition to analyzing the probability of occurrence, they should also analyze the expected financial, human resource, and operational consequences (John-eke & Eke, 2020). The third is creating a strategy that is not expected to cover every tiny detail of the plan but clearly outlines the well-thought-out functional instructions to be implemented and the goals and expectations of the organization upon survival. The fourth is working on the plans; as there are other unforeseeable difficulties that may emerge, leaders ought to be flexible enough to come up with alternative plans if needed. The final one is assessing performance, where regardless of the outcome, the management should take the insights to benefit them by gaining a competitive advantage.
How Managers Ensure Organizational Character during a Crisis
In the event chaos ensues within the organization, communication determines the outcome; it is critical to have a common talking point. This can be done by appointing a spokesperson who is surrounded by experts to ensure that what they pass on to the rest of the people in the organization is accurate and well thought out. Systematic and effective communication ensures the organization remains calm, confident, and ready to handle the situation. The leaders must remain truthful and prompt in their communication no matter the intensity because lying could cause more harm than good (Payton, 2021). Addressing the situation immediately it happens minimizes rumors and speculations and assures the audience that the management is in control. The bearer of bad news should receive immense support from the rest of the management team. Whether the causes of the crisis/chaos are internal or external, it is inappropriate to blame it on anyone without concrete evidence or give a blanket statement as it creates an unnecessary sense of fear and panic. These can cause people to behave in a manner that they would not normally do, and it can be damaging to the organization.
The crisis within an organization is inevitable; it may not be a frequent occurrence, but organizations should anticipate it at some point in the life of the organization. What determines the survival or collapse of an organization after a crisis is a preparedness. Therefore, it is important to have a strategic plan that lists the anticipated problems, effective measures to be taken, and the consequences on the organization. Crisis plans may not always perfectly fit the situation, but they give a clear direction of what to do in certain situations. They give the affected organization a competitive advantage that could see an organization get better after the crisis than ever before. Once the crisis occurs, the outcome depends on how well communication is done with the rest of the people. Prompt, truthful, and effective communication helps in maintaining organizational character.
John-eke, E., & Eke, J. (2020). Strategic planning and crisis management styles in organizations: A review of related literature. Journal of Strategic Management, 5(1), 36-46. Web.
OECD. (2020). Coronavirus (COVID-19): SME policy responses. OECD. Web.
Payton, P. (2021). Crisis Management Strategies for Sustaining Organizations during a Crisis. Scholarworks.waldenu.edu. Web.