Casting Crisis:Effective Handling Of Catastrophe In The Business Entity
Sunny • onManagement 13 years ago • 7 min read

Crisis: An unstable or crucial time or state of affairs whose outcome will make a decisive difference for better or worse (Webster's New Collegiate Dictionary). 

With the increasing complexities in business, at any point of time there would be a risk of encountering a situation, which may invariably damage the health or reputation of a company in some way or other if handled improperly by the management. 

As everyone knows, crisis situations can, and do, occur on any project during any stage of development and/or at any time. "Planning before Panic" during a crisis is the key to keeping oneself motivated to continue and a successful (and profitable) business outcome. ( Dennis Woolbert, CEO)

We could expect crisis either by mere lack of prophecy or by improper management of the company. Marketing crisis, financial crisis, etc are common occurrences. Financial crisis being a universal feature, particularly in this emerging market. A crisis is perhaps the ultimate teachable movement.

Unfortunately, not all organizations are aware of the difference between marketing in routine situations versus marketing in crisis situations, namely:

  • Marketing's routine purpose is to build the value of the business.

  • Marketing's crisis function is to preserve the value of the business.

Crisis Management: Disasters and other events that stop normal business processes require that management take immediate action to ensure the health and safety of personnel, and the viability of the enterprise. (Gartner Research)

Crisis management is to be the enterprise's first response to an event that might change the way business operations are normally dealt with. It is one of the key elements of business continuity planning. One of the most bewildering aspects of crisis management to the inexperienced is it’s unpredictable nature. 

In order to handle a predicament properly and effectively, a company must take several critical steps.

Ten steps to predict or handle Crisis scenario
  • Anticipation of crisis.

  • Response to crisis before occurrence.

  • Impact of crisis on the organization.

  • Identification of crisis.

  • Assessment of crisis.

  • Recognition of key roles.

  • Discover the root cause of the crisis instead of providing the solution.

  • Accurate planning and wise decision-making.

  • Tools used in solution.

  • Riding out of the crisis.

Anticipation of crisis

In any field, there is no such thing as a crisis, which does not occur. Plan before panic. We being mortals commit mistakes knowingly or unknowingly, so there would definitely be a chance of facing cataclysm. As risks are inherent, we can even expect crisis due to increasing competitions in this ever-shifting business model or may be by the financial downtrend in the state. A natural disaster occurs. By the definition given above, all of these are crisis scenarios such as those routinely faced by most organizations. So one should be mentally prepared for such situations and ready to face the challenge. Even a well-established company may face it. Ex - Enron, Amazon, and Johnson & Johnson etc.

Response to crisis before occurrence

How many of you have a crisis plan BEFORE having a significant crisis? Less than five percent. As we read above crisis is definite, no way to escape from that hindering situation. We have to respond to the crisis before it arises. Suppose if there were drift in the finance for the next year then crisis would certainly rise it’s ugly hood. So one has to plan accordingly. Half measures in providing a solution are to be avoided.

Impact of crisis on the organization

If there is a crisis in any of the sectors in the state or on a global platform, the impact of that effect would definitely on the company, which may not happen in our organization. These we cannot even predict and prevent. Best example is September 11 attack, with the effect of this attack the whole business scenario has changed. How that effect impacts on our company? With that attack there was a drift in the finance sector. Our country also faces financial paucity so the enterprises would not be getting loans etc, the impact would be in such a way. One should be always alert to challenge this crisis with the local and global stance. These would drastically change the company’s health. We should consider all these factors to run our organization smoothly and profitably.

Identification of crisis

The utmost thing is that the crisis has to be identified. what type of crisis? Is it a predictable or unpredictable one?

Unpredictable crisis is which happens accidentally.

  • Natural disaster · 

  • Fire accident · 

  • Death or serious injury to an employee/employees.

  • Law Enforcement, etc.

Predictable crisis is one arises by the mere laxity or competition.

  • Marketing Crisis

  • Financial crisis

  • Media crisis

  • Technology crisis

  • Labor crisis, etc.

Decisions have to be taken according to the category of the crisis.

Assessment of crisis

Assessment of a situation is, therefore, the first step one has to take in advance. Nevertheless, if you have not prepared in advance, your reaction will be delayed by then. Will a crisis take your company down? If, in what way it is going to ruin your company? Identify the nature of the crisis. One has to recognize what might happen to the company. Assessing should not be assumption it should be practical. Asses the financial, marketing, reputation of the company so as to take initiation.

Recognition of key roles 

Identify Spokespersons. They should be the only individuals who should speak on the company’s behalf in the hour of need. The CEO should be one of those spokespersons, need not necessarily the prime spokesperson. The fact is some of the chief executives are brilliant entrepreneurs but not very effective in-person communications. Maximize the key persons to minimize the crisis.

Discover the root cause of the crisis instead of providing the solution

It would always be better to recognize the root cause of the crisis and purge it rather than providing an instant solution. We can know the root cause only after serious contemplation by asking the elementary “Why’’. Solutions provided by the spokespersons are to be absolute. They have to pertain to each and every detail of the crisis. This would save as lot of time, money and energy.

Accurate planning and wise decision-making

A systematic order should be followed while planning, it should be discussed with the others in the company. Consider the realistic abilities, available time and resources of the staff. At first, one has to know the entire situation of the organization before adopting a plan or a decision. Schematic procedure should be adopted and that should be registered so that if one fails to do as planned the latter would know what plans his predecessor has failed to implement. Innovative plans are always welcome. Crisis communications plan, which provided them with a system for coordinated, prompt, honest, informative and concerned response to crises. Wise decision ought to be taken in order to cope up in the crisis scenario. The final decision should be favorable to all parties.

Tools used in solution

A small team of senior executives should be identified to serve, as your company's crisis management team would be the best tool to solve. Spokesperson ship would be the best alternative. Collaborative decision-making are the key points. Develop one to three key messages about the situation, which are simple enough for everyone’s comprehension, and application in their day-to-day affairs. Brief all employees in person, about what is happening and keep them well abreast of the current happenings on regularly. Immediacy in action is a must.

Riding out of the crisis

Do the Same Thing Over and Over Again Expecting Different Results. No matter what the nature of a crisis...no matter whether it is good news or bad...no matter how carefully you've prepared and responded. Eventually the aim is to ride of out the crisis.

Finally …. Therefore, now you know how to minimize, get rid of crisis. Moreover, if you heed at least some of this advice, you will be one of the rare exceptions to the "head in the sand" attitude, which most companies have towards crisis. Crises do not disappear. They are managed with common sense. Are you prepared for the worst nightmare?


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