Whether it’s a global pandemic, economic downturn, company scandal, or natural disaster, crisis situations can have a significant impact on businesses and their marketing strategies. All businesses are susceptible to crises, so it’s critical to be prepared to address them with a crisis management plan.
Table of Contents
- What Is a Business Crisis?
- Crisis Management Process
- Crisis Management and Response
- The Importance of a Crisis Management Plan
- Steps to Creating a Crisis Management Plan
- Identify All Possible Crises
- Determine the Impact of Different Types of Crises
- Determine How to Resolve Each Type of Crisis
- Delegate Responsibilities in Each Scenario
- Develop Plans for Resolution
- Conduct Training with the Team
- Update Crisis Management Plans Regularly
- Stages of a Crisis
- Risk Assessment
- Proactive Crisis Management Is the Key to Recovery
A crisis management plan encompasses the possible sources of a crisis, understanding the stages of a crisis, and ensuring that the right team is in place to manage and work through it.
What Is a Business Crisis?
A business crisis is an event that can threaten a business by damaging operations, ruining reputation, impacting finances, or harming employees. This may be caused internally or externally, such as an employee conduct scandal (internal) or the COVID-19 pandemic (external).
Crisis management, which is part of public relations, is the process of preparing for and managing any disruptive or unexpected emergency situations that may affect the business, employees, stakeholders, customers, or revenue.
Crisis Management Process
The crisis management process is much more than addressing the crisis itself. It also includes preparing for the unexpected and mitigating the damage after a crisis has occurred.
Here are the steps in the crisis management process:
The first part of crisis management is preventing any potential crises. This includes creating a crisis management plan, compiling and training a crisis management team, and conducting practical exercises for implementing the plan.
Another step is drafting the crisis communication message that may need to be relayed in times of crisis, such as pre-writing crisis response messages to launch them quickly when an emergency situation happens.
Crisis Management and Response
The second step of the crisis management process is the plan itself, the process of dealing with and responding to the stages of a crisis. This is essentially when the crisis management plan is put into action, such as releasing crisis statements, contacting the employees, stakeholders, and public, and ensuring company safety.
Crisis management doesn’t end when the crisis is over. Brands need to stay in contact with the public and stakeholders to address concerns and answer questions. In most cases, sending proactive updates to all parties affected is important.
Once the waters calm, it’s important for brands to evaluate their crisis response and communications to see how the strategy can be improved for the future.
The Importance of a Crisis Management Plan
If a business faces a crisis and isn’t prepared with a crisis management plan to guide actions and communications, there can be long-term consequences. These may include operational and financial consequences, such as business downtime or lost revenue, legal issues, or reputational damage. In some cases, a crisis can drive a company out of business.
According to research from PR News and CS&A International, a specialist risk, crisis, and business continuity management consultancy, about 62% of companies have crisis plans, though it’s uncertain how many regularly update them. In addition, few companies consistently practice crisis scenarios.
Source: CS&A Report
Source: CS&A Report
It’s imperative for all businesses to have a crisis management plan in place to be prepared for any unplanned event and prevent long-term damage from happening as a result. Crisis management plans:
- Help companies maintain a strong reputation with customers, competitors, and industry leaders before, during, and after a crisis.
- Improve the safety, health, and wellbeing of company employees and customers
- Provide peace of mind to a company that they’re prepared for whatever comes their way
- Increase productivity and reduce business downtime during and after a crisis
- Designate roles and responsibilities to different team members to ensure faster action and better resolution
Steps to Creating a Crisis Management Plan
Though crisis management plans will need to be tailored to each individual company, these are the general steps in creating a robust strategy to prepare:
Identify All Possible Crises
Not all businesses are susceptible to all types of crises. It’s important for companies to determine what crises are possible and plan around them, including:
- Financial crisis: This can occur when a business has a drop in demand for their product or service.
- Personnel crisis: This can occur when an employee or an associate is involved in conduct or activity that’s illegal or unethical – a scandal. This misconduct can occur in or out of the workplace.
- Organizational crisis: This occurs when a business has wronged it’s customers by taking actions that negatively impact its customers, such as failing to disclose information that’s key to the customers’ experience.
- Technological crisis: This occurs when servers go down or another technology tool fails to function properly, causing a business to lose time, revenue, or customer trust.
- Natural crisis: Floods, tornados, winter storms, or other natural disasters can cause a crisis and may damage or completely destroy a business’s physical workplace or vital components like warehouses or data storage facilities.
Determine the Impact of Different Types of Crises
Understanding the crises that can affect a business is key to determining the impact each of these events can have on a company, its employees, or its customers. Some examples include:
- Loss in sales
- Tarnished reputation
- Customer dissatisfaction
- Increase in expenses
- Decrease in customer trust or loyalty
Quantifying the impact a crisis can have offers insights into the angles of threats and how to prepare properly. This should guide the appropriate actions to take after an event.
Determine How to Resolve Each Type of Crisis
Businesses must determine the actions that they should take to respond and work through a crisis. Some of the common crisis management methods include:
- Responsive crisis management: When a business prepared for a type of crisis in advance, they can roll it out at any point in time. For example, having steps in place for a financial crisis may outline the process to inform employees about the event and address stakeholders.
- Proactive crisis management: This is when a business anticipates a type of crisis and proactively prepares for it, particularly with a natural disaster like a business located in a flood zone.
- Recovery crisis management: This is when a business manages a crisis that happened unexpectedly, such as a technological crisis.
Companies can identify all the crises that may affect their businesses and develop a business continuity plan to identify all potential aspects of these crises on a very detailed level.
Delegate Responsibilities in Each Scenario
An essential part of a crisis management plan is designating roles and responsibilities to each member of the team. This may include employees with expertise in different aspects of the business, including public relations, human resources, marketing, and more. Some crises may require legal assistance or consultants.
Develop Plans for Resolution
There should be detailed resolution plans for each type of crisis. Here are some questions to consider?
- What tools and resources are necessary?
- How long will the crisis take to resolve?
- Which parties are involved?
- Do customers or the public need crisis communication?
- What caused the crisis and can it be prevented in the future?
Conduct Training with the Team
Everyone involved in the crisis management plan will need to be trained on the role they will play in an actual crisis. This can happen with meetings or formal training with experts in crisis management.
Employees who aren’t part of the crisis management team may still be affected by it, so they should also be trained on the actions they should take in the event of a real crisis. A good example is a natural disaster. Employees should be trained on the safety protocols during a real-world crisis to ensure everyone knows what steps to take.
Update Crisis Management Plans Regularly
Companies can change structure, expand, grow, or add to their labor force over time, complicating a crisis management plan. It’s important to revisit the crisis management plan periodically to ensure that it’s still suitable for the current business environment.
In addition, companies should analyze the results of the crisis management plan to determine if it was successful during a real crisis. Depending on the responsiveness and the sentiment of the public, the plan may need to be revised or updated.
Stages of a Crisis
The stages of a crisis are important to understanding how one may unfold and what responses are appropriate at different times. These include:
Not all crises will offer opportunities for warnings, but there are signs that may indicate an impending crisis like weather patterns, financial issues, or employee behavior.
Risk assessment begins immediately following a crisis. This is when the key team members begin assessing impact, determining next steps, and evaluating the possible ramifications or damages.
After the level of risk is considered, the team can determine which crisis management plan is appropriate to implement. This involves a lot of communication to inform everyone of the crisis and begin taking action.
The management stage is when the team comes together to implement a resolution plan and adapt to any worsening effects over time. This includes communicating with employees, stakeholders, and customers to keep them updated.
The resolution stage is when the team should have fulfilled their responsibilities. The crisis is ideally under control at this point, and the goal becomes returning to normal business operations.
Once the resolution plans are underway, the company moves into recovery. This includes getting employees back to their day-to-day operations and ensuring customers are set up for success with products once again.
It’s important to analyze the results of the crisis management plan during the recovery phase and identify opportunities to improve the plan for future crises.
Proactive Crisis Management Is the Key to Recovery
Taking a proactive approach to crisis management is essential for companies to not only prepare for any type of crisis that may impact business but maintain a positive and professional reputation. A crisis management plan considers all angles of the crisis, assigns responsibilities, and can prevent long-lasting repercussions.