Crisis Communication

This posting provides the definition of a crisis, a discussion of how organizations can prepare for crisis events, and an approach for organizations to follow when crisis occur. Furthermore, it gives a description of our class discussion about this issue and personal experiences and examples.

What is a crisis?
Our textbook “Corporate Communication” (Argenti, 2007, p. 213) states the following definition of a crisis: “A crisis is a major catastrophe that may occur either naturally or as a result of human error, intervention or even malicious intent. It can include tangible devastation, such as the destruction of lives or assets, or intangible devastation, such as the loss of an organization’s credibility or other reputational damage. The latter outcomes may be the result of management’s response to tangible devastation or the result of human error”. The characteristics of crises are among others: (1) the element of surprise, (2) insufficient information, (3) the quick pace of events, and (4) intense scrutiny. These characteristics make it difficult for executives to maintain control. In crisis situation, the executives often adopt a short-term focus and forget to consider long-term objectives. Attention shifts from the business as a whole to the crisis alone. This bad crisis management can be avoided if a company’s management is prepared for crises.

How to prepare for crises
Managers should be aware of the fact that crises can happen to every company at any time and that they often occur when they are least expected. History of crises shows that each industry can be affected by a crisis. Therefore, it is crucial that company’s set up and maintain crisis plans which determine what to do in a crisis situation.
There are several steps that need to be taken in order to thoroughly prepare for a crisis. First of all, an organization should assess its individual risk. Concerning this risk evaluation, managers should take into account that some industries are more prone to crises than others. They can conduct a brainstorming to list possible crisis situations. Afterwards, probabilities should be assigned to the listed situations. This makes it possible to focus on the more probable evens although less likely events should not be completely ignored. After the probability assignment is done, management should quantify the risk exposure by determining potential crises effects on constituencies.
Secondly, setting communication objectives for potential crises is important because a company should well know what it wants to say to whom in the case of crisis. In a crisis, events usually happen very rapidly. Companies that have not determined communication objectives before a crisis starts usually do not have the time to define them during a crisis. This leads to bad communication.
The third step is to analyze the channel choice and to determine which channels are most appropriate to the crisis communication to certain constituencies. It is obvious that a sensitive communication to employees requires other channels than a trust rebuilding communication to customers does. This has to be considered when a crisis plan is developed.
Another important necessity of planning for communicating in a crisis is deciding in advance who will be member of what team for each crisis. These teams should vary according to the differing nature of each crisis. In some cases, senior managers should lead a crisis communication team; in other cases, it might make more sense to assign employees who are closest to the crisis event to be spokespersons of their teams.
The fifth point that needs to be considered is that effective crisis communication is centralized. In the event of a crisis, it is important to act rapidly. Responsibilities have to be clearly defined so that everybody knows what he or she has to do. This especially is a challenge for companies that usually apply a decentralized communication approach. Therefore, a crisis preparation should include a plan for centralization.
At the end of the planning process, a formal plan should be formulated and communicated to all relevant constituencies. It is crucial that the formal crisis plan is well-known among the workforce.
A formal plan crisis plan should include following points (Argenti, 2007, p.231):
- A list of whom to notify in an emergency
- An approach to media relations
- A strategy for notifying employees
- A location to serve as crisis headquarters
- A description of the plan

Communication during the crisis
Although setting up and communicating crisis communications plans help to prepare for a crisis, all the planning does not mean that acting in an actual crisis situation is easy. I already mentioned that every mentioned that every crisis is different. Nevertheless, there are some general steps which help companies to handle a crisis.
The first is getting control of the situation as soon as possible which involved defining the real problem. Then (step 2), management should gather as much information as possible in order to develop an appropriate understanding of the problem. If it takes long to collect the information, the organization should communicate this. In step 3, a centralized crisis center needs to be set up to be able to centrally manage the crisis (see previous section). After this has been done, the crises team should start communicating early and often (Step 4). At this stage silence and delayed responses should be avoided. It is necessary to collaborate with the media in crisis situations. Therefore, crisis management should ensure that they understand the media’s mission in a crisis (Step 5). This understanding can be used to take the 6th step: communicate directly with affected constituents. Throughout the whole crisis, management should not panic and remember that business must continue (Step 7). Finally, after the crisis is survived management should immediately make plans to avoid further crises.

Class Discussion (28/03/08)
In class, we talked about the difference between natural and manmade crises. While the occurrence of natural crises is not initiated by humans, manmade crises are the result of malicious, negligent, inaccurate, or flawed human behavior. Some examples of natural crises, which were mentioned by the class, are earthquakes, tsunamis (South East Asia on Christmas 2004), or hurricanes and tornados (Katrina). Big manmade crises were the attacks on the World Trade Center, the oil spill of the Exxon Valdez (the captain was drunk), the Perrier crisis, or the Enron/Arthur Andersen scandal. After we had established a better understanding of the term crisis, we turned to the question how company should handle crises. We concluded that companies should prepare themselves for crises by developing plans how to act in a crisis situation. Dr. Szul pointed out that although preparation for crises is so crucial; there are only a few companies which set up accurate crises plans. This can lead to a costly loss of reputation.
A special crisis we focused on was the Coca Cola India Crisis. In the crisis, a non governmental organization accused Coca Cola India to use water that contains morbid germs. As a consequence of these accusations, many Indians stopped drinking Coca Cola. We analyzed the Coca Cola India’s crisis communication approach and identified the mistakes they made. We came to the conclusion that Coca Cola India should have been better prepared. This kind of crisis was not the first incident in India. Therefore, the company should have known that NGOs would try to attack them. This had given Coca Cola India the opportunity to act more proactively and handle the crisis more successfully.

Personal Experiences/ Examples
I experienced what bad crisis communication looks like when I played soccer for a club in Germany. After we lost several games in a row, our coach was heavily criticized. The local media reported that he was thinking about resigning as consequence of the bad results. No club official spoke to the team to explain what the clubs plans were. The lack of information led to even greater uncertainty within the team. Under these circumstances, the team’s performance was unlikely to get better. So we lost the next game, too, and everybody was talking about a new coach. Without informing the team, the club officials announced on a local soccer webpage that they wanted to hire a new coach. I was very disappointed that our club officials did not spoke to us before they made a decision. A lot of trust between the team and the players of the team (the club’s internal constituencies) was lost. I learned from this crisis that it is important for leaders to talk to internal constituencies before they make decisions that affect those persons within an organization. I think if our officials had been honest to us, the crisis would have been much easier to handle. Furthermore, the relationship between leaders (officials) and internal constituencies (team) would have been much better after the crises, than it was in the described case. This incidence showed me the importance of a good crisis communication.

Another example of bad crisis communication is the behavior of the Soviet Union’s government when the nuclear power plant busted in Chernobyl. I cannot remember the disaster myself but my parents told me much about it. At the end of April 1986, Swedish scientists measured unusual high radioactive radiation throughout whole Middle and Western Europe. Based on an analysis of the wind over the last days the scientists concluded that an accident must have happened in the Soviet Union. The scientist informed European government and the media which reported the scientist’s findings. The media reports caused many Europeans to be afraid. Among these people were my parents. When European governments and the media asked the Soviet Union what happened in their country, they did not get the true answer. The Soviet Union’s government stated that they experienced some problems which they handled easily. A few days later, when the truth could not been hidden any longer and the problems became so serious that the Soviet Union needed help from other countries, they told the true story. Now the direct victims in Chernobyl were helped by the world community. This help would have been available much earlier, if the Soviet Union’s government had communicated honestly. The described communication mistakes caused a huge loss of reputation and credibility.
To draw a conclusion, I can say that I learned from these crisis situations that most effective crisis communications is quick, proactive, and honest communication. Organizations which do not obey this rule will be cursed with a loss of trust of their constituencies.

Links:

http://www3.niu.edu/newsplace/crisis.html

http://www.globalprblogweek.com/archives/7_musthave_elements_.php

http://www.lsu.edu/pa/crisis.html

http://www.ala.org/ala/oif/iftoolkits/toolkitsprivacy/privacycommunication/crisiscommunication/crisiscommunication.cfm

http://www.101publicrelations.com/crisis-communication.html

http://marketing.about.com/od/publicrelation1/a/crisiscomm.htm