Stage 2: Preparing to Manage the Crisis
IN BUSINESS, CREATING a crisis-management plan means making as many decisions as you can before the crisis occurs, so that your energies can go into handling the crisis effectively if and when it does occur. Many of these tasks are fairly easy to do when things are going well, but difficult and stressful to do in the middle of a crisis.
However, just as a hospital arranges for a standby generator in case power goes out during surgery, you need backup plans for the set of crises you have identified as the ones your company or department must expect and prepare for.
Recognizing the risks and costs
Consider a major investment company that had only one line of business: helping individual investors buy and sell stocks. When the investment market was at its peak, this company did a booming business. It poured its profits into expanding its business by hiring more people and opening more offices. But when the economy stalled and individual investors stopped buying, the company had no other sources of revenue. The company’s stock dropped, and it was forced to make huge layoffs—which affected everyone in the organization. By exploring other sources of revenue and investing some of its profits in those opportunities—and by doing some “what-ifs” about its rate of growth—the company might have lessened some effects of the disaster.
Use the results of your crisis audit as a basis from which to brainstorm potential crises. Question basic assumptions about your business—for both the present and the future. What assumptions do you have that might not be true? Ask yourself, “What would happen if people stopped buying our best-selling product?” or “What if demand for our product is so huge that we can’t fill our orders?” It’s important to do this as a group. Other people can provide a valuable perspective on each other’s closely held assumptions. And finally ask, “How would this impact our group?”
Once you’ve determined what crises you need to plan for, consider ways to minimize these risks. Also, brainstorm the costs for each risk you’ve identified. Consider everything that might go wrong, and assess the costs if it should. A risk analysis measures more than just costs in terms of money. Determine costs in terms of human health and safety, and other important factors such as ability to meet customers’ demands, ability of employees to work and communicate efficiently, and your company’s reputation. Prioritize those risks that are most pressing and costly, and deal with them first.
Developing a crisis plan
After you have selected a key what-if scenario and analyzed possible consequences, brainstorm the kinds of decisions that will have to be made. For example, in the event of a natural disaster, employees may have to be evacuated, and second- or third-shift employees might have to be notified. If a problem arises in getting a product to market, additional staff may have to be hired quickly, alternative methods of transportation might have to be lined up, or management may have to answer phones. In the event of an impending strike by transportation workers, you might have to call in a team of employees who drive minivans to bring some people to work, and arrange for some people to work from home.
As you go through this exercise, start to consider who should be making these decisions. Also, perform a reality check on your plan by brainstorming possible unintended—and undesirable—side effects. For example, when a chain of auto-repair shops wanted to boost sagging sales, management offered mechanics sales incentives. The more work they brought in, the bigger bonus they’d make. Unfortunately, some of the mechanics began recommending unnecessary repairs. Customers complained that they were being ripped off, and the chain’s reputation suffered. Similarly, a factory offered incentives for every defective product turned in, but it soon turned out that some workers were deliberately damaging products in order to receive the awards. And when a pizza company promised to deliver its “pizza in 30 minutes or it’s free,” speeding drivers caused car accidents.
You don’t have to cover every eventuality, but thinking things through carefully can help prevent such unanticipated problems.
Forming a crisis-management team
The outcome of the crisis depends on the performance of the people making the decisions. The better prepared they are, the better the crisis will be handled. Determine who on your team will:
- Be involved in handling each aspect of the crisis
- Make what kinds of decisions
- Notify authorities within the company
- Notify employees, government agencies, media, and so forth
- Decide whether employees should stay home
- Decide to evacuate a building
- Decide to hire temporary personnel in the event of an unexpected business rush
Once these decisions have been made, make sure that every person on the team has a backup in case they are unavailable.
In addition, create and distribute a list of all phone numbers, e-mail addresses, and ways to reach critical team members. Have people put the list on their computers, in their mobile-phone address books, on wireless communicators, and in their home offices . . . wherever anyone on the team could possibly need access to it.
Then, identify both formal and informal networks within the organization. Who are key players you may need to rely on in a crisis?
Creating a communications and resource plan
Create lists of all people who will need to be contacted in the event of a crisis—not just the members of the team—and how to contact them. You may need to include all employees, vendors, and customers.
Also, for each crisis on your list, think about what resources will be needed to handle the situation. For example, if you manage a research project in a pharmaceutical firm, you may have to prepare for a biological or health-related crisis. If you are trying to develop a market niche in an underdeveloped country, your employees may be in real physical danger. In both these examples, the resources required would be very different—from a store of specific antidotes to a detailed escape plan.