Crisis Management

A sudden and unexpected event leading to major unrest amongst the individuals at the workplace is called as organization crisis. In other words, crisis is defined as any emergency situation which disturbs the employees as well as leads to instability in the organization. Crisis affects an individual, group, organization or society on the whole.

Characteristics of Crisis

• Crisis is a sequence of sudden disturbing events harming the organization.
• Crisis generally arises on a short notice.
• Crisis triggers a feeling of fear and threat amongst the individuals.

Reason of Crisis

Crisis can arise in an organization due to any of the following reasons:

• Technological failure and Breakdown of machines lead to crisis. Problems in internet, corruption in the software, errors in passwords all result in crisis.
• Crisis arises when employees do not agree to each other and fight amongst themselves. Crisis arises as a result of boycott, strikes for indefinite periods, disputes and so on.
• Violence, thefts and terrorism at the workplace result in organization crisis.
• Neglecting minor issues in the beginning can lead to major crisis and a situation of uncertainty at the work place. The management must have complete control on its employees and should not adopt a casual attitude at work.
• Illegal behaviors such as accepting bribes, frauds, data or information tampering all lead to organization crisis.
• Crisis arises when organization fails to pay its creditors and declares itself a bankrupt organization.

Crisis Management

The art of dealing with sudden and unexpected events which disturbs the employees, organization as well as external clients refers to Crisis Management.

The process of handling unexpected and sudden changes in organization culture is called as crisis management.

Need for Crisis Management

• Crisis Management prepares the individuals to face unexpected developments and adverse conditions in the organization with courage and determination.
• Employees adjust well to the sudden changes in the organization.
• Employees can understand and analyze the causes of crisis and cope with it in the best possible way.
• Crisis Management helps the managers to devise strategies to come out of uncertain conditions and also decide on the future course of action.
• Crisis Management helps the managers to feel the early signs of crisis, warn the employees against the aftermaths and take necessary precautions for the same.

Essential Features of Crisis Management

• Crisis Management includes activities and processes which help the managers as well as employees to analyze and understand events which might lead to crisis and uncertainty in the organization.
• Crisis Management enables the managers and employees to respond effectively to changes in the organization culture.
• It consists of effective coordination amongst the departments to overcome emergency situations.
• Employees at the time of crisis must communicate effectively with each other and try their level best to overcome tough times. Points to keep in mind during crisis
• Don’t panic or spread rumours around. Be patient.
• At the time of crisis the management should be in regular touch with the employees, external clients, stake holders as well as media.
• Avoid being too rigid. One should adapt well to changes and new situations.

Types of Crisis

The crisis is of different types and nature and implies different responses and thereby different means of its management. The following are the major types of Crisis:

1. Financial Crisis

Financial Crisis occurs when the business is hit with the crisis financially. An example of a financial crisis is a business not having funds to pay its dues such as paying dividends, interests, making repayments of loans, etc. Such a crisis arises when the business incurs losses over considerable periods of time or when due to lack of accountability loses consumers’ trust among other situations.

This crisis is handled by mobilizing requisite funds as a short term solution and in taking major financial decisions such as restructuring, changing business operations, etc as long term solutions.

2. Technological Crisis

The technological crisis occurs as a result of break downs in the common scientific and technological tools and appliances that we use in a business. If the servers of Facebook get overloaded and all the user accounts and details are thereby deleted then such a crisis will be a technological crisis.

Common technological crisis includes software failure, industrial accidents, etc. The usual means of management would include primarily mitigating the losses and stopping the effects of the failure from affecting more people or elements.

The next step would include trying to gain back what was corrupted or lost with the help of experts in the field and would also involve finding the source and reason for the crisis.

3. Crisis of Malevolence

All businesses compete with each other. But some competitors take such extreme steps that they, in fact, try to go below the belt and ruin the other business for their own success. The crisis that happens as a result of the extreme tactics employed by a competitor or a miscreant to ruin the business is known as a crisis of malevolence.

These crises include those which are created by hacking into a company’s server, tampering with their products, etc. The measures include finding the source and minimizing the damage as soon as possible with identifying who perpetrated the crisis.

4. Natural Crisis

Natural Crisis refers to those that are created as a direct result of a natural event such as a volcano or earthquake etc. These crises are completely out of management’s hands and cannot be prevented, unlike the other crisis. The crisis management steps include evacuating the area and taking mitigating actions as precautions such as building Earthquake resistant buildings, preparing evacuation plans, etc beforehand.

Crisis of Organisational Misdeeds

Crisis of Organisational Misdeeds includes:

1. Crisis of Deception
2. Crisis of Skewed Management Values
3. Crisis of Management Misconduct