The Importance of Crisis Management in Business

Guest blog by Dr. Alessandro MerendinoCentre for Business in Society

Alessandro-Merendino-webCrisis management is the process by which an organisation deals with a major incident that threatens to harm business, its stakeholders, or the general public. The large-scale industrial and environmental disasters in the 80s triggered the study of crisis management and it is considered to be the most important process in public relations. Crisis management is perhaps even more relevant and important to today’s businesses in terms of safeguarding data, ethical supply chains, cross-cultural communication, safe products and man-made environmental disasters. The technology advancements in today’s business world have transformed productivity and communication. Businesses struggle to keep up with the pace of technology development resulting in the mad rush and push to prove otherwise. It is this haste to keep up with the modern world where crisis management is key. Many businesses react to crises rather than planning for them. Crisis management in the modern world is now more important than ever.

A crisis is made up of 3 factors:

  1. a threat to the organisation,
  2. the element of surprise, and
  3. a short decision time.1

Venette2 suggests that “crisis is a process of transformation where the old system can no longer be maintained.” Therefore, the fourth factor is the necessity for change. If change is not required, the event could more accurately be described as a failure or incident.

Current challenges in crisis management for businesses include resilience, human trauma, sustainable supply chains, decision fatigue, recovery processes, risk management and measurement methodologies and sustainable management. How a company manages a tough crisis often gives customers a far more honest look at how they are run than any meticulously fashioned press release could ever offer.

There are many examples of ineffective crisis management. For example, the FIFA crisis where some top-managers were arrested to have accepted millions of bribes; Krispy Kreme Klub, accused to have used an inappropriate and offensive name of a customer promotion; The recent VW crisis that falsified the results of cars performance; Sport Directors where top-managers were accused to have paid workers under the legal minimum wage and the more recent BHS collapse.

Failure to effectively manage a crisis can lead to serious company losses, harm to stakeholders or end the organisation’s very existence. The unsuccessful management of a crisis can damage the reputation of the company, its geographic location, its workers, management and even whole communities. The snowballing or ‘domino effect’ of crises in business can therefore impact in areas far beyond the business itself.

Large volumes have been written about crisis management by both practitioners and researchers from many different disciplines which make it a challenge when trying to synthesize our knowledge base. However, what we can do is learn from business mistakes and failure to effectively manage crises to inform the planning and implementing of business crisis management strategies. Initial processes and management style that I have researched include owning the mistake, providing frequent and transparent updates and adopting an ‘all-hands’ response (all your personnel having at least some knowledge of the crises and what is being done).

The importance of crisis management is being increasingly recognised in the researcher’s world as a field of study that has direct impact on businesses. Businesses want to know how to implement crisis management strategies that can save them from disasters that are sometimes unforeseeable.

As a result, I have been funded by the ESRC to host a two hour event on Tuesday 8th November that looks at these challenges. Speakers are unconfirmed at present but keep your eyes peeled as the website will be updated very soon. You can also follow us for live updates on Twitter: @CBiS_CovUni

1Seeger, M. W.; Sellnow, T. L.; Ulmer, R. R. (1998). “Communication, organisation and crisis”. Communication Yearbook 21: 231–275.

2 Venette, S. J. (2003). Risk communication in a High Reliability Organisation: APHIS PPQ’s inclusion of risk in decision making. Ann Arbor, MI: UMI Proquest Information and Learning.

44 thoughts on “The Importance of Crisis Management in Business

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  9. Hi, It has come to our attention that you are using our client’s photographs on your site without a valid licence. We have already posted out all supporting documents to the address of your office. Please confirm once you have received them. In the meantime, we would like to invite you to settle this dispute by making the below payment of £500. Visual Rights Group Ltd, KBC Bank London, IBAN: GB39 KRED 1654 8703, 1135 11, Account Number: 03113511, Sort Code: 16-54-87 Once you have made the payment, please email us with your payment reference number. Please note that a failure to settle at this stage will only accrue greater costs once the matter is referred to court. I thank you for your cooperation and look forward to your reply. Yours sincerely, Visual Rights Group Ltd, Company No. 11747843, Polhill Business Centre, London Road, Polhill, TN14 7AA, Registered Address: 42-44 Clarendon Road, Watford WD17 1JJ

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  16. Hi, It has come to our attention that you are using our client’s photographs on your site without a valid licence. We have already posted out all supporting documents to the address of your office. Please confirm once you have received them. In the meantime, we would like to invite you to settle this dispute by making the below payment of £500. Visual Rights Group Ltd, KBC Bank London, IBAN: GB39 KRED 1654 8703, 1135 11, Account Number: 03113511, Sort Code: 16-54-87 Once you have made the payment, please email us with your payment reference number. Please note that a failure to settle at this stage will only accrue greater costs once the matter is referred to court. I thank you for your cooperation and look forward to your reply. Yours sincerely, Visual Rights Group Ltd, Company No. 11747843, Polhill Business Centre, London Road, Polhill, TN14 7AA, Registered Address: 42-44 Clarendon Road, Watford WD17 1JJ

  17. Hi, It has come to our attention that you are using our client’s photographs on your site without a valid licence. We have already posted out all supporting documents to the address of your office. Please confirm once you have received them. In the meantime, we would like to invite you to settle this dispute by making the below payment of £500. Visual Rights Group Ltd, KBC Bank London, IBAN: GB39 KRED 1654 8703, 1135 11, Account Number: 03113511, Sort Code: 16-54-87 Once you have made the payment, please email us with your payment reference number. Please note that a failure to settle at this stage will only accrue greater costs once the matter is referred to court. I thank you for your cooperation and look forward to your reply. Yours sincerely, Visual Rights Group Ltd, Company No. 11747843, Polhill Business Centre, London Road, Polhill, TN14 7AA, Registered Address: 42-44 Clarendon Road, Watford WD17 1JJ

  18. Hi, It has come to our attention that you are using our client’s photographs on your site without a valid licence. We have already posted out all supporting documents to the address of your office. Please confirm once you have received them. In the meantime, we would like to invite you to settle this dispute by making the below payment of £500. Visual Rights Group Ltd, KBC Bank London, IBAN: GB39 KRED 1654 8703, 1135 11, Account Number: 03113511, Sort Code: 16-54-87 Once you have made the payment, please email us with your payment reference number. Please note that a failure to settle at this stage will only accrue greater costs once the matter is referred to court. I thank you for your cooperation and look forward to your reply. Yours sincerely, Visual Rights Group Ltd, Company No. 11747843, Polhill Business Centre, London Road, Polhill, TN14 7AA, Registered Address: 42-44 Clarendon Road, Watford WD17 1JJ

  19. Hi, It has come to our attention that you are using our client’s photographs on your site without a valid licence. We have already posted out all supporting documents to the address of your office. Please confirm once you have received them. In the meantime, we would like to invite you to settle this dispute by making the below payment of £500. Visual Rights Group Ltd, KBC Bank London, IBAN: GB39 KRED 1654 8703, 1135 11, Account Number: 03113511, Sort Code: 16-54-87 Once you have made the payment, please email us with your payment reference number. Please note that a failure to settle at this stage will only accrue greater costs once the matter is referred to court. I thank you for your cooperation and look forward to your reply. Yours sincerely, Visual Rights Group Ltd, Company No. 11747843, Polhill Business Centre, London Road, Polhill, TN14 7AA, Registered Address: 42-44 Clarendon Road, Watford WD17 1JJ

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  26. Hi, It has come to our attention that you are using our client’s photographs on your site without a valid licence. We have already posted out all supporting documents to the address of your office. Please confirm once you have received them. In the meantime, we would like to invite you to settle this dispute by making the below payment of £500. Visual Rights Group Ltd, KBC Bank London, IBAN: GB39 KRED 1654 8703, 1135 11, Account Number: 03113511, Sort Code: 16-54-87 Once you have made the payment, please email us with your payment reference number. Please note that a failure to settle at this stage will only accrue greater costs once the matter is referred to court. I thank you for your cooperation and look forward to your reply. Yours sincerely, Visual Rights Group Ltd, Company No. 11747843, Polhill Business Centre, London Road, Polhill, TN14 7AA, Registered Address: 42-44 Clarendon Road, Watford WD17 1JJ

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