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The Crisis Management Plan

By Edward Devlin

According to various crisis management experts, the term crisis management could be defined as special measures taken to solve problems caused by a crisis.

"To confine or minimize any damage to the organization's reputation or image," was another definition offered by executives when asked by Julia Gabis.1 Gabis pointed out in the article, "Crisis: Danger or Opportunity," that good crisis management accomplishes more. Good crisis management should involve more than simply trying to minimize danger to an organization; it should also seek to maximize every possible opportunity. Good crisis managers achieve both. Gabis used as examples the Tylenol incident and the Exxon-Alaska incident.

"A classic case of excellent crisis management is Johnson & Johnson's handling of the Tylenol poisoning incident a few years back. The situation was every corporate executive's worst nightmare come true; it could have put Tylenol (and perhaps Johnson & Johnson itself) out of business. Instead, the company not only retained consumer confidence, but today Tylenol has a larger share of the market than it did before the scare.

"On the other hand, an example of how NOT to manage a crisis is Exxon's mishandling of the oil spill in Alaska. It's a perfect case of a company doing everything wrong from not being prepared for a spill of such mammoth proportions to the media's portrayal of Exxon's chief executive, sitting passively in his New York home waiting by the telephone for reports of the situation."

Crisis management planning is not a science; it is more of an art. Therefore, when referring to the members of the Crisis Management Team throughout the book, we are referring to a group of executives who have the expertise (skill acquired by experience, study, or observation) to carry out the successful management of a crisis situation.

The Crisis Management Plan (CMP) is a documented plan detailing the actions the executives want to be taken when a crisis strikes the organization. It is designed to put order into confusion. After a crisis has surfaced, the executives who have been selected to serve on the Crisis Management Team (CMT) will work together to achieve control of the crisis in order to minimize the impacts of the crisis. When a crisis has reached the acute stage, the team will employ the following steps:

  1. Take charge quickly.
  2. Determine the facts.
  3. Tell your story.
  4. Fix the problem.

Adhering to these steps will enable your organization to achieve control of the crisis. Remember that the key to successfully managing a crisis is to "Be Prepared." A number of organizations are not prepared.

Plan Should Be Inclusive
The plan cannot limit itself to disasters, or to one or two types of crises (non-physical crises). Organizations are exposed to more than one type of crisis, so the plan must identify actions to be taken based on a number of different crisis scenarios. The plan will identify these actions based on the specific "type" of crisis. The actions needed for a product safety problem will probably differ from the actions that need to be taken when the organization experiences an incident that is threatening the organization's reputation, or a financial crisis.

Throughout the book there will be a number of examples of organizations that have experienced a crisis. The information was obtained from articles in newspapers or magazines. The objective is not to cast aspersions on these organizations, or their management; rather, the objective is to share information acquired over the past three decades that explains how a crisis started, its cause, and how an organization managed it. The aim in this book is similar to the course a professor has been teaching at Dartmouth. Let me share an article in Business Week magazine (June 9, 2003), entitled "Why Smart Executives Fail."

"Professor Sydney Finkelstein of Dartmouth College's Tuck School of Business teaches a class entitled, 'The ABC's of Failure.' Casting off standard management fare about how to copy what companies do right, Professor Finkelstein presents his unconventional research on worst practices and corporate mistakes. The course is a twist on the hundreds of case studies churned out each year at other School's of Business, which mostly prompt students to dissect successes. Prof. Finkelstein's approach is "Some of the best learning comes from studying the things that go wrong." His theory is that troubled companies are more interesting than happy [companies].

"His interest is not so much about pointing out flaws, as it is about identifying the decisions that lead to mistakes in the first place. He starts at the source of the problem rather than conduct the more typical examination of just the negative result. And because he focuses mainly on otherwise intelligent managers who were respected in business, the lessons are more profound, say students."

Plan Viability
People often ask me, "What does the plan need to be viable?" Unlike most other plans in the organization, the Crisis Management Plan needs the participation of executive management. What I mean by the participation of the executives is they have to do more than give the Crisis Management Plan "lip-service." They also need to do more than just provide a budget. As discussed in Chapter 5, they must participate in developing the plan. They should identify the people they feel would be in the best position to answer the key questions of What, When, Why, Where, Who, and How. This is the group consisting of the members of the Crisis Management Team (CMT).

Also, to be a viable, workable plan, the Crisis Management Plan must be developed with the participation of the members of the CMT. Without their participation, the plan lacks context, the interrelated conditions in which something exists or occurs. Without their participation, there is no guarantee that they are committed to it. The members of the CMT will not feel they own the plan because they were not involved in preparing it.

When Did the Concept Start?
In books and articles by Steven Fink, Gerry Meyers, and Ian Mitroff, it appears that the concept of managing a crisis evolved from the incident at Three Mile Island. That experience, in 1979, demonstrated that in an era of aggressive news media, and an evolving sophisticated public, organizations cannot avoid a crisis. During the Three Mile Island incident, people wanted answers - and they wanted them then, and not in a couple of days. This was true for the nearby residents of the nuclear plant, government officials of the Commonwealth of Pennsylvania, as well as people throughout the United States. The news media acted as the voice of the people. The organization responsible for Three Mile Island was negligent in its actions because it tried to put a different spin on the story.

For example, because it provided more misinformation than information, it caused confusion, anger, and fear. This situation has become a legendary example of how "not to manage" a crisis. As Steven Fink, president of Lexicon Communications Corp., Los Angeles, said, "The term crisis management was literally born as the nuclear reactor was dying. Five years after the Three Mile Island crisis event, the first-ever graduate school program in crisis management was started by Carnegie Mellon University in Pittsburgh.

What Is a Crisis?

In discussing the development of a Crisis Management Plan, one should start by clarifying what a crisis is. For the purpose of this book, a "crisis" is an unstable time for an organization, with a distinct possibility for an undesirable outcome. This undesirable outcome could interfere with the normal operations of the organization, it could damage the bottom line, it could jeopardize the positive public image, or it could cause close media or government scrutiny. Obviously, the full gamut of disasters comes to mind; that is, fires, floods, tornadoes, earthquakes, bombings, etc. In addition, examples of a crisis can include when an organization experiences a product failure, a product safety issue, product tampering, a product market-shift, an incident that results in a poor image or negative reputation, an international incident that negatively affects the organization, and a financial problem - especially a fuzzy accounting problem. (Author Note: The "fuzzy accounting" problem is difficult to prepare for because you will be working with the culprit when developing the Crisis Management Team's plan.)

Keep in mind that crisis does not only mean danger. It also means an opportunity.

1. Julia E. Gabis is an attorney specializing in health care law and crisis management with the Philadelphia law firm of Gollatz, Griffin, Ewing McCarthy.

About the Author
From Crisis Management Planning and Execution by Edward S. Devlin, New York: Auerbach Publications, 2006.

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