Managing a business is never a bed of roses, and no matter how careful you are, the risk of encountering a crisis is always looming. Crises won’t go away on their own unless you, the business owner or the crisis manager, know how to deal with them. This means you’ll need to adopt an effective crisis management strategy as well as having proper crisis communication plans to deal with potential crises.
In this post, we’ll dive into what crisis management is all about. We’ll also share the best crisis communication plans that you can implement right away using Venngage.
Click to jump ahead:
- What is crisis management?
- 3 phases of the crisis management process
- 5 stages of crisis management
- How companies manage crises
- Benefits of having crisis management plans
- FAQs about crisis management
What is crisis management?
Crisis management is the process of preparing for and dealing with events—often emergencies—that damage the company.
These events are referred to as crises and in most cases, they occur unexpectedly. Crises can be caused by something internally, like a negligent employee caught on camera for not wearing gloves while preparing food, or externally like the current pandemic where most establishments needed to temporarily stop their operations.
What are some examples of crisis management?
Here are a couple of examples of real crisis management executed by top brands. You can lift ideas from these brilliant tactics to recover from a fiasco.
PepsiCo’s syringe issue
Years ago, a syringe was allegedly found in a can of Diet Pepsi. The company was confident enough that the news was a hoax. To prove their claim, they worked with the FDA and even created videos to show their process. While their sales dropped for a couple of weeks, they recovered just after a month.
This is timely for most companies today as people can easily post their negative feedback on social media. Instead of ignoring the comments, your crisis response team should address these right away.
Texaco’s racial discrimination issue
Six African American employees sued Texaco for racial discrimination. To make matters worse, there was a recording between the company’s executives about the said issue.
The CEO of Texaco apologized in public, and the involved executives were suspended. They even hired an African American-owned advertising agency to run their campaign. The company paid $176 million to settle the lawsuit and issued additional discrimination checks.
From this example, you can tell that even though an apology isn’t enough for matters concerning racial discrimination, it’s important that the company still issues their apology in addition to other measures to navigate the crisis.
What are the three phases of a crisis management process?
There are three phases in crisis management. These are pre-crisis, crisis response, and post-crisis. Let’s go over each of these below.
Pre-crisis is all about prevention, as the aim is to reduce the risks that could lead to a crisis.
It includes drafting the crisis management plan, selecting and training the crisis management team, and simulating the identified threats.
One thing you can do during this phase is to organize a crisis communication exercise, in which teams are formed to discuss and navigate a hypothetical crisis.
Here’s an example of a crisis communication exercise report in which the teams discuss a data breach crisis. Customize this template if you plan to include this exercise in your training:
A crisis response happens after a crisis hits the business. This is where you execute the crisis management plan.
The key persons should be fast in implementing the strategies before it further affects the operations. In some cases, you’ll need to release a public statement and immediately conduct investigations to propose the right solutions.
For an external crisis such as the pandemic, it’s important to calculate or estimate the risks your business will face because of the crisis’ impact. Here’s a template to help you:
You can use this template in the pre-crisis phase too when you assess potential hazards that your business could face and what impact they’d likely have.
Your work doesn’t stop when your company has already surpassed the crisis.
You still need to check the issues from time to time and see if everything is in place. In addition, you need to evaluate if your crisis response was the best approach. It could help you fine-tune your crisis management plan for the future.
What are the five stages of crisis management?
A crisis management team should be on the lookout for early signs of crises. This is what we refer to as signal detection. It will help the company take preventive measures that can stop or lessen the effects of a negative event.
This template applies to an internal organizational crisis, but you can see that the first step is always to look out for signs of crises and try to understand its root cause as well as its impacts.
During the probing stage, you need to research all possible resolutions for the crisis. You also need to give a heads-up to your key stakeholders so they will be prepared for the worst.
Page 2 and 3 of this crisis communication plan focuses on examining the severity of the crisis, which will help determine the course of action your company can take:
When the crisis can’t be avoided, the next best thing is to control or contain it. This is called the damage containment stage and it aims to minimize the effects on your company. At the same time, it pushes you to continue your business operations if possible.
Use this business impact worksheet to understand how the crisis affects different business operations and determine the next steps:
The recovery stage is where your business tries to return to its normal operations. Expect to have minor issues along the way as your team and other stakeholders are still adjusting.
This business continuity plan template should be used in the previous stage when you assess the resources needed to deal with the crisis, but it can also help determine the resources needed for the recovery phase:
The learning forms part of the post-crisis activities where the team assesses if their solutions were the best. This is also the perfect time to review your crisis management plan and verify if you have followed all the required steps. If changes are to be made, you can use the template below where it provides the necessary actions per stakeholder.
How do companies manage crises?
Below is an overview of how most successful companies manage crises.
- Have a strong leadership team that mentors and guides employees.
- Create a crisis management team by carefully selecting members with outstanding problem-solving skills.
- Develop a practical crisis communication plan.
- Train the crisis management team based on the identified risks from the plan.
- Update the crisis management plan regularly and solicit views from various stakeholders.
Make sure you always report on results after handling a crisis and update your crisis management plans or crisis management methods accordingly. Share any important updates with your company like in this email:
What are the benefits of having a crisis management plan?
If your company doesn’t have a crisis management plan yet, you badly need to prioritize this right now. Some start-ups might think this is unnecessary. However, remember that a crisis occurs to all types of businesses, whether big or small. Thus, you have to be prepared no matter what.
Below are the benefits of having a crisis management plan in place.
Organizes your company’s resources
As you design your crisis management plan, you also need to build and organize your resources so you can easily pull these out in case of an emergency. This will save you time in case an actual crisis occurs.
Determines potential threats
Another advantage of working on crisis management is that you can identify possible threats for your business before they actually happen to you.
With a pre-planned crisis management strategy, you can continue or normalize your business operations without affecting your current clients, ensuring business continuity.
Improves the line of crisis communication
To make an effective crisis management plan, one has to include the communication process. This element shows you the key persons you need to reach out to.
Take a look at what Johnson & Johnson did during the Tylenol crisis. They addressed the issue by pulling out all the products and giving hotlines for individuals and news outlets interested in learning more about Tylenol:
The next template is also a good crisis response plan as it includes the contact numbers of the emergency response teams. This makes communication easier for everyone in the company.
Provides confidence to internal and external stakeholders
When your company prioritizes crisis management planning, it gives the management, employees, business partners, investor and customers added confidence. They now have an idea that whatever happens, whether natural disasters or financial crises, your company is ready to resolve any issue.
If your crisis communication team is still building a business contingency plan, here’s a good template that could help you.
FAQs about crisis management
Below are commonly asked questions about crisis management. Take a look to understand how you can implement the right strategies.
What is the first rule of crisis management?
The first rule of crisis management is to always plan for the worst cases, even if the odds are you won’t ever encounter such scenarios. Having this mindset means you’re always prepared and ready to address even your company’s worst nightmare.
What are crisis management skills?
If you want to manage a crisis effectively, you must have the right skills. These are the following skills you must improve.
In conclusion: Ensure your crisis management teams are always prepared for any potential crises
Crisis management should be taken seriously and proper communication plans or emergency response plans should be in place.
If you need to create crisis management plans for your company, feel free to customize the templates listed above. It’s free to get started.