In business, crisis management is practically unavoidable. Mistakes will be made. Accidents will happen. Products will be flawed. Acts of God will continue.
Since you can’t avoid crises, you’d better prepare for their inevitable eventuality, and: act promptly, intelligently, decisively, strategically, politically, sensitively, honestly, and with a genuine effort to resolve the issue and prevent further harm and recurrence.
As a reminder, some major crises include: Johnson & Johnson (Tylenol); Proctor & Gamble (Tampon/ toxic shock); Union Carbide (Toxic Chemicals); Three Mile Island (Nuclear); Hurricane Katrina; Exxon(Valdez/ Oil Spill); the 2008 Financial Meltdown (as well as many prior Market crashes), and most recently, the BP (Oil Spill).
THE BP CRISIS
This is being written on around day 45 of the Gulf (of Mexico) Oil Spill Crisis. BP (British Petroleum) is under siege with public relations, environmental, and financial problems, as a consequence of a disastrous, deadly, contaminating, incident of unprecedented proportion. This infamous event began in late April, 2010 when an explosion destroyed the surface drilling platform, (with 11 platform worker fatalities), and shut-off devices failed to turn off the gusher of oil spewing from a severed pipe at the bottom of the sea, one mile deep.
Various strategies were tried to stem the daily multi-thousand barrel flow of pollution from the wrecked installation. Robots were placed to handle repairs at the high pressures, great depth, and poor visibility, on the seabed. The U.S. Government mobilized it’s resources (Coast Guard, FEMA, various federal agencies, National Guard, etc,), but were largely ineffective and responsiveness appeared to be “too little; too late.” BP tried multiple approaches to capping the well and stopping the oil flow. Approaches termed: “Top Kill,”:riser package cap,” “replacing a ‘blowout’ preventer,” and a longer term “relief well” is in progress (“BP Begins…New Strategy…”Bloomberg.com, May 30, 2010). So far, nothing has worked, and perhaps irreversible damage is being done to precious wetlands, beaches, and habitats for marine life, birds, animals, and birds. What a mess!
THE MANAGEMENT PERSPECTIVE
“Crisis Management” is a leadership specialty, and reputations and fortunes of individuals, governments, and private companies can be severely, perhaps irreparably, damaged if the event, public perception, and restorative actions are mishandled. The classic strategies for these types of events were largely ignored, or conspicuously fumbled. The President of BP looked bad, as did the President of the United States. Ineptness appeared to rule the day and the government, along with one of the largest energy corporations in the world, were unable to control, or resolve the event.
Although there is not consensus about how a crisis should be handled, there are a number of common themes. The basics are:
The most important activity which can be taken, is to take action(s) to prevent a crisis from occurring in the first place!
Should a crisis occur, despite all your good preventative efforts, have plans in place to deal with likely, unlikely, and forecastable occurences. Appropriate planning, prior to the inevitable disaster, will help focus efforts, limit delays, and mitigate the damage. It provides a level of reassurance for all stakeholders.
Initiate timely, forceful, and focused actions to limit the scope and duration of the crisis.
Management consists of planning, organizing, leading and controlling. In a crisis, the leadership must be clear, respected, visible, and trustworthy. Coordination and resource management are essential; project management skills are required.
Honesty, transparency, and frequency are important. Deception, minimization, hiding, or avoidance are deadly. Trust will be lost when lies or misrepresentation are discovered. The press needs access, and will become hostile if spokespersons are not forthright.
–CRISIS ETHICS and CRISIS HUMANITY
The crisis needs to be handled in an ethical fashion. It is essential that morality supersede financial considerations.
The emotions, health, feelings; personal and financial impact on individuals are paramount considerations. Leaders need to sincerely demonstrate their compassion, sensitivity, and empathy for those adversely impacted. The human side of crisis will undoubtedly require immediate, continuing, and genuine support.
BACK TO OUR EXAMPLE…
The BP incident appears to have been mishandled on so many levels that it will surely be a case study on how crises should NOT be managed. BP has suffered billions in stock losses, and probable financial liabilities. The damage to business and government reputations and trust is yet to be determined, although it is appears major destruction has been done in this arena, as well as to the environment and economy.
With the high stakes implicit in major crises, managers would be smart to consider the aforementioned points; update, review, and revise their Crisis Management Policies and Plans, and be prepared. You don’t want to be in the news for your mismanagement in a crisis.
About the Author
Ben A. Carlsen, Ed.D, MBA, is an experienced leader and educator with over 30 years experience in management, consulting, and teaching. Dr. Carlsen is a management consultant, and business writer in the Miami, Florida area.
Carlsen was Chairman of the Los Angeles County Productivity Managers Network, Chair of the Marketing Managers Association, and President of the Association for Systems Management (So. California Chapter). For more info visit: http://www.drben.info