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CrisisManagement
AboutthisTopic:CrisisManagement

TopicMentor
NormanR.Augustine
Whenitcomestocrisismanagement,NormanR.Augustineisagraduateoftheschoolofhard
knocks.HavingservedaschairmanandCEOofLockheedMartinCorporationdirectorof
Black&Decker,PhillipsPetroleum,andProcter&GambleandundersecretaryfortheU.S.
ArmyduringtheVietnamWar,Augustinehasyearsofexperiencemanaginginturbulentand
uncertaintimes.HeistheauthorofAugustine'sLaws(VikingPenguin,1986)and"Managing
theCrisisYouTriedtoPrevent"(HarvardBusinessReview,1995).

TopicSourceNotes
Learn
NormanR.Augustine."ManagingtheCrisisYouTriedtoPrevent."HarvardBusinessReview,
OnPointEnhancedEdition.Boston:HarvardBusinessSchoolPublishing,2002.
NormanR.Augustine.Personalcommunication.November2001.
KatieCarlone.Personalcommunication.January2002.
JaneE.Dutton,PeterJ.Frost,MonicaC.Worline,JacobaM.Lilius,andJasonM.Kanov.
"LeadinginTimesofTrauma."HarvardBusinessReview,JanuaryFebruary2002.
StevenFink.CrisisManagementPlanningfortheInevitable.NewYork:American
ManagementAssociation,1986.
HarvardBusinessSchoolPublishing.Manager'sToolkit.Boston:HarvardBusinessSchool
Press,2004.
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"HowtoKeepaCrisisfromHappening."HarvardManagementUpdate,December2000.
IanI.Mitroff,ChristineM.Pearson,andL.KatharineHarrington.TheEssentialGuideto
ManagingCorporateCrises.Oxford:OxfordUniversityPress,1996.
"ReadThis,ThenGoBackUpYourData."FortuneMagazine,SpecialTechEdition,Winter
2002.
MichaelSilvaandTerryMcGann.OverdriveManaginginCrisisFilledTimes.NewYork:
JohnWiley&Sons,1995.
SherrySontagandChristopherDrew."BlindMan'sBluff:TheUntoldStoryofAmerican
SubmarineEspionage."PublicAffairs,1998.
KeesVanDerHeijden.ScenariosTheArtofStrategicConversation.NewYork:JohnWiley&
Sons,1996.
LillianVernonwithCatherineFredman."TooMuchofaGoodThing."UnitedAirlines
HemispheresMagazine,November2001.
FredVogelstein."CanSchwabGetItsMojoBack?"FortuneMagazine,September17,2001.
PierreWack."Scenarios:UnchartedWatersAhead."HarvardBusinessReview,September
October1985.
Steps
StevenFink.CrisisManagementPlanningfortheInevitable.NewYork:American
ManagementAssociation,1986.
Tips
NormanR.Augustine."50SignsofTroubleAListbyNormanAugustine."Unpublished.
NormanR.Augustine."ManagingtheCrisisYouTriedtoPrevent."HarvardBusinessReview,
OnPointEnhancedEdition,March2002.
"HowtoKeepaCrisisfromHappening."HarvardManagementUpdate,December2000.
Tools
NormanR.Augustine."50SignsofTroubleAListbyNormanAugustine."Unpublished.
TheBureauofLaborStatistics.
StevenFink.CrisisManagementPlanningfortheInevitable.NewYork:American
ManagementAssociation,1986.
IanI.Mitroff,ChristineM.Pearson,andL.KatharineHarrington.TheEssentialGuideto
ManagingCorporateCrises.Oxford:OxfordUniversityPress,1996.

WhatWouldYouDo?
Whatwouldyoudo?
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Calisthemanagerforasuccessfulchainofretailstores.Overthepastyear,businesshas
beenbooming.Earningsareupandprofitmarginsaregrowing.Becausebusinesshasbeen
sopositive,Calwassurprisedwhenhereceivedamemofromthecompany'svicepresident
askinghimtoperformacrisisaudit.Whatdidthevicepresidentmeanbya"crisisaudit"and
whydidCalhavetoworryaboutacrisiswhenbusinesswasgoingsowell?Caldidn'thavea
cluewheretobegin.
Whatwouldyoudo?
Calmightbeginbytalkingwithcolleagueswhoworkindifferentareastobetterunderstand
whatmightgowrongintoughertimes.Ifyouwereresponsibleforatowndam,youwould
certainlyperformanauditofitsstructuralintegritybeforeastormcausedthewatertorise.
Likewise,itisimportantforCaltoperformacrisisauditwhenthingsaregoingwellatwork
sothathecanbebetterpreparedshouldacrisisarise.Oneofthefirststepsinperforminga
crisisauditistotalkwithmanydifferentpeoplewithintheorganizationtogatherdifferent
perspectivesofwhatcouldhappen.Next,CalshouldconductaSWOTanalysisto
determinethecompany'sstrengths,weaknesses,opportunities,andthreatsforeachpotential
crisis.
Inthistopic,you'lllearnhowtopreparefor,manage,andresolvecrises.
AtCal'scompany,profitmarginsaregrowingandearningsareupsowhymightacrisisaudit
benecessarynow?

TopicObjectives
Thistopichelpsyouto:
Avoidacrisisthroughplanning
Preparetomanagecrisesyoucan'tavoid
Recognizeacrisisandcontainitbeforeitspreadsevenfurther
Resolveacrisisinthemosteffectiveway
Learnfrompastcrises
Takecareofyourselfduringacrisis

September11,2001Howonecrisiswasavoided
Acrisisisaneventthatcanaffector
destroyanentireorganization.
IanMitroff
September11was,withoutadoubt,theworstcrisisonUnitedStatessoilinmoderntimes.
ThousandsofliveswerelostinNewYork'sWorldTradeCenter,thePentagon,andinrural
Pennsylvania.BecausetheWorldTradeCenterwashometomanyoftheU.S.'sleading
financialinstitutions,inadditiontotheterriblelossofhumanlifeinthecollapseofthetwo
towers,financialrecords,personalcomputers,servers,andbackuptapedrivesandallthe
informationtheycontainedweredestroyed.
Sowhathappenedtoallthedata?Themortgages?Creditinformation?Investmentdata?
Allbut5%ofthecompaniesinvolvedintheattackrecoveredtheirdata.Why?Mostcompanies
intheWorldTradeCenterhadlearnedfromthe1993attackonthetowersbycreatingand
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implementingplanstoregularlystorecriticalinformationoffsite.OnSeptember11,2001,
almostallthedatahousedintheWorldTradeCenterexistedelsewhereinduplicate.

Crisisdefinition

Simplyput,acrisisisachangesuddenorslowlyevolvingthatresultsinanurgentproblem
thatmustbeaddressedimmediately.Acrisiscanoccurinmanyforms:
Lifethreateningproductdefectsarediscovered
Computerhackersshutdownacompany'sentiresystemanddenyaccesstocustomers
Ahardfreezedestroysaregion'scitruscrops
Aterroristattackdestroyslivesandproperty
Akeymanagerdieswithnoimmediatereplacement
Crisesarenotthenormalupsanddownsofabusinesscycle,thoserecurringproblemsfacedin
thecourseoftakingrisksandexploringnewavenuesofopportunities.
Crisesarewrenching,painfulevents.Yetsomegoodcancomeoutofthesedifficultexperiences
becausethelearningthatcomesfromdealingwithacrisiscontainswithinittheseedsforfuture
successincrisisprevention,crisismanagement,and,insomecases,evennewopportunities.

Naturalorcompanyrelatedevents
Twotypesofcrisesfallinthiscategory:
Uncontrollablenaturalevents.Anaturaleventofcatastrophicmagnitudecanstrike
unexpectedlybeitanearthquake,typhoon,tornado,hurricane,blizzard,flood,fire,or
someothernaturaldisaster.Forexample,earthquakescancrushbuildings,destroy
infrastructures,andinterruptcommunications.
Healthandenvironmentaldisastersrelatedtothecompany.Unlikenaturalevents,
somehealthandenvironmentrelateddisasters,thoughnotnecessarilycausedbythe
company,aredirectlyrelatedtothecompany.Thecompanyisresponsibleoris
perceivedtoberesponsiblefordealingwiththem.
Considerthefollowingexamples:
Producttamperingbyanoutsiderthatcandamageyourcompany'sproductsand
harmconsumers,andaffecttheoverallimageofyourproductandcompany
Seriousproductproblemsordefects,suchasdefectivetiresorfoodcontamination,
forwhichyourcompanydoesbearresponsibility
Catastrophicaccidentsthathappenonthecompany'swatch,suchasmajoroilspills
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orradiationleakage
Environmentalpollutionunknowinglycausedbyyourcompanyinyearspastfor
example,toxicwastewithlonglastingharmfuleffectsonwildlifeandhuman
healththathasbeendumpedintowaterways

Technologybreakdowns
Everyoneknowswhatit'slikewhentheservergoesdown.Inthisinformationage,weare
extraordinarilydependentontechnologytocommunicate,storeinformation,doresearch,buy,
andsell.Businesstodaycouldnotfunctionwithouttechnology.
Thefollowingaresomecommontechnologicalproblems:
Dataloss:MostcompaniesintheUnitedStatesdonothavedatabackupplans,despitea
UniversityofTexasstudyfindingthatonly6%ofcompaniesthatundergomajordataloss
willsurvivethatcrisis.
Securitybreaches:A2001surveyrunbytheFederalBureauofInvestigationandthe
ComputerSecurityInstituterevealedthat85%oflargecompaniesandgovernment
agencieshavedetectedcomputerbreachesinthepastyear,andwhilemostcomputer
attackscomefromoutside,attacksfrominsidecausethegreatestfinancialloss.
Communicationstechnology:Aretailer'sWebsitegoesofflineduringthebusiest
season,stallingordersandfrustratingcustomersandservicerepresentatives.Avirtual
team'sWebsitegoesdown,makingitimpossibletomeetacriticaldeadline.Anentire
phonesystemgoesout,sothatnooneinacompanycanreceiveormakecallsexcepton
theirmobilephones.Allofthesearecrisesgeneratedbytechnologicalfailures.
Outmodedequipment:Whenpeopleworkonagingequipmentoronfailingnetworks,
theyfaceaseriesofongoing,minorcriseseverydayinefficientworkingconditions,
difficultymeetingdeadlines,lostemails,constantfrustrationallofwhichcanleadtoa
majorcrisiswhenthesystemsfinallycollapse.

Economicandmarketforces
Withaglobaleconomyandhighspeedinformation,marketsandeconomieschangefarmore
rapidlythantheydid20yearsago.Theseforcescanchangeorappeartochangequite
swiftly.
Considerthefollowingexamples:
Marketswings:Anunexpectedspikeorcollapseinbuyingcanalterpredictedsales,
productdevelopment,andscheduling.Eventhoughregularmarketswingscanmakefor
difficulttimes,amajordisruptioninmarketsresultsincrises.
Trends:Anoverallchangeindemand,oftenduetoaparadigmshift,leavesbackward
lookingcompaniesinthedust.Theriseofthepersonalcomputerisanexcellentexample.
Althoughitwasnotpredicted,itbecamethenewparadigm.Companiesthatbelievedthat
mainframetechnologywouldalwaysbetheonlymarketwerecaughtunaware.
Investmentbubbles:Periodsoframpantspeculationandinvestmentfrenzyblow
businessopportunitiesoutofproportionuntiltheeconomicrealitiescausethebubblesto
burst.Theinstantdeflationofportfolios,lifesavings,retirementincomes,andjob
opportunitiescreatescrisesformany.

Relationshipcrises
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Allbusinessesdependonpeople,boththosewithinthecompanyandthoseoutsidebusiness
partners,vendors,andcustomers.Whatdoesacompanydowhenasubcontractorinchargeof
securityallowsaseriousbreachatamajorairport,whenavendorfailstodelivercritical
supplies,whenanemployeeiscaughtembezzlingmoneyfromaclientaccount,whenapartner
isindicted,orwhenamajorcustomergoesoutofbusiness?Relationshipproblems,eventhose
assmallasapersonalconflictwithinagroup,canleadtoaseriouscrisis.

Sixstagesofcrisismanagement
Allcriseswhetherrelatedtouncontrollableevents,health,technology,changingmarkets,or
relationshipshavethepotentialtoaffectthecompany'sreputation,itsbottomline,itspeople,
and,ultimately,itsabilitytodobusiness.Althoughthereisnosimpleformulaforeliminating
crises,followingthesixstagesofcrisismanagementcancertainlymakeabigdifferenceinhow
successfullyyoucopewithcrises.
Stage1:AvoidingtheCrisis
Stage2:PreparingtoManagetheCrisis
Stage3:RecognizingtheCrisis
Stage4:ContainingtheCrisis
Stage5:ResolvingtheCrisis
Stage6:LearningfromtheCrisis

Thequiettaskofavoidingcrises

Crisesthatarehandledpoorlyoftengetthegreatestmediaattention.Butwedon'toftenhear
muchaboutcrisesthatwereprevented.RemembertheY2Kbug?OnNewYear'sDay,2000,
virtuallyeverycomputerintheworldmadethecalendarswitchtothenewmillenniumwithout
ahitch.Allthoselisteningfortroubleheardwasthequietsoundofacrisisthathadbeen
prevented.Foryears,businesseshadworkedtosolvetheY2Kproblembeforeithappened.And
theireffortspaidoff.
Ofcourse,managersateverylevelofanorganizationintercedeandpreventminorcrisesevery
day.
Asalesrepresentativenoticesthataclient'snameismisspelledoneverypageofamajor
salesproposal.Themanagerhasallthecopiesdestroyed,makestheadjustments,andhas
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newproposalsprintedatanallnightcopycenter,savingthecompanyfromlosinga
majoraccount.
Amanagerforeseesacashflowshortage,takesstepstohurryreceivables,andmakessure
acreditlineisavailableatthecompany'sbankshouldtheexpectedcashstillnotcomein.
Amanager,wheninformedthatakeyemployeeisleaving,takesstepstofinda
replacementinsteadofleavingittothelastminute.
Allthesemanagersareactivelyinvolvedinavoidingcrises.It'stheirjob.

Thecrisisaudit
Makealistofeverythingthatcouldattracttroubletothebusiness,considerthe
possibleconsequences,andestimatethecostofprevention.
NormanAugustine
Mostmanagersarealreadyattunedtopossibleandprobablecrisesandtakesomestepstoavoid
them.Butyoucanbecomeevenmoreeffectivebypreparingforcriseswhenthingsaregoing
well.Thefirststepistoperformacrisisaudit.Lookforthingsthataregoingwrongnoworthat
havethepotentialtogowronginthefuture.
Acrisisauditmaylooklikeonemore"Todo"onyourlonglist,butexaminingwhathasthe
potentialtogowrongshouldnotbejustonemoreitemtobesqueezedintoyouralreadybusy
daybut,rather,animportantpartofyourcompany'sordepartment'slongtermplan.

Performacrisisaudit
Acrisisauditinvolvesthefollowingsteps:
Makecrisisplanningapartofyourstrategicplanning.Incorporatethecrisisauditinto
yourpartoftheoverallstrategicplanningprocess.Whetheryourunyourownbusinessor
department,youstillhavetoplanstrategicallyforthefuture,andthatplanningneedsto
includecrisisplanning.
Gettogetherandshareideas.People'sperspectivesaboutpotentialcrisesoftendiffer
greatly.Noonepersonhasalltheinformationacompanyneeds.Bytalkingtopeople
fromotherareasofyourdepartment,division,orcompany,youmaygetsomesurprising
information.Workwithcolleaguesinyourdepartmentandinotherdepartmentsto
analyzeyoursituation.
PerformtheSWOTanalysisfromacrisisperspective.Oneusefulstrategicplanning
toolistheSWOTanalysis(strengths,weaknesses,opportunities,threats).Conductthe
analysisspecificallyfromacrisisperspectiveafterall,crisesoftenevolvefrominternal
weaknessesorexternalthreats.
Whatareyourorganization'sinternalweaknesses?Wheremightacrisisoccurinyour
normalbusinessprocedures?Forexample,areyousounderstaffedthatifonememberof
theteamweretoleave,youcouldn'tfunction?Orisyourinfrastructureoldandpatched
together?Areyouhavingqualitycontrolproblemsthatcouldleadtoconsumer
dissatisfactionorharm?
Whatareyourmostlikelyexternalthreats?Whichofthosethreatswouldbethemost
damagingtoyourcompany?Isyourcompetitionlikelytointroducearadicallynew
product,makingyoursobsolete?
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Note:Oftenpeoplerefusetorecognizetheonemajorthreatthatloomsoverthecompany.
Byignoringthereality,anyconstructiveactionthatmightavertorlessentheimpactof
theproblemisleftundone.
Forexample,ifyourcompanyhasbeensuccessfullyproducingonemajorproductline,
butthemanagersrefusetoacknowledgeanew,innovativeproductthatwilleventually
makeyourentireproductlineobsolete,yourcompanyverylikelywillnotsurvive.
Focusonthefourmajorcrisisareas:healthandenvironmentaldisasters,technological
breakdowns,economicandmarketforces,andrelationships.
Developyourcrisisrisklist.Inperformingthecrisisaudit,askyourselvestwobasic
questions:
1.Whataretheworstthingsthatcouldgowrong?
2.Whatarethemostlikelyorprobablecrisesthatcouldoccur?
Youcan'tpossiblyaddresseverypotentialproblemorcrisis,andsomecrisessimplywon'ttouch
yourorganization.Forexample,ifyourcompanyisnotlocatedinanearthquakezone,don'tput
earthquakesonyourcrisisrisklist.Or,ifyouarepartofaconsultingfirm,youwon'tbe
worryingaboutapossiblelaborstrike.
Narrowthecrisisrisklistbyfocusingonthecrisesthatwouldhavetheworstresult,wouldbe
mostlikelytooccur,andwouldaffectyourgroup.

KeyIdea:Focusonthefourmajorcrisisareas
KeyIdea
Tryingtoanticipateeverypossibletypeofcrisiscanbeoverwhelming.Let'slookinmore
detailathowyoufocusonthefourmajorcrisesareas.
Areaone:Healthandenvironmentaldisasters.Thehealthandsafetyofemployees,
consumers,thegeneralpublic,andtheenvironmentarehighpriorities.Thistypeof
crisiscanescalatefromasmallproblemtoamajorcrisisquickly,particularlywhen
peoplewithintheinstitutiontrytocoveritup,placeblame,orminimizeits
importance.
Areatwo:Technologicalbreakdowns.Youprobablyalreadyhaveagoodideaof
someofthebiggestweaknessesinyourcompany'sordepartment'stechnology.Maybe
it'sthephonesystem,theserver,ortheInternetconnection.Weaknessesintechnology
canprecipitateparalyzingcrisesifleftuntreated.
Areathree:Economicandmarketforces.Economicforcesandmarketswingscan
becriseswiththegreatestopportunitieshiddeninsidebutonlyifyouareprepared.
Otherwise,anunexpectedmarketswingcanbedamagingorevendevastating.
Areafour:Relationships.Peopleareunpredictable.Theymaydothingsthatyou
wouldnotthinkpossible,particularlyifmoneyoradvancementisinvolved.
Organizationswithwhomyouhavepartneredforalongtimemayalsosurpriseyou.
Consider,forexample,theadvertisingagencywhoseFortune500clientsimplyclosed
itsdoors.Millionsofdollarsworthofbusinesswerelost.Asamanager,youhaveto
dealwithnumerousanddiverserelationships.Lookforvulnerablerelationships.Be
particularlyawareoftheonevendor,client,orcomputerwhizwhosesuddendeparture
couldruinyourcompany.
Adeeperunderstandingofthefourmajortypesofcrisesmaymakeyourcrisisprevention
processsimpler.Canyouidentifythem?

Exampleofaneconomiccrisis

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Exampleofaneconomiccrisis
Considerasmall,healthrelatedInternetstartupcompanyattheheightoftheebusiness
investmentbubble.Thedevelopmentteaminvestedanenormousamountofmoneyincreating
contentthatwasprovidedforfreeonthecompany'sWebsite.Littlemoneyorresourceswere
lefttodevelopthesubscriptionsitethepartofthesitethatwasactuallysetuptomakea
profit.ThecompanywasfollowingthemodelofotherWebdevelopmentcompaniesatthetime
givingawaymostoftheircontentforfree.Andmanyofthesecompanieswentoutof
business,theultimatebusinesscrisis!Whydidthishappen?Thetinystartupmighthavefailed
anyway,butbyfollowingwhateveryoneelsewasdoingwithoutquestioningthebusiness
fundamentals,theyguaranteedit.Theyignoredhowtheyweregoingtomakeaprofitoncethe
venturecapitalmoneyranout.

Alwaysbeprepared

Inbusiness,creatingacontingencyplanmeansmakingasmanydecisionsasyoucanbeforethe
crisisoccurs,sothatyourenergiescangointohandlingthecrisiseffectivelywhenitdoes
occur.Manyofthesetasksarefairlyeasytodowhenthingsaregoingwell,butdifficultand
stressfultodointhemiddleofacrisis.
However,justasahospitalarrangesforastandbygeneratorincasepowergoesoutduring
surgery,youneedbackupplansforthesetofcrisesyouhaveidentifiedastheonesyour
companyordepartmentmustexpectandpreparefor.

LeadershipInsight:Stayuptodate
I'dliketotalktoyoutodayaboutcrisismanagement.We'reallfamiliarwiththeSeptember
11thcrisis.Iremembertheeveningbefore,flyingfromNewYorktoLondononbusiness.
WhenIarrivedinLondon,weweretalkingtoourteaminournetworkmanagementcenter,
whichhadlargescreensaroundeventsintheworld.Atthattime,Iwasonthephonewithan
individualwhoworkedformeinaNewYorkCityoffice.Andshesaidtome,"Colleen,
something'swrong,I'mseeingpaperflyingoutsidethewindow."
AndIsaidtoher,"Getoutofthebuildingnow.There'saproblem."AsIturnedtolookatthe
TV,weallrememberthatpictureoftheplanescrashing.
ButwhatIknewhadtooccuriswehadaresponsibilityforourcustomerstomakesurethat
weputouremergencycontrolcenterupandrunningimmediately.Thegoodnewsiswehad
averydefiniteplan.Wehadgreatprocesses,andtheteamaroundtheworldralliedquickly
toputitintoplace,butitdidn'ttakelongtorealizetherewasaholeinourplan.
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WehadrecentlyacquiredabusinessinNewYorkCity,andthatteamhadtobegottenoutof
thebuildingandoutofthecityquickly.WequicklymobilizedtheindividualthatIwas
talkingtoonthephonetorallytherestofherteammatestogetoutofthebuilding,andthey
did.
We'dhadnoinjuriesinthebuilding.Theonlythingthatwasdamagedinthatcrisisinour
buildingwasourinformation.Wewereabletoreturnwhenitwassafeandgetthosedata
storages.
Whatwelearnedisnomatterhowwellyou'reprepared,youneedtoreviewyourprocesses
andyourpreparationwhentherearesignificantchangestoyourcompany,likean
acquisition.
Whenorganizationalchangetakesplace,don'tforgettoupdateyourcontingencyplans.
ColleenO'Keefe
SeniorVicePresidentandGeneralManager,CollaborativeSolutions
andGlobalServices,Novell
ColleenO'KeefeistheSeniorVicePresidentandGeneralManagerof
CollaborativeSolutionsandGlobalServicesatNovell,aglobalIT
infrastructuresoftwarecompanyheadquarteredinWaltham,Massachusetts.
Inthisrole,shecombinesher30yearsofoperational,customer,and
professionalservicesexpertisewiththespanoffocusacrosssolutionsand
servicesthatenableshertoservecustomersandpartnersinadeeperway.
BeforejoiningNovell,ColleenservedasVicePresidentandGeneral
ManagerofthePaymentSolutionsDivisionatNCRCorporation.She
previouslyservedasVicePresidentofGlobalManagedServicesforNCR's
WorldwideCustomerServicesdivision,whereshewasresponsibleofthe
development,marketing,andsaleofNCR'sportfolioofITservice
capabilities.
Colleenhasabachelor'sdegreeineconomicsfromtheCollegeoftheHoly
Crossandamaster'sdegreeinbusinessadministrationfromtheUniversity
ofHartford.ShealsoattendedStanfordUniversity'sExecutiveEducation
Program.

Recognizetherisks
Consideramajorinvestmentcompanythathadonlyonelineofbusinesshelpingindividual
investorsbuyandsellstocks.Whentheinvestmentmarketwasatitspeak,thiscompanydida
boomingbusiness.Itpoureditsprofitsintoexpandingitsbusinessbyhiringmorepeopleand
openingmoreoffices.Butwhentheeconomystalledandindividualinvestorsstoppedbuying,
thecompanyhadnoothersourcesofrevenue.Thecompany'sstockdroppedandtheywere
forcedtomakehugelayoffswhichaffectedeveryoneintheorganization.Byexploringother
sourcesofrevenue,andinvestingsomeofitsprofitsinthoseopportunitiesandbydoingsome
"whatifs"abouttheirrateofgrowththecompanymayhavelessenedsomeeffectsofthe
disaster.Ofcourse,somethingsareclearinhindsight,butimportantlessonsareallaround.
Usetheresultsofyourcrisisauditasabasisfromwhichtobrainstormpotentialcrises.
Questionbasicassumptionsaboutyourbusinessboththepresent,andthefuture.What
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assumptionsdoyouhavethatmightnotbetrue?Askyourself,"Whatwouldhappenifpeople
stoppedbuyingourbestsellingproduct?"or"Whatifdemandforourproductissohugethat
wecan'tfillourorders?"It'simportanttodothisasagroup.Otherpeoplecanprovidea
valuableperspectiveoneachother'scloselyheldassumptions.Andfinallyask,"Howwould
thisimpactourgroup?"
Onceyou'vedeterminedwhatcrisesyouneedtoplanfor,considerwaystominimizethese
risks.

Activity:Crisiswarningsigns
Thisselfassessmentwillhelpyouidentifypotentialsourcesofriskforyourcompanyor
businessunit.
Answereachofthefollowingfourteenquestions"yes"or"no."Recordyouranswertoeach
questionmanuallyasyougo.
Consideryoursituationandidentifywhetheryouarecurrentlyexperiencingthefollowing.
1.Isyourgroupreleasinganewproductorlaunchingnewbusinessprocesses?
2.Areyouinstitutinganewprocess?
3.Hasyourcompanyrecentlyexperiencedachangeinmanagement?
4.Areyourdepartment'sorcompany'sprofitsdeclining?
5.Doesyourbusinessdependonafewmajorcustomers?
6.Doyourbusinessactivitieshavethepotentialtoharmtheenvironment?
7.Hasyourproductorcompanyrecentlyexperiencedrapidgrowth?
8.Isyourcompanyinvolvedincostlylitigation?
9.Isyourcompanysusceptibletonaturaldisasters?
10.Isyourcompanyvulnerabletofraud?
11.Doesyourbusinessdependonfamilyrelationshipsorownership?
12.Isyourcompanyoperatinginapoliticallyoreconomicallyunstablecountry?
13.Isthegeneralattitudeofyourdivisionorgroupaggressiveandrisktaking?
14.Doesyourdepartmentorcompanyusehazardousmaterialsormanufacturehazardous
products?
Tallyyourscore,givingyourselfonepointforeach"yes"answer,andselectitfromthe
optionsbelow.
04
Youanswered"No"formostorallofthequestions.Eventhoughyourbusinessis
notcurrentlyinacrisissituation,considerthequestionstowhichyouanswered
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"Yes"andthinkabouthowyouwouldrespondtoarelatedcrisissituationinthe
future.
514
Youanswered"Yes"for5ormoreofthequestions.Yourbusinessmayhavea
higherthanaverageprobabilityofencounteringacrisissituation.Considerthe
questionstowhichyouanswered"Yes"andthinkabouthowyouwouldrespondtoa
relatedcrisissituationinthefuture.

Brainstormcosts
Withyourgroup,brainstormthecostsforeachriskyou'veidentified.Considereverythingthat
mightgowrong,andassessthecostsifitshould.Ariskanalysismeasuresmorethanjustcosts
intermsofmoney.Determinecostsintermsofhumanhealthandsafety,andotherimportant
factorssuchasabilitytomeetcustomers'demands,abilityforemployeestoworkand
communicateefficiently,andthecompany'sreputation.
Prioritizethosethataremostpressing,anddealwiththemfirst.

KeyIdea:Comeupwithacrisisorcontingencyplan
KeyIdea
Havingselectedakeywhatifscenarioandanalyzedpossibleconsequences,brainstormthe
kindsofdecisionsthatwillhavetobemade.Intheeventofanaturaldisaster,employees
mayhavetobeevacuated.Secondorthirdshiftemployeesmighthavetobenotified.Ifa
problemarisesgettingaproducttomarket,additionalstaffmayhavetobehiredquickly,
alternativemethodsoftransportationmighthavetobelinedup,ormanagementmayhaveto
answerphones.Intheeventofanimpendingstrikebytransportationworkers,youmight
decidetocallinateamofemployeeswhodriveminivanstobringsomepeopletoworkand
arrangeforsomepeopletoworkfromhome.
Asyougothroughthisexercise,starttoconsiderwhoshouldbemakingthesedecisions.
Sometimes,crisesareunavoidable.Acontingencyplanwillhelpyouprepare.

Explorethecrisisplan'spossiblesideeffects
Performarealitycheckonyourplanbybrainstormingpossiblesideeffects.
Forexample,whenachainofautorepairshopswantedtoboostsaggingsales,management
offeredmechanicssalesincentives.Themoreworktheybroughtin,thebiggerbonusthey'd
make.Unfortunately,someofthemechanicsbeganrecommendingunnecessaryrepairs.
Customerscomplainedthattheywerebeingrippedoff,andthechain'sreputationsuffered.
Similarly,afactoryofferedincentivesforeverydefectiveproductturnedin,butitsoonturned
outthatsomeworkersweredeliberatelydamagingproductsinordertoreceivetheawards.And
whenapizzacompanypromisedtodelivertheir"pizzain30minutesorit'sfree,"speeding
driverscausedcaraccidents.
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Youdon'thavetocovereveryeventuality,butthinkingthingsthroughcarefullycanhelp
preventproblems.

Formacrisismanagementteam
Theoutcomeofthecrisisdependsontheperformanceofthepeoplemakingthedecisions.The
betterpreparedtheyare,thebetterthecrisiswillbehandled.
Determinewhoonyourteamwill:
Beinvolvedinhandlingeachaspectofthecrisis
Makewhatkindsofdecisions
Notifyauthoritieswithinthecompany
Notifyemployees,governmentagencies,media,andsoforth
Decideifemployeesshouldstayhome
Decidetoevacuateabuilding
Decidetohiretemporarypersonnelintheeventofanunexpectedbusinessrush
Oncethesedecisionshavebeenmade,makesurethateverypersonontheteamhasabackupin
casetheyareunavailable.
Createanddistributealistofallphonenumbers,emailaddresses,andwaystoreachcritical
teamplayers.Havepeopleputthelistontheircomputers,intheirmobilephoneaddressbooks,
onwirelesscommunicators,andintheirhomeoffice...whereveranyoneontheteamcould
possiblyneedaccesstoit.
Then,identifybothformalandinformalnetworkswithintheorganization.Whoarekeyplayers
youmayneedtorelyoninacrisis?Makeitapointtoestablishrelationshipsthatyoudon't
alreadyhave.Whenacrisiscomes,it'saloteasiertohandleifyoualreadyknowalltheplayers.

Createacommunicationsplan

Youneedareliablecommunicationsplan.Createlistsofallpeoplewhowillneedtobe
contactednotjustthemembersoftheteamandhowtocontactthem.Youmayneedto
includeallemployees,vendors,andcustomers.

Developaresourceplan
Foreachcrisisonyourlist,thinkaboutwhatresourceswillbeneededtohandlethecrisis.For
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example,ifyoumanagearesearchprojectinapharmaceuticalfirm,youmayhavetoprepare
forabiologicalorhealthrelatedcrisis.Ifyouaretryingtodevelopamarketnicheinan
underdevelopedcountry,youremployeesmaybeinrealphysicaldanger.Inboththese
examples,theresourcesrequiredwouldbeverydifferentfromastoreofspecificantidotesto
adetailedescapeplan.

Whenrealitystrikes

Thechiefexecutiveofficerofamajorcorporationwasalertedonedaythatthepresidentofone
ofitssubsidiariesafilmcompanyhadbeenaccusedofembezzlingmoneyandforging
checks.ButtheCEOrefusedtobelievethatthefilmcompanypresidentwouldevercommit
suchcrimes.Heignoredtheproblem,butitdidn'tgoaway.BythetimetheCEOdecidedtofire
thepresident,thecharismaticthiefhadgottenboardmemberslineduponhisside.Theboard
insistedonkeepingthepresident.Thesituationworsened,withreportscomingoutinthepaper
tarnishingthenameofthefilmcompany,thecorporation,andallinvolvedincludingtheCEO.
Itwasanugly,painfulcrisis,andonethatcouldhavebeencompletelyavoidedhaditbeen
recognizedasapotentialcrisisanddealtwithpromptly.
LiketheCEO,manymanagersdon'twanttofaceunpleasantsituations.Unfortunately,
unpleasantsituationscanbesignsofanimpendingcrisis.Payattentiontothatvoiceinsideyou
thatsays"Uhoh,there'ssomethingwrong!"TheCEOmusthavebeenverydisturbedwhenhe
foundoutthathisfilmcompanypresidentwasaccusedofembezzling.Butherationalizedthe
eventbytellinghimselfthatwhathehadheardwasimpossible.

Isitacrisis?
Onadaytodaybasis,managerslearnofmanydisturbingfactsandevents.Insteadoftryingto
ignorethem,rationalizethem,orminimizetheirimportance,turnaroundandfacethem.Takea
minutetostepoutsideyourselfandquestiontheeventanditsconsequences.
Characterizetheevent.Ifyouansweryestoanyofthefollowingquestions,youare
probablydealingwithanimpendingcrisis.Hastheeventcausedordoesithavethe
potentialtocause:
Injurytoanyperson?
Athreattothehealthorsafetyofanyperson?
Athreattotheenvironment?
Abreakdowninyourcompany'sabilitytoservecustomersorathreattoyour
company'sreputation?
Aseriousthreattoemployees'moraleandwellbeing?
Alossofdata?
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Seriousfinancialloss?
Alegalactionagainstyourcompanyoranindividualassociatedwithit(employee,
subcontractor,partner)?
Evaluatethesizeofthecrisis.Onceyou'verealizedthatyouaredealingwithacrisis,
youneedtodetermineitsscopeandmagnitude.Quicklygatherasmuchinformationas
youcan.Askyourselfquestionssuchasthefollowing:
Howmanypeopleareinvolved?Whoarethey?
Howlongisthislikelytolast?
Haveanylawsbeenbroken?Ifyes,whichones?
Whoalreadyknowsaboutthecrisis?Whatdotheyknow?
Whoneedstoknow?
Whatarethecostsalreadyintermsofhealth?Money?Reputation?
Selfreflect.Evaluatehowyoumanagethesituation.Areyousomeonewhotendsto
underreact?Maybeyouneedtobecomemoreconcerned.Ordoyouhaveatendencyto
overreact?Youmayneedtocalmdown.
Consideryourvalues.Whatisimportant?Whatistherightthingtodo?Forexample,if
anemployeeisbreakingthelawandusingthecompanytodoitwhatisyour
responsibility?Or,ifasubcontractorisdisposingoftoxicwastefromyourcompany
illegally,harmingtheenvironment,andpossiblyendangeringlives,andyoususpectthe
companyisturningablindeyetoit,whatshouldyoudo?

Activity:Crisisornot?
Noteverydifficultsituationcountsasacrisisanurgentsituationthatmustbeaddressed
immediately.Seeifyoucantellthedifferenceintheexamplesbelow.
Oneofyourproductsisfoundtohaveadefectthatcouldcauseinjurytotheuser.
Isthissituationacrisis?
Crisis
Correctchoice.Ifaproductdefectcouldcauseinjury,youaredealingwithacrisis
situation.
Notacrisis
Notthebestchoice.Ifaproductdefectcouldcauseinjury,youaredealingwitha
crisissituation.

Twoexecutivesarehavingadispute.
Isthissituationacrisis?
Crisis
Notthebestchoice.Whileadispute,ifleftunchecked,betweentwocolleagues
maycausesomediscomfort,itisunlikelythatthissortofsituationwouldqualifyas
acrisis.
Notacrisis
Correctchoice.Whileadispute,ifleftunchecked,betweentwocolleaguesmay
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causesomediscomfort,itisunlikelythatthissortofsituationwouldqualifyasa
crisis.

Adirectreport'sbehaviorangersyourlargestclient.
Isthissituationacrisis?
Crisis
Correctchoice.Ifthedamagetoasignificantclientrelationshipcouldleadtoa
debilitatingdropinyourcompany'srevenueorreputation,itisacrisis.
Notacrisis
Notthebestchoice.Ifthedamagetoasignificantclientrelationshipcouldleadtoa
debilitatingdropinyourcompany'srevenueorreputation,itisacrisis.

Hackersbreakintoyourcomputernetworkandobtainsensitivedata.
Isthissituationacrisis?
Crisis
Correctchoice.Losingsensitivedatacouldhavecatastrophicrepercussionsand
countsasacrisis.
Notacrisis
Notthebestchoice.Losingsensitivedatacouldhavecatastrophicrepercussions
andcountsasacrisis.

Yourcompany'smarketsharedecreasesby10%overthecourseofoneyear.
Isthissituationacrisis?
Crisis
Notthebestchoice.Whilea10%dropinmarketsharecouldindicateserious
problemsinproducts,services,ormarketing,andrequireimmediateaction,itisnot
acrisis.
Notacrisis
Correctchoice.Whilea10%dropinmarketsharecouldindicateseriousproblems
inproducts,services,ormarketing,andrequireimmediateaction,itisnotacrisis.

Howwillyoudealwiththecrisis?

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Howwillyoudealwiththecrisis?
Youknowyouhaveacrisisonyourhands.Whatdoyoudo?Youmayhavetodealwithsome
aspectsofthecrisisimmediately,butyouwillalsoneedtocomeupwithaflexibleplanfor
dealingwiththecrisis'shortandlongtermeffects.
Getateaminplace.Youwillneedtogetyourcrisismanagementteaminplaceas
quicklyaspossible.Dependingonthescope,membersoftheteammayneedtobe
assignedtothecrisisfulltime.Ifthecrisisisbigenough,oroflongenoughduration,you
mayneedtopullthecrisismanagementteamoffsomeoralloftheirregularduties.
Ifyouhaveperformedacrisisaudit,thenyourteammemberswillalreadyknowwhat
theirrolesareandhowtocommunicatewitheachother.
Gettheinformationyouneed.Throughoutthecrisis,you'llneedkeyinformationabout
what'shappeningasithappens.You'llneedtoasktherightpeopletherightquestions.
Workwithyourteamtomakesuretheinformationisflowing.You'llalsoneedtomake
senseoutoftheinformationyouget.Sortoutwhat'srelevant,andwhatisn'twhat's
importantandwhat'strivial.It'seasytogetboggeddownindetails,sostepbackevery
nowandthen,andtakeabroadviewofthesituation.
Atthisphaseofthecrisis,it'simportanttohaveasoundingboardapersonyoucantrustto
helpyoutalkthroughideas,information,anddecisions.

Damagecontrol

Whenacrisisdoesstrike,thefirstthingyoumustdoiscontainit.Yourgoalistostopthe
hemorrhagingfast.Youmustmakedecisionsquickly.Beonthescene.Yourphysicalpresence
isimportant.Itletseveryoneknowthatyourcompanycaresaboutwhatishappening.Andyou
mustcommunicatecriticalinformationtokeypeople.
Forexample,whenasupermarketchainwasaccusedbymajorTVnetworkofsellingspoiled
meat,thevalueofitsstockplummeted.Butthemanagementteamrespondedquickly.They
gatheredthefactsbynotonlylisteningtothenewsmediaandhearingthemessagefrom
stockholdersbutbypayingattentiontoandworkingwiththeirownemployeesaswell.
Theyimmediatelystoppedthepracticeofsellinglessthanfreshmeat,andtheyputlarge
windowsinthemeatpreparationareassothepubliccouldwatchmeatbeingpackaged.They
expandedtheiremployeetraining,gavepublictoursoftheirfacilities,andofferedconsumer
discountstodrawpeoplebackintothestores.Thecompanyeventuallyearnedanexcellent
ratingfromtheFoodandDrugAdministrationandsalesreturnedtonormal.

Bedecisiveandcompassionate

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Bedecisiveandcompassionate
Whenatorrentialrainfloodedasectionofabuilding,thewaterdestroyedcomputers,carpeting,
paperrecords,andtheworkspaceof10employees.Themanagerwasonthesceneasthe
workersshowedupinthemorningtohelpworkersanddirectimmediatecleanupefforts.Later,
afterthecleanup,workersbeganhavingbreathingproblemsandheadaches.Thoughthecarpet
hadbeencleaned,itwasdeterminedthatitwasprobablyinfestedwithmold.Insteadoftryingto
cleanthecarpetagain,orwaitingforbudgetaryapproval,themanagerimmediatelyorderedall
thecarpetintheareatoberemovedandreplaced.
Makedecisions.Thismanagerdemonstratedtwoessentialqualitiesnecessaryinacrisis
decisivenessandcompassion.First,hispresenceonthesceneshowedthathe,andthe
company,cared.Later,hisdecisivenessinreplacingthetoxiccarpetingdemonstratedthat
thehealthofemployeeswasmoreimportantthananyotherconsideration.
Decisivenessisnotalwayseasy,butitisimportant.Oftenyouhavetoactontoolittleor
inexactinformation.Ifthereisnoworkablecontingencyplaninplace,ifthereareno
guidelinesforthesituation,andiftherearenotrustedconfidants,thereisstillalways
yourconscience.Askyourself,whatistherightthingtodo?Andthendoit,hopingitis
therightthing!
Respondtoyourpeople.Compassionisapartofmanyorganizations'cultures,anditis
typicallyrewardedinthosecultures.Butnotalways.Somecompaniespridethemselves
onhavingaruthlessandcompetitiveculture.Nevertheless,amanagerstillhasthepower
tosetthetoneforhisorherowndivision.Nomanagerregardlessofthecorporate
culturehastoabandoncompassionorhumanity,especiallyduringacrisis.

LeadershipInsight:Createasenseofurgency
In1987,IwasworkingatCharlesSchwaboutinSanFrancisco.InOctoberofthatyear,
aboutthreeweeksafterthecompanyhadgonepublic,thestockmarketcrashed.Itdropped
23percentofitsvalueinonedayitwascalled"BlackMonday."Itwasaveryexcitingtime
tobeatSchwab.Theactualtechnologythatwe'dbuiltinthecompanyheldupfineduring
thecrashtheproblemwastherewerehundredsofthousandsofpeopletryingtocallintothe
companyandfindoutwhattheycoulddowiththeiraccounts,andthephonesystemsall
melteddown.Theyjustcouldn'thandlethatkindofincomingvolume.
Everyoneinthecompanywasfocusedonthecrash,thecustomer,andhowtheycould
addresstheproblemsthatwerecreatedbythephonesoverthefirstseveraldays.Thatmeans
thateverybodywasmanningthephones,everybodywasonacomputersystemcalling
peoplebackandtryingtogetthemtakencareof,makethetradestheyneededtomake,and
keepthecustomerhappy.
Myjobwasinplanning.AfterI'dbeenonthephonesforawhile,Istartedrunningsome
financialmodelsbecauseIwasstartingtogetfrightenedaboutwhatwasgoingtohappen
downtheroad.Schwabwasaretailbroker:itdependedonindividuals,momsandpops
investingtheirmoneyformakingthebusinessviable.
Myconcernwaspostcrash,themomsandpopsacrossthecountryweregoingtobestuffing
theirmoneyinamattress,theyweregoingtobescaredtodeathtobebackinabrokerage
accountorinamarketandwhatthatmeanttoourbusinesswasgoingtobepretty
significant.
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IfoundthetimetogetholdoftheCEOatthetimeandtalktohimabitaboutit,andhe
sharedmyconcernsaswellasthesenseofurgencyaroundthis.Whathedidwaspretty
quicklyorganizeagroupofhisseniorexecutivesandtaskthemtocomeupwithawayto
manageouroperatingexpensesouroverheaddownsothatwe'dbeabletoabsorbthat
kindofadropintradingvolumeandnotsinkthecompany.
I'dsaywithin60daysorsowehadsomeprettygoodideasonthetable,verycreativeideas
likedoingfurloughsforkeyemployeessothatwe'dkeepthemattachedtothecompany.We
knewthemarketwouldcomebackwedidn'tknowwhen.Andothertypesofwaystocut
ourexpenseswithoutguttingthecompany.
Within90daysofthat,Isuspect,weactuallybeganimplementingtheplans,sothatsix
monthsoutwewerestartingtheseetheimpactofthethingsthatwehadputtogetherthose
first60daysafterthecrash,andactuallybroughtourbreakevencosts,orbreakevenlevelfor
thecompany,downbyabout30percent.Itwasaprettyremarkableachievement.
AndasIthinkbackaboutthatandtheleadershiplessonsthatcomefromthat,Ithinkabout
thefactthatthisCEOhadrecognizedtheproblemimmediatelyandtookaction.Hedidn't
wonderaboutit,hedidn'tthinkaboutwhattodo,hepulledhisseniorstafftogetherandtold
them,"Thisiswhatyouhavetodo.You'reaccountableformakingthishappen,andwe've
gottoactquickly."
Soheestablishedasenseofurgency,andhegavethemafocusaroundexactlywhattheyhad
todo.
Inlookingback,Ithinkthisisprobablythemostcriticallessonfromthewholething.Ithink
abouttakingaCPRcourse,andoneofthefirstthingsthatIrememberbeingtaughtiswhen
youhavetoadministerCPRtosomebody,youhavetofindsomeoneinthecrowdthat's
goingtogatherandpointtothemspecificallytothemandsay,"Yougocall911."
Becauseifyoumakeitageneralstatement,ifyousay,"Somebodycall911,"it'snotlikely
it'sgoingtohappen.Everyoneisgoingtoassumesomeoneelsehasdoneit,thatkindof
thing.
AndIthinkinthiscase,it'saperfectexampleofthat.Hegavethemtheaccountability,he
gavethemthefocus,andhesaid,"Thisisanurgency.Thisisnotsomethingweneedtoget
tosometime,weneedtodoitquickly."
AndIthinktheproofis,ayearout,theshareholderswerestillhappy,theanalystsonWall
Streetwerestillhappy.Eventhoughthestockwasworth$8ashareandithadgonepublicat
$16asharethepriorSeptember,theywereallprettyhappy,becauseIthinktheyknewthat
thecompanywasn'tjusttalkingabouttakingaction,thatthey'dalreadydoneit.
Andinfact,theycouldseethroughthefinancialsthatwehadputtogetheraplanthatcould
beexecutedinawaythatwouldmakethecompanynotonlyviable,butprobablyeven
strongerwhenwecameouttheotherside.
Makepeopleaccountablebygivingspecificassignments.
RayCarvey
ExecutiveVicePresident,COOandCFO,HarvardBusinessPublishing
RayCarveyistheExecutiveVicePresident,ChiefOperatingOfficer,and
ChiefFinancialOfficeratHarvardBusinessPublishing.In1995,hejoined
thecompanyasChiefFinancialOfficer.
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Heisresponsibleforallenterprisewidefunctions,includingFinance,
EnterpriseTechnology,CreativeServices,BusinessIntelligence,Business
ProcessManagement,andInternationalSalesandMarketing.Rayisthe
company'sprimaryliaisonwithHarvardBusinessSchoolonallfinancial
andreportingissuesandisalsoresponsibleforGlobalStrategy.
PriortojoiningHarvardBusinessPublishing,hewasVicePresidentof
FinanceandAdministrationandChiefFinancialOfficerofMorgan
MemorialGoodwillIndustries,Inc.,ChiefFinancialOfficerofBlyth
Software,andCorporateTreasurerofIngresCorporation.Rayalsoworked
atCharlesSchwabandCompanyandDiGiorgioCorporation.
HeearnedbothhisundergraduatedegreeandhisMasterofBusiness
AdministrationatBostonCollege.

Gopublic
One'sobjectiveshouldbetogetitright,getitquick,getitout,andgetitover.
WarrenBuffett
Anyonewhoishandlingacrisisisgoingtohavetocommunicatewithothers.Thiscouldbethe
generalpublic,oryourimmediatevendors,suppliers,andclients.Inanycase,youwillneedto
communicatetoyourteamhowthecrisiswillimpactthemandwhattheyneedtodo.Whatyou
sayandhowyousayitarecritical.Youaremanagingtheperceptionsofpeoplewhosereactions
candrasticallyaffectwhathappens.Thewayyoucommunicatecanprecipitateactionsthatcan
makethecrisisworseorbetter.Acrisis,bydefinition,meansthatthereisbadnews.Dealing
withpainandangerearlyoncanforestallfarworseproblemslateron.Yourgoalistocontain
theoverallcrisis,nottomakethepresentmomenteasier.

KeyIdea:Guidelinesforcommunicating
KeyIdea
Whencommunicatingduringacrisis:
First,expectrumorsandfalseinformation.Duringacrisis,peoplewant
informationtrueornot.Usethecommunicationplanyou'vedevelopedaspartof
yourcrisisplanningtoaddressandstopthefloodoffalsenews.
Second,notifykeypeople.Informanyonewhoneedstoknowcompany
management,customers,employees,suppliers,governmentauthoritiesanddoso
quickly,withintwohours,ifpossible.Ifyouhavecreatedacommunicationplanorlist
ofimportantphonenumbers,nowisthetimetouseit.
Third,sticktothefacts.Whetheryou'retalkingtocoworkers,authorities,orthe
media,makeyourmessagestraightforwardandhonest.
Avoidthesetypical,butinappropriatemessages:
"Nocomment."
"Wehaven'treadthecomplaint."
"Amistakewasmade."
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Giveallthefactsthatyouknow.Youarenotobligatedtospeculate,ortocoverup
becauselyingandspeculatingwillonlydamageyourcredibilityandyourcompany's
credibilityifandwhenyouareprovenwrong.
Communicateallthebadnewsatonce.It'slikepullingoffastickybandage.Itwill
hurtnow,butitwillbeoversoon.
Fourth,communicatehonestly.Ifyoudon'tcommunicatehonestlyandopenly,you
willlikelyfaceahostofdangers,suchaspeopleblamingyouwhentheyfindoutyou
misledthem.
Goingpublicisanimportantpartofcontainingthecrisis.Howcanyoumakesureyou
communicateeffectively?

Activity:Maketherightchoices
Practicemakingtherightdecisioninacrisissituation.
TheInformationTechnologydepartmentofSarah'scompanywarnsherthatthereare
indicationsthatseveralemployees'accounts(somecontainingsensitiveinformation)may
havebeencompromised.TheITmanagerwouldliketolookintothesituationfurther,but
herresourcesarebusyworkingonanimportantprojectforSarah'sboss.Unfortunately,
Sarah'sbossisoutofthecountryfortheweek.WhatshouldSarahdo?
Sarahshouldleaveamessageforherboss'smanagerabouttheissue.
Notthebestchoice.WhileSarahwouldnormallydiscussstaffingissueswith
higherups,thispotentialcrisisrequiresdecisiveaction.
SarahshouldasktheITdepartmenttolookintothecompromisedaccounts
immediately,evenifitmeansdelayingotherprojectsforthetimebeing.
Correctchoice.EventhoughSarahwouldnormallydiscussstaffingissueswithher
supervisor,thisincidentrequiresimmediate,decisiveaction.
SarahshouldinstructtheITprofessionalstofinishherboss'sprojectandthenlook
intotheproblem.
Notthebestchoice.Disclosureofsensitiveinformationisaseriousproblem.Even
thoughSarah'sITdepartmentisalreadyquitebusy,sheshouldmakethis
investigationapriority.

Raymondhasrecentlydiscoveredthatasubcontractorhasembezzledmoneyfromhis
department.Hehasmetwiththeappropriatelegalandfinancialexecutivesofthecompany,
andtheyareaddressingthesituation.AlthoughRaymondhasbeencircumspect,hebegins
hearingrumorsandgossiparoundtheoffice.WhatshouldRaymonddotocontainthe
situation?
Raymondshouldspeakwithhisemployeesandtellthemthefactsaboutthe
situation.
Correctchoice.Thebestwaytocounterrumorsandgossipistofullycommunicate
thesituationwithallinvolved.Sincelegalissuesareinvolvedinthissituation,
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Raymondwillwanttocheckwiththecompany'slegalcounselaboutwhattypesof
thingshecandiscuss.
Raymondshouldinstructhisemployeestostopspeakingaboutthesituation.
Notthebestchoice.Raymondwillneedtocommunicatewithhisemployees
honestlyaboutthesituation,totheextentpermittedbythecompany'slegalcounsel.
Raymondshouldkeepsilentsoasnottofurthercomplicatethesituation.
Notthebestchoice.Raymondshouldprovidewhatfactualinformationhecan,
givenanylegalconstraints.

Fatima'sdepartmenthasrecentlyencounteredamajordefectwithitsleadingproductline.
Fatimastartsreceivingcallsfromthepressalmostimmediately.Whatshouldshedo?
Fatimashouldrespondtoeachphonecallwithasimple"Nocomment."
Notthebestchoice.Thissortofresponsemaybetypical,butitdoesnothingto
convincepeoplethatinformationisnotbeingwithheld.
Fatimashouldorganizeapressconferencesothatshecanmakesurethatallthe
factsofthesituationareknown.
Correctchoice.Communicatingallthebadnewsinasituationsuchasthismaybe
painful,butitisalsoanimportantstepincontainingthecrisis.
Fatimashoulddenyanyknowledgeoftheproblemuntilshehasabettersenseof
howtohandlethesituation.
Notthebestchoice.Attemptingtocoverupinformationcouldmakethesituation
evenmoredangerous.Peoplewillresentthecoverup,andworkevenharderto
figureoutwhatisgoingon.

Movequickly

Bydefinitionacrisisrequiresfast,confidentdecisionmaking.Buthowdoyoumakegood
decisionswheneventsaremovingquickly,whenthingsareconfusing,andwhenit'shardtosort
outwhat'simportant?Howcanyoustayontrack?

LeadershipInsight:Trustyourjudgment

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LeadershipInsight:Trustyourjudgment
Onmy12thdayonmyjobasHarvardviceprovostforinternationalaffairs,IthoughtIwas
goingtobefired.AwarhadbrokenoutinLebanon,Israelhadbegunbombing,anditbegan
tooccurtomethatIshouldmakethedecisionthatHarvardoughttodosomethingaboutit
butinternationalevacuationswasnotinmyjobdescription.Actuallytellingdeansand
differentofficialsinotherpartsoftheorganizationthattheyoughttobeworkingtogetherto
getpeopleoutwasnotpartofmyjobdescriptionormyauthority.Ithinkleadersinacaseof
anemergencycan'tbeparalyzedbywaitingforstandardoperatingprocedures.Theyhaveto
act.Theyhavetomaketherulesastheygoalong.Andsoifitwasn'tprohibited,Iwasgoing
todoit.
TheonethingthatIneededistomakesurethattheguywhohadappointedme,theprovost
oftheUniversity,whomIbarelyknew,wouldsay,"OK.Tryit."Thesameprocessof
decisionmakingoccurredatamomentinthecrisisjustabitlater.Yeah,wedidn'thave
moneytodothis.Itwasnotinthebudget.WehadnotbudgetedforawarintheMiddleEast.
Andsohowtogetthesepeopleoutrequiredthedeansofthevariousschoolstobeableto
putupsomemoneysothatwecouldevacuatepeoplefromBeiruttoDamascus,thenthe
deanswouldpayfromDamascusbacktoBoston.Andmostofthedeanssaid,"Yes."Oneof
thedeanssaid,"No."Andsooneofthequestionswashowdowegetthesepeopleout?We
don'twantthemabandonedinDamascus.SoIhadtoshamethedean.IsaidIwouldpayfor
thisairfareoutofmyownpocket.
Soinacrisiswhenyourpeopleareatrisk,whentheorganizationisatrisk,theonlywayfor
aleadertoaskotherstojoininsolvingtheproblemandtoaddressitistotakerisksyourself.
Iwasatriskofbeingfired.Iwasatriskoflosingsomepersonalmoney,butthat'stheright
waytomaketheorganizationovercometherisksthatitfaceswhenleadersarepreparedto
putinsomeoftheirskin.
Don'tbeparalyzedwhentherearenostandardoperatingprocedures.Trustyourjudgmentand
takeaction.
JorgeI.Domnguez
ViceProvostInternationalAffairs
HarvardUniversity
JorgeI.DomnguezservesmanyrolesatHarvardUniversity.HeisAntonio
MaderoProfessorofMexicanandLatinAmericanPoliticsandEconomics,
ViceProvostforInternationalAffairs,SeniorAdvisorforInternational
StudiestotheDeanoftheFacultyofArtsandSciences,andChairmanof
theHarvardAcademyforInternationalandAreaStudies.
HehasauthoredandcoauthoredvarioustitlesincludingConsolidating
MexicosDemocracy:The2006PresidentialCampaigninComparative
Perspective,TheConstructionofDemocracy:LessonsfromPracticeand
Research,andBetweenComplianceandConflict:EastAsia,Latin
America,andtheNewPaxAmericana.
ApastPresidentoftheLatinAmericanStudiesAssociationandapast
BoardChairmanoftheLatinAmericanScholarshipProgramofAmerican
Universities,JorgecurrentlyservesontheEditorialBoardsofPolitical
ScienceQuarterly,ForeignAffairsenespaol,CubanStudies,andForo
internacionalandisaContributingEditortoForeignPolicy.HewasSeries
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EditorforthePeabodyAwardwinningPublicBroadcastingSystem
televisionseries,CrisisinCentralAmerica.
Hiscurrentresearchfocusesontheinternationalrelationsanddomestic
politicsofLatinAmericancountries.

Beawareoftheeffectsofstress
Typically,threeemotionscancombinetocreatethestressyoufeelduringacrisis:
Fearofdisaster
Anticipationofapotentiallypositiveoutcome
Desireforthecrisistobeover
Understress,youfeelthepressuretomakeadecision.Butthepressurecanpushyoutoastate
ofpanicwhereyouaremakingdecisionssolelytobe"doingsomething."Inreality,however,
youaredispersingenergyandresourcesandthisenergyisyoursourceofstrength.Usethe
powerofpositivestresstohandlethecrisisasaconfidentleader.
Trytoavoid"toxic"stressresponses.Oftenpeoplerespondtothesenaturalandconflicting
feelingsoffear,hope,anddespairinwaysthatcanaggravateratherthanrelievethecrisis.
Besuretoavoidthesecommonineffectiveandoftenharmfulresponses:
Whenindoubt,screamandshout.Thenoisemayseemasthoughthemanagerisdoing
something,butitisawasteofenergyandfailstolessenthecrisissituation.
Hideyourheadinthesand.Attimes,thepressuretoactbecomessostressful,a
managerslipsintoastateofparalysisandcan'tmakeanydecisionsatall.

Theleadershiprole
WhetheractingastheCEOofalargecorporationorasupervisorofadepartment,aneffective
leaderfindsoutasquicklyaspossiblewhattherealproblemis.Ofteninacrisis,therewillbea
flurryofinformation,mostofitinaccurate.It'syourtasktodiscoverthetruthandfaceitby
askingtherightpeople,listeningtothemostreliablevoices,andgoingtotherightplaces.
Aleaderinacrisisrespondsby:
Facingthecrisisturningfearintopositiveaction
Beingvigilantwatchingfornewdevelopmentsandrecognizingtheimportanceofnew
information
Maintainingfocusontheprioritiesensuringthatpeoplearesafefirst,andthen
assessingthenextmostcriticalneeds
Assessingandrespondingtowhatisinhisorhercontrolandignoringwhatisnot

KeyIdea:Takeaction
KeyIdea
Asaleader,youshoulddoseveralthingstoresolvethecrisis:
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One:Youshouldact.Onceyouunderstandtheproblem,therearereallyprobably
onlyafewrealisticoptionsopentoyou.Ifyouhaveacrisisplaninplace,useit.
Two:Helpeveryoneworktogether.Aleaderhasthepowertodrawpeopletogether
toactasateam.Ifyourpeopleknowyouareincharge,theywillrespondtoyour
direction.
Three:Avoidblamingothers.Asthecrisisheatsup,theimpulsetoblamepeoplecan
becomeirresistible.Certainly,ateammember'sincompetenceorseriouserrormay
havecausedthecrisis,ormaybeperpetuatingit.However,duringtheheatofthe
crisis,tryingtofindascapegoatiscounterproductive.Focusyourpeopleonhandling
thecrisis,notonblamingothers.
Later,afterthecrisis,itwillbeuptoyoutoanalyzewhetherornotapersonshouldbe
reprimandedinsomeway.However,keepinmindthatconstantfaultfindinglowers
moraleandstiflesthecreativityandcommitmentyouneedtosolvetheproblem.
Createanatmospherewherepeoplelookforwardtowhatneedstobedone,not
backwardtowhowasatfault.
Four:Dowhatneedstogetdone.Rules,policies,structures,procedures,andbudgets
arecreatedtomaintainorderandprovideaproductiveprocessinthenormalcourseof
business.However,mostruleswerenotcreatedwithacrisisinmind.Dowhateverhas
tobedone,anddon'tworryaboutthe"rules"!
Leadershavegreatresponsibilityintimesofcrisis.Whenitcomestimetotakeaction,what
shouldyoudo?

LeadershipInsight:Avertingahealthcarecrisis
BioMrieuxisaFrenchhealthcarecompanyspecializingin"invitrodiagnostics,"which
meansthatwearesellingcriticalproductslifeanddeathproductstohospitals.But
imagineacrisiswhereacompanythatisnumberoneinFranceformanyproductsis
suddenlynotabletodeliveranyproducttoitscustomers.
Howdidthathappen?Whathappenedis,in1999,theyearIjoinedthiscompany,we
decidedtoopenanewdistributioncenter.Verysimple:Beforewewoulddeliveroursupplies
alloverEuropenowwewoulddeliverdirectlytoourcustomers.
Thatprojecthadalltherecipesforbeingsuccessful.Wehadaveryprofessionalteam
workingonit,andweprobablychosethebesttechnologyandthebestpartners.Yetit
miserablyfailed.
Thedayweopenedthecenter,weimmediatelybegantoreceiveveryangryphonecallsfrom
customersalloverEuropenotonlyFrance,butSpain,Italy,theU.K.,theNetherlands,
becausesomeofthemdidnotreceivegoods.Somewouldreceivesomeproductsbutnotthe
goodones,ornottheonethattheyhadordered.Somewouldreceivejustemptyboxes
andagain,remember,ourproductsarecriticalforthepatient.It'snotpossibletohaveany
backordersinhealthcare.
Sowhydidwemakethesekindsofmistakes?SomethingIaskeveryonesimplyto
remember:Neverbeoverreliantoroverconfidentontechnologies.Evenverygood
technologiesneedtimetoworkoptimally.
Second,alwaysinvolveyourcustomersinthosekindsofbigprojects.Customerslike
transparency.Theydonotliketobeheldhostage.Sowheredidwegofromthere?Youcan
imaginethattheyhadbeenverytenseweeksevenjusttwoweeksbutwewereableto
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solvetheproblemandsolvethecrisisbasicallybecauseofthreeactions.
Thefirstoneis,weimmediatelydecidedtodecentralizeandsimplifyourdecisionmaking
process.WhatImeanbythisisthatoursalesrepsonthefieldwereimmediatelyempowered
tomakethebestdecisionsfortheircustomers.Theywouldbeabletodecidewhetherthey
wouldallocatetheproducttothesecustomersortothosecustomers.Whatitmeansisthat
thisflexibilitytriggeredcreativity.Wehadseenexamplesofrealpartnershipbetweenangry
customersandoursalesreptryingtohelpeachothertomakesurethatwecouldatleast
allocatetheproductsamongthedifferentcustomers.
Thesecondactionwastoinvolveeverybodyandputeverybodyonboard.WhenIsay
"everybody,"Isayfromthepresidentofthecompany,totheCEO,totheexecutive
committeethemaindirectors.Everybodywassenttoourwarehousetoworkmanually
andfilltheboxesthemselvestomakesurethatourproductscouldgotoourcustomers.
Andyoucan'tevenimaginethefantasticmotivationforawarehouseemployeetoseethe
presidentofhiscompanyworkinghandinhandwithhimtosolvetheissue.Sofast
reaction,involvingeverybody,andworkingasateamaredefinitelythreesuccessfactorsto
solveacrisis.
Threefactorsaswiftreaction,involvingeveryone,andteamworkcanhelpresolvea
crisis.
ThierryBernard
SeniorVicePresident,CommercialOperations,BioMrieux
ThierryBernardistheSeniorVicePresidentofCommercialOperationsfor
bioMrieux,aworldwidegroupspecializinginthefieldofinvitro
diagnosticsformedicalandindustrialapplications.
ThierryjoinedbioMrieuxin1999,startingasStrategyDirectorbefore
headingStrategyandClinicalMarketing.In2002,heassumed
responsibilityfortheEurope/MiddleEast/Africazone.Whilehecurrently
livesinBoston,hehaspreviouslylivedinEngland,Belgium,andSpain.
ThierryisagraduateofSciencesPo(Paris)andhasamaster'sdegreein
economyandadministrationfromtheCollegeofEuropeandaMasterof
SciencefromtheLondonSchoolofEconomics.Healsohasadegreein
ForeignTrade(Barcelona)andisoneofFrance'sforeigntradeadvisers.

Exampleofworkingtogether
Whenacatalogretailerthatofferedalargenumberofcustomproductsmonogrammedbags,
sweaters,andsoforthputoutitsholidaycatalog,itwasshockedbythepositiveresponse.
FromthemomentthecatalogwasreleasedinOctober,itsphonelineswereswamped.The
companyhiredtemporaryhelptoworkthephones,butstillhadatremendousbottleneck:
customizingandshippingtheproducts.Itwastheholidayseason.Theheadofdistribution
recognizedthatiftheydidn'tgeteverythingshippedintimefortheholidays,theremightnotbe
anextseason.
SotheCEOputoutacallforhelpandrecruitedmanagementandadministrativestafftoworkin
thewarehouseintheeveningsaftertheyhaddonetheirregularjobs.Everyoneworked
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togetherforsixlongandgruelingweekseveryonefromthetopdown.Byworkingasateam,
thewholecompanyeventuallyenjoyedastonishingsuccessbygrowing80%inthatoneyear.
Whatcouldhavebeenacrisisandfailurewasturnedaroundbyteamwork.

Oncethechaoshaspassed

Whenyoumakeitthroughacrisis,don'tjusttrytoputitbehindyou.Rather,takethe
opportunitytolearnfromtheexperienceandmakechangestoavoidorprepareforanother
similarcrisis.
Engineersuseearthquakesasalearningexperiencetoplanforstrongerroads,bridges,and
buildings.Theyusemassivefloodstodeterminethebestwaysforpeopletoadaptto(build
damsordikes)oryieldto(moveoutofafloodplain)thepowerofnature.
Anorganization,too,candoapostcrisisaudittolearnandevenprofitfromtheevent.
Forexample,wheneveryoneinthecatalogcompanymentionedearlierworkedovertimetofill
alargevolumeoforderstheyhadn'texpectedtoreceive,theysuccessfullyhandledthe
immediatecrisis.Butoperatingincrisismodeisanineffectivewaytoworkallthetime(even
thoughsomebusinessesdon'tseemtothinkso).Ittakesitstollonmorale,turnover,andthe
healthofeveryone,especiallythemanager.Aftertherushatthecatalogcompany,everyonewas
givenlargebonusesandextravacationtime.Thenmanagementtookstepstoplanforthenext
year,sothecompanywouldbepreparedtomeetalargedemandwithlesspressureonthe
employees.

Reviewhowthecrisiswashandled
Planthetimingofthecrisisreviewsoonenoughaftertheeventsothatpeoplerememberdetails,
butlongenoughforsomeemotionalhealingtohavetakenplace.
Startbyanalyzingthecrisisfrombeginningtoend.Pinpointactions,assumptions,andoutside
factorsthatprecipitatedthecrisis.Askyourselfthefollowingquestions:
Knowingwhatweknewthen,couldthecrisishavebeenprevented?How?
Atwhatpointdidwerealizewewereinacrisis?Couldwehaverecognizedthesigns
earlier?
Whatwarningsignalswentoffthatwemayhaveignored?
Whatwarningsignalsdidwepayattentionto?
Whatweretheearlysigns?Whyweretheyturningpoints?
Whatdidwedoright?Whatcouldwehavedonebetter?
Whatwerethestresspointsinthesystemthatfailed?

KeyIdea:Lookandplanahead

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KeyIdea:Lookandplanahead
KeyIdea
Knowingwhatyouknownow,howcanyoupreventthesametypeofcrisisfromoccurring
again?Createaplansothatyoulearnfromwhatyouknow.
Getinputfromeveryone.Youneedtogeteveryone'sstory,butpayattentionin
particulartothosewithexpertiseintheareasofimportance.Ifthecrisiswas
technological,thenlistentothecomputerexperts,theITgroup,thenetworkengineers.
Ifthecrisiswasrelationalacriticalvendorcutsoffyoursupplyofgoodstalkto
yourbuyers,butthengetoutinthefieldandfindoutwhathappenedandwhy.
Incorporatetheideasandinformationinyournextroundofstrategicplanning.
You'vealreadyperformedyourfirstcrisisauditnow,you'llhavemuchmore
knowledgetoimprovetherevisedauditandthecrisispreventionplan.
Eachcrisisprovidesalearningopportunity.Howcanyoumakesureyouunderstandthe
situationwellenoughtokeepitfromhappeningagain?

Exampleoflookingandplanningahead
Successfulmanagersmakeeachcrisisalearningexperience.
Forexample,acatalogcompanyexperiencedacrisiswhenitsphonelineswereswampedafter
thereleaseofitsholidaycatalog.
Managementlistenedtoitsemployeesandtooutsideconsultants.Consultantsanalyzed
workflow,lookedatbottlenecksandtechnology.Andeveryoneinthecompanywhohad
workedinthewarehousetohelpgetthroughthecrunchnowunderstoodfirsthandhowthe
businesswasrun.Theirexperiencehadtaughteveryoneagreatdeal.TheCEOsetupasystem
totapintothecumulativeknowledgeofeveryoneinthecompany.Asuggestionprogramwas
implemented,andmanysuggestionswereputintopractice.A$100rewardwasgiveneach
quartertotheemployeewhocameupwiththebestidea.

Trackresults
Tracktheresultsofchangesyoumakeinthewakeofthecrisis.Howaretheyworking?Will
theyactuallyreducethenegativeimpactofafutureevent?
Forexample,asaresultofacomprehensiveanalysisandmuchplanning,thecatalogcompany
waswellpreparedforthenextseason.Someoftherealizationsandimprovementsthatwere
generatedbytheanalysisincluded:
Problemrealized

Actiontaken

TheoutdatedIT
systemwas
incapableof
handlingthelarge
volumeofbusiness.

Thesystemwas
redesignedand
overhauled.Itgrewfrom
oneofthesmallest
divisionsinthecompany

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tooneofthelargest.

Thereweretoo
Numberofcolorsoffered
manycolorsfor
wasreducedofferings
customizableitems, werestreamlined.
whichcauseddelays
inprocessing
orders.
Mostoftheorders Morecatalogswere
cameinathree
offeredthroughoutthe
monthperiod,while year.
itwasslowtherest
oftheyear.
Manyshoppers
orderedatthelast
minute,creating
enormousdemand
onresourcesatone
time.

Tospreadoutthe
frequencyofdemand,
incentiveswereofferedto
encouragecustomersto
orderearlierintheseason.

Toomanycatalogs Thereleaseofcatalogs
wentoutatonce.
andabilitytorespondwas
tracked,sothatsystems
werealwaysinplaceto
handledemand.

Activity:Preventingfuturecrises
Doyouknowwhatconcreteactionstotakeafteracrisistopreventmoreproblemsinthe
future?
Lauraleadstheformulationdivisionatamajorpharmaceuticalcompany.Herdepartment
recentlyencounteredamajorcrisissituationwhensomeofthecompany'sproductwas
tamperedwithbyanoutsideparty.Furtherinvestigationidentifiedseriousgapsinsecurity
duringproduction.
Additionally,Lauradiscoveredthatthequalityassuranceteamwasdangerously
understaffed.
WhichofthefollowingstepsshouldLauraNOTtaketomakesurethatthissortofcrisis
doesnothappenagain?
Testqualityassuranceemployeestodeterminewhethertheycandistinguishbetween
pureandadulteratedtablets
Notthebestchoice.Laurashouldtakethisstep.Bytestingwhetherquality
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assuranceemployeescouldhaveidentifiedadulteratedtablets,Laurawillhavea
betterunderstandingofthescopeofchangesthatneedtobemadeinquality
assurance.
Replacethemanagerresponsibleforsecurity
Correctchoice.WhileLauramayultimatelydecidetoreplacethemanager
responsibleforsecurity,thisactionalonewillnotguaranteeabettersecuritysystem.
Fundnewtrainingtohelpallemployeesspotpossiblesignsoftampering
Notthebestchoice.Laurashouldtakethisstep.Newtrainingwouldbeagoodway
toensurethatallemployeesareawareofstepstheycantaketopreventarecurrence.
Hireadditionalqualityassurancestafftoensurethatthedepartmenthasthe
personnelitneedstodoitsjob
Notthebestchoice.Laurashouldtakethisstep.Itisimportanttotakeconcrete
stepstowardasolutiononceproblemssuchasalackofqualityassurancestaffhave
beenidentified.

Focusyourenergy

Managerscanshowthemselvesastrueleadersduringacrisis.Howdoleadershandle
themselvesduringacrisis?Howdotheyhandletheiruncertaintyandfear?Theyusetheenergy
theyderivefromtheirfeelingstofacethecrisisanddealwithitaseffectivelyaspossible.

Dealwithashorttermcrisis
Ifthecrisisflaresupandisoverquickly,thentrythesesimplestepstomaintainyourown
emotionalbalance.
1.Stop.Assoonasyoubegintofeelthefirstrushofanxietyfloodingyourmind,say
"Stop!"toyourself.Tofaceacrisis,youneedtohaveaclearmindasuncloudedby
anxiety,toxicstress,andfearaspossible.Thus,recognizingthosefeelingsandverbally
pushingbackcanblockthemfromcontrollingyourmindandactions.
2.Breathe.Takeadeepbreath.Justastheword"stop"blocksthenegativethoughtsfrom
yourmind,breathingovercomesthestressinducedtendencytoholdyourbreath.
3.Reflect.Byinterruptingthepatternoftoxicstressandgivingyourselfenergythrough
breathing,youcannowfocusontherealproblem,thecrisisyouface.Byreflectingon
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yourstressresponse,youcanbegintodistinguishthedifferentlevelsofthoughtandto
sortoutreasonablefromirrationalstressresponses.Youcanseethepracticalsituation
morecalmlyandrealisticallyanddistinguishitfromthedistortionsofyouranxiety
influencedthoughts.
4.Choose.Finally,withyourattentionnowonthepracticalsituationitself,youcanchoose
tofindrealsolutions,followthecrisisplanyourgrouphasdeveloped,andtendtothe
needsofthepeopleyoulead.

Dealwithalongtermcrisis
Youmayhavetohandleanotherkindofcrisisonethatstartsasaslowburnandthenbreaks
outintoawildfireoftrouble.Forexample,financialcrisesoftenstartassmallproblemsin
receivables,orperhapscashflowfluctuations,andthenbuildtoaninabilitytoborroworcover
basicexpenses.Youmayhaveasenseoftheemergingcrisisforseveralweeksormonths,yet
you'reunabletostopthespreadoftrouble.
Inthiscase,whenyou'recopingwithstressoverlongperiodsoftime,takingcareofyourself
becomesevenmoreimportant.Longtermstresscanbetoxicphysicallyharmfultoyou.
Takingcareofyourselfgivesyouthestrengthandstaminatotakecareoftheimpactofthe
crisis.Soevenwhenyoufeelhemmedinbythegrowingcrisis,rememberto:
Talktopeopledon'tbecomeisolated
Getenoughsleep
Exerciseregularly
Eatabalanceddiet
Avoidalcohol,caffeine,andsugar
Takeabreakwheneveryoucan
Findhumorwhereveryoucan

FrequentlyAskedQuestions
Whatifmybosswantstocoverupaproblem?
First,talktoyourboss.Ifthatdoesn'twork,tellhisorhersupervisor,ortalktoyourhuman
resourcesdepartmentforhelp.Ifyourbossistryingtocoverupaproblem,thenyouwilleither
becomepartofthecoverup,oryouwillappeartobepartofit.Insomecases,youmighteven
beblamedfortheproblem,whichcoulddamageyourreputation.
ShouldIdisclosepossibleproblems(tothepublic,myboss,mycolleagues)ifIamnot
certainthattheyarerealproblemsorifthereisapossibilitythattheymightbeavoided
altogether?
Ingeneral,itisbesttodiscloseevenpotentialproblems.Althoughonedoesnotwanttomakea
habitofcryingwolf,itismuchworsetosurpriseotherswhenproblemsdobecomeserious.
Furthermore,whenproblemsaredisclosed,yourcompanymaybeabletofindawayof
avoidingthem.
WhatifIdiscoverthatacapableandloyalemployeehasviolatedthelawanddoneso
thinkingthatitwouldbeintheinterestofthecompany?
Theviolationshouldbedisclosedimmediatelytoatleastthelegaldepartmentandgenerallyto
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theauthorities.Thecompanycanprovidetheemployeewithgoodoutsidelegalassistance,buta
firmcannevercondoneanyformofviolationofthelaw,nomatterhowwellintentioned.
HowdoIdealwithrumorsthataredamagingmorale?
Theonlywaytostoprumorsiswiththetruth.Itisimportantthatmanagementbeverycandid
andthatitmakeavailabletoemployees,andothers,truthfulinformationinatimelyfashion.
ThiscanbedonewithWebsites,tapedmessages,memos,andthelike.
HowcanIcarryoutmynormalresponsibilitiesandfightacrisisatthesametime?
Youprobablycan't.Intimesoftruecrisis,itisbestthatyoufocusyourattentionentirelyon
resolvingthecrisisanddelegatetosomeothercapableindividualtheresponsibilityofdayto
dayoperations.
Whenmanagingacrisis,Imaysimplynothavetimetodevoteagreatdealofeffortto
communicatingwitheveryonewhowantstoknowwhatitishappening.HowcanIhandle
this?
Takethetime!Communicationsareabsolutelycriticalinsolvingproblems.Andthebest
communicationsofallarefacetofaceandfromthepersonincharge.
Inthemiddleofacrisis,shouldIthrowawayrecordsthatmightindicatehowerrorswere
made?
Thisis,ofcourse,alegalissueandtherearelawsthatgovernthedestructionofdocuments.
Fromanoverallmanagementview,however,itisbestnevertodestroyrelevantmaterials
bearingonacrisisuntillongafterthecrisishasbeenresolved.Inshort,complywiththelaw,
buterronthesideofnotdestroyingrelevantdocuments.
IfIamrequiredtospeaktothemedia,shouldItalkofftherecord?
Ingeneral,itisapoorpracticetospeakofftherecord.Ifyoudon'twanttoseestatementsyou
aremakinginprint,youprobablyshouldn'tbemakingthestatementsinthefirstplace.Onrare
occasions,itmaybehelpfultoprovide"background"information,butthisshouldbedoneonly
inextraordinarycircumstances.
IfIhaveimportantinformationtorevealrelatingtoacrisis,whomshouldItellfirst:the
media,theemployees,theshareholders,orthepublic?
Allshouldbetoldatthesametime.Firstofall,inthismodernageinformationtravelsvery
quickly.Eventhougheachoftheseconstituenciesandothersareextremelyimportantandhave
arighttoknow,theonlypracticalsolutionistoinformeveryoneataboutthesametime.
IfI'minchargeofageographicallydiverseteam,shouldIreturntoheadquarterswhereI
havegoodcommunicationsandstaffsupport,orshouldIgotothelocationofthecrisis?
Theanswertothisobviouslydependsonthecircumstances,butitisgenerallybesttobeatthe
locationofthecrisis.Onecanbringalongthekeymembersofthestaff,andcommunications
todaycanbeestablishedratherquickly.
ShouldIsaypubliclyhowbadtheoutcomeofagivensituationmightturnouttobe?
Anyeffectiveleadercannotbeapessimist.Bythesametoken,agoodleadermustbearealist.
Mostpeople,particularlymostemployees,wouldratherknowthefullrangeof"reasonable
possibilities"thantobesurprisedbyaverynegativeoutcome.Byadoptingthisstrategyoftotal
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candor,thepossibilityalwaysexistsforpositivenewssomethingthatiswelcomeintimeof
crisis.
Ifakeypersonisnotperformingwellinthemidstofacrisis,shouldthatpersonbe
replaced?
Changingleadershipinthemiddleofacrisisisnotadesirableactionandshouldbeavoidedif
possible.Changesinpersonnelarebesthandledinmorenormaltimes.Butifapersonissimply
notperformingthejob,thenthereisnoalternativethantomakeachange.
AmIobligedtofollowtheadviceofmylawyerifIdon'tagreewithit?
Thisisadifficultquestion.Iftheadviceconcernsthepossibilityofbreakingthelaw,itwould
bewisetofollowtheadviceofthelawyeroratleasttoobtainanindependentopinion.In
mattersnotinvolvingthelawitself(forexample,involvingpossiblefinancialliability),a
lawyer'sviewisoftenbasedonthedesiretoavoiddamaginglegaljudgments.
Management'sresponsibilityismuchbroaderandincludesotheroutcomesthatcanharmthe
companythemostimportantofwhichareonesthatcanaffectthefirm'sreputation.Inmost
cases,oneshouldcarefullyconsidertheviewsofthelegaldepartment,butconsideritasonly
oneamongmanyinputstobeweighedwhenarrivingatdecisionsduringperiodsofcrisis.
ShouldIpubliclyadmiterror?
Ifanerrorhasbeenmadetheanswerwouldgenerallybeyes.Thereare,ofcourse,legal
implicationstodoingsothatmustbeweighed.Inthelongterm,however,iferrorshavebeen
made,itisbesttorecognizethemiffornoreasonotherthantheywillalmostinevitablycome
outinanyevent.
Shouldthepublicspokespersonintimesofcrisisbetheheadofpublicrelations?
Ifitisatruecrisisaffectingthecorporationasawhole,thespokespersonshouldbetheCEO.
Onlythemostseniorindividualcanbebroadlyrecognizedashavingauthoritytospeakon
behalfoftheentireorganization.Forcrisesconfinedtoanindividualpartofthecorporation,it
maywellbethattheheadofpublicrelationsshouldbethespokesperson.

Overview
Thissectionprovidesinteractiveexercisessoyoucanpracticewhatyou'velearned.These
exercisesareselfchecksonlyyouranswerswillnotbeusedtoevaluateyourperformancein
thetopic.
Scenario
Assumetheroleofamanagerinafictionalsituationandexploredifferentoutcomesbasedon
yourchoices(510minutes).
CheckYourKnowledge
Assessyourunderstandingofkeypointsbycompletinga10questionquiz(10minutes).

Scenario:Part1

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Part1
YoumanageDatServ'sInformationSystemsdepartment.DatServprovidesinformation
servicestoabroadrangeofcustomersandhasbeenverysuccessful.Yourdepartmentis
responsibleformaintainingallthecompany'sdatabasesandinformationrelatedsystems.
Youknowthatifanythingeverhappenedtoharmthefirm'sdataoritsreputationfor
deliveringsecureservice,thecompanycouldgooutofbusiness.Youalsoknowthatcrisis
preventionisfarlessexpensiveandtimeconsumingthantakingactionafteracrisishits.So,
youdecidetoinviteotherDatServmanagerstojoinyouinacrisismanagementtaskforce.
Asitsfirststep,thetaskforceresolvestoperformacrisisauditananalysisdesignedto
helpDatServavoiddisasters.
Howshouldyourtaskforceapproachtheauditingeffort?
Listonlytheworstthingsthatcouldhappenandidentifythosethat
aremostlikely
Correctchoice.
It'shelpfultoprioritizeyourauditeffortbyassessingyourcrisisrisk.
Youcan'taddresseverypotentialcrisis,solistonlytheworstdisasters
thataremostlikelytostrike.Forexample,ifyourorganizationisn't
locatedinanearthquakezone,don'tlistearthquakesinyourcrisis
audit.Butifyourbusinessisdatamanagement,you'lldefinitelywant
tolistpossibletechnologicalbreakdowns.
Crisescanoccurinmanyforms:environmentalandhealthdisasters,
technologicalbreakdowns,shiftingeconomicandmarketforces,and
unpredictablehumanbehavior(suchasattacksoninformation
systemsbycomputerhackers).Inyouraudit,decidewhichpossible
crisesaremostpertinenttoyoursituation.
Brainstormallpossiblecrisesanddevelopabroadbasedcrisis
responseplan
Notthebestchoice.
It'sinefficienttotryaddressingeverypotentialprobleminacrisis
audit,sofocustheeffortontheworstdisastersthatmaystrikeyour
company.Then,foreachitemonyourlist,you'llneedtoworkouta
planforhowyouwouldrespondifthatcrisisweretooccur.
Reviewyourcompany'spastcrises,andlistthemostfrequently
occurringonesinyouraudit
Notthebestchoice.
Thegoalofacrisisauditisnottolookbackinhistory,buttolook
forwardatwhichdisastersmightoccurinthefuture.Also,youusea
crisisaudittoassessyourcrisisrisk.Thatis,youidentifytheworst
thingsthatcouldgowronganddecidewhichofthemaremostlikely
orprobable.Thoughcrisescantakemanyforms,listonlythosethat
aremostpertinenttoyoursituation.
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Scenario:Part2
Part2
You'vecompletedyourcrisisaudit.Thetaskforcehasdevelopedcontingencyplansforthe
worstpotentialdisastersonthelist.You'vealsoanalyzedtherelativerisksinvolvedineach
scenario.YoufeelconfidentthatDatServisreadytohandleanyofthesituationslistedinthe
audit.
Thenatechnicianfromyourgroupcomestoyouwithtroublingnews:Apparently,ahacker
hasbrokenintooneofDatServ'scustomerdatabasesandcorruptedsomeoftheinformation
init.Luckily,DatServ'stechstaffhasquicklyreprogrammeditssecuritysoftwareand
recoveredthedamageddata.Thestaffhasalsoreassuredtheaffectedcustomerthatno
permanentharmwasdonetoitsdatabase.Thetechnicianaskswhetheryouthinkanything
elseshouldbedoneinresponsetotheincident.
Howdoyourespondtothetechnician?
SinceDatServrepairedthedamagequicklyandnoonewasharmed,
youdecidethehackingincidentdoesn'trequirefurtheraction
Notthebestchoice.
Bydenyingtheseriousnessoftheincident,youputDatServina
dangerousposition.Thoughtheincidentcausednopermanentharm
andwasresolvedquickly,itrevealsthatDatServ'soverallapproachto
securitymayneedreexamining.Dismissingtheincidentasminorand
failingtoexploreitscausesandramificationscouldleadtomuch
worsedamageinthefuture.
Todealwithpossiblerumormongering,youdecidetofindout
whetheranyofDatServ'scompetitorshavelearnedofthesecurity
breach
Correctchoice.
Atthisstageoftheincident,it'sbesttogathermoreinformation.That
way,youavoideitherunderoroverreactingwhileyoudecide
whetheryouhaveatruecrisisonyourhands.Inadditiontofinding
outifdestructiverumorsoftheincidenthavebegunspreading
throughouttheindustry,youshouldinvestigatewhathappened,why,
andwhattheconsequencesare(includinganylegalramifications).
Basedontheinformationyougather,youcanthendecidehowtotake
effective,appropriateaction.
Youdecidethat,tobeonthesafeside,youshouldmobilizethecrisis
taskforce
Notthebestchoice.
Byjumpingintoactionbeforeunderstandingmoreaboutwhat
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happened,why,andwhattheramificationsare,youriskoverreacting
totheincident.Untilyouknowmore,labelingtheincidentasafull
blowncrisismayonlycauseeveryoneinvolvedtopanic
unnecessarily.Onceyou'veinvestigatedfurther,youcandesignan
effective,appropriateplanofaction.

Scenario:Part3
Part3
Aftergatheringmoreinformationaboutthehacking,youdecidetoreviewallofDatServ's
securitysoftware,withaneyetowardmakinganynecessarychangestopreventfurther
hacking.However,newsoftheincidenthasspreadthroughouttheindustry.Theaffected
DatServcustomertellsothercustomersaboutthesecuritybreach.Equallyalarming,a
journalistcallsyourdepartmentlookingforinformation.Apparently,someonehasleaked
wordoftheincidenttoanindustrytrademagazine.
EventhoughDatServfixedthebreachquicklyandrepairedthedamage,itseemsyou'venow
gotapublicrelationsdisasteronyourhands.You'vegottosaysomethingaboutthesituation
tokeypeopleincludingDatServ'stopmanagement,majorcustomers,employees,andthe
media.Butwhat?
Whatdoyousaytokeypeopleaboutthesituation?
Youacknowledgethatamistakewasmadeandreassurethepublic
thatthesecurityproblemwasfixedandwon'thappenagain
Notthebestchoice.
Sinceyouhaven'timplementedthechangestoDatServ'ssecurity
systemyet,youcan'tpromisethatasimilarincidentwon'thappen
again.Whenyouprovideonlylimitedinformationandmovetoo
quicklytopromisesthatyoucan'tbackupyet,peoplemaythink
you'vegotsomethingtohide.They'llkeepdigging.Andwhenthey
findoutwhat'sreallygoingon,they'llblameyou.It'sbettertogiveall
thefactsthatyoudoknow,inastraightforward,honestway,and
deliverallthebadnewsatthesametime.
Youcommunicateallthebadnewsatthesametimeandtellpeople
everythingyouknowaboutwhathappened
Correctchoice.
Bytakingthisapproach,youcomeacrossasopenandhonest.People
won'tconcludethatyou'rehidingsomething,andtheywon'tfeel
compelledtokeepdiggingformore"dirt."Thoughthisapproachcan
bepainfullikepullingoffastickybandageallatoncethepain
willendmuchsoonerthanifyouomitorcoverupkeyfacts.
Youconfirmthataproblemdidoccur.Buttocontainthedamageand
avoid"addingfueltothefire,"youreleasethepertinentinformation
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selectively
Notthebestchoice.
Omittingkeyfactsisjustasharmfulascoveringupacrisis
completely.Why?Peoplecan'tfullyunderstandtheproblemifyou're
notcompletelyopenandhonestwiththem.Andiftheycan't
understandtheproblem,theycan'thelporsupportyouinresolving
thesituation.Duringacrisis,youneedallthesupportyoucanget.

Scenario:Conclusion
Conclusion
You'vecommunicatedeverythingyouknowaboutthesecuritybreachtokeypeopleinan
open,straightforwardway.Thecompany'stopmanagers,employees,andevencustomers
approveofyourresponse.YoumoveforwardwithyourreviewofDatServ'ssecurity
systems.
Tomanagecrises,youfirstneedtoanticipateandprepareforpotentialdisasters.Then,you
mustrecognizeacrisiswhenithits.Finally,youhavetocommunicatehonestlywith
everyoneaffectedbythecrisis.
Together,thesethreestrategieshelpyou"expecttheunexpected"andtakeappropriate
action.

Activity:CheckYourKnowledge:Question1
You'vejustbeenassignedthetaskofpreventingcrisesthatcouldcausegreatharmtoyour
organization.What'sthefirstthingyoudo?
Identifythecrisesthatwouldcausemostharm
Notthebestchoice.
Whileyouwilleventuallyneedtoidentifywhichcriseswouldcausemostharm,thisisn't
thefirststepyoushouldtake.Instead,youshouldformacrisisanalysisteamcomprising
experiencedpeoplewithdifferentperspectives.Theywillprovideyouwiththemost
valuableinputonhowtopreventandmanagecrisesinyourorganization.Makeyour
crisisanalysisteamaformalonewithassignedtasks.A"watercooler"chatwillnotgive
youthedepthorbreadthyouneedtopreventandmanagecrises.
Identifythecrisesthatwouldbemostlikely
Notthebestchoice.
Whileyouwilleventuallyneedtoidentifywhichcriseswouldbemostlikely,thisisn'tthe
firststepyoushouldtake.Instead,youshouldformacrisisanalysisteamcomprising
experiencedpeoplewithdifferentperspectives.Theywillprovideyouwiththemost
valuableinputonhowtopreventandmanagecrisesinyourorganization.Makeyour
crisisanalysisteamaformalonewithassignedtasks.A"watercooler"chatwillnotgive
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youthedepthorbreadthyouneedtopreventandmanagecrises.
Formacrisisanalysisteam
Correctchoice.
Puttingtogetheracrisisanalysisteamcomprisingagroupofexperiencedpeoplewith
differentperspectiveswillgiveyouanexcellentstart.Maketheteamaformalonewith
assignedtasks.A"watercooler"chatwillnotgiveyouthedepthorbreadthyouneedto
preventandmanagecrises.

CheckYourKnowledge:Question2
Akeyemployeehasjustinformedyouthathiswifehasaterminalillness.Afterexpressing
yoursympathyandconcern,whatdoyoudo?
Findouthowlongsheisexpectedtolive
Notthebestchoice.
Youneedtobesympathetictoyouremployee'scrisis,andfindingouthowlonghiswife
isexpectedtolivedoesn'tconveysympathy.Thecorrectansweris,"Workwithhimand
otheremployeestocreateaflexibleworkplan."Youremployeemaywantandevenneed
toworkduringthecrisis,andmaybeverycapableofperformingonaparttimebasis.
Bringingpeopletogetherduringthiscrisiscanhelpcreatetheemotionalsupportyour
employeewillneedtogetthroughit.
Workwithhimandotheremployeestocreateaflexibleworkplan
Correctchoice.
Youremployeemaywantandneedtoworkduringthecrisis,andmaybeverycapableof
performingonaparttimebasis.Bringingpeopletogetherduringthiscrisiscanhelp
createtheemotionalsupportyouremployeewillneedtogetthroughit.
Encouragehimtotakealeaveofabsence
Notthebestchoice.
Thoughencouraginghimtotakealeaveofabsencemayconveyyourcompassionforhis
situation,youremployeemaywantandevenneedtoworkduringthecrisis,andmaybe
verycapableofperformingonaparttimebasis.Also,youmaynotbeabletoafford
losinghimatthemoment.Thecorrectansweris,"Workwithhimandotheremployeesto
createaflexibleworkplan."Bringingpeopletogetherinthiswayduringthiscrisiscan
helpcreatetheemotionalsupportyouremployeewillneedtogetthroughitandcanhelp
ensurethatyourgrouphastheresourcesitneedstocontinuetoperformitswork.

CheckYourKnowledge:Question3

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Trueorfalse:Whenanalyzingthepotentialdamageacrisiscancause,thebottomlineisthe
mostimportantfactortoconsider.
True
Notthebestchoice.
Thisstatementisactuallyfalse.Acrisishasthepotentialtodamagethehealthandsafety
ofemployees,yourcompany'sreputation,andyourabilitytoservecustomersallequal
inimportancetotheorganization'sbottomline.
False
Correctchoice.
Acrisishasthepotentialtodamagethehealthandsafetyofemployees,yourcompany's
reputation,andyourabilitytoservecustomersallequalinimportancetothe
organization'sbottomline.

CheckYourKnowledge:Question4
Whatpercentageofcompaniesthatexperienceamajordatalosssurvivethatcrisis?
Lessthan10%
Correctchoice.
AUniversityofTexasstudyfindsthatonly6%ofcompaniesthatundergomajordataloss
survivethecrisis.Thegoodnewsisthatthisisonecrisisthatanorganizationcanavoid
relativelyeasily.
Between10%and30%
Notthebestchoice.
Between10%and30%vastlyoverstatesthepercentageofcompaniesthatsurvivea
majordataloss.AUniversityofTexasstudyfindsthatonly6%ofcompaniesthat
undergomajordatalosssurvivethecrisis.Thegoodnewsisthatthisisonecrisisthatan
organizationcanavoidrelativelyeasily.
Morethan30%
Notthebestchoice.
30%vastlyoverstatesthepercentageofcompaniesthatsurviveamajordataloss.A
UniversityofTexasstudyfindsthatonly6%ofcompaniesthatundergomajordataloss
survivethecrisis.Thegoodnewsisthatthisisonecrisisthatanorganizationcanavoid
relativelyeasily.

CheckYourKnowledge:Question5
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Whichtypeofcrisisactuallycontainsthegreatestpotentialforbusinessopportunity?
Apublicsafetydisaster
Notthebestchoice.
Whilesomehighprofilecasesofpublicsafetydisastershaveledtoenhancedreputation
foranorganization,crisesthataffecthumanhealthdon'tgenerallyprecipitatebusiness
opportunities.Thecorrectansweris,"Amarketswing."Changesinthemarketcanspell
disasterorgrowthforacompany,dependingonhowwelltheorganizationpredictsand
handlessuchchanges.
Atechnologicalbreakdown
Notthebestchoice.
Whileatechnologicalbreakdowncanbethedrivingfactorbehindpositivechange,itis
notusuallytheoriginofanewbusinessopportunity.Thecorrectansweris,"Amarket
swing."Changesinthemarketcanspelldisasterorgrowthforacompany,dependingon
howwelltheorganizationpredictsandhandlessuchchanges.
Amarketswing
Correctchoice.
Changesinthemarketcanspelldisasterorgrowthforacompany,dependingonhow
welltheorganizationpredictsandhandlessuchchanges.

CheckYourKnowledge:Question6
Aninternalaccountantinformsyouthatyourhighlypaidstaffmember(withwhomyouhavea
friendlyrelationship)maybeembezzlingsmallsumsofmoney.Whatdoyoudo?
Telltheaccountantthattheemployeemakestoomuchmoneytostealsuchsmallamounts
Notthebestchoice.
Assumingthataparticularcrisiscouldn'thappenisonesurewaytoleaveyourself
unprepared.Instead,youshouldexaminethebookscloselywithyouraccountand,if
somethingisamiss,callinanindependentauditor.Bytakingthesesteps,youinvestigate
thefactsasquicklyandobjectivelyaspossiblewhichisimportanttodoinanycrisis.
Discusstheproblemwiththeemployee"offline"asasubtlewarningtostopthe
embezzlingincaseithappenstobetrue
Notthebestchoice.
Ifyouremployeeisembezzlingandyouwarnhimtostop,youwilllooklikean
accomplicewhenhiscrimeiseventuallydiscovered.Instead,youshouldexaminethe
bookscloselywithyouraccountand,ifsomethingisamiss,callinanindependent
auditor.Bytakingthesesteps,youinvestigatethefactsasquicklyandobjectivelyas
possiblewhichisimportanttodoinanycrisis.
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Examinethebookscloselywiththeaccountant.Ifsomethingisamiss,callinan
independentauditor
Correctchoice.
Byexaminingthebookswithyouraccountantandcallinginanindependentauditorif
somethingisamiss,youinvestigatethefactsasquicklyandobjectivelyaspossible
whichisimportanttodoinanycrisis.

CheckYourKnowledge:Question7
Whichofthefollowingorganizationalcultureswouldlikelybemostresponsivetoandeffective
inhandlingacrisis?
Acompetitiveculturewheredecisionsgetmadeandthejobgetsdonenomatterwhat
Notthebestchoice.
Highlycompetitiveculturesmayspurprofitsduringgoodtimes,butduringacrisis,these
typesofculturesoftenexpendenergyonblamingratherthansolving.A"getitdoneatall
costs"attitudecanactuallycreateacrisisifthisattitudetemptsemployeestocrossethical
andmorallines.
Thecorrectansweris,"Afriendlyculturebasedontrust."Acompanythatvaluestrust
andcompassionandthathascreatedinformalnetworksfortheexchangeofinformation
canmosteasilydemonstratetheteamspiritandopencommunicationneededtosurvivea
crisis.
Afriendlyculturebasedontrust
Correctchoice.
Acompanythatvaluestrustandcompassionandthathascreatedinformalnetworksfor
theexchangeofinformationcanmosteasilydemonstratetheteamspiritandopen
communicationneededtosurviveacrisis.
Aculturewhereinformationiscloselyprotectedanddecisionsaremadeatthetop
Notthebestchoice.
Inorganizationswhereinformationiscloselyprotectedanddecisionsaremadeatthetop,
leadersmissoutonthediverseperspectivesthatmanypeoplethroughouttheorganization
canbringtothesituation.Noonepersonhasalltheinformationacompanyneedsto
handleacrisis.
Thecorrectansweris,"Afriendlyculturebasedontrust."Acompanythatvaluestrust
andcompassionandthathascreatedinformalnetworksfortheexchangeofinformation
canmosteasilydemonstratetheteamspiritandopencommunicationneededtosurvivea
crisis.

CheckYourKnowledge:Question8

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CheckYourKnowledge:Question8
Adisasterhasjuststruckyourcompany,andyouarethedesignatedspokesperson.Apress
conferencewilltakeplaceinonehour.Howareyouandyourstaffpreparingtohandleit?
Youarewritingacarefullywordedstatementthatrevealsonlywhatisabouttobecome
publicknowledge
Notthebestchoice.
Revealingselectedbitsofbadnewswhenthereismoretocomeerodestrustandmakes
thecrisisseemworse.Instead,youshouldbepreparinghonestanswerstothefive
questionsyouwouldleastliketobeasked.
Peoplearegoingtoaskyoutoughquestionswhetheryoulikeitornot.You'rebetteroff
beingpreparedwithcandidanswers,eveniftheansweris"Idon'tknow."
Youarewritingaconfidentstatementthatputsthemostpositiveoutlookontheproblem
andsolutions
Notthebestchoice.
Youaredealingwithacrisis,notasalescall.Tryingtomakethingslook"rosy"may
causepeopletoseeyouasdeceptive.Instead,youshouldbepreparinghonestanswersto
thefivequestionsyouwouldleastliketobeasked.
Peoplearegoingtoaskyoutoughquestionswhetheryoulikeitornot.You'rebetteroff
beingpreparedwithcandidanswers,eveniftheansweris"Idon'tknow."
Youarepreparinghonestanswerstothefivequestionsyouwouldleastliketobeasked
Correctchoice.
Peoplearegoingtoaskyoutoughquestionswhetheryoulikeitornot.You'rebetteroff
beingpreparedwithhonestanswers,eveniftheansweris"Idon'tknow."

CheckYourKnowledge:Question9
Youaretheprojectmanageronakeyproductforyourcompany.Earlyresultsfromusertesting
aremixed.Youmuststilldeliverwithinyourdeadlineandonbudgetbutyoudon'tknowwhere
tobegin.Whatisyourfirststep?
Setupaflexibleproductionteamthatcanquicklymakechangestotheproductindicated
byfocustests
Notthebestchoice.
Settingupateamtomakeeverychangesuggestedbyfocustestswastesenergy,time,and
moneywhichyoucan'tafford,givenyourneedtodeliverwithinyourdeadlineand
budget.Thecorrectansweris,"Stepbackfromtheproduct.Analyzeinformationyouare
gettinginordertoseewhattheproblemreallyis."
Youcansolveacrisisonlyifyouknowwhatitis.Onceyou'veisolatedtheproblemby
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analyzinginformation,youcanbreakitdownintocomponentpartsanddecidehowto
resolvethesituation.
Stepbackfromtheproduct.Analyzeinformationyouaregettinginordertoseewhatthe
problemreallyis
Correctchoice.
Youcan'tsolveaproblemuntilyou'veclearlyidentifiedwhatitis.Onceyou'veisolated
theproblem,youcanbreakitdownintocomponentpartsanddecidehowtoresolvethe
situation.
Continuewiththevisionthatbegantheproductandgoaboutbusinessasusual,creating
anatmosphereofconfidenceandcalm
Notthebestchoice.
Continuingonaclearlyquestionablepathwastesvaluabletimeandwilllikelycausea
problemtogrowintoacrisis.Youcan'taffordeitheroftheseoutcomes,givenyourneed
tostayondeadlineandwithinbudget.Thecorrectansweris,"Stepbackfromthe
product.Analyzeinformationyouaregettinginordertoseewhattheproblemreallyis."
Youcansolveacrisisonlyifyouknowwhatitis.Onceyou'veisolatedtheproblemby
analyzinginformation,youcanbreakitdownintocomponentpartsanddecidehowto
resolvethesituation.

CheckYourKnowledge:Question10
Acrisisisfinallyover,andeveryonefeelsbothrelievedandweary.Thoughyou'retemptedto
getonwithlife,youknowthatyoumustassesswhatwentwronginordertopreventitfrom
happeningagain.Wheredoyoustart?
Getinputfromeveryoneinvolvedtocreateaplanforthefuture
Correctchoice.
Everyonewhowasaffectedbythecrisishasavaluableperspectiveonwhatwentwrong
andideasforhowtopreventasimilarcrisis.Getinputfromalltheseindividualsbefore
makingnewplans.
Determinewhocausedtheproblemanddisciplinehimorher
Notthebestchoice.
Youranalysisofwhatwentwrongmayeventuallyresultindisciplinaryactionhowever,
it'sbesttofirstgetinputfromeveryoneinvolvedinthecrisistocreateaplanforthe
future.Alltheindividualswhowereaffectedbythecrisishaveavaluableperspectiveon
whatwentwrongandideasforhowtopreventasimilarcrisis.
Workwithoneortwokeyplayerstocreateaplanforthefuture
Notthebestchoice.
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Whileworkingwithoneortwokeyplayerstocreateaplanforthefuturemaybeeasier,
youwillmissvaluableknowledgegainedbymanypeopleduringthecrisis.Therefore,
youshouldgatherinputfromeveryoneinvolvedinthecrisisbeforecreatingaplanforthe
future.Alltheindividualswhowereaffectedbythecrisishaveavaluableperspectiveon
whatwentwrongandideasforhowtopreventasimilarcrisis.

CheckYourKnowledge:Results

Yourscore:
Stepsforconductingacrisisaudit
1.Selectacrisismanagementteam.
Seekdiversityinperspectiveforyourcrisismanagementteam.Chancesarethatpeople
inyourcompanymayhaveverydifferentideasaboutpotentialcrises.Agroupof
accountantswillprobablynotcomeupwithsameanswersasagroupofgraphic
designers.
Ifyourdivisionlacksdiversity(forexample,allaresalesrepresentatives),youmaywant
toaskpeoplefromanotherdivisiontoparticipateinordertogetsomeoutside
perspective.Theymaybefromdivisionswithwhomyoudealregularlyasales
departmentmaywantsomeonefrommarketingandsomeonefrominformation
technologytojoininthisprocess,orapurchasingdepartmentmaywanttobringina
representativefromshippingandreceiving.Youmayevenwanttobringinanoutside
party,suchasakeyvendororcustomer.Afterall,preventingacrisisisjustasmuchin
theirinterestasitisinyours.
2.Arrangeabrainstormingmeeting.
Bringyourgrouptogetherwiththesolepurposeofbrainstormingpotentialcrisesthat
mightthreatenyourorganization.Sharinginformationandperspectiveswillhelpgroup
membersfocusontheproblemsandleadtobettersolutions.Theresultswillbemuch
morethoughtful,focused,andconstructive.
3.Focustheteamonthefourcrisiscategories.
Manypeoplewillhavesomeideasaboutpotentialcrises,butyoucanbroadeneveryone's
thinkingbyaskingthemtoconsiderthefollowingfourcategories:
Healthandenvironmentaldisasters
Technologicalbreakdowns
Economicandmarketforces
Relationships
Youmaywanttointroducethisconceptduringthemeeting,oryoumaydecidetohave
membersthinkaboutthesethingsbeforethemeetingandcomepreparedwithideas.
4.Identifythecrisesofconcern.
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Haveyourcrisismanagementteamidentifythepotentialcrisesthataremostlikelyto
happenandwouldcausethemostnegativeresults.
Sinceyoucan'tpossiblypredictallthecrisesthatcouldoccur,narrowthescopetoones
thatareofmostconcerntoyourorganizationinyoursituation.
5.Assesscurrenteffortstopreventcrises.
Examinethewayyouprevent,reactto,andlearnfromcrises.Consider:
Thewayyoureviewpastcrisesandnearcrises.Ifyoudealwithcrisesandlearn
fromtheminpositiveways,youhaveagoodfoundationonwhichtobuild
Howsystemslikeformalreportingstructures,informalnetworks,andjob
descriptionsaresetuptohelpescalateorcontainacrisis
Plansandearlywarningsystemsalreadyinplacetodetectandpreventcrises
Crisiscommunicationplansthatexistorneedtobedeveloped
Whoisinvolvedinorresponsibleforpreventingacrisis

Stepsforcreatingacrisisplan
1.Identifyobstaclesandfailpoints.
Whatfactorscouldmakethecrisisworse?Lackofstaff?Noevacuationplan?
Technology?Weather?Lackofmoney?Lackofknowledge?Brainstormobstaclesand
failpointsandthendeterminewaystodealwiththem.
2.Createaresourceplan.
Dependingonthetypeofcrisis,considerwhatyoumayneedtoresolveit.Thenplanfor
thoseresourcestobeonhandwhenneeded.Forexample,employeestravelingto
dangerouspartsoftheworldmayneedquickaccesstocash.Determinewhatresources
youneed,howyouwillgetthem,andwhowillbeincharge.
3.Createacommunicationplan.
Decidewhowillneedtoknowaboutthecrisisincludebothinternalandexternal
people.Thendevelopacommunicationplansothateachkeypersonwillbeinformedas
needed.Thecommunicationplancouldbeassimpleasanemergencycontactlistora
morecomplexcommunicationtreedesignatingtheflowofmessages.
4.Distributeresourceandcommunicationplans.
Makesureallkeypeoplehaveandunderstandtheresourceandcommunicationplans.
Callameetingtoreviewtheplansandgoovereachperson'sroleduringanemergency.A
mockcrisisdrillcouldevenbeperformedtotestwhethertheplanswillactuallywork.

Tipsforavoidingcrises
Avoidtechnologicalbreakdownsbykeepingcomputersandothersystemsuptodate,and
troubleshootingquicklywhenproblemsdoarise.
Avoidlaborproblemsduringcrunchtimesbyschedulingcontractrenewalsand
negotiationsfortimesoftheyearwhenbusinessisslow.
Avoidrelationshipcrisesbyconfrontingandnegotiatingproblemsbeforetheyescalate.
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Avoidtransitionalcrisesbyhavingaclearplanforqualifiedpeopletosucceedkey
personnelshouldtheybesuddenlyunabletodotheirjobs.
Avoidlegalentanglementsbydiscouraginga"getitdoneatallcosts"attitude.
Avoidongoingfinancialcrisesbyfullyfundingdevelopmentprojectsfromthebeginning.

Tipsforavoidingaprojectcrisis
Don'tstartaprojectunlessitisfullyfunded.
Dotrytomakeonlyonemajoradvanceatatime.
Dofundaprogrambasedonmilestones.Avoidfundingaprogrambasedonyearlyor
monthlyinstallments.
Dorememberthatthegoalsandmajorobjectivesoftheprojectaremoreimportantthan
thesystemsandmeasurementsusedtoattainthegoal.
Dobesurethatacleartechnologyplanisinplacebeforetheprojectbegins.
Douseprototypestotestnewproducts.
Doanticipateblipsbyprovidingfundingreservesandscheduleflexibility.
Doassignaprojectmanagerwhocaresmoreaboutgettingthejobdonethanabout
gettingpromoted.
Dobesuretheprojectmanagerisclearlyincharge.
Don'tallowadversarialrelationshipstodevelopbetweenstakeholders.
Doemphasizereliabilityandqualityinthedevelopmentofproductsandservices.
Dotrytomaintainmanagementstability.
Dolimitoversightonprojectmanagement.
Don'tterminateaprojectinmidstreamunlessyouhaveaverystrongreason.

Tipsforcommunicatingduringacrisis
Don'tspeculateaboutwhathappenedoraboutwhatcouldhappen.
Don'tcoverup,lie,orhedge.
Don'tqualifysympathy,asin"We'resorrythishappened,but..."
Don'tassignblame.Thegoalistoresolvethecrisis.Findingfault,ifnecessary,willcome
later.
Don'tpromiseanythingthatyoucan'tdeliver.Itiswisertounderpromiseandthendeliver
more,thantooverpromiseandcomeupshort.
Don'twalkintoapressconferenceoranykindofpresentationunprepared.(Or,atleast,
trynotto.)
Dogetthefactsasquicklyasyoucan,tothebestofyourability.
Doshowupinperson.Youaretheleader,andpeoplewanttohearfromyou.
Dogivethefacts.
Dobehonestaboutwhatyouknowanddon'tknow.
Doacknowledgeandshowsympathyforhumansuffering.
Doacceptresponsibilityforhandlingthecrisis(notcausingit).
Dogiveallthebadnewsatonce.Leakingoutbadnewsalittlebitatatimeexacerbates
thecrisisandunderminesyourcredibility.
Domakealistofthefivequestionsyouwouldleastliketobeaskedbeassuredthat
someonewillaskthemandbepreparedtoanswerthem.
Dosetuparumorcontrolhotlineiframpantspeculationcouldfuelthecrisis.
Dorecordavoicemessageonaphonelineattheendofeachday,sothatpeoplecancall
andhearwhatisreallygoingon.Yourvoiceisapowerfulcommunicationstool.
DouseaWebsitetogatherandpostimportantinformation.YourcompanyWebsitehas
credibilityandiseasilyaccessiblebyeveryone.(Unlessofcourseyouarehavingacrisis
becauseyourWebsiteisdown.)

Tipsforhandlingacrisis

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Tipsforhandlingacrisis
Putyourcommunicationplanintoaction.Useyourcommunicationplantodelegate
responsibilityandclarifyhowothersshouldcommunicate,withwhom,when,andhow
often.
Getyourcrisisteaminplace.Determinewhocanhelpyouhandlethecrisisandbring
themtogetherimmediately.Youmayneedtocreateateamwhosejobitistohandlethe
crisis,whileothersinyourdepartmentorbusinessarechargedwithrunningbusinessas
usual.
Breakthecrisisdownintocomponentparts.Ifyoulookattheproblemasonebigtidal
wave,youwillquicklybewashedaway.Smallerproblemscanbemorereadilyhandled
thanthewholecrisis.
Delegate.Onceyouhavebrokentheproblemintoitscomponentparts,youwillbeableto
delegatesomeofthework.Determinewhoisbestforwhatjobandgrantauthoritytoget
thatjobdone.
Bedecisiveandflexible.Thetwooppositeendsofthespectrumindecisivenessand
arroganceareequallydestructiveinacrisis.Gettheinformationyouneed,reflect,and
makehonestdecisions.

The10worstthingsthatcouldhappenlist

Checklistof30warningsignsofpotentialtrouble

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Emergencycontactlist

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Precrisisresourceplanningworksheet

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Scenarioimpactassessment

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Worksheetforcapturinglearningfromthecrisis

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WhyDevelopOthers?
Attheendoftheday,youbetonpeople,notstrategies.
LarryBossidy
FormerCEO,AlliedSignal
Intodaysglobalbusinessenvironment,marketsandregulationschangequickly.
Competitorsconstantlyinnovate.Technologicalchangesarethenorm.
Inordertooutmaneuverthecompetitionandmeetthedemandsofthemoment,organizations
mustbeagile.Theymustexecuteflawlessly.Andtheymusttransformthemselves
continuously.
Areyourleadersready?
Dr.NoelM.Tichy
Professor
UniversityofMichiganRossSchoolofBusiness
WehavenowenteredanerawhereIdontcarewhatindustryyourein,youneedleaders
whocanmakedecisions,makejudgmentcallsateverysinglelevel.Allthewaydowntothe
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interfacewiththecustomer.
IfyougotoacompanylikeGoogleoranyofthehightechcompanies,alotofthe
innovationthatAmazondoesishappeningrightatthefrontline.Goahead,tryit,putitout
there,we'lllearnfromit.Thatcannothappeniftheseniorleadershipdoesn'thavea
commitmenttobothdeveloptheleadershipcapability,butdevelopthebusinessthrough
engagingpeopleatalllevelsoftheorganization.
Becomingateachingorganization
Iliketotellparentsthattheycannotdelegatetheirresponsibilitytodeveloptheirchildren.
AndIthinkitisthesameinanorganization.Dayinanddayoutthepersonthathasthe
biggestimpactonpeopleintheorganizationisthenextlevelaboveandtheassociates
aroundandbelow.AndsotobuildalearningorganizationIsayisnotenough.Learning
couldbe,youknowwearelearningcooking,wearelearningthisorthat,butteaching
organizations,whenIlearnedsomething,Ihavearesponsibilitytoteachmycolleagues.
Soeverybodytakesresponsibilityforgeneratingnewknowledgeanditisnotenoughtobea
learner,youthenhavetotranslateitintoteaching.
TheVirtuousTeachingCycle
Theroleofaleaderistoensurethatthepeoplewhoworkforthemandaroundthemare
bettereveryday.There'sonlyonewaytomakepeoplebetter.It'stoteachthem,learnfrom
them,createwhatIcall"virtuousteachingcycles,notcommandandcontrol.
Avirtuousteachingcycleisteachlearn,teachlearn.Andtheleaderhasaresponsibilityfor
reducingthehierarchy,forhavingapointofviewtostartthediscussion,butthentobe
responsibletoheareveryone'svoice,geteveryoneinvolvedinadisciplinedway.Itisnota
freeforall.Butitistheleader'sresponsibilitytocreatethatvirtuousteachingcycle.
AwonderfulexampleofvirtuousteachingcycleistheprogramthatRogerEnricoranat
Pepsi,whereeveryoneofthe10vicepresidentscomeswithabusinessproject.
RogerEnricogetssmarterasresultoffivedayswith10vicepresidents,becausehe's
learningfromthem.Heneedstolowerthehierarchy.Heneedstobeopentolearning.Andin
turn,thepeopleparticipatingneedtobeenergizedandempoweredtocomeupandengagein
problemsolving.
AnotherexampleisatBestBuy,whereeverymorninginthestoresyouwouldbring20
associatesorsotogetherandtheywouldreviewtheprofitandlossstatementfromtheday
before,whatwelearnedfromthedifferentcustomersegmentsinourstores,whatwecando
toimproveourperformancethisday.Andtheydothateverysingleday.Thestoremanager
waslearningmostlyfromtheassociatesonthefloor.
Thatwasavirtuousteachingcyclewereeverybodyisteachingeverybody,everybodyis
learningandtheresulthasbeenanincredibleresultatBestBuy.
Thegrowthanddevelopmentofpeopleisthehighestcallingofleadership.
HarveyS.Firestone
Founder,FirestoneTireandRubberCo
Thereareclearadvantagestoleaderleddevelopment.
Butformanyleaders,takingonteaching,coaching,andotherdevelopmentresponsibilities
canseemdaunting.Youmightavoidtakingontheserolesduetolackoftime,resources,or
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yourownlackofcomfortwiththisrole.
Thefollowingtipsandresourcescanhelpyouimpartvaluablelearningtoyourteamevery
day.
Todevelopothers
StartwithaTeachablePointofView
ThefirstrequirementofbeingabletodevelopotherleadersistohavewhatIcallateachable
pointofview.Ioftengivetheexampleof,ifIranatenniscampandyoujustcametoday
oneofthetenniscamp,IbetterhaveateachablepointofviewonhowIteachtennis.Soyou
arestandingtherelookingatmeandithasgotfourelements.One,theideas,wellhowdoI
teachthebackhand,theforehand,theserve,rulesoftennis.ThenifIamagoodtennis
coach,Ihaveasetofvalues.WhataretherightbehaviorsIwant,howdoIwantyouto
dress,howdoIwantyoutobehaveonthetenniscourt.
Butifthat'sallIhave,whatdoIdo?Showyouapowerpointpresentationandthenexpect
youtohit500backhands,500serves,runaroundforeighthours.Ihavetohaveateachable
pointofviewonemotionalenergy.HowdoImotivateyoutobuyintotheideasandvalues?
OnoneendofthespectrumitcouldbeIthreatenyouwithcorporalpunishment,theotherI
cangiveyoustockoptions,Icanmakeyoufeelgoodaboutyourself,Icanhelpyoudevelop
asahumanbeing,whatmotivatesyou.
Andthenfinally,howdoImakethetoughjudgmentcalls,theyes/no,decisionsasthetennis
coach,theballisin,theballisout.Idon'thireconsultantsandsetupacommittee,itis
yes/no.Andthesamewithrunningabusiness,whataretheproducts,services,distribution
channels,customersegmentsthataregoingtogrowtoplinegrowthandprofitabilityofthe
organization.
WhatarethevaluesthatIwanteveryoneintheorganizationtohave,howdoIemotionally
energizethousandsofpeople,andthenhowdoImaketheyes/no,judgmentsonpeopleand
onbusinessissues.Sothefundamentalbuildingblockofbeingabletodevelopotherleaders
istohavethatteachablepointofviewjustlikethetenniscoach.
Todevelopothers
Leadwithquestions
Questionsarehugelyimportantbecauseyouwanttocreatedialogueandagain,whatIcalla
virtuousteachingcyclewheretheteacherlearnsfromthestudentsandviceversa.Which
meanseverybodyoughttobefreetoaskwhateverisontheirmind,whateveritwilltaketo
getclarityandunderstanding,butitisnottheleaderjustcominginandfreeformasking
questions.Ibelievetheleaderhasaresponsibilityforframingthediscussion,forhavingas
besttheycanateachablepointofview,theymayneedhelpfromtheirpeopleinflushingit
out,buttheyneedtosetthestagebutthenithastobeaveryinteractive,whatIcallvirtuous
teachingcycleenvironment,teachlearn,teachlearn,teachlearn.
Todevelopothers
Makeitpartofyourroutine
AgoodexampletomeofanoutstandingleaderdevelopingotherleadersisMyrtlePotter
whoatthetimeIamcommentingwasChiefOperatingOfficerofGenentechrunningthe
commercialsideofthebusiness.Andshewouldtaketimeattheendofeverysinglemeeting
anddosomecoachingofthewholeteamonhowwecouldperformasateambetter,andthen
shewouldoftentakeindividualsandsay,couldwespend10minutesoveracupofcoffee,I
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wanttogiveyousomefeedbackandcoachingonthatreportthatyoujustpresentedonor
howyouarehandlingaparticularlydifficulthumanresourceissue,butitwaspartofher
regularroutine.AndIthinkthechallengeforallofusasleadersistomakethatawayoflife
anditisbuiltintothefabricofhowweleadanditisnotaoneoffevent,threetimesayear.It
ishappeningalmosteveryday.
Todevelopothers
Makeitapriority
Oneofthebiggestchallengesingettingpeoplekindofonthispathistoovercomesomeof
theirownresistance,eitherfearorthewayIviewtheworldIdon'thavetimeforthis,
everybodycanmaketime.RogerEnricoisCEOofPepsi.Hedidn'thavetimetogoofffora
weekatatimeandruntrainingsessions.Hehadtoreadjusthiscalendar.Soitrequiresyou
tolookinthemirrorandsay,isthisimportant.Ifitisimportant,ofcourseIcanmakethe
time.ThenIhavetogetovermyownanxietyonhowwellIcandoit,butitisacommitment
togetonthepaththatsays:thisishowIamgoingtodrivemyownperformanceandthe
performanceofmycolleagues.
Todevelopothers
Learntoteach
Ithinkthebiggestmistakeistoassumeyouaregoingtobegoodatitrightoffthebat.Itis
likelearninganythingelse.Firsttimeyougooutandtryandplaytennis,goodluck.Butyou
gottostaywithitandyougottoengageyourpeopleinhelpingmakeyoubetterandthem
better.Andsoitisajourneyyouneedtogeton,notIamgoingtodoitperfectlywhenIstart
out.
Ifyouwanttobeagreatleaderwhoisagreatteacher,it'sverysimple.Youhavegottodive
intothedeependofthepool.Butyou'vegottodiveintothepoolwithpreparation.Idon't
wantyoudrowning.Iwantyousucceeding.Itisextraordinarilyrewardingformosthuman
beingstoteachothers.Ithinkonceyoucanturnthatswitchon,itisselfperpetuating.You
getalotofreinforcement,yourteamisbetter.Youperformbetterbecauseyourperformance
goesupanditbecomesthisvirtuousteachingcycle.
Youropportunitytodevelopothers
Weveheardwhydevelopingotherscandrivegreaterbusinessresults,andhowtomakethe
mostofyourleaderleddevelopmentefforts.ThematerialsprovidedinDevelopOthers
enableyoutocreatepersonalizedlearningexperiencesforYOURteamwithintheflowof
theirdailyactivities.Usetheguidesandprojectstoengageyourteamquickly.Andto
explorehowkeyconceptsapplytotheminthecontextoftheirprioritiesandgoals.
Thevalueofteachingistheperformanceoftheorganizationistotallydependentonmaking
yourpeoplesmarterandmorealignedeverydayastheworldchanges.Inthe21stcentury
wearenotgoingtogetbywithcommandandcontrol.Wearegoingtohavetogetbywith
knowledgecreation.Thewayyoucreateknowledgeinanorganizationisyoucreatethese
virtuousteachingcycleswhereyouareteachingandlearningsimultaneously,respondingto
customerdemandsandchanges,respondingtochangesintheglobalenvironment.My
bottomlineisifyou'renotteaching,you'renotleading.

Aleadersmostimportantroleinanyorganizationismakinggoodjudgmentswellinformed,
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wisedecisionsaboutpeople,strategyandcrisesthatproducethedesiredoutcomes.Whena
leadershowsconsistentlygoodjudgment,littleelsematters.Whenheorsheshowspoor
judgmentnothingelsematters.Inadditiontomakingtheirowngoodjudgmentcalls,good
leadersdevelopgoodjudgmentamongtheirteammembers.
Dr.NoelM.Tichy
Professor,UniversityofMichiganRossSchoolofBusiness
Dr.NoelM.TichyisProfessorofManagementandOrganizations,andDirectoroftheGlobal
BusinessPartnershipattheUniversityofMichiganRossSchoolofBusiness.TheGlobal
BusinessPartnershiplinkscompaniesandstudentsaroundtheworldtodevelopandengage
businessleaderstoincorporateglobalcitizenshipactivities,bothenvironmentalprojectsand
humancapitaldevelopment,forthoseatthebottomofthepyramid.Previously,Noelwashead
ofGeneralElectricsLeadershipCenteratCrotonville,whereheledthetransformationto
actionlearningatGE.Between1985and1987,hewasManagerofManagementEducationfor
GEwherehedirecteditsworldwidedevelopmenteffortsatCrotonville.Hecurrentlyconsults
widelyinboththeprivateandpublicsectors.HeisaseniorpartnerinActionLearning
Associates.Noelisauthorofnumerousbooksandarticles,including:
FormoreinformationaboutNoelTichy,visithttp://www.noeltichy.com.

ShareanIdea
Leadersareinauniquepositiontorecognizetheideasandtoolsthataremostrelevantand
usefulfortheirteams.Ifyouonlyhaveafewminutes,considersharinganideaortoolfromthis
topicwithyourteamorpeersthatisrelevantandtimelytotheirsituation.
Forexample,considersendingoneofthethreerecommendedideasortoolsbelowtoyourteam
withyourcommentsorquestionsonhowtheideaortoolcanbeofvaluetoyourorganization.
Bysimplysharingtheitem,youcaneasilyengageothersinimportantconversationsand
activitiesrelevanttoyourgoalsandpriorities.
The10worstthingsthatcouldhappenlist
Stepsforconductingacrisisaudit
Tipsforavoidingaprojectcrisis
Toshareanidea,tip,step,ortoolwithyourcommentsviaemail,selecttheEMAILlinkinthe
upperrightcornerofthepagethatcontainstheidea,tip,step,ortoolthatyouwishtoshare.

Discussion1:Avoidingtheworstthatcouldhappen
Ifeverythingsgoingwellinyourteamrightnow,thelastthingyourpeoplemaywanttodois
conductacrisisauditthinkingaboutwhatcouldgowrong,inabigway,inthefuture.
Conductingacrisisauditmaylooklikeonemoretodoonyourteamsalreadylonglist.But
itsacrucialpartofyourgroupslongtermplanning.
Byanticipatingtheundesirableeventsthataremostlikelytohappentotheirgroupandthat
woulddelivertheworstimpacts,yourteammemberscandevelopstrategiesforavoidingthose
crises.
Usetheseresourcestoleadadiscussionwithyourteamabouthowtoavoidtheworstthings
thatcouldhappentotheirgroup.
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Downloadresources:
DiscussionInvitation:AvoidingtheWorstThatCouldHappen
DiscussionGuide:AvoidingtheWorstThatCouldHappen
DiscussionSlides:AvoidingtheWorstThatCouldHappen(optional)
TipsforPreparingforandLeadingtheDiscussion
Workingthroughthediscussionguidecantakeupto45minutes.Ifyoupreferashorter15or
30minutesession,youmaywanttofocusonlyonthoseconceptsandactivitiesmostrelevantto
yoursituation.

Discussion2:Learningfromacrisisweexperienced
Whenyourteammembersmakeitthroughacrisis,theymaybetemptedtojusttrytoputit
behindthem.Thatreactionisunderstandable.However,thatmaykeepyourteamfromlearning
fromthecrisisakeystepincrisismanagement.Bytakingtheopportunitytolearnfroma
crisistheyveexperienced,yourteammemberscandeterminewhatchangesareneededto
preventasimilarcrisisfromoccurring,andexecutethosechanges.
Anexcellentwayforyourteammemberstolearnfromacrisisistoevaluatehowtheymanaged
apreviouscrisisandthenexploreideasforpreventingasimilarone.
Usetheseresourcestoleadadiscussionwithyourteamabouthowtolearnfromacrisistheyve
experienced.
Downloadresources:
DiscussionInvitation:LearningfromaCrisisWeExperienced
DiscussionGuide:LearningfromaCrisisWeExperienced
DiscussionSlides:LearningfromaCrisisWeExperienced(optional)
TipsforPreparingforandLeadingtheDiscussion
Workingthroughthediscussionguidecantakeupto45minutes.Ifyoupreferashorter15or
30minutesession,youmaywanttofocusonlyonthoseconceptsandactivitiesmostrelevantto
yoursituation.

StartaGroupProject
Justlikeanychangeeffort,successfullyincorporatingnewskillsandbehaviorsintoonesdaily
activitiesandhabitstakestimeandeffort.Afterreviewingordiscussingtheconceptsinthis
topic,yourdirectreportswillstillneedyoursupporttofullyapplynewconceptsandskills.
Theywillneedtoovercomeavarietyofbarriersincludingalackoftime,lackofconfidence,
andafearofmakingmistakes.Theywillalsoneedopportunitiestohonetheirskillsandbreak
oldhabits.Tohelpensuretheirsuccess,youcanprovidesafeopportunitiesforindividualsand
yourteamasawholetopracticeandexperimentwithnewskillsandbehaviorsonthejob.
Forexample,toencouragetheadoptionofnewnorms,youcanprovideyourteammembers
withcoaching,feedback,andadditionaltimetocompletetasksthatrequiretheuseofnew
skills.Managementapproachessuchasthesewillencourageteammemberstoexperimentwith
newskillsuntiltheybecomeproficient.
Grouplearningprojectsprovideanothervaluabletechniqueforacceleratingteammembers
developmentofnewbehaviors.Agrouplearningprojectisanonthejobactivityaimedat
providingteammemberswithdirectexperienceimplementingtheirnewknowledgeandskills.
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Throughalearningproject,teammembersdiscoverhownewconceptsworkinthecontextof
theirsituation,whilesimultaneouslyhavingadirectandtangibleimpactontheorganization.

Thedocumentsbelowprovidesteps,tips,andatemplateforinitiatingagrouplearningproject
withyourteam,alongwithtwoprojectrecommendationsforthistopic.
Downloadresources:
TipsforInitiatingandSupportingaLearningProject
LearningProjectPlanTemplate
LearningProject:ConductaCrisisAudit
LearningProject:DevelopaCrisisPlan

Leadershipina(Permanent)Crisis
RonaldHeifetz,AlexanderGrashow,andMartyLinsky."Leadershipina(Permanent)Crisis."
HarvardBusinessReview,July2009.
Downloadfile
Summary
Thecurrenteconomiccrisisisnotjustanotherroughspell.Today'smixofurgency,highstakes,
anduncertaintywillcontinueevenaftertherecessionends.Theimmediatecrisiswhichwe
willgetthroughwithpolicymakers'experttechnicaladjustmentssetsthestagefora
sustained,orevenpermanent,crisis,arelentlessseriesofchallengesnoonehasencountered
before.Insteadofhunkeringdownandrelyingontheirfamiliarexpertisetodealwiththe
sustainedcrisis,peopleinpositionsofauthoritywhethertheyareCEOsormanagersheading
upacompanyinitiativemustpracticewhattheauthorscalladaptiveleadership.Theymust,of
course,tackletheunderlyingcausesofthecrisis,buttheymustalsosimultaneouslymakethe
changesthatwillallowtheirorganizationstothriveinturbulentenvironments.

LettheResponseFittheScandal
AliceM.TyboutandMichelleRoehm."LettheResponseFittheScandal."HarvardBusiness
Review,December2009.
Downloadfile
Summary
Afullblownscandalcancauseacompanygreatturmoil,eveniftheorganizationisn'tatfault.
Criseseasilyextendbeyondtheoriginalperpetrators,spillingovertootherbusinessesalongthe
valuechainandtothoseapartfromthechainthatresembletheguiltypartiesinsomecentral
way.Forinstance,thedairy,petfood,andtoymanufacturingscandalsinChinaoverthepast
fewyearshaveinmanyconsumers'mindsrenderedallChineseproductssuspect.Drawingon
morethan10yearsofresearch,marketingprofessorsTyboutandRoehmhavedevelopeda
frameworkforcraftingjustright,justintimeresponsestoscandals.Theyoutlinefour
importantsteps:assesstheincident,acknowledgetheproblem,formulateastrategicresponse,
andimplementtheresponse.

TheCEOCan'tAffordtoPanic
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EricJ.McNulty,JamesJ.DunneIII,LeonardJ.Marcus."TheCEOCan'tAffordtoPanic."
HarvardBusinessReview,March2010.
Downloadfile
Summary
WhenabombexplodesinatrainstationinBoston,theexecutiveteamofafinancialservices
firmacrossthestreetisplungedintocrisismode.Nooneispreparedforthecity'srequesttouse
thefirm'slobbyasatriagecenterandtemporarymorgue.TheCEO'sinstinctistosayyes,but
ashisteamdebatestheconsequencesliabilityissues,theeffectontraumatizedemployees
herealizesjusthowcomplicatedadecisionitis.Twoexpertscommentonthisfictionalcase
study:JamesJ.DunneIII,seniormanagingprincipalatSandlerO'Neill+Partners,saysthat
actingethicallyiswhatsavedhisfirmafter9/11.LeonardJ.Marcus,foundingcodirectorofthe
NationalPreparednessLeadershipInitiative,advisestheCEOtodowhatwillhelpemployees
bouncebackthequickest.
v11.0.3.032920132016HarvardBusinessSchoolPublishing.Allrightsreserved.Privacy

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