Crisis: when does a molehill become a mountain?

Caroline Keown-McMullan

The author Caroline Keown-McMullan, Lecturer in Hotel Management, University of Ulster at Jordanstown, Newtownabbey, Co. Antrim, UK. Abstract Crises are hitting our industries with alarming regularity. Yet the word crisis is usually used with little thought to its meaning. Examines the various meanings which have been proposed by authors in the eld of crisis management, and contends that for a situation to develop into a crisis three elements must be present: a triggering event causing signicant change or having the potential to cause signicant change; the perceived inability to cope with this change; and a threat to the existence of the foundation of the organization.

Disaster Prevention and Management Volume 6 Number 1 1997 pp. 410 MCB University Press ISSN 0965-3562

In 1972, C.F. Hermann[1] expressed concern that researchers had made little attempt to attach a common meaning to the word crisis. Failure to do so, in his opinion, resulted in those reading such work having to infer from the context that the situation concerns some critical or urgent problem[1, p. 4]. In an attempt to bridge this gap in knowledge, Hermann proposed that a crisis was characterized by three dimensions: high threat, short decision time, and an element of surprise[1, p. 14]. Since 1972, a greater effort has been made to dene what constitutes a crisis. A starting point would appear to be that, contrary to popular opinion, a crisis is not always bad or negative for an organization. This point is well illustrated in Chinese where the symbol depicting a crisis, wei-ji, is a combination of two words, danger and opportunity. A crisis could, therefore, be considered as a turning point. Fink[2] suggests that A crisis is an unstable time or state of affairs in which a decisive change is impending either one with the distinct possibility of a highly undesirable outcome or one with the distinct possibility of a highly desirable and extremely positive outcome. It is usually a 50-50 proposition, but you can improve the odds[2, p. 15]. Wiener and Kahn[3] suggest 12 generic dimensions of a crisis. The rst of these also refers to a crisis as a turning point: crisis is often a turning point in an unfolding sequence of events and actions[3]. While the notion of a positive outcome from a crisis situation is emerging from the literature, the idea of a crisis as a negative situation is still the most prevailing interpretation. One of the factors that appears to determine when an incident reaches crisis status is potential damage. To qualify as a crisis the entire foundation of an organization or business must be threatened. Reilly[4] states that her denition of a crisis implies elements of magnitude, the need for taking action and the necessity of a timely response and denes organizational crisis as a situation which potentially threatens the existence of the affected organization[4, p. 80]. Shrivastava and Mitroff[5] recognize that corporate crises threaten a companys most important goals of survival and protability[5, p. 6]. Brewton[6], who examines crises in hotels, also highlights the importance of potential damage when he says: Two criteria generally dene whether a situation is a crisis. The rst 4

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characteristic is the potential for injury to guests or staff and damage to company assets. The second criterion is one of urgency that is, how fast events are occurring and how quickly major decisions have to be made. If one or other criterion is not present, even a bad situation is not really a crisis[6, p. 10]. The idea of urgency, and the speed with which decisions must be made, are themes which recur in the work of researchers such as Reilly[4], Gladwin[7] and Fink[2]. More complex denitions, outlining conditions which must prevail if a situation is to be classied as a crisis, are put forward by Brewton[6], Wiener and Kahn[3], Miller and Isacoe[8], Hermann[1], and Fink[2]. According to Brewton[6, p. 10], a crisis should have some or all of the following features: severe disruption of operations; increased government regulation; negative public perception of the company; nancial strain; unproductive use of management time; and loss of employee morale and support. Wiener and Kahn[3, pp. 21-2] cite 12 generic dimensions to a crisis. Crisis: (1) is often a turning point in an unfolding sequence of events and actions; (2) is a situation in which the requirement for action is high in the minds and planning of participants; (3) is a threat to the goals and objectives of those involved; (4) is followed by an important outcome, the consequences and effects of which will shape the future of the parties to the crisis; (5) is a convergence of events, the combination of which produces a new set of circumstances; (6) is a period in which uncertainties about the assessment of the situation and alternatives for dealing with it increase; (7) is a period or situation in which control over events and their effects decreases; (8) is characterized by a sense of urgency, which often produces stress and anxiety among the actors; (9) is a circumstance or set of circumstances in which information available to participants is usually inadequate; (10) is characterized by increased time pressures for those involved; 5

(11) is marked by changes in the relations among participants; (12) increases tensions among the actors, especially in political crises involving nations. Miller and Isacoe[8, p. 22] examined several traits of crisis used in psychological and sociological research. Crisis: is acute rather than chronic, although the length of the crisis is usually unspecied; produces changes in behaviour that are frequently pathological, such as inefciency, frustration and scapegoating; is characterized by threat to the goals of the person involved; is relative in that what is a crisis for one party or participant may not be for another; produces tension in the organism, including physical tension and anxiety. As already mentioned, Hermann[1, p.187] proposes that a situation is said to be a crisis if it: threatens one or more important goals of a state (or organization); allows only a short time for decision before the situation is signicantly transformed; occurs as a surprise. Fink[2, pp. 15-16] suggests that a crisis is a situation that runs the risk of: escalating in intensity; falling under close media or government scrutiny; interfering with normal operations of business; jeopardizing the positive public image presently enjoyed by a company or its ofcers; damaging a companys bottom line in any way. Having identied how a situation develops into a crisis, Fink then examines how a crisis manifests itself in an organization. He divides the anatomy of a crisis into four stages: the prodromal crisis stage; the acute crisis stage; the chronic crisis stage; and the crisis resolution stage. Like an illness, contends Fink, A crisis is a uid, unstable, dynamic situation And it must be ministered to in much the same way. With both an illness and a crisis, things are in a state of constant ux[2, p. 20]. The prodromal crisis stage is really the warning stage. As with an illness, a crisis identied at this stage will be most easily cured or even prevented. Fink likens this stage to sailors

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spotting a storm. They cannot change the storm but they can prepare themselves for it. The acute crisis stage is described as the point of no return the crisis has hit at this stage and damage limitation is the objective. This stage of the crisis is characterized by the speed and intensity with which things happen. The chronic crisis stage could also be called the clean-up or post-mortem phase of the crisis. This is when investigations are carried out, self-analysis is undertaken and healing begins. Fink suggests that adept managers will use this phase as a good time for further crisis management, when strengths and weaknesses can be identied. The crisis resolution stage is when the patient is well and whole again[2, p. 25]. To reach this stage should be the goal of all managers/organizations during the crisis. While Fink accepts that all crises may not have all four stages, he suggests they cannot have any more than these four stages. The denition put forward by Hermann in 1972 has not remained unchallenged. Subsequent studies such as those completed by Lentner[9, pp. 112-35] and Brady[10] proposed that threat is the most important element in determining when a problem becomes a crisis, and that time pressure and surprise as necessary constituents of a crisis had little empirical backing. Billings et al.[11] provide one of the most comprehensive reviews of Hermanns model. They suggest that Hermanns model should be replaced with the model illustrated in Figure 1.

problem: The degree of perceived crisis is a function of the perceived value of possible loss, probability of loss and time pressure[11, p. 304]. The denitions proposed thus far have related, primarily, to a situation within the organization; however, the role of the media should not be overlooked. The level of importance allocated to the media varies. Martin Langford[12], chairman of the Public Relations Consultants Association (PRCA), states:
What makes a problem into a crisis is the media or, in some instances, the likelihood of media attention. In normal circumstances, when corporate problems are solved routinely, the media are supposed to appear at the end of the process when all information has been gathered, all decisions have been made and materials and spokespersons have been fully prepared. It is when the media intervenes too early that a crisis ensues. A problem which might be on the agenda for the future becomes a crisis when it is pushed by the media into the present. A potential problem becomes a crisis when the media announces its existence, even as a potential. If a true disaster strikes it is the medias treatment of that event which determines to a great extent whether a corporation has a problem or a full-blown crisis.

Michael Bland[13] also emphasizes the signicance of the media when he says:
At its simplest, a crisis can be dened as unexpected bad publicity it is the publicity element that usually gives the most trouble and needs most careful handling. In terms of management time and resources, communicating with the many outside agencies involved, especially the media, could involve much more time and effort than the crisis itself ... it is usually the publicity that would harm the company or brand rather than the other ramications arising from the incident.

Once the organization is aware of a discrepancy, some judgement is made with regard to the signicance of the problem

Billings et al. assert that the rst step in establishing whether or not a particular situation may be classied as a crisis involves perceiving an event in the environment which triggers the crisis. This triggering event must then be perceived, attended to and evaluated against some standard or measure of how things should be in order for a problem to be sensed[11, p. 302]. Once the organization is aware of a discrepancy, some judgement is made with regard to the signicance of the 6

The importance of the media has certainly increased in recent years. With advances in communication, a crisis in one country can quickly become world news. Doeg[14], when discussing crises in the food and drink industry, stresses the inuence which improved media coverage has had. He uses examples of the Perrier and Heineken crises to show how a problem with a brand in one country can quickly become a worldwide problem:
The advent of 24 hour television and radio news plus the increasing number of channels has led to even greater demands for news. Come what may, items and newsbites have to be found to ll the time slots[14, p. 10].

The previous denitions focus on procedural traits inherent in any crisis. Other writers have

Crisis: when does a molehill become a mountain?

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Caroline Keown-McMullan

Figure 1 A model of crisis perception

adopted a more substantive approach to developing an understanding of what is a crisis. These denitions focus on particular crises and identify the types of crisis which can strike an organization. One of the most comprehensive crises inventories has been compiled by Mitroff[15]: major product defects; major plant/equipment defects; major industrial accidents; major computer breakdowns; hostile takeovers; onsite sabotage/product tampering; offsite sabotage/product tampering; counterfeiting; false rumours, malicious slander; bribery, price xing; 7

sexual harassment; terrorism; executive kidnapping; poor or faulty operator training; copycat threats; recalls; boycotts; loss of proprietary information; misinformation/miscommunication[15, p. 15].

Brewton[6, p. 11] adds unexpected market shift and government interference to this list and Laurence Barton[16], who concentrates on crises which can strike a hotel, suggests: natural disasters such as ood or blizzard; gas or chemical leaks; terrorist or war-related

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Caroline Keown-McMullan

activity; infection or food poisoning outbreaks; and rape or other violent crime against guests.

While these lists are not exhaustive, they do provide an indication of the type of situation which may constitute a crisis

While these lists are not exhaustive, they do provide an indication of the type of situation which may constitute a crisis. Crises can be divided into those caused by internal forces and those caused by external inuences. The nature of the crisis can be divided into either technical/economic failures, or failures in the human/organizational/ social processes. Figure 2, from Shrivastava and Mitroff[5, p. 7], illustrates how various triggering events may be classied. Cell 1 includes technical or economic failure in the internal environment. This cell would include industrial accidents such as those at Bhopal, Three Mile Island and Chernobyl. Cell 2 also covers technical or

economic failure but this time in the external environment. These factors could include hostile takeover bids and currency problems. Cell 3 involves what could be termed human error in the organization. Often these problems stem from poor communication, or imprudent decisions. Finally, Cell 4 covers adverse reaction to the organization from forces outside it. This could include crises arising from product sabotage. A model such as that proposed by Shrivastava and Mitroff[5] can be a useful way to begin dening the types of crisis which could hit a particular organization.

Towards a denition
A universally accepted denition of what constitutes a crisis has not yet been developed and it is unlikely to emerge in the near future. From the work already carried out in this eld, it appears that for a situation to develop into a crisis there must be three elements present (Figure 3): (1) a triggering event causing signicant change or having the potential to cause signicant change. Once this trigger is perceived by those in the organization it will cause a crisis if:

Figure 2 Types of corporate crisis triggering events

Crisis: when does a molehill become a mountain?

Disaster Prevention and Management Volume 6 Number 1 1997 410

Caroline Keown-McMullan

Figure 3 Elements of a crisis

(2) management feel that they are unable to cope with the change which has taken place; and (3) the trigger is so signicant as to pose a threat to the survival of the organization.

a crisis situation develops. This results in feelings of anxiety and increased levels of stress. The anxiety experienced when control appears to be slipping will also be intensied when the change is likely to jeopardize the existence of the business.

The triggering event

While there is no doubt that some crises develop relatively slowly over a considerable length of time, there is usually a triggering event which acts as a catalyst in hurtling a particular problem or opportunity to the centre of attention. The current BSE crisis is a good example to illustrate this. BSE has been present in herds for a considerable length of time but it took media interest and death attributed to CJD, the human form of BSE, to bring the problem to the attention of the general public and to spark what has become known as the BSE crisis. Other crises have a more dramatic and spontaneous trigger for example, when a product has been tampered with or an industrial accident takes place. However, in both conditions the situation has the potential to develop into a crisis because of some triggering event.

Threat to survival
Such a trigger must be capable of causing signicant change or at least be seen as having the potential to cause signicant change. For a situation to develop into a crisis it must be so signicant as to threaten the existence of an organization, or government, or country. It is when all three conditions prevail that a crisis will arise.

Conclusion
Whatever denition is accepted, it is clear that a crisis has a profound inuence on people, organizations, or even entire countries. Whether the result is negative or positive, one thing which is certain is that change will have taken place. Even where a crisis is successfully managed, an organization will have undergone signicant change. This point is well made by Augustine who says:
As a result of this awless sense of timing, I have assembled ample evidence that there is no magical 9-1-1 number you can call to extricate yourself from such predicaments. You get into a x, you get yourself out of it. It is that simple. There is no way to run the sausage machine backward and get pigs out the other end. After all, if the solution were easy, it would not be a crisis[17].

Perceived inability to cope

The same triggering event could occur in two organizations and yet only develop into a crisis in one. The explanation for this is managements perception of their ability to manage what has happened. Once management feel something is beyond their control 9

Crisis: when does a molehill become a mountain?

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Caroline Keown-McMullan

References
1 Hermann, C.F., International Crises: Insights from Behaviour Research, The Free Press, New York, NY, 1972. 2 Fink, S., Crisis Management, American Management Association, Amacom, New York, NY, 1986. 3 Wiener, A.J. and Kahn, H., Crisis and arms control, in Hermann, C.F. (Ed.), International Crises: Insights from Behaviour Research, The Free Press, New York, NY, 1972, p. 21. 4 Reilly, A., Are organizations ready for crisis? A managerial scorecard, Columbia Journal of World Business, Spring, 1987, pp. 79-88. 5 Shrivastava, P. and Mitroff, I.I., Strategic management of corporate crises, Columbia Journal of World Business, Spring, 1987, pp. 5-11. 6 Brewton, C., Managing a crisis: a model for the lodging industry, The Cornell HRA Quarterly, Vol. 28 No. 3, 1987, pp.10-15. 7 Gladwin, T.N. and Kumar, R., The social psychology of crisis bargaining: toward a contingency model, Columbia Journal of World Business, Spring, 1987, pp. 23-31. 8 Miller, K. and Isacoe, I., The concept of crisis, in Hermann, C.F. (Ed.), International Crises: Insights from Behaviour Research, The Free Press, New York, NY, 1972. 9 Lentner, H.H., The concept of crisis as viewed by the United States Department of State in Hermann, C.F.

(Ed.), International Crises: Insights from Behaviour Research, The Free Press, New York, NY, 1972, pp. 112-35. 10 Brady, L.P., Threat, decision time and awareness: the impact of situational variables on foreign policy behaviour, doctoral thesis, Political Science Department, Ohio State University, Columbus, OH, 1974. 11 Billings, R.S., Milburn, T.W. and Schaalman, M.L., A model of crisis perception: a theoretical and empirical analysis, Administrative Science Quarterly, Vol. 25, 1980, pp. 303-16. 12 Langford, M., Crisis communication, in Doeg, C. (Ed.), Crisis Management in the Food and Drinks Industry, Chapman & Hall, London, 1995, p. 1. 13 Bland, M., The crisis checklist, in Doeg, C. (Ed.), Crisis Management in the Food and Drinks Industry, Chapman & Hall, London, 1995, p. 4. 14 Doeg, C., Crisis Management in the Food and Drinks Industry: A Practical Approach, Chapman & Hall, London, 1995. 15 Mitroff, I.I., Crisis management: cutting through the confusion, Sloan Management Review, Winter, 1988, pp. 15-20. 16 Barton, L., Crisis management: preparing for and managing disasters, The Cornell HRA Quarterly, April, pp. 59-65. 17 Augustine, N.R., Managing the crisis you tried to prevent, Harvard Business Review, NovemberDecember 1995, p. 148.

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