Is the process by which an organization deals with a major event that threatens to harm the organization.

Is the art of making decisions to head off mitigate the effects of such an event , often while the event itself is unfolding. This often means making decisions about your institutions future while you are under stress and while you lack key pieces of information .

Business & Government

Educational institutions

family

Natural crisis Technological crisis Confrontation crisis Crisis of malevolence Crisis of organizational misdeeds Workplace violence Rumors

 Natural crisis, typically natural disasters considered as

'acts of God; are such environmental phenomena as earthquakes, volcanic eruptions, tornadoes and hurricanes,floods,landslides,tsunamis,storms,and droughts that threaten life,property,and the environment itself.
Example : 2004 Indian ocean earthquake (Tsunami)

Technological crisis are caused by human application of science and technology. Technological accidents inevitably occur when technology becomes complex and coupled and something goes wrong in the system as a whole.

Example: Chernobyl disaster, Exxon Valdez oil spill

Confrontation crisis occur when discounted individuals and/or groups fight businesses, government, and various interest groups to win acceptance of their demands and expectations. Example: Rainbow/ PUSH(People United to Serve Humanity) boycott of Nike

An organization faces a crisis of malevolence when opponents or miscreant individuals use criminal means or other extreme tactics for the purpose of expressing hostility or anger toward, or seeking gain from, a company, country, or economic system, with the aim of destabilizing or destroying it. Sample crisis include product tampering, kidnapping, malicious rumors, terrorism and espionage. Example: 1982 Chicago Tylenol murders.

Example: 1982 Chicago Tylenol murders.

Crisis occur when management takes actions it knows will harm or place stakeholders at risk without adequate precautions. Some crisis are caused not only by skewed values and deception but deliberate amorality and illegality.

Example: Martha Stewart Fraud case

Crisis occur when an employee or former employee commits violence against other employees on organizational grounds. Example: John DuPont ,a multimillionaire, convicted of murdering Olympic Wrestler Dave Schultz

Rumors
False information about an organization or its products creates crisis hurting the organizations reputation. Sample is linking the organization to radical groups or stories that their products are contaminated. Example: Procter & Gambles

Erica James, an organizational psychologist at the university of Virginias Darden Graduate School of Business, identifies two primary types of organizational crisis. James defines organizational crisis as any emotionally charged situation that, once it become public, invites negative stakeholder reaction and thereby has the potential threaten the financial well-being, reputation, or survival of the firm or some portion thereof. 1. Sudden crisis 2. Smoldering crisis

Sudden crisis are circumstances that occur without warning and beyond an institution's control. Consequently, sudden crisis are most often situations for which the institution and its leadership are not blamed.

Smoldering crisis differ from sudden crisis in that they begin as minor internal issues that, due to managers negligence, develop to crisis status. These are situations when leaders are blamed for the crisis and its subsequent effect on the institution in question.

Signal detection

Preparation & prevention

Containment & damage control

Business recovery

learning

Signal detection is the stage in a crisis in which leaders should, but do not always, sense early warning signals(red flag) that suggest the possibility of a crisis. The detection stages of a crisis include:
Sense-making: represents an attempt to create order and make sense, retrospectively, of what occurs.

Perspective-taking: the ability to consider another persons or groups point of view.

Preparation and prevention

It is during this stage the crisis handlers begin preparing for or averting the crisis that had been foreshadowed in the signal detection stage. Organizations primary mission is to prepare for and prevent the escalation of crisis events.

When crisis hits, organizations must be able to carry on with their business in the midst of the crisis while simultaneously planning for how they will recover from the damage the crisis caused. Crisis handlers not only must engage in continuity planning( determining the people, financial, and technology resources needed to keep the organization running), but will also actively pursue organizational resilience.

In the wake of crisis, organizational decision makers adopt a learning orientation and use prior experience to develop new routines and behaviors that ultimately change the way the organization operates. The best leaders recognize this and are purposeful and skillful in finding the learning opportunities inherent in every crisis situation.

 Rapid response

Stay calm
Be visible Put people before business

Tell the truth

To get to business as soon as possible

Odwalla juice e-coil outbreak in 1996 health officials in Washington state informed the company that they had discovered a link between several cases of E.coil 0157:H7 and Odwalla fresh apple juice. One child died and more than 60 people in the Western United States and Canada became sick after drinking the juice. Sales plummeted by 90%,Odwalla's stock price fell 34%. Customers filed more than 20 personal-injury lawsuits and the company looked as though it could well be destroyed

Odwalla's CEO Stephen Williamson ordered a complete recall of all products containing apple or carrot juice. This recall covered around 4,600 retail outlets in 7 states. On all media interviews, Williamson expressed sympathy and regret for all those affected and immediately promised that the company would pay all medical costs Internal communication: Williamson conducted regular company-wide conference calls on a daily basis, giving employees the chance to ask questions and get the latest information. This approach proved so popular that the practice of quarterly calls survived the crisis. External communications:Within 24 hours, the company had an explanatory web site (its first) that received 20,000 hits in 48 hours. All possible attempts were made to provide up to the minute, accurate information.

The next step was to tackle the problem of contamination. The company switched from unpasteurized juice to a process called "f lash pasteurization" which would guarantee that E-coli had been destroyed without compromising flavor. Within months of the outbreak, the company had in place what some experts described as "the most comprehensive quality control and safety system in the fresh juice industry." The new process was communicated in all advertising and public outreach campaigns

The company's values spoke of nourishing people - and when the crisis came it was an adherence to honest, straight talking and accepting responsibility that helped to get the company through. There are critics who refuse to credit the company with any integrity whatsoever - but even these will concede that as an exercise in crisis management, Odwalla stands as an example of best practice that few can match. The year after the crisis, Odwalla was voted "Best Brand Name in the Bay Area" by San Francisco Magazine. This was the first indication amongst many that Odwalla's reputation had survived.