5.7 - Crisis management and contingency planning

Crisis

Crisis is a period of extreme difficulty or danger.

Crisis management

Crisis management is the process of dealing with a crisis or an emergency.

Contingency

Contingency is a future event that is possible but not 100% likely to occur.

Contingency planning

Contingency planning is preparing an action plan for potential crisis.

• As you can see from the definition, contingency planning is something that happens before the crisis.

• So, you try to prevent the crisis before it happens.

• That is why, contingency planning is proactive because organisations are planning what to do in case of an emergency, before it happens.

• Since there is a pre-planned procedure in contingency planning, it is bureaucratic in nature.

Factors showing how successfully an organisation manages crisis

• Transparency

• Communication

• Speed

• Control

Transparency

Transparency is the extent to which information regarding costs, damage, consequences, etc is made available to relevant stakeholders.

• If crisis management is not transparent enough, then stakeholders are kept in the dark, they panic and do not trust managers.

• If managers are too transparent and disclose every single bit of information about how crisis is managed, then managers are perceived as incompetent and not being able to take situation under control.

• So, in order to have “just enough” of transparency, organisations that deal with crisis should be transparent, but should not disclose everything at once.

• Some things are better to be available post-fact, in order to prevent panic.

Communication

Communication in crisis management refers to establishing reliable official channels for spreading up-to-date information.

• If there is no communication, then stakeholders will eventually get information from alternative unreliable sources (such as rumours) and will not have a clear and up-to-date information regarding crisis management.

• However, if there is too much back-and-forth communication, then crisis management is prolonged.

• The “golden middle” could be one-way communication which refers to keeping stakeholders informed and updated, but not requesting feedback on what is being communicated.

Speed

Speed in crisis management is the rate at which crisis management decisions are made and executed.

• If crisis management is too long, then the effects of crisis are too harmful.

• However, fast decisions are often careless, which might only worsen the effects of the crisis.

• Ideally, crisis management decisions should be quick but verified, meaning that some key stakeholders should quickly consider decisions from various perspectives before they (decisions, not managers) are executed.

Control

Control in crisis management refers to the extent to which organisation has power to influence the course of events and people’s behaviour.

• If there is lack of control, then, obviously, crisis goes out of control.

• If there is too much control, it might result in demotivated staff that resists change, which might only worsen the effects of crisis.

• The solution to the right degree of control might lie in centralised decision-making with a degree of flexibility and teamwork.

Factors of the impact of contingency planning

• Costs

• Time

• Risks

• Safety

Cost

• They are saved in the long term.

• However, in the short term, costs are higher.

• For example, purchasing fire extinguishers increases short-term costs but reduces costs in case of fire because damage caused by fire is minimised thanks to fire extinguishers.

TIme

• Less time is needed to react to an emergency because there is a plan in place, so stakeholders know what to do in case of crisis.

• However, more time is needed to develop a contingency plan.

• For example, fire drills are time-consuming and disrupt the working process but reaction time is minimised in case of real fire.

Risk

• It is lowered if crisis actually happens.

• However, maybe, contingency plan will never be used, so it is a waste of time, in a way…

• For example, most people who practice fire drills never end up in a real fire (luckily), so from a certain (weird) perspective, they wasted their time preparing to something that never happened (thank God).

Safety

• Safety regulations minimise risks.

• However, it is impossible to guarantee 100% safety anyways…

• For example, practicing fire drills still does not mean that everyone will survive in case of real fire (sadly).