Why You Need a Crisis Management Plan & How To Create One

The pandemic has been a stark reminder that no business should be without a crisis management plan. Learn about the importance of these plans and how to create one.

Guest blog post by Kelly Lowe

The past year and a half has been many things. One of them is a time of serious lessons for individuals and society as a whole. A hard lesson undoubtedly learned by some businesses and organizations was the importance of having a crisis management plan.

According to the 2021 PWC Global Crisis Survey, only 20% of the more than 2,800 business leaders across 29 industries in 73 countries surveyed said the pandemic had a positive impact. Over 70% of respondents said the global health crisis affected their business negatively. 

Sixty-two percent said a crisis plan directed their responses, but of those, only 35% said their plans were “very relevant.” 

Clearly, there are many entrepreneurs, business owners, and bosses who need to rethink their approach to crisis management. 

Let’s look at the importance of having a crisis management plan and how to create one using the principles of Radical Candor. This means that you’ll create a plan that shows you Care Personally and Challenge Directly so that you get the result you aim for

Crisis management

Good Examples Of Crisis Management

Before we look at a few surprising statistics and helpful tips for creating a plan, let’s glance at good examples of crisis management—examples where the Radical Candor principles of being kind, clear, specific and sincere are evident.

Johnson & Johnson

One of the best examples of effective crisis management happened in 1982 when several people in Chicago died after taking Tylenol capsules that had been injected with cyanide. Evidence showed the tampering happened after those products had been placed on store shelves.

On the afternoon that the first two people died, Johnson & Johnson set up toll-free hotlines for consumers, it paused all product advertising, and it sent 450,000 messages to healthcare professionals, hospitals, and others. The company also warned consumers not to use the product, and it recalled all products from stores at a cost of more than $100 million.

“What J&J executives have done is communicate the message that the company is candid, contrite and compassionate, committed to solving the murders and protecting the public,” the Washington Post reported.

James Burke, who was CEO, was hailed for the honesty and integrity he displayed throughout the crisis. Even though the company was not responsible for the crisis, it went the extra mile to assure and protect consumers, and to communicate with stakeholders proactively. Johnson & Johnson made massive strides in the development of tamper-proof packaging. 

Cleveland Clinic Abu Dhabi

The Cleveland Clinic Abu Dhabi, a U.S. medical center in the United Arab Emirates, offers another good example of crisis management. It was one of the medical facilities to deal with COVID-19 patients after the coronavirus spread beyond China’s borders.

Besides continuing to treat transplant, cancer, and other patients, the clinic formed a crisis management team drawn from all organizational levels. It quickly increased its capacity to deal with emergencies, coordinated with other hospitals, and cared for employees. 

Clinic workers received counseling, healthy food, childcare, online workouts, space for meditation, and sleeping rooms at the facility. They also had opportunities to talk honestly about emotional and other challenges. The clinic’s crisis management demonstrated proactive engagement and problem-solving, empowering teams and employees, candor, and compassion.

You’ll need to care more about just getting the job done in the face of a crisis. You’ll have to care about the people who do the job and build authentic relationships that will see you through any situation—crisis or otherwise.

Crisis Management Statistics

The following statistics, most of which were gathered prior to the COVID pandemic, further highlight the need for reliable and relevant crisis management plans:

  • According to PWC, 69% of leaders experienced a corporate crisis between 2014 and 2019 with those leaders experiencing an average of three crises each.
  • JOTW found that only 45% of communicators had a documented crisis communications plan, despite 59% of them having drafted a communications strategy.
  • According to Morrison & Foerster and Ethisphere, 56% of senior-level executives in crisis management-related fields said they had only some confidence in their crisis management plans.
  • The same firm found that 46% of senior-level executives in those fields were only somewhat confident in their own ability to manage a crisis, and 10% were minimally confident in their ability. Five percent had no confidence in their crisis management abilities.

It’s not possible to plan for every crisis. But it is possible to create a plan that offers a reliable starting point for navigating the crises that may come your business’ way. The planning process can help your team to develop a culture of proactivity and a system for distributing or positioning resources in the relevant places as quickly as possible when faced with a crisis.

Crisis Management Plan Benefits

The goal of crisis management planning is to ensure that bosses, workforces, and businesses are better equipped to respond effectively to specific crises. With the implementation of Radical Candor, establishing a culture of psychological safety and implementing feedback process that’s kind, clear, specific and sincere—they can do so as a cohesive unit who are all working from the same framework. However, the benefits aren’t limited to the final document.

Planning the relevant communications, information, and tasks required to deal with various crises, emergencies, and threats can help you and your team to identify further threats. With Radical Candor, you can achieve results collaboratively that you’d never achieve individually.

Beyond that, all the planning, as well as implementing those plans, can lead to better outcomes—financial outcomes among them.

According to an Oxford Executive Research Centre study, publicly traded companies that implemented their crisis management or disaster recovery plans decreased the initial negative financial impact of crises by 60%. Companies that did not implement their plans saw initial losses equal to 11% of their capitalization, as well as average stock price losses of almost 15%.

Another reason crisis management planning is important is that helps you improve the safety and wellbeing of your employees, customers, and the public. For example, if your business has reserves of volatile, potentially explosive chemicals, you need a reliable plan to deal swiftly and effectively with potential leaks. 

A crisis management plan can also be important because the law requires certain businesses and industries to have one. The absence of a plan could result in your company getting fined or otherwise penalized. Also, a good plan can decrease downtime if a crisis shuts down operations. Plus, it can help your business avoid or decrease reputational damage.

Creating A Crisis Management Plan

Crisis management

Use the following 6 steps to create a crisis management plan for your business:

  1. Identify the Risks

Start creating a plan by identifying potential crises, issues, and risks that could affect the function and processes of your business. Rather than doing it on your own, involve company leadership, the crisis response team, relevant employees, and other stakeholders. This further cultivates a relationship built on trust and collaboration. 

A pandemic, natural disasters, and riots were only some crises that businesses faced in the last year and a half. While you should include events such as those, the planning should consider staff or other workplace issues, public relations or social media blunders, cyberattacks, and product recalls, too. 

  1. Predict the Impact On Business

When you and your team have identified potential threats, the next stage of creating a crisis management plan is to determine the potential impact of such events on your business. 

Do this by completing a business impact analysis (BIA) and use as many available resources as possible to draw your conclusions. If the impact is largely financially focused, your accounting software is a valuable resource. You can draw reports, evaluate cash flow, and rework budgets. If the focus is on reputational damage, social media analytics and marketing stats will provide insight into how you can move forward. 

The impact may have more than one focus, so it’s important to get honest buy-in from all stakeholders to assess potential outcomes. 

  1. Identify Responses

When you’ve identified potential risks and you’ve assessed the possible impact on your business, you and your team can start identifying contingencies that can help your company respond effectively. Do this by considering the various steps required to resolve or mitigate each issue, the resources needed for that to happen, and how employees and various departments can get involved.

  1. Create the Plan

When the above three initial steps are complete, you can start building the plan. This is where Radical Candor principles can truly shine. After identifying potential threats, assessing their potential impact, and identifying contingencies, you can start fleshing out the plan in collaboration with key employees. 

Share your views and ask those employees for feedback in meaningful conversations. Listen to everyone’s ideas, challenge concepts that need further thought, and work together to determine the best course of action. If you listen and provide feedback that’s honest and constructive, the plan will come together in a way that delivers the best possible results for all parties involved. 

  1. Familiarize Employees With the Plan

When the crisis management plan is complete, ensure all relevant employees familiarize themselves with the plan and especially with their roles within the various responses and processes. Make sure they have easy access to the information they need during a crisis. One way of doing so is to use a crisis management app. Implement drills, rehearsals, and other crisis management-related training regularly.

  1. Reconsider the Plan Regularly

Technological developments, legal changes, staff turnover, and other changes over which you have little to no control happen all the time. This makes it necessary to revisit your crisis management plan from time to time. Review and test it with your team at least annually, with the goal of identifying and making changes that will keep it up to date.

No business should be without an effective crisis management plan. Use Radical Candor principles combined with the above steps to create a plan that equips you to navigate any crisis successfully.

 

Kelly LoweKelly Lowe is a passionate writer and editor with a penchant for topics covering business and entrepreneurship. When she’s not tapping away at her keyboard writing articles, she spends her free time either trying out different no-bake recipes or immersing herself in a good book.

 

 

 

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