Tuesday, April 6, 2010

Recognizing the Crisis

The CEO of a major corporation was alerted one day that the president of one of its subsidiaries—a film company—had been accused of embezzling money and forging checks. But the CEO refused to believe that the film-company president would ever commit such crimes. He ignored the problem, but it didn't go away. By the time the CEO decided to fire the president, the charismatic thief had gotten board members lined up on his side. The board insisted on keeping the president. The situation worsened, with reports coming out in the paper tarnishing the name of the film company, the corporation, and all involved—including the CEO. It was an ugly, painful crisis, and one that could have been completely avoided had it been recognized as a potential crisis and dealt with promptly.

Like the CEO, many managers don't want to face unpleasant situations. Unfortunately, unpleasant situations can be signs of an impending crisis.

Is it a crisis?

Pay attention to that voice inside you that says "Uh-oh, there's something wrong!" The CEO must have been very disturbed when he found out that his film-company president was accused of embezzling. But he rationalized the event by telling himself that what he had heard was impossible.

On a day-to-day basis, managers learn of many disturbing facts and events. Instead of trying to ignore them, rationalize them, or minimize their importance, turn around and face them. Take a minute to step outside yourself and question the event and its consequences.

Characterize the event. If you answer yes to any of the following questions, you are probably dealing with an impending crisis.

Has the event caused—or does it have the potential to cause

  • injury to any person?
  • a threat to health or safety of any person?
  • a threat to the environment?
  • a breakdown in your company's ability to serve customers or to do business?
  • a serious threat to employees' morale and well-being?
  • a loss of data?
  • a breakdown in your company's ability to communicate?
  • potential damage to your company's reputation?
  • serious financial loss?
  • a legal action against your company or an individual associated with it (employee, subcontractor, partner)?
Evaluate the size of the crisis. Once you've realized that you are dealing with a crisis, you need to determine its scope and magnitude. Quickly gather as much information as you can.

Ask yourself questions such as the following:

  • How many people are involved? Who are they?
  • How long is this likely to last?
  • Have any laws been broken? If yes, which ones?
  • Who already knows about the crisis? What do they know?
  • Who needs to know?
  • What are the costs already in terms of health? Money? Reputation?
Self-reflect. Evaluate how you manage the situation. Are you someone who tends to underreact? Maybe you need to become more concerned. Or do you have a tendency to overreact? You may need to calm down. If you have time, talk over the event with someone you trust to check the validity of your reaction.

Consider your values. What is important? What is the right thing to do? For example, if an employee is breaking the law—and using the company to do it, what is your responsibility? Or, if a subcontractor is disposing of toxic waste from your company illegally, harming the environment, and possibly endangering lives, and you suspect the company is turning a blind eye to it, what should you do? Who is ultimately responsible when carcinogenic chemicals are found in a community's water supply?

How will you deal with the crisis?

You know you have a crisis on your hands. What do you do? You may have to deal with some aspects of the crisis immediately, but you will also need to come up with a flexible plan for dealing with the crisis' short- and long-term effects.

Get a team in place. You will need to get your crisis-management team in place as quickly as possible. Depending on the scope, members of the team may need to be assigned to the crisis full-time. If the crisis is big enough, or of long enough duration, you may need to pull the crisis-management team off some or all of their regular duties.

If you have performed a crisis audit, then your team members will already know what their roles are and how to communicate with each other.

Get the information you need. Throughout the crisis, you'll need key information about what's happening—as it happens. You'll need to ask the right people the right questions. Work with your team to make sure the information is flowing. You'll also need to make sense out of the information you get. Sort out what's relevant, and what isn't; what's important and what's trivial. It's easy to get bogged down in details, so step back every now and then, and take a broad view of the situation.

At this phase of the crisis, it's important to have a sounding board—a person you can trust to help you talk through ideas, information, and decisions.

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