When I hear the term crisis, I think of times when things are difficult or dangerous.
I’m thinking of a natural disaster like a tsunami or earthquake that causes a lot of damage and suffering.
There are various types of crises one may face, such as existential, man-made, and business crises. What we’re going to cover in this article is the latter.
The types of business crises that can cause great damage to your company no matter your industry, size, or resources are: financial crisis, management crisis, marketing crisis, natural disaster, public relations crisis, and supply chain crisis.
Businesses are vulnerable to crises, so it’s crucial to be ready for anything that might happen to prevent your company from failing.
This means that almost seven out of every ten leaders have experienced at least one corporate crisis in the past five years, with the average number of crises experienced being three.
If your business experiences an unplanned event, you can follow a crisis management plan to get through it. This plan includes understanding the different stages of a crisis, and having the right team to help you manage the situation.
This guide will cover all the information you need to know about business crises, but let’s start with a review of the definition of a business crisis.
What Is a Business Crisis?
When we talk about a “crisis,” we are talking about a time when things are very difficult or bad. There are several types of events that can qualify, including:
- Physical or public health emergency
- Service disruption
- Security incident
- Legal entanglement
- Public relations nightmare
A common thread among these types of crises is that they have the potential to impact a large number of customers simultaneously. When a crisis affects many customers, you will usually need to communicate with the public. This means that you want your team to speak in one voice.
A business crisis is an event that could damage a company’s reputation, business operations, finances, or harm its employees.
A business crisis can be caused by something happening within the company or from an outside source. Because business crises can be serious, it is a good idea to make a plan for how to deal with one before it happens.
What Is Crisis Management?
Crisis management is the process of preparing for and managing any disruptive or unexpected emergencies that could negatively affect your business, stakeholders, employees, customers, and revenue. Crisis management is an important component of public relations.
Crisis Management Process
The most important part of crisis management is managing the crisis itself, although there is much more to the process than that.
Let’s unpack the primary steps in the crisis management process so your team and crisis leaders can be best prepared.
Crisis management starts with preventing potential crises. This includes creating a crisis management plan, hiring and training a crisis management team, and conducting practice exercises for implementing the plan.
Another part of this step is to draft any crisis communication messages you may have to relay in times of crisis. Pre-writing these messages saves time when an emergency happens.
Crisis Management and Response
The second step of crisis management is when you respond to the different stages of a crisis.
This is stage is when you need to take action and put your crisis management plan into place. News of the crisis is first released to the public, employees and stakeholders are contacted, and safety is the top priority.
After a crisis has passed or subsided, your crisis management work is not finished. You need to keep in touch with your employees, customers, and stakeholders, and be available to answer questions. You should proactively update the relevant parties.
After your team has gone through a mock crisis, sit down with them and review how the plan went. See what could be improved and make changes to the plan accordingly. How did your crisis communications perform? Were there any questions or concerns that your audiences had that you didn’t address? Any lessons you learn from this experience should be integrated into your crisis management process for future planning.
Now that we know what a crisis is, let’s dive into creating a crisis management plan for your business.
What Is a Crisis Management Plan?
The purpose of a crisis management plan is to help a business deal with a disruptive or unexpected emergency in an established, streamlined way. Your crisis management plan should be ready before any crises happen so your business is prepared to use it to deal with and fix any unexpected events.
Why Create a Crisis Management Plan
Facing a crisis without a plan can have severe and long-term consequences for your business. The consequences of this situation could create various legal, operational, and public relations problems. A crisis could cause so much damage that it forces you to close your business.
However, 29% of companies that faced a major crisis from 2014-2019 say they have no staff dedicated to crisis preparedness or response, which shows that many companies are not prepared for a crisis. Almost a third of companies are unsure if their crisis management plans are current.
All businesses should have a crisis management plan in place to prevent long-term damage from happening as a result of any unplanned event. Here are four more reasons why you should have a crisis management plan for your business:
Crisis management plans:
- Help you maintain your great reputation with customers, competitors, and industry leaders during and after a crisis.
- Improve the safety, health, and well-being of everyone who works for and does business with your company.
- Give you peace of mind as an employer and company — you’ll be ready for any situation that comes your way.
- Increase productivity during and after a crisis. Everyone will know their role and function throughout a crisis so there’s less downtime, more action, and quicker resolution.
How to Create a Crisis Management Plan
- Identify all possible types of crises.
- Determine the impact of each type of crisis on your business.
- Consider the actions you’d need to take to resolve each type of crisis.
- Decide who will be involved in the actions you need to take in each scenario.
- Develop resolution plans for each type of crisis.
- Train everyone who needs to be familiar with your plans.
- Revisit and update your plans regularly and when necessary.
The Do’s and Don’Ts of Crisis Management
Losing the trust of your customers can be damaging to your business relationships, so take measures to restore trust quickly if it’s lost. The following are some tips to keep in mind when responding to an emergency.
- Do restore service ASAP (if possible) — In a short-term crisis, the goal should be to resolve the issue and return to normal as quickly as possible. In an ongoing crisis, it may mean trying to mitigate negative impacts while the situation evolves. Share regular updates through email, social media, the help center, and your company website. If service can’t be restored at the levels customers are used to, just briefly and honestly explain the situation, convey that you’re working to mitigate it, and outline the best ways to reach you and/or set expectations for response time.
- Do provide a consistent response — Your crisis communications should be consistent with your brand’s voice (taking into account the seriousness of the situation) and across teams — this is a time to unite and provide a clear message that you’re there to help. Providing a timely and consistent customer experience during crises also bolsters confidence that the next time there’s a crisis, customers know what to expect and trust you to execute.
- Do have a plan — Whether you already have a crisis plan or are developing one on the fly, establishing a plan will help keep everyone in your organization (including your support team) calm. This will also keep your customers calm — hearing from confident, prepared, and knowledgeable employees is exactly what they want from you in an emergency. Customers want to know that you can manage the problem (and hopefully prevent it from happening again) and to know that you care about them.
- Don’t be defensive — This is no time to deny, cover up, or shift blame. Transparency and honesty are key, both internally and externally. It’s okay to say that you don’t know the answer to a question or that you’re still evaluating the situation. Just keep the lines of communication open between you and your customers. It’s not ‘us’ versus ‘them’ — we’re all in this together.
- Don’t make hasty decisions — You may need to shift tactics or reevaluate your plan several times throughout a crisis. You want to act swiftly, but don’t make a hasty decision in the heat of the moment. Keep your options open and revisit your plan as the situation unfolds. You never know when you might need to pivot and you don’t want to be locked into a stance that is no longer appropriate, given the circumstances.
- Don’t ignore risk — You can never be too careful, especially if health, safety, or security are at risk. That doesn’t mean you should jump to conclusions, but it’s often better to be overly cautious. Companies are rarely criticized for being too careful or taking a potential risk too seriously. If anything, your customers may thank you for your abundance of concern.
How to Communicate During a Crisis
The first thing to do when a crisis occurs is to address the problem, which is the most important task. Communicating effectively with your customers and stakeholders is the next thing to do. If you don’t communicate well with your customers, the trust you’ve worked hard to create will be destroyed.
Be proactive and let everyone know what’s happening. Below are a few tips to help you communicate better when you’re feeling tense.
- Be timely — Communicate as soon as you can, and then follow a set cadence for follow-up communications. If you need to adjust the cadence (for example, if it becomes clear that a situation will last for days or longer), then communicate what the new cadence will be. Meeting a cadence means that sometimes you will not have new information to relay, but radio silence will needlessly increase your customers’ stress.
- Be relevant — Communicate the scope of the issue (who is affected, or likely to be), as well as the impact (how it will affect them). Include workarounds, if any.
- Be accurate — Don’t speculate. Incorrect information can set unrealistic expectations. Having to correct yourself publicly damages trust in your competence. Therefore, you should ensure that a situation meets your crisis criteria before communicating publicly — build in a window of time at the start of your process for this verification step.
- Be compassionate — This means taking ownership and acknowledging the impact the crisis is having on your customers. Apologize for that impact, avoid being defensive, and don’t shift blame — your customers depend on you.
- Be honest — This should go without saying, but… don’t lie to your customers. It will come back to haunt you. It’s okay to say you don’t know the answer to something, but try to follow up as soon as you have more information.
- Be transparent — Share as much as you can, to the extent that it can help set expectations for your customers. They don’t need to know which version of some third-party tool you use to build your software, but it can help them to know (for example) that you’re working on reverting a build, or that you’re having problems with a server that’s impacting connectivity with a particular segment of customers.
- Use one voice — There are two parts to this. First, the right hand should know what the left hand’s doing. Marketing should know what customer service is communicating, and vice versa. And how often. Before you talk to customers, convene internally around a single source of truth. By no means should individual employees attempt to dive in and respond ad-hoc, as mixed messages will damage your company’s perceived competence. Second, the voice should be consistent in tone and terminology from one situation to the next. Including sample message templates in your process documentation is a great way to ensure this.
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