From crisis prone to crisis prepared: a framework for crisis management

Abstract

Executive OverviewFor the tirst time in history, human-induced crises have the potential to rival natural disasters in both scope and magnitude. The financial cosfs of some crises have exceeded one billion dollars; the devastation wrought by these crises has included loss oi hundreds of human lives as well as immeasurable damage to future generations and to the environment. For instance, major crises such as Chernobyl and Exxon Valdez, as well as the oil spills and fires during the Gulf war, affected large regions of the globe. Previously, such effects could only have been wrought by natural disasters.This article seeks to explain how organizations may actually contribute to their own crises, as well as what can be done to avert human-induced disasters, and to manage those that still occur. A framework is provided for executives interested in improving their organizations' crisis preparedness. First, we consider how to defermine those crises for which a company should prepare. Next, the phases of a crisis are described followed by a description of the organizational systems which affect and are affected by it. Stakeholders' roles in the management of a crisis are discussed. The article concludes with implications for managers and executives interested in taking action. ArticleTylenol Chernobyl, Bhopal, the Space Shuttle Challenger, and Exxon Valdez. These human-induced disasters have become household words. The brand name Tylenol became synonymous with producf tampering on a nationwide scale when cyanide was heinously injecfed into pain capsules; Chernobyl-the explosion of a Soviet nuclear reactor-with the hazards associated wifh nuclear power, and as a result, a threat to the existence of the worldwide nuclear industry; Bhopal-the explosion of a pesticides manufacturing plant in India owned and operated by Union Carbide-with the hazards associated with modern chemical technology; the Space Shuttle Challenger-the loss of seven astronauts-with the dangers inherent not only in technology but also in the management of technology; Exxon Valdez-the devastation of one of the world's most pristine and sensitive ecosystems-with the danger associated with operating colossal technology. The list goes on and on. Every day seems to bring news of another crisis.The potential for large scale, human-induced crises is virtually built into the fabric of our times.' In many cases, the potential negative effects of technology exceed the ability of our organizations and management structures to control them. Indeed, there is evidence which indicates that each of the dramatic cases cited earlier could have been prevented if human operators and their managers had been crisis prepared, that is, equipped to anticipate, respond to, and learn from their crisis experiences.Ĉ ritical differences exist between human-induced and natural disasters. The public generally reacts more negatively to the effects of human-induced crises than to natural disasters. It is conceded that organizations have little control over natural catastrophes. Human-i...

Organizational Design and Restructuring in Response to Crises: Lessons from Computational Modeling and Real-World Cases

“…As widely documented by other scholars (Baligh et al 1990, Mackenzie 1978, Scott 1987, we believe that the organizational design and the task environment interact to affect organizational performance in crisis situations (Lin 2000a, Pearson andMitroff 1993). Indeed, recent research on adaptive organizations suggests that design and expertise work synergistically to affect performance, particularly in nonroutine settings (Hollenbeck et al 1995, Levinthal andWarglien 1999).…”

“…Crises are typically caused by both external and internal stress factors, and have the potential to result in catastrophic consequences if wrong decisions are made (Pearson and Mitroff 1993, Perrow 1984, Staw et al 1981). …”

“…An example may be the incident, which is described below, of an Iran Air flight being shot down by the USS Vincennes (Rochlin 1991). We believe that there may be a systematic approach to exploring organizational performance during crises through observable factors including expertise, organizational design, and task environment , Hollenbeck et al 1995, Levinthal and Warglien 1999, Pearson and Mitroff 1993.…”

Business continuity management in Jordanian banks: Some cultural considerations

“…Culture to an organization is like personality is to a human being, and since many aspects of human personality are unconscious, many aspects of organizational culture are hidden. Therefore, organizations may be unaware of the forces influencing their actions which subsequently can cause crises and disasters (Smith and Elliott, 2007;Pearson and Mitroff, 1993;Mitroff, 1988;and Pauchant and Mitroff, 1988). (Pauchant and Mitroff, 1992).…”

Measuring the Efficacy of Leaders to Assess Information and Make Decisions in a Crisis: The C-LEAD Scale

“…Furthermore, this tool makes a valuable contribution to the practice of leader training and development, as it can be used to identify the capabilities of leaders in advance of a crisis so that interventions to improve efficacy can be made (Combs & Luthans, 2007;Pearson & Mitroff, 1993). In addition, since C-LEAD predicts leader role taking, crisis training programs can be structured more efficiently to target those most likely to volunteer to take on crisis leader roles.…”