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Although the percentage of businesses involved in crisis planning increased after September 11, 2001, it is still alarmingly low. Some managers believe crisis planning unnecessary, while others become overwhelmed when attempting to plan for all potential crises. Even those managers who develop plans may find them overly-simplistic or ineffective when crises occur. This work discusses the importance of crisis planning and presents a five-step process to simplify planning efforts while increasing their effectiveness. Effective crisis preparedness can be achieved by forming a crisis team, analyzing vulnerabilities, creating strategies, working the plans, and assessing plan performance.
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Journal of Business & Economics Research April 2005 Volume 3, Number 4
19
Crisis Planning: Increasing Effectiveness,
Decreasing Discomfort
Michelle G. Hough, (Email: mgh11@psu.edu), Pennsylvania State University, McKeesport Campus
John E. Spillan, (Email: jes40@psu.edu), Pennsylvania State University, DuBois Campus
ABSTRACT
Although the percentage of businesses involved in crisis planning increased after September 11,
2001, it is still alarmingly low. Some managers believe crisis planning unnecessary, while others
become overwhelmed when attempting to plan for all potential crises. Even those managers who
develop plans may find them overly-simplistic or ineffective when crises occur. This work
discusses the importance of crisis planning and presents a five-step process to simplify planning
efforts while increasing their effectiveness. Effective crisis preparedness can be achieved by
forming a crisis team, analyzing vulnerabilities, creating strategies, working the plans, and
assessing plan performance.
INTRODUCTION
he old saying goes, into each life some rain must fall. Likewise, we might say, into each business
some crisis must occur. Whether loss of data from a computer glitch, loss of equipment, or life due to
a full-scale natural disaster, adversity strikes businesses with alarming frequency and little warning.
Just as individuals save for rainy days to mitigate their ill-effects, businesses can benefit from employing a proactive
strategy toward potential crises. Crisis management entails minimizing the impact of an unexpected event in the life
of an organization (Spillan & Hough, 2003). Oxford Executive Research Centre study showed that publicly traded
companies able to execute disaster recovery plans reduced the initial negative capital impact by 60%; companies
unable to execute plans had initial losses equating to 11% of their capitalization and average stock price losses of
almost 15% (West, 2003). In fact, evidence shows that the effective execution of well-developed crisis plans can not
only control crises; it can create competitive advantage for the “afflicted” organizations.
In the pre-September 11 world, organizations traditionally did little to formally plan for adversity. Spillan
and Hough’s study of small businesses in New York and Pennsylvania showed that only 15% of businesses surveyed
had crisis management teams, that respondents demonstrated little concern for crises, and that concern was generated
for a potential crisis only if the business had experienced that event previously (2003). Henry’s pre-September 11
survey of Fortune 500 companies found that only 30% of respondent organizations had crisis management plans
(Henry, 2000). Overwhelmingly, businesses justified their apathy toward crisis management with reasons such as the
improbability of crises occurring, the lack of need for planning due to the cohesiveness of the management team, and
the use of insurance coverage as an acceptable crisis planning substitute (Caponigro, 2000, Mitroff, 1989).
Yet it appears that the tragic events of September 11, 2001, aided perhaps by recent corporate ethic scandals,
have impacted organization’s attitudes toward crisis management. Since the September 11 attacks, the American
Management Association has surveyed members and customers regarding crisis management efforts and has found
increasing attentiveness toward the discipline. In 2003, 64% of respondents indicated they had crisis management
plans, up from 49% in 2002. Further, 62% of respondents have crisis management teams, up from 54% in 2002, and
42% indicated they conduct crisis drills or simulations, up from 39% in 2002 (AMA, 2003). The approach to crisis
management, whether reactive or proactive, has consequences that each manager has to weigh in relation to his/her
business goals. The following illustration provides a graphic depiction of the crisis event stream for managers
engaging in reactive and proactive decision making.
T
Journal of Business & Economics Research April 2005 Volume 3, Number 4
20
Figure 1 - Crisis Management Two Stances
a. Reactive Stance Crisis Stage Post-crisis Stage
-------------------------------------------------------------------------------------------------------------------------------------------------------------
b. Proactive Stance Preparation Stage Crisis Stage Post-crisis Stage
OR
(Source : J. E. Spillan, Ph.D., M. G. Hough, D.Sc.)
Figure 1 illustrates the events which occur in crisis situations. In the reactive stance, decisions about the crisis
are made after the event has occurred. In the proactive stance, managers have anticipated crises and have completed
vulnerability analyses toward developing plans to deal with potential crises. The consequences of each management
decision are significant. Managers must weigh the difference between the investments in planning for a crisis against
the losses they may incur from failing to plan. Clearly, implementing some sort of crisis planning process provides
significant benefit for the continued viability of the business.
CRISIS PLANNING
Traditionally, the field of crisis management has addressed the actions taken by an organization when
confronted by a crisis. Caponigro (2000) defines crisis management as the function that works to minimize the impact
of a crisis and help the organization gain control of the situation, while Whitman and Mattord (2003) define crisis
management as the actions taken during and after a disaster. While proper management of an existing crisis is
important, actively planning to prevent crises and to mitigate the effects of those crises which cannot be prevented is
critical. To date, little attention has been given to this key component of crisis management. Crisis planning can be
defined as proactively assessing and addressing vulnerabilities to avoid or minimize the impact of crises. It focuses on
the activities that should be addressed before a crisis ever looms.
CRISIS PLANNING PROCESS
As a necessity, businesses are viewing crisis planning with increased interest. But understanding the
importance of crisis planning is different from developing effective plans, particularly when management may have to
sell the need for crisis planning to organizational cultures that previously looked upon the effort as a waste of time and
money. Attempting to plan for all the potential crises that could conceivably strike a business can be time-consuming,
tiresome, and difficult. As such, even organizations that choose to plan for crises may find their plans shallow,
overly-simplistic, or ineffective when crises occur and plans are put to the test. To effectively tackle adversity then,
management must not only believe in the value of crisis planning, they need to understand the components of effective
Pre-Crisis:
No crisis
planning
efforts
Pre-Crisis:
Vulnerability
analysis
Crisis
planning
and
preparation
CRISIS
1. React
2. Plan to
prevent
reoccurrence
CRISIS
minimized
CRISIS averted
1. Pay costs incurred
2. Restructure
3. Review decision-making
4. Make personnel changes
5. Brace for potential
business failure
1.Crisis reaction
2. Crisis planning
to prevent
reoccurrence
Journal of Business & Economics Research April 2005 Volume 3, Number 4
21
crisis planning and implement those components in their organizations. Discussed here is a five-step process that
management can follow to create sufficiently detailed, comprehensive crisis plans. By following the process of
forming a team, analyzing vulnerabilities, creating strategies, working the plans, and assessing performance, managers
can decrease their discomfort regarding crisis planning and increase the probability that their organizations will
survive, or perhaps even benefit from, times of crisis.
Step 1: Form A Crisis Team
Look beyond the financial statements of any successful business and you will likely see a cohesive, effective
management team. Just as the formation of an effective management team is critical to the financial success of an
organization, the choice of the individuals who will comprise the crisis team is critical not only to successfully
managing crises; it may be a decision upon which corporate survival rests. Gerber and Feldman (2002) suggest that
the crisis team be comprised of the firm’s top managers, including a senior accounting or financial officer, a senior
human resources representative, a senior manufacturing or operations representative, a senior information systems or
technology officer, a senior insurance or risk management representative, internal and external public relations/media
relations representatives, and internal and external legal counsel.
Although designating the top management team as the crisis team undoubtedly will assure that crisis
planning is viewed in a strategic manner, some adjustments to the team mix may be necessary to ensure its
effectiveness. If certain top managers are relatively new to the organization, it may be beneficial to substitute a lower-
level manager with greater organizational experience. Likewise, external consultants may be used to fill gaps of
expertise regarding some crisis events with which the organization is not familiar. Additionally, the organization
should investigate the possibility of retaining as consultants retired employees whose wealth of specific organizational
knowledge may enrich the subsequent steps of analyzing vulnerabilities and creating strategy.
Further, regardless of education or experience, some individuals do not perform well in crisis situations. As
such, it is critical that the team be formed of personalities whom not only work well as a team, but whom can operate
in a pressure-filled environment, even for extended periods of time when necessary. Finally, consideration should be
given to appropriate team size. Initially, it may seem desirable to compile a team with representation in every
organizational area and with expertise in a wide variety of crisis situations, but problems of coordination and control
increase proportionally with team size. Creating a very large crisis team conceivably could lead to less effective
performance during a crisis event. For these reasons, effective team configuration may be the most critical step to
ensuring comprehensive management of crises.
Step 2: Analyze Vulnerabilities
For some, critically assessing all the crises that potentially could strike a business is not only disheartening, it
can be completely overwhelming. Most managers can easily list the three or four crises they most likely face fire;
floods; extended power outages; hurricanes or other natural disasters. Few, excluding those managers in organizations
with risk management departments, can comprehensively list and rank all potential vulnerabilities. Additionally, the
attacks on September 11, 2001 generated a new set of concerns formerly thought so improbable as to prompt
immediate exclusion from consideration. In fact, the events of September 11 created an entirely new meaning to the
phrase “worst case scenario” and may possibly be the primary impetus to increased management attention on crisis
planning (Spillan & Hough).
Table 1, revised from Crandall et al. (1999) to include terrorist activities, provides a detailed list of crises and
impacts from which the crisis team can begin their vulnerability analysis. Depending upon the organization,
additional crises may require assessment. For example, transnational corporations with operations in countries less
than politically or economically stable may need to place more emphasis than their domestic counterparts on assessing
vulnerabilities related to revolution, invasion, kidnapping of key managers, or governmental corruption. After
tailoring the list of potential crises, the crisis team should analyze the events not only for probability of occurrence,
but also to assess the associated financial, operational, human resource, and public relation consequences. Ideally, the
Journal of Business & Economics Research April 2005 Volume 3, Number 4
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outcome of vulnerability analysis will be a prioritized list of potential crises with some grouping of events which will
require similar management strategies.
Table 1 - Crisis Classification Framework
Category
Impact
Crisis Events
Operational
Short-term or long-term disruption of
organization’s daily activities
Loss of records permanently due to fire
Computer system breakdown
Loss of records permanently due to computer
system breakdown
Computer system invaded by hacker
Major industrial accident
Major product/service malfunction
Death of key executive
Breakdown of a major piece of production/service
equipment
Public Image
Negative public perception
Boycott by consumers or the public
Product sabotage
Negative media coverage
Fraud
Loss of stakeholder confidence, reduced employee
morale and productivity
Theft or disappearance of records
Embezzlement by employee(s)
Corruption by management
Corporate espionage
Theft of company property
Employee violence in the workplace
Asset misappropriation
Natural Disaster
Temporary or permanent disruption of daily
activities, destruction of facilities or equipment,
loss of life
Flood
Tornado
Hurricane
Earthquake
Legal
Negative public perception, loss of stakeholder
confidence, bankruptcy due to cost of legal
representation or payment of fines and penalties
Consumer lawsuits
Employee lawsuit
Government investigation
Product recall
Terrorism
Temporary or permanent disruption of daily
activities, long-term consequences in employee
morale and confidence, destruction of resources,
loss of life
Bomb
Kidnapping
Massacre
Chemical or biological attack
Adapted from Crandall, et al. (1999).
Step 3: Create Strategies
Armed with a prioritized list of potential crises, the crisis team can set to work on developing comprehensive
strategies to avoid or mitigate crisis events. As with any strategic initiative, the role of the crisis team is not to create
and orchestrate minutely detailed plans; its focus instead is to establish major goals and expectations for crisis survival
along with sufficiently detailed directives to be implemented at functional levels. For example, it is probably
counterproductive for a crisis team to create detailed disaster recovery plans in the event of a major computer system
outage. Instead, the crisis team should focus on goals and objectives for recovery such as identifying the maximum
acceptable loss of data, mandating a frequency for system backups, detailing expectations regarding the timeframe for
system recovery, prioritizing the mission-critical systems for restart, and providing direction regarding the use of
external disaster recovery installations. The systems operations group then would derive and implement the detailed
disaster recovery procedures to accomplish the crisis team’s goals and objectives.
Journal of Business & Economics Research April 2005 Volume 3, Number 4
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Relieved of attempting to plan to minute levels of detail, the crisis team adds the greatest value by focusing
on the comprehensiveness of the strategies they deliver. A truly comprehensive strategy will focus on all aspects of
the organization’s survival including detailing interdependencies among departments; building contingencies in the
task environment with customers, distributors, suppliers, and even some friendly competitors; and addressing
requirements of the general environment such as liaising with employees’ families, aid providers such as fire
departments and emergency medical technicians, government agencies, affected local communities, and other
stakeholders. Inherent in comprehensive strategy formulation is the development and utilization of effective, fail-safe
mechanisms for communication, including the appointment of a corporate spokesperson that can interact with all
parties in a knowledgeable, professional manner.
Finally, no crisis planning strategy is complete unless it includes a mechanism for attempting to circumvent
crises from the outset. Given sufficient warning, most crises can be significantly diminished if not entirely avoided
(Spillan & Hough, 2003). The organization will benefit greatly if the crisis team mandates the development of an
early warning system, complete with a list of indicator events which automatically trigger the execution of crisis
plans. Employee preparedness is critical to the effectiveness of an early warning system. Employees who have
received sufficient training, been exposed to comprehensive simulations and drills, and who have participated in the
testing and fine-tuning of crisis plans will not only be vigilant in watching for early warning signs, they will likely be
effective and efficient in executing the developed strategies and increasing the likelihood of a successful crisis
outcome.
Step 4: Work The Plans
In theory, the preparation entailed in forming an effective crisis team, creating comprehensive crisis planning
strategies, implementing the strategies in sufficient detail at functional levels, and training and preparing employees to
perform effectively and efficiently in crisis situations should ensure that any crisis can be mitigated or avoided. In
reality, few plans account for all potential variation or complexity in a given situation. Only rarely does a plan so
perfectly fit the situation for which it was intended that no modifications are necessary and execution is flawless.
Instead, organizations dealing with crises frequently are faced with the need to deviate from their plans in order to
deal with unforeseeable complexities in the crisis situation.
In these instances, the wisdom and experience of both the crisis team and the effected employees is
invaluable. To whatever extent is reasonable, the organization should work the plan but be sufficiently empowered
and flexible to adapt to variations as events require. When adaptations are warranted, the crisis team should ensure
that the deviations are documented, including the rationale and the outcome of the changes, so that the changes can be
evaluated after the crisis has passed and incorporated as needed into future plans. As important as creating and
rehearsing plans for crises are, understanding when and how to deviate from the plans may be even more crucial to
surviving a crisis situation.
Step 5: Assess Performance
Sometimes, even the best-laid plans fail despite all efforts to the contrary. Whether the execution of a crisis
plan was a dismal failure or an astounding success, lessons can be learned from analyzing actual performance against
the expectations of the plan. If performance fell short, it is important to question why and determine how to remedy
the shortcomings in the future. If performance exceeded all expectations, possibly turning a potential disaster into an
advantageous situation, analyzing the success can provide important insights that may be transferred to other
situations. Innovations developed during crisis situations may even be applied to normal operating conditions to
create a long-term strategic advantage. Regardless of the outcome, analysis of past performance almost always
provides significant lessons for the future.
CONCLUSION
Since September 11, 2001, managers are increasingly aware of the importance of crisis management. While
managing an existing crisis is important, actively planning to prevent crises is critical. Crisis planning, or proactively
Journal of Business & Economics Research April 2005 Volume 3, Number 4
24
assessing and addressing vulnerabilities to avoid or minimize the impact of crises, focuses on the activities that
should be addressed before a crisis ever looms. Planning for crises can minimize their impact and even create
competitive advantage yet trying to anticipate all the adverse events that might occur in an organization and then plan
related crisis strategies can be disheartening or overwhelming. By following the steps of forming a team, analyzing
vulnerabilities, creating strategies, working the plans, and assessing performance, managers can decrease their
discomfort regarding crisis planning and increase the probability that their organizations will survive and possibly
benefit from times of crisis.
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Pengelolaan lembaga anak usia dini perlu dikelola dengan baik agar menjadi sebuah lembaga berkualitas. Penelitian ini bertujuan mengkaji manajemen strategi pembelajaran lembaga pendidikan anak usia dini pada masa pandemi Covid-19. Metode penelitian ini menggunakan kualitatif, yaitu memakai data yang diperoleh dari hasil analisis di lapangan baik melalui observasi, wawancara maupun dokumentasi. Hasil penelitian menunjukkan adanya manajemen strategi yang diupayakan oleh kepala sekolah dalam mengelola risiko bencana di lembaganya. Kepala Sekolah TK Pertiwi 4 Giripurno Borobudur menerapkan manajemen strategi pembelajaran sebagai cara dalam rangka memperlancar proses pembelajaran di masa pandemi. Setidaknya ada empat strategi yang dilakukan TK Pertiwi 4 Giripurno dalam mengelola pembelajaran di era pandemi, di antaranya yaitu implementasi perencanaan yang matang melalui analisis manajemen krisis (before crisis, during crisis dan after crisis), pengorganisasian (organizing) lembaga yang tersistem, pelaksanaan (actuating) yang maksimal dan pemantauan (controlling) dengan menyesuaikan pada ketentuan perundang-undangan terkait situasi kondisi kedaruratan pandemi Covid-19. Melalui implementasi manajamen strategi tersebut, maka dapat menjadi strategi yang efektif dan efisien dalam mengendalikan proses pembelajaran walaupun di tengah kondisi krisis pandemi Covid-19.
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This chapter explores the preparedness and initial responses to the COVID-19 crisis of two higher education institutions, Tampere University in Finland and the University of São Paulo in Brazil, using a crisis management framework. The crisis has disrupted teaching and research operations and caused unforeseen challenges to universities. While the crisis is still ongoing, and the long-term impact of the crisis cannot be assessed, this chapter focuses on the initial phase of the crisis, crisis preparedness, and response. The findings suggest that the Finnish case university applies a very systematic and centralized crisis management strategy, while the Brazilian case university has a more decentralized approach coming from its collegial mode of governance. Cross-case analysis shed light on similarities and differences in their capacity to respond to crises such as COVID-19.
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The purpose of this paper is to propose instruments to improve crisis management in an organization from the perspective of organizational learning. The assumption on which the research was based is the claim that the success of crisis management depends both on the effectiveness of the learning processes that enable overcoming a crisis and the ability to learn a lesson from a crisis. Organizational crises may be conducive to the process of intensive organizational knowledge acquisition. Actions undertaken in terms of crisis management often constitute the means for organizational learning, which is related to issues of the adaptation, survival, and competitiveness of enterprises in conditions of discrete changes in the environment. A crisis is a chance for revitalizing changes that would otherwise be impossible to implement. Increasing the ability to manage crises can be considered as a favorable condition for long-term economic and social development. Real help for managers confronted with organizational crises depends on the awareness of the importance of anti-crisis management and, above all, the problems they must face. In shaping the ability to learn valuable lessons from a crisis, the following factors are crucial: normalization mechanisms, the organization’s double-loop learning ability and the managers’ awareness of its importance in learning from a crisis, and the organization’s single-loop learning ability. Improving organizational learning should lead to the reconstruction of the organization’s abilities to cope in the crisis.
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In a crisis it is highly unlikely that problems will be solved at a single stroke or by ad-hoc action. Despite the urgency of the crisis the situation demands planning and coordination. For those who have had responsible positions during a corporate crisis, and this includes not only top management but also non-executive directors, banks, management consultants and receivers, emphasize that crisis management is a three-dimensional problem. It must address: •☆strategic and operating problems;•☆the political problem of how to implement deicisions among often conflicting interested parties;•☆the organizational structure necessary to overcome the crisis.The author offers a framework for corporate crisis management. Among the questions demanding answers: (1) What are the main reasons for the failure of crisis management? (2) How can the crisis be identified before it is too late? (3) What strategies are suitable for overcoming a crisis? (4) How should management organize itself to overcome a crisis? (5) What functions must assume a leading role during a crisis? (6) How does crisis management turn into the successful management of innovation?
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Firms involved in international business are affected by many crisis and crisis-like events not generally associated with normal operations. Crisis management provides a business firm with a systematic, orderly response to crisis situations. Many crises can be prevented – or at least coped with more effectively – through early detection. The real challenge is not just to recognize crises, but to recognize them in a timely fashion and with a will to address the issues they represent. A crisis in an international business firm can consist of as many as four different and distinct phases: prodromal crisis stage, acute crisis stage, chronic crisis stage and crisis resolution stage. Recognizing these phases, and dealing with them effectively, gives the business manager an important edge in addressing issues of importance to the organization.
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This study examines crisis planning in a survey of small businesses. It specifically focuses on the perceived importance of crisis planning by small business managers. In particular, we investigate whether the experience of an actual crisis event by a business generates concern for future crises, if concern is generated more from the occurrence of a crisis event or from the presence of a crisis management team. Results of the study indicate that crisis planning receives little attention in the small businesses surveyed, and for most small business managers, an actual crisis event must occur before crisis planning becomes a concern. Concern for crises is generated by experiencing crisis events, rather than by the presence of crisis management teams. It was found that even those businesses that had previously experienced crises did not have crisis management teams.
Crisis Management: A New Plan Is Necessary
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Wilderoter, D. "Crisis Management: A New Plan Is Necessary," National Underwriter (Property/Casualty/Employee Benefits), 91(33): 34-35 & 40-41.
You'd Better Have a Hose if You Want to Put Out the Fire
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Henry, R. You'd Better Have a Hose if You Want to Put Out the Fire (California: Gollywobbler Productions, 2000).
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Mitroff, I. (1989) "Programming for Crisis Control", Security Management, (October 1989): 75-79.
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